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Analysis for 'Skinny Bundles'

  • Disney and Google Gain Importance in Pay-TV

    The U.S. pay-TV business performed better than expected in Q3 ’20, with top providers “only” losing around 120K subscribers, according to data compiled by Leichtman Research Group. The results would have been even stronger if a portion of YouTube TV’s one million subscriber additions in 2020 are attributed to Q3 specifically.

    Google didn’t break out how many of YouTube TV’s additions came in Q3, but given the return of major sports during the quarter, it’s probably fair to assume at least 500K-600K. Add those to Hulu + Live TV’s 700K additions in Q3 and just these two virtual pay-TV providers may have accounted for 1.2 to 1.3 million additions.  That would be enough to more than offset the approximately 1.15 million subscriber losses that the largest cable, satellite and telco pay-TV providers incurred.

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  • YouTube TV Posts Surprisingly Strong Growth to Reach 3 Million Subscribers

    Alphabet announced strong Q3 ’20 results last week, which included several YouTube metrics: $5 billion in quarterly revenue (up 32% vs. a year ago), 30 million music and premium paid subscribers, and 3 million paid YouTube TV subscribers. For YouTube TV, that’s a  jump of 50% from the 2 million subscriber level that Alphabet reported earlier this year in February.

    That’s surprisingly growth from my perspective for a number of reasons. First, YouTube TV raised its rate to $65 per month in June, an aggressive 30% hike from $50 per month. The primary justification YouTube TV offered for the increase was the addition of 8 ViacomCBS cable TV networks, BET, CMT, Comedy Central, MTV, Nickelodeon, Paramount Network, TV Land and VH1. But of the group, only Nickelodeon was among the top 25 most viewed networks in 2019 and it was number 25.

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  • VideoNuze Podcast #521: Understanding YouTube TV’s Aggressive Rate Increase

    I’m pleased to present the 521st edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia. Colin and I wish all of our listeners a safe and healthy July 4th weekend.

    YouTube TV raised its price 30% this week, from $50 per month to $65 per month. On today’s podcast Colin and I explore what’s behind the increase and what its likely impact will be.

    From my standpoint, the increase says a lot about how bullish Google now is about using YouTube itself to reach coveted TV ad buyers. That’s due not only to YouTube’s improving content quality but to the adoption of connected TVs as a primary way to consume YouTube content. This dynamic makes YouTube TV less strategic for Google, and therefore diminishes its willingness to subsidize monthly losses.

    Meanwhile Colin sees YouTube TV falling into the “big bundle” trap of adding more networks and continually raising rates, that has led to record cord-cutting among traditional providers.

    Listen in to learn more!

    (As a side note, Colin is participating in an interesting webinar next week on pay-TV providers can help SVOD and AVOD services to succeed. Free registration)
     
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  • YouTube TV’s Latest Rate Hike Reflects Rising Importance of CTV Ads

    Yesterday YouTube TV raised its monthly rate by 30% from $50 to $65. It’s the fourth rate hike in just the past 2 years, as YouTube TV moved from its introductory rate of $35 to $40 to $50 to the new $65 per month. As recently as March, 2018 it was still possible to sign up for $35 per month and be grandfathered into that rate for a short period.

    I’ve been a mostly satisfied YouTube TV subscriber since the early days, and of course, the rate increases have been painful to absorb. The fundamentals of YouTube TV as a pay-TV alternative that were appealing from day one have changed little - strong cross-platform access, unlimited DVR, 6 concurrent users, etc. What has changed is the growth in number of TV networks carried; indeed yesterday’s rate hike was tied to the launch of a group of ViacomCBS networks, just as the previous hike was tied to the addition of Discovery networks.

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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:

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  • PlayStation Vue and HBO Max Underscore TV Industry’s Uncertain Economics

    Just before the WarnerMedia team took the stage to unveil details of HBO Max, Sony announced that would it shut down its 4 year old PlayStation Vue virtual pay-TV service on January 30th. The moves are 2 great examples of the constantly-shifting strategies of big media companies.

