Posts for 'SVOD'

Disney reported its fiscal 2023 first quarter this week, the first since Bob Iger returned to the CEO role. While other parts of the business are doing reasonably well, for Direct-to-Consumer, which includes Disney+, Hulu and ESPN+, subscriber gains were weak and ARPU was down. Iger also shared that Disney will cut its content spending by $3 billion this year. For Colin and me, all of that makes Disney’s DTC future seem murky.

Disney also plans to lay off 7,000 employees and take a $5.5 billion charge, while also stating it intends to restore its dividend by the end of the year - all a big victory for Wall Street. The layoff continues a disturbing pattern by most large tech and media companies (a topic about which I do a mini-rant during the podcast, sorry) which has put CEOs' lack of accountability on full display and smashed any delusions anyone might have had about any sort of an employer-employee "social contract" still existing (again sorry, I digress)

The most meaningful quote from Disney’s earnings call on late Wednesday was when Iger said “…the streaming business, which I believe is the future and has been growing, is not delivering basically the kind of profitability or bottom-line results that the linear business delivered for us over a few decades.”

Nor will it ever.

As Colin and I discuss this week (and as we’ve discussed ad nauseam in the past), the linear business model was based on the pay-TV multichannel bundle, which was the very definition of artificial economics. In the bundle, lots and lots of channels were delivered for a single price. The bundle’s monthly price steadily increased over the years as broadcast and cable TV networks raised their carriage fees paid by pay-TV operators.

The “elephant in the room” was that most pay-TV subscribers watched only a handful of TV networks, and yet paid for ALL of them. By far the biggest beneficiaries of pay-TV’s artificial economics were sports networks, with ESPN at the very top of the list. I first wrote about the “sports tax” 12 years ago in “Not a Sports Fan? Then You're Getting Sacked For At Least $2 Billion Per Year.” Things have only gotten worse for non-sports fans since. However, with streaming’s rise, the elephant is now fully visible, and has driven cord-cutting to record levels.

And just as the Internet has ruthlessly rationalized the economics of practically every other industry, it is now doing the same to the TV industry. The Internet allows zero room for artificial economics and anyone who violates this precept is an ostrich with their heads fully underground. Iger understands this, and his quote should fairly be seen as a signal to Wall Street that Disney is extremely unlikely to ever achieve historical financial performance in its TV businesses.

As if all of that weren’t enough, Iger then went on CNBC’s “Squawk Box” yesterday and told David Faber that “Everything is on the table…" with respect to Hulu’s eventual ownership resolution (reminder, Disney has a deal in which Comcast can force Disney to buy its 30% stake for a set minimum price that would translate into around $9 billion).

Iger’s comments basically turned Hulu into a hot potato. Really dedicated VideoNuze readers will recall that almost 5 years ago, in March, 2018 I wrote “Why Comcast Should Take Control of Hulu.” Then, subsequent to Comcast’s Peacock reveal in January, 2020, I followed up with “Quick Math Shows Comcast Missed Out On Almost $6 Billion in Revenue By Not Buying the Rest of Hulu.”

Instead, Comcast/NBCU launched Peacock and will have lost over $5.5 billion on it just between 2022-2023. If Comcast does come back in and buy Disney’s 70% stake in Hulu it will rank as the #1 irony in all the years I’ve been in the industry.

And it would make Disney’s DTC future even murkier still.

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On this week’s podcast, Colin Dixon and I boldly  introduce to the industry a new acronym (technically it’s a “macronym” or “nested acronym”).

We’re all aware that free ad-supported TV (“FAST) services are currently all the rage and that many are predicting it will become a multibillion dollar streaming segment in the years ahead.  

Content providers, TV OEMs and TV networks are seizing the opportunity by launching new FAST services to capitalize on two key trends - advertisers’ insatiable demand for premium CTV ad inventory and viewers’ SVOD fatigue especially as economic uncertainty surges.

All of this makes FASTs a “road to gold” in the short-term.

But, in the longer-term, an unintended consequence of FASTs’ growth may be to precipitate accelerated churn among SVOD providers. Hence the new macronym: SVOD Losses On the Way (“SLOW”).

