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Inside the Stream: Exclusive Interview With Top Wall Street Analyst Michael Nathanson
We’re excited to have top Wall Street media analyst Michael Nathanson join us this week. Michael and his partner Craig Moffett of MoffettNathanson are the “one-two punch” of the TV, streaming and broadband industries. Their analyses and insights are widely considered best in class. Michael is an old friend, and we’re so pleased to have him join us in this exclusive, must-listen interview.
Among the many topics we cover: the recent decline in CTV CPMs due to Amazon’s market entry and why the new inventory will be digested, the competitive dynamics in the broader CTV/AVOD market, YouTube’s massive scale and Michael’s prediction that YouTube TV will be the pay-TV market leader in two years with 10 million subscribers, FAST’s potential, legacy media’s abysmal $30B cumulative loss on DTC services in the past 5 years, why streaming’s future will be driven by advertising and why the “unit value” of advertising is poised to soar due to AI and finally, the biggest potential surprise in the next year.
Anyone who wants to understand what’s really happening in the TV/streaming industries will find this exclusive interview invaluable.
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Topics: Disney, Hulu, Netflix, Podcast, YouTube
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Inside the Stream: YouTube TV’s Strong Q3, Sports in Flux
LRG estimates that YouTube TV added 600K subscribers in Q3 ’23, bringing it to a total of 6.5 million subscribers. YouTube TV’s growth is by far the strongest of all pay-TV providers, double the growth of Hulu + Live TV and Fubo, with all traditional providers losing subscribers in Q3.
On this week’s podcast we discuss what’s behind YouTube TV’s growth, and also how sports TV continues to be in flux.
Listen to the podcast to learn more (23 minutes, 36 seconds)
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Topics: Podcast, YouTube TV
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Inside the Stream: Linear TV and Pay-TV Decline; Subtitles; Roku Adds Local TV News
First up on Inside the Stream this week Colin and I discuss the latest data from Nielsen’s The Gauge report. While it said that “linear TV” viewing fell below 50% for the first time, we explain how a more accurate headline would probably be that broadcast and cable TV viewing fell below 50%. Viewership is following along with pay-TV adoption, which we also discuss fell further in Q2 ’23.
Also in this week’s podcast, new data shows that watching TV with subtitles has become quite popular, especially among younger audiences. Finally, The Roku Channel is going to stream local news from 30 CBS and FOX channels, further converging broadcast TV and streaming.
Listen to the podcast to learn more (27 minutes, 7 seconds)
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Topics: CBS, FOX, Nielsen, Podcast, Roku
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Inside the Stream: How Overlapping “Doom Loops” are Crushing the TV Industry
In this week’s podcast we discuss the overlapping “doom loops” that are crushing the TV industry. These were first articulated by MoffettNathanson, and built upon by Colin. The doom loops include 1) TV networks shifting investment/focus from linear TV to streaming, in turn driving more cord-cutting, 2) Fewer remaining pay-TV subscribers available to shoulder the cost of sports TV networks, in turn leading to more cord-cutting, 3) Audience shifts away from traditional TV driving ad dollars to follow, further pressuring traditional TV’s revenue.
Yet another more doom loop could be added with news this week that Disney is finally pushing forward with a direct-to-consumer model for ESPN. Given how expensive that DTC service is likely to be, it’s ultimate adoption probably won’t extend much beyond hard-core sports fans.
But it will cause the unintended consequence of raising the visibility of the multibillion dollar per year “sports tax” non-sports fans have long been paying, which Major League Baseball Commissioner Rob Manfred explicated at a Paley Center event last month when he said, “It’s a great business model when a whole bunch of people pay for something they don’t really care if they have or not, which is what the cable bundle did for us. It’s hard to replicate that.”
So it’s safe to say that ESPN’s DTC service will also drive up cord-cutting.
The “doom loops” are now on display for all to see, prompting Colin and I to wonder truly, what the remaining life span of pay-TV is?
Before we get started, we give a quick overview of Wurl’s new ContentDiscovery offering, for which Colin and I wrote an accompanying white paper.
Listen to the podcast to learn more (35 minutes, 28 seconds)
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Topics: ESPN, MoffettNathanson LLC, Podcast
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Inside the Stream Podcast: Pay-TV is in Free Fall; What’s it Mean for Sports Teams’ Valuations?
Pay-TV providers lost another 7 million subscribers (approximately) in 2022 as losses accelerated from 2021. The losses span those actually cutting the cord, plus those that simply don’t take on a pay-TV subscription in the first place.