    PS Vue was an early mover in virtual pay-TV (or “vMVPD”). But if you think of the industry in 4 quadrant terms, with price on one axis and channel lineup on the other, PS Vue was relatively high on both - it offered a mostly complete channel lineup competitive with traditional pay-TV operators, but not at a significantly reduced price (which is the top motivator for prospects).

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  • AT&T Moves Further From vMVPD Model With New Price Hikes

    AT&T is moving further away from the low-cost virtual MVPD (“skinny bundle”) model it helped pioneer with DirecTV Now back when it launched in 2016. Per multiple reports on Friday, AT&T will increase the monthly price of its “Plus” tier by $15 (to $65 per month) and its “Max” tier by $10 (to $80 per month) in November.

    This past summer AT&T rebranded DirecTV Now as AT&T TV Now. DirecTV Now had already imposed a $10 per month price hike back in March and consolidated DirecTV Now’s original 3 tiers into the 2 current tiers and included HBO with both of them. If you were to back out the $15 per month that a standalone HBO Now subscription would cost, then the “Plus” and “Max” tiers would be $50 per month and $70 per month, respectively.

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  • VideoNuze Podcast #485: Research Shows Relationship Between Sports and Pay-TV

    I’m pleased to present the 485th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

    On this week’s podcast we discuss highlights of a recently released sports and news consumer survey conducted by consulting firm Altman Vilandrie & Company. Catching our attention was how well virtual pay-TV operators are doing with regular sports viewers. This reflects how much emphasis vMVPDs have put on adding sports networks to their packages (and also indicates why their prices are rising).

    There was a lot of other interesting data related to sports and news consumption by age, type of sports, different services and more in the survey.

    If you’d like to learn more about the full survey results, contact Matt Del Percio at Altman Vilandrie & Company.

    Listen in to learn more!

     
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  • DirecTV Now Loses Another 168K Subscribers in Q2 ’19

    What a difference a year makes. In July ’18 when AT&T reported its Q2 earnings, its vMVPD DirecTV Now gained another 325K subscribers. It was the fourth consecutive quarter of 300K+ additions and DirecTV Now was setting the pace of growth for the nascent vMVPD industry that in turn was offsetting traditional pay-TV losses.

    Flash forward to this morning’s Q2 ’19 AT&T earnings and the DirecTV Now narrative has changed dramatically. In Q2 ’19, DTV Now lost 168K subscribers, reducing its quarter end total to 1.3 million subscribers. Looking back over the past year, DTV Now peaked with 1.86 million subscribers at the end of Q3 ’18 when it eked out a 49K addition.

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  • Virtual Pay-TV: What’s Next for Advertisers and Content Providers? [VIDEO]

    Virtual pay-TV (or “vMVPDs”) providers already deliver live, linear and on-demand programming to millions of subscribers, creating a rich new source of targetable premium video ad inventory, often on connected TVs. But virtual pay-TV is itself in a state of flux, with providers revamping packages, evolving their marketing and raising their prices.

    At the recent Video Ad Summit we discussed these dynamics on a session I moderated that included Hannah Brown (Chief Strategy Officer, fuboTV), Chris Maccaro (CEO, Beachfront Media), Matt McLeggon (Senior Director, Advanced TV Growth, SpotX) and
    Beth Weeks (VP, Director Media, Digitas North America).

    Some of the key takeaways included that virtual pay-TV operators are seeking more scale, especially to help educate ad buyers about why the opportunity is compelling (buy side education and overcoming fragmentation was a big theme), how important automation, content discoverability and viewer experiences will be for virtual pay-TV and how linear/sports remain an important part of virtual pay-TV’s appeal.

    Watch the video now!

     
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  • VideoNuze Podcast #465: Hulu Is In the Video Industry’s Sweet Spot

    I’m pleased to present the 465th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

    Hulu is in the video industry’s sweet spot. A hybrid ad-supported brand-safe streaming service, now with 28 million subscribers. The best opportunity TV advertisers have to recapture young TV-watching audiences who are the biggest cord-cutters. Disney as its primary owner which itself is all in on streaming, willing to support Hulu’s land grab investments in original programming and marketing. And perhaps the biggest growth driver yet to come: bundling with Disney+ starting later this year.