There are still only 24 hours in the day, and viewers constantly make choices about what to watch, what services get displaced and what they’re willing to pay for. If viewers reapportion their viewing time to strong FAST services that are flooding the market, then they’re being “trained” to consume free premium video via FASTs. Further, their expectations for ever-better shows to be accessible without payment also escalates.

SLOW is a concept I’ve been contemplating for some time, especially as I read one FAST-boosting report or article after another, as well as observing the slowing growth SVODs are already experiencing.

But this week’s announcements of WBD moving “Westworld” plus a trove of other programming to Tubi and to The Roku Channel FAST services really crystallized things for me. After all, “Westworld” is a show that garnered 54 Emmy nominations and 9 wins in its four-year run. Its popularity has faded recently and HBO cancelled it, but it still boasted a familiar, name-brand cast. For HBO, it was no “Game of Thrones” or “The Sopranos,” but it was respectable. Now all 36 episodes will be available completely for free on Tubi and The Roku Channel.

To be clear - and as I say in the podcast - I remain a fan of FASTs. I’m only raising the caution flag that the decision-making around which FASTs to launch and what premium content will be included must be made with a lot of strategic awareness. Companies condition their customers what to expect; once this conditioning is set it is incredibly difficult to recondition them.

Note: There will be a dedicated session on whether FASTs are a road to gold or a road to “SLOW” at VideoNuze’s CTV Advertising PREVIEW virtual event on Feb. 28th afternoon. Sign-up is complimentary. Initial speakers being announced next week.

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In this week’s podcast, Colin and I discuss Warner Bros. Discovery’s plan to launch a new streaming bundle in France dubbed “Warner Pass,” exclusively on Amazon Prime Channels, which Variety reported. Warner Pass will include all HBO content, plus 12 WBD channels including CNN, Discovery Channel, Eurosport and others.

The move caught our attention because WBD has been quite vocal about its intention to launch a combined HBO Max / discovery+ service (expected to be simply called “Max”), which the Variety report noted it still plans to introduce in France in 2024.

Colin and I think Warner Pass could offer clues about how WBD will price the combined service eventually (especially in Europe). Yet it raises a concern that having two different streaming brands in France with similar content is clumsy and could cause consumer confusion (not to mention spending required to support two streaming brands).

Further, as we discussed in December, Warner Pass is yet another step in reversing the company’s strategy on third-party distribution. Prior WarnerMedia management decided to pull HBO from Amazon Prime Channels and others in September, 2021. As I wrote back then, in a direct-to-consumer world, not owning the subscriber, nor seeing their detailed viewing data, are real drawbacks.

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On this week’s edition of Inside the Stream, nScreenMedia’s Colin Dixon and I dig into four topics: World Cup streaming quality and the lack of 4K differentiation, Netflix’s offer to refund advertisers due to inventory shortfalls, WBD’s decision to remove “Westworld” from HBO Max, and the proliferation of music-oriented FAST channels.

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HBO Max is coming back to Amazon Prime Video Channels, reversing a move by prior owner WarnerMedia just over a year ago. Removing HBO Max led to an immediate loss of 5 million subscribers who had signed up through Amazon Channels (it’s unclear how many rejoined directly).

On today’s podcast, Colin and I try puzzle through why WBD, which is now HBO’s owner, would want HBO Max to rejoin Amazon Channels. Although Amazon will surely generate some incremental HBO Max subscribers, their lifetime value is likely to be far lower than HBO Max subscribers who sign up directly with the service. That’s because Amazon has “customer ownership” of these subscribers and shares little to no data with SVOD providers that would be critical to retention (starting with an email address to directly communicate with them). I wrote about my personal experience with this in August, 2021.

The move seems to suggest a push for incremental subscribers, despite the likelihood of a higher churn rate. That’s at odds with streaming services executives recent emphasis on profitability over pure subscriber growth. It’s possible Colin and I are missing something here. If you think you know what it is please let us know.

To wrap up the discussion we also discuss WBD's reported new strategy to collect its streaming services under the "Max" brand in 2023.