On this week’s podcast Colin and I discuss pay-TV’s melting iceberg, and among its consequences, what’s it mean for sports teams’ valuations and players’ salaries. Since cord-cutting came along, there’s always been a notion of sports providing a “firewall” bottom on pay-TV subscribers. But with so many sports rights now leaking into the streaming domain - having been snapped up by Big Tech - the paradigm-busting question looms larger.
Another, related consequence of pay-TV’s implosion is the demise of regional sports networks (RSNs). They’re also experiencing financial turmoil due to bad deal-making, disconnects with audiences and sub-par demand. Even mighty ESPN has been the subject of M&A rumormongering as newly restored CEO Bob Iger has to pick his priorities.
All of this is to say that the economics of the sports business are changing in front of our eyes. If sports networks’ financial viability is impaired, rendering them unable to competitively bid for rights, then the question becomes, will Big Tech step in as a backstop, building on their current commitment? As I assert in the podcast, I think their commitment to becoming a viable backstop will only become known as the ultimate CTV ad monetization opportunity crystallizes. Specifically, if CTV can legitimately become full/lower funnel - bringing in buckets of cash with it - then backstop viability is far more likely. Absent that it’s jump ball. We’ll see.
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Topics: Podcast
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NFL Rights Deals Soar As Pay-TV Subscribers Contract
The Wall Street Journal is reporting that the fees CBS, Fox, NBC and ESPN each pay to broadcast NFL games will double or more in new long-term agreements currently being finalized. Once again we are presented with the incongruity that sports rights are escalating even as the pay-TV subscriber audience able to watch these networks is shrinking.
As the Q4 earnings season wrapped up, the contraction of pay-TV was again in the news this week as analysts tallied the final losses for 2020. MoffettNathanson pegged the subscriber loss in 2020 among traditional cable, satellite and telco operators at approximately 6 million, with virtual operators (e.g. YouTube TV, Hulu, etc.) offsetting it by adding approximately 2 million subscribers.Categories: Broadcasters, Cord-Cutting, Sports
Topics: CBS, ESPN, FOX, MoffettNathanson LLC, NBCU, NFL
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VideoNuze Podcast #546: Comcast Has Nearly 10 Million More Broadband Subscribers Than Video Subscribers
Welcome to the 546th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.
Comcast reported its Q4 and full year 2020 this week and as usual, the divergence between residential video and broadband subscribers was stark. Remarkably, Comcast now has nearly 10 million more residential broadband subscribers (28.3 million) than residential video subscribers (18.9 million). The pandemic furthered the divergence, with 1.9 million broadband subscribers added in 2020 (up 47% vs. 2019) while video subscribers declined by 1.3 million (nearly double the 671K lost in 2019).
Broadband has been Comcast’s core strategy for a while now, and we discuss how Peacock is one of the beneficiaries. Peacock now has 33 million sign-ups and is well ahead of plan. Peacock has also made some strong content moves with “The Office,” “Modern Family,” the WWE Network and some sports coming over from NBCSN which is being closed down.
Listen in to learn more!
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Topics: Comcast, Peacock, Podcast
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VideoNuze Podcast #539: Strong Third Quarter for Pay-TV
I’m pleased to present the 539th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.
Despite gloomy predictions, the pay-TV industry in the U.S. turned in a relatively healthy third quarter in 2020, likely gaining subscribers. This was due to robust additions by virtual pay-TV providers (led by Hulu + Live TV and YouTube TV) and moderating losses by traditional providers (especially AT&T which had a huge loss in Q3 ’19).
Colin and I discuss how a big reason for Q3’s gains was the return of all major sports. Except for the NFL, major sports aren’t available in Q4. That means churn is likely to be up in Q4, though it could be offset by the pandemic keeping people indoors more.
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Topics: Podcast
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Cord-Cutting Slows in Q3 as Virtual TV Providers Jump
Cord-cutting slowed down in Q3 ’20, with top pay-TV providers in the U.S. losing around 120K subscribers, according to Leichtman Research Group. These pay-TV providers account for about 95% of total pay-TV subscribers in the U.S. In Q3 ’19, on a pro forma basis, this group of providers lost approximately 945K subscribers.
While top traditional pay-TV providers all improved their performance in this year’s third quarter, a key driver of overall industry performance was virtual pay-TV providers, which recorded their best quarter ever. According to LRG, four of the virtuals (Hulu + Live TV, Sling TV, AT&T TV Now and fuboTV) collectively added 1.035 million subscribers in Q3 '20. Hulu + Live TV was by far the biggest contributor, with 700K additions, making it now the fifth largest pay-TV provider with 4.1 million subscribers.Categories: Cord-Cutting
Topics: Hulu, Leichtman Research Group
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Forecast: Cord-Cutting to Quadruple Over Next 5 Years
A forecast from The Diffusion Group last week calls for the rate of cord-cutting in the U.S. to nearly quadruple over the next 5 years compared to the rate for the prior 5 years. TDG expects by 2025 pay-TV subscribers will contract by 36% from 2020, compared with a 9.5% contraction experienced in the 2015-2019 period.