    On this week’s podcast Colin and I talk about all of the above (and a few challenges Hulu still faces).

    If you want to learn more about Hulu’s success, come to the 9th annual Video Advertising Summit for my keynote interview with Hulu’s SVP and Head of Ad Sales Peter Naylor!

    Listen in to learn more!

     
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  • Hulu Tops 28 Million Subscribers as Viewership Surges

    Hulu announced this morning that it has topped 28 million subscribers, with 26.8 million paid and 1.3 million promotional (Hulu operates both ad-supported/ad-free SVOD services and Hulu Live TV but didn’t provide a breakdown). Hulu added 7.5 million paid subscribers in 2018. Viewership also intensified with average time spent per subscriber up over 20% in 2018 and total hours watched per subscriber up 75%. Importantly, 80% of Hulu’s viewing occurs in the living room.

    While Netflix has become the market leader in ad-free OTT viewing,  Hulu has become the clear market leader in hybrid ad-supported premium OTT viewing. This is an extremely valuable place to be as cord-cutting accelerates and advertisers seek out viewer-friendly and targetable environments for their TV ad budgets. Hulu made a very smart move earlier this year, actually cutting the price of their ad-supported SVOD service by $2, to $6 per month, which no doubt is continuing to add to subscriber growth. A deal with Spotify announced in March to give Spotify Premium subscribers access to Hulu's ad-supported service is also likely having an early impact.

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  • VideoNuze Podcast #464: Baby Boomers’ OTT Use Climbs; DirecTV Now Loses Subscribers Again

    I’m pleased to present the 464th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

    First up this week Colin walks us through Nielsen and YouTube data he’s been analyzing that shows how 50-64 year olds are watching OTT video at a pretty significant level. According to his analysis, this group’s viewing could be at least 60% of the level of 18-34 year olds, which have been the main focus of many observers’ attention.

    This adoption ties to our second topic which the Q1 ’19 loss of around 83K subscribers by DirecTV Now. Virtual pay-TV operators have a big opportunity to drive OTT viewing on connected TV devices, and Colin and I surmise these are taking up a bigger share of 50-64 year olds’ viewing which is more focused on long-form entertainment and sports. However the DirecTV Now loss shows that different players are benefiting differently from this shift.

    Listen in to learn more!

     
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  • VideoNuze Podcast #462: YouTube TV’s Rate Hike; NABShow Takeaways

    I'm pleased to present the 462nd edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

    Colin and I both shed a tear this week as YouTube TV raised its rate to $50/month (up $10 for those currently paying $40/month and up $15 for those like Colin and me who were grandfathered at the original $35/month price - a whopping 43% increase).

    While Colin says he wasn’t surprised, I actually was. There’s been a huge window for YouTube TV to grab market share as other virtual pay-TV operators raised their rates and/or scaled back promotions. But Google has obviously decided it was done heavily subsidizing YouTube TV. Colin and I discuss the implications of the move and how the “new normal” in virtual operators’ rates will likely reduce cord-cutting.

    Then we switch gears with Colin sharing his takeaways from NABShow - focusing on AI, cloud and live.

    Listen in to learn more!

     
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  • VideoNuze Podcast #458: DirecTV Now Changes Packaging; Fact-Checking Netflix

    I’m pleased to present the 458th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

    Earlier this week, DirecTV Now changed its packaging and pricing by introducing 2 new tiers, DirecTV Now Plus and DirecTV Now Max. They are both anchored by HBO, but also lose popular networks from Viacom, Discovery and AMC.

    On today’s podcast Colin and I discuss the likely rationale behind the changes and what impact they’ll have. One thing seems clear: given the spectrum of TV networks they carry, Hulu Live TV and YouTube TV are poised to become leaders in the virtual pay-TV industry.

    Next, Colin updates us on several statements a Netflix executive made earlier this week that he believes need further clarity. Colin delights in “keeping them honest” and his watchdog role benefits all of us trying to understand industry data.

    Listen in to learn more!