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Although Disney gained a healthy 14.6 million direct-to-consumer subscribers in its fiscal fourth quarter reported this week, it also lost nearly $1.5 billion in the segment. That raised its annual DTC loss for fiscal 2022 to over $4 billion, more than twice the $1.7 billion it lost in fiscal 2021. Disney reiterated that it expects DTC losses will decrease going forward and that Disney+ specifically will achieve profitability in fiscal 2024, absent a “meaningful shift in the economic climate.”

On this week’s edition of Inside the Stream, nScreenMedia’s Colin Dixon and I examine the various cross-currents impacting Disney’s DTC business going forward. These include declining ARPU at Disney+ domestically and Disney+ Hotstar, upcoming price increases, SVOD and FAST competition, content costs and more. The stakes are high for Disney to turn the corner on DTC profitability but it isn’t clear when or how that will happen.

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In Q3 ’22 Netflix added 2.4 million subscribers globally, beating its forecast of a million additions, and more importantly, reversing the two prior quarters’ declines. As nScreenMedia’s Colin Dixon and I discuss on this week’s Inside the Stream, there’s a lot of action just ahead for Netflix as it rolls out its ad-supported tier and modifies its longstanding account sharing approach.

The latter will likely impact tens of millions of subscribers, who will have multiple variables to consider in order for family members to retain access to Netflix. We do a little back of the envelope math that illustrates  the significant revenue opportunities all of this will create for Netflix.

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This week on Inside the Stream Colin and I interview Hub Entertainment Research’s Founder and Principal Jon Giegengack about top conclusions from the firm’s latest “Decoding the Default” survey (excerpt here). Among them are that streaming services continue to gain as the default source for viewers (with Netflix by far the leader), being the default is the best protection from churn, SVOD stacking appears to have plateaued and some streaming services seem to be pretty well insulated from inflation. We discuss all of these and more.

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Amazon took the unusual step of releasing viewership data for its new Lord of the Rings series “The Rings of Power,” saying that over 25 million Prime members watched it on its first day. On this week’s podcast Colin and I discuss how to put this number into context, and also whether the series is worth the reported $58 million per episode it cost. Then we transition to reviewing new data about viewer satisfaction with ad-supported FAST services vs. ad-free SVOD services.

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This week, nScreenMedia’s Colin Dixon and I welcome Grace Lam, Roku’s Director of Partner Growth as our guest. Grace takes us inside the campaign that Roku and HBO Max launched for the new TV series “House of the Dragon.” It is the biggest SVOD campaign Roku has undertaken to date, involving multiple elements. Grace walks us through the campaign’s goals, viewer benefits, success metrics and how Roku aims to have the campaign be a template for future SVOD partnerships.

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On this week’s episode of Inside the Stream nScreenMedia’s Colin Dixon and I discuss Disney’s direct-to-consumer (D2C) performance in its fiscal third quarter, ending July 2, 2022 and the impact of upcoming price increases across all of its streaming services. Disney now has over 221 million streaming subscribers of which 152.1 million are Disney+ subscribers (up 14.4 million in the quarter).

But these Disney+ subscribers will see their monthly fee increase by 38% in December, from $7.99 to $10.99, no doubt causing higher churn. Disney hopes to offset this with its new ad-supported “Disney+ Basic” tier which will run $7.99 per month. Hulu will increase by $1 per month to $7.99 and ESPN+ will increase by $3 per month to $9.99 as previously announced. Colin and I explore all these changes and what impact they’re likely to have (and Colin has a nice recap of the changes).

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This week on Inside the Stream nScreenMedia’s Colin Dixon and I discuss Netflix’s plans to launch ad-supported service tiers and introduce paid account sharing options. Netflix provided updates on both during its Q2 ’22 earnings call earlier this week. Colin and I agree that both are important steps for the company but that there are myriad execution challenges as the moves will introduce new complexity and decision-making for subscribers.

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This week on Inside the Stream nScreenMedia’s Colin Dixon and I discuss conflicting data about Netflix’s customer satisfaction from ASCI and Whip Media. Netflix remains an essential streaming service for many people, especially for watching drama, according to Parrot Analytics. However, new data from Antenna indicates that in April almost a quarter of Americans who signed up for Netflix dropped it within a month. We try to make sense of it all.