Overall TDG sees legacy pay-TV providers ending 2020 with around 76 million subscribers. TDG also sees virtual pay-TV providers ending 2020 with around 11 million subscribers.Categories: Cord-Cutting
Topics: The Diffusion Group
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VideoNuze Podcast #514: Digging Into Pay-TV’s Q1 Losses and ViacomCBS’s Gains
I’m pleased to present the 514th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia. As always, we hope our listeners are staying well.
This week we share thoughts on the nearly 2.1 million video subscribers that large pay-TV operators lost in Q1. It was a record loss, and approximately half of it was attributable just to AT&T. Virtual pay-TV operators also had a tough first quarter. As a result linear TV networks must look to direct-to-consumer models, which is what ViacomCBS is doing with CBS All Access and Pluto. Subscriber gains have been impressive and we examine the company’s successful strategy.
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Pay-TV Loses Over 2 Million Video Subscribers in Q1 As Negative Forces Accelerate
Large pay-TV providers lost a total of nearly 2.1 million video subscribers in Q1, according to data compiled by Leichtman Research Group. The 2.1 million is more than double the approximately 1 million video subscriber loss sustained in Q1 ’19 and a record for the industry.
No doubt Q1 reflected ongoing challenges the industry has faced for years: high pricing relative to SVOD services, subpar linear viewing experiences interrupted by too many ads, a proliferation of connected TV devices enabling myriad competitive OTT services to be viewed on the big screen, etc. But the tail end of Q1 also saw the first impacts of Covid-19: the loss of live sports which has been a pay-TV’s firewall for years and the economic crisis that’s leading to consumer belt-tightening.Categories: Cable TV Operators, Cord-Cutting, Satellite, Telcos
Topics: Leichtman Research Group
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Sling TV’s “Happy Hour Across America” Could Drive Further Cord-Cutting
Yesterday, Sling TV unveiled its “Happy Hour Across America” promotion which allows viewers free access to Sling Blue during the 5pm-midnight window. Sling Blue includes 50+ linear TV networks, cloud DVR and a 50K title VOD library. There were already significant macro trends driving cord-cutting of traditional pay-TV. The Happy Hour promotion follows Sling’s prior “Stay in & Sling” initiatives.
Following are some of the reasons why Sling TV’s new Happy Hour promotion could further accelerate cord-cutting:Categories: Cord-Cutting, Virus
Topics: Sling TV
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Pay-TV Providers Lost Approximately 5 Million Subscribers in 2019
It’s too soon to know whether 2019 will be remembered as the turning point year for the pay-TV industry - when all of the negative trends coalesced into a perfect storm that permanently diminished the industry’s place in American homes. But I’d say the odds are likely that 10-20 years from now, 2019 will likely be the top candidate for “turning point year.”
For evidence, consider new data from Leichtman Research Group, finding that major pay-TV providers which account for 95% of the market, lost 4.9 million subscribers in 2019. If 100% of providers had been counted, the losses would have been 5 million or more.Categories: Cable TV Operators, Cord-Cutting, Satellite, Telcos
Topics: AT&T, Leichtman Research Group
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Here’s the Math For How YouTube’s Total Revenue Could Exceed $25 Billion in 2020
Finally, finally, finally, Google provided some transparency about YouTube’s financial condition, in its Q4 ’19 and full year 2019 earnings report yesterday. YouTube’s financials have been treated as a state secret by Google since the beginning of time, with only high level usage information periodically shared.
Even yesterday’s reveal was only for YT’s advertising revenue, which came in at $4.7 billion for Q4 ’19 and $15.1 billion for the year. YT’s subscription revenues - which consist of YT Music, YT Premium includes YT Music) and YT TV (its virtual pay-TV service) - were buried in “Google other revenue.” On the earnings call, CEO Sundar Pichai said all YT subscriptions had a $3 billion annual run rate at the end of 2019.
Using some conservative assumptions and relatively quick math, it’s clear that YT’s total revenue could exceed $25 billion in 2020. As I also detail below, YT has to be considered among the best acquisitions in corporate America’s history. For Google, only the acquisition of Android (for the measly price of $50 million) could be considered more successful.
Here are my calculations:Categories: Advertising, Aggregators, Cord-Cutting, Skinny Bundles
Topics: Facebook, Google, Netflix, YouTube, YouTube TV
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VideoNuze Podcast #499: AT&T is Bleeding Pay-TV Subscribers, Leading to 2020 Surge in Cord-Cutting
I’m pleased to present the 499th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.
Earlier this week AT&T reported its Q4 ’19 earnings. There was plenty of lousy news, and as Colin and I discuss, at the top of the list was a loss of over 1.1 million pay-TV subscribers in the quarter, compared with 658K subs lost in Q4 ’18. For the full year, AT&T lost 4.1 million, more than 5x the 750K it lost in 2018. The combined 4.8 million subs that AT&T has lost in the past 2 years is nearly 20% of what it started with back on Dec. 31, 2017.
There is arguably no bigger influence on the pay-TV industry’s overall cord-cutting rate than AT&T because of its sheer size and outlier loss level. All of that - and lots of other factors - lead us to believe that the rate of cord-cutting is actually going to accelerate in 2020. Colin has crunched the numbers and believes when all the Q4 results are reported, the traditional industry (not including vMVPDs’ gains) will probably lose around 6.5-7 million subs in 2019. He sees that escalating to around 8.5 million in 2020.
We dig deeply into all of this on the podcast. We all have a front row seat to an industry in complete transformation. As it has in countless other industries, we are watching the Internet massively disrupt the pay-TV and TV industries.
Listen in to learn more!
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The VideoNuze podcast is also available in iTunes...subscribe today!Categories: Cord-Cutting, Podcasts, Telcos
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AT&T Lost Over 1.1 Million Video Subscribers in Q4 ’19; Nearly 20% of Base in Past 2 Years
AT&T reported its Q4 ’19 earnings this morning and in the “Entertainment Group," it was U-G-L-Y. The top line numbers are mind-boggling: 945K “premium video” subscribers (DirecTV and U-verse) lost and 219K “OTT video” subscribers (DirecTV Now and AT&T TV) lost for a total of 1.164 million lost. In Q4 ’18, AT&T lost 391K premium subs and 267K OTT subs for a total of 658K subs lost. So the Q4 ’19 sub loss was 77% higher than the Q4 ’18 sub loss - although in the category of “cold comfort,” it was 14% lower sequentially vs. Q3 ’19 when AT&T lost 1.36 million combined video subscribers.
But broaden the lens to consider full year 2019 vs. full year 2018 and things look even worse. In 2018 AT&T lost a total of 750K subscribers (a result that was helped enormously by the addition of 654K total DTV Now subscribers in first half of the year, more on that below). In 2019 AT&T lost 4.1 million subscribers or more than five times the prior year.Categories: Cord-Cutting, Telcos
Topics: AT&T
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VideoNuze Podcast #484: New Industry Data on Connected TVs and Cord-Cutting
I’m pleased to present the 484th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.
On this week’s podcast we discuss newly released industry data from FreeWheel’s Q2 ’19 Video Marketplace Report, Roku’s Cord-Cutting 2019 study and Manatt-Vorhaus Advisors Digital Strategy study.
Each contains insights about the video industry and fast-changing viewer behaviors. In particular, we focus on the dominance of connected TVs in video ad views, new trends in cord-cutting and the rising usage of smartphones among younger audiences.
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Topics: FreeWheel, Podcast, Roku, Vorhaus Advisors
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Research: Streaming Services Linked to Cord-Cutting
Streaming services have long been linked to cord-cutting, and new research from Manatt and Vorhaus Advisors provides another window into the relationship. Among those likely to cut the cord in the next year, nearly half (44%) said that after doing so they would rely on SVOD services like Netflix or Hulu.
And when asked their reasons for going without pay-TV service, “too expensive’ topped the list of reasons cited (as expected) with 47%, followed by “I don’t watch enough TV to make it worth it” (30%). But then the next 3 reasons all relate to the strength of streaming services: “I am satisfied with online streaming options on my TV,” (24%) “I have enough entertainment options on the Internet” (23%) and I can watch the TV shows and movies I like on the Internet” (21%).Categories: Cord-Cutting
Topics: Vorhaus Advisors
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VideoNuze Podcast #479: Pay-TV’s Q2 Subscriber Losses; Viacom-CBS Upside
I’m pleased to present the 479th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.
Q2 was a very tough quarter for pay-TV operators, with cord-cutting soaring to a record level. This week we dive into the numbers and discuss why things have changed so dramatically since Q2 ’18. Then we transition to the Viacom-CBS deal, which was formally announced this week. Colin sees substantial upside, leveraging Pluto TV, which Viacom acquired earlier this year.
Listen in to learn more!
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The VideoNuze podcast is also available in iTunes...subscribe today!Categories: Cord-Cutting, Deals & Financings, Podcasts
Topics: AT&T, CBS, Leichtman Research Group, Podcast, Viacom