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In this week’s Inside the Stream podcast nScreenMedia’s Colin Dixon and I discuss how SVOD services are diversifying their monetization models beyond purely subscriptions. Examples of services doing so include Disney+, Netflix, HBO Max and Curiosity Stream. We examine what’s behind these moves and the multiple benefits they deliver.

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In this week’s Inside the Stream podcast nScreenMedia’s Colin Dixon and I discuss Netflix’s Q1 results which included a loss of 200K subscribers vs. a forecast gain of 2.5 million.

Netflix provided a number of reasons for the loss, which we explore. We’re both excited about the prospects for a lower priced ad-supported option, which is long overdue. We’re less sanguine about Netflix reeling in widespread password sharing, which it has traditionally sanctioned and now reaches an estimated 100 million households.

Listen on to hear all of our observations about Netflix’s challenges and what it can do to restart growth. (29 minutes, 46 seconds)

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This week Colin and I discuss the future integration of Discovery+ and HBO Max. New details were shared this week by the company’s chief financial officer at an industry conference. Specifically, Colin sees strong upside in a discounted bundle of the streaming services and the eventual integration of their respective technology platforms the CFO described. However, he’s skeptical of an eventual plan to actually merge the services. We discuss the pros and cons.

Separate, we dig into a new test by Netflix to potentially charge subscribers an extra fee for out-of-house users.

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Welcome to this week’s edition of Inside the Stream, the podcast where nScreenMedia’s Chief Analyst Colin Dixon and I take listeners inside the world of streaming video.

This week Colin shares thoughts SVOD growth, citing a new forecast from Digital TV Research forecasting subscriptions will reach 1.75 billion globally in 2027. Then Colin shifts to data from Omdia indicating that vMVPD subscribers use 13.5 streaming services per month, almost double non-vMVPD subscribers.

We also spend some time discussing the evolution of alternative currencies developing to Nielsen for measuring ads on premium video services.

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Welcome to this week’s edition of Inside the Stream, the podcast where nScreenMedia’s Chief Analyst Colin Dixon and I take listeners inside the world of streaming video.

Disney+ added nearly 12 million subscribers in the recent holiday quarter, an encouraging sign that bundling Disney+ with Hulu and ESPN+ is a highly effective strategy. Disney+ also had strong gains in the US and Canada market, adding 6.6 million subscribers in the quarter, while Netflix by comparison added only 1.2 million. Colin and I dig into all the Disney+ numbers and discuss what might be next.

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Welcome to this week’s edition of Inside the Stream, the podcast where nScreenMedia’s Chief Analyst Colin Dixon and I take listeners inside the world of streaming video.

This week we discuss Netflix’s Q4 ’21 earnings report released yesterday and its forecast for Q1 ’22. Both came up a little light, as the SVOD category continues to mature, Covid pull-forward creates tough comparisons, there’s intensifying competition, and Netflix’s release schedule for popular content shifts.

All of that said, with over 220 million global subscribers, Colin and I still see Netflix as the SVOD category leader well into the future.

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Late last week Disney told its Hulu + Live TV subscribers that Disney+ and ESPN+ would be bundled starting Dec. 21st, and that their rate would be increasing by $5 per month. Coming off an anemic fiscal Q4 ’21 in which Disney+ added just 2.1 million subscribers, the lowest by far since launching in late 2019, the intra-company move meant the automatic addition of 4 million Hulu + Live TV subscribers to Disney+’s total in one magical wave of CEO Bob Chapek’s wand.

I received a number of emails from VideoNuze readers to the effect of “that kind of corporate trickery doesn’t feel like a positive sign for Disney+.” I don’t dispute that there’s merit to that line of thinking, but I’d discount it. The step up in Disney+ subscribers in fiscal Q1 ’22 will be so delineated that it means Wall Street won’t give Disney+ any credit for it because investors are tunnel-visioned on Disney+’s organic growth heading in 2022 (that’s kind of what happens when an SVOD service goes from a standing start to 118 million subscribers in less than two years…expectations become quite high).

I’d assert that the tunnel vision on Disney+’s growth is causing under appreciation of what may be a far more important driver of Disney’s decision to bundle Disney+: Hulu’s burgeoning opportunity in connected TV advertising.

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