     
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  • HBO Returns to Workhorse Role in New DirecTV Now Packages

    AT&T is revamping its programming packages for DirecTV Now, and one thing that is clear is that HBO is returning to its traditional workhorse role in driving consumer appeal for a list of ad-supported TV networks.

    According to Cord Cutters News, AT&T will introduce two new packages, DirecTV Now Plus and DirecTV Now Max for $50/month and $70/month respectively. Subscribers to current packages will be grandfathered in, but will see a $10/month rate increase, so the current entry level Live a Little package will move up to $50/month.

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  • Charter’s New Skinny Bundle Will Have Narrow Appeal and Limited Long-Term Value

    Last week Charter, the second-largest U.S. cable TV operator, announced plans to launch “Spectrum TV Essentials,” a $15/month package of 60+ entertainment channels. According to Charter’s press release, Spectrum TV Essentials will be “made available exclusively in Charter’s footprint to Spectrum Internet customers who don’t already subscribe to Spectrum video services.” This means targeting broadband-only subscribers who have either cut the cord or never subscribed. It’s unclear how Charter will handle a prospect looking to downgrade from an existing multichannel TV bundle to Charter’s new skinny bundle (or “virtual pay-TV service,” as these bundles are often called).

    Regardless, the way Spectrum TV Essentials is currently constructed/priced it is likely to have relatively narrow appeal and limited long-term value. It can be compared most to Philo TV, another inexpensive entertainment-only service. Charter has agreements with Viacom, Discovery, A&E, AMC and Hallmark to carry their networks, but NOT CBS, Disney, Fox, NBCUniversal or Turner, at least currently. So a ton of popular TV networks/programs will be missing, raising, once again the “Swiss cheese” problem of inexpensive skinny bundles that have too many holes in their programming lineups to have broad appeal. Such is the nature of striving to keep subscriber rates low; many expensive networks must be excluded.

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  • VideoNuze Podcast #453: Super Bowl Streaming Hits New High

    I’m pleased to present the 453rd edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

    This past Sunday’s Super Bowl set the record for the lowest total score in the Big Game’s history, but it also set the highest record for number of people watching the action via the Internet. According to Colin’s excellent analysis, upward of 7 million people streamed some portion of the game. About 2.6 million did so via CBS and NFL digital properties. But per Colin’s calculations nearly twice as many watched via virtual pay-TV operators, which stream their services over the Internet. We both believe YouTube TV played a leading role.

    So while the total TV audience watching shrunk to 98.2 million, its lowest level in over 10 years, the number of people who trusted the Internet to stream the action rose to a new high. We discuss the implications of this and the growing role virtual operators are playing now. We also observe how the Big Game’s advertising roster included SVOD providers and other digital-first companies, a sign of its ongoing superiority in reaching a mass audience.

    Listen in to learn more!
     
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  • YouTube TV’s Performance Remains Shrouded in Mystery

    Over the past two days Alphabet released strong Q4 ’18 results and YouTube’s CEO Susan Wojcicki posted her annual letter to its creator community. There was plenty to learn from both, but one thing persisted for yet another quarter - YouTube TV’s performance remained shrouded in mystery. Since its initial launch nearly two years ago, in April, 2017, Alphabet and YouTube executives have been incredibly disciplined about not uttering a word (as best I know) about YouTube TV’s total subscribers, quarterly additions, profitability (or lack thereof) or product roadmap.

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  • VideoNuze Podcast #452: Where Do Virtual Pay-TV Operators Go From Here?

    I’m pleased to present the 452nd edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

    This week’s news that DirecTV Now lost 267K subscribers in Q4 ’18 (a swing from 368K it added in Q4 ’17) raises critical questions about where the virtual pay-TV industry goes from here? As virtual operators’ discounted promotions trail off, prices rise, programming gets rationalized, competition rises and viewers turn to SVOD and ad-supported OTT options, a far more challenging road lies ahead for growing and retaining subscribers.

    In this week’s podcast, Colin and I dig into these issues and speculate on whether, 2 years from now virtual operators combined are more likely to have 15 million subscribers or 1 million subscribers? In other words, which direction is this industry really going in? AT&T seems determined to play a key role with the collection of assets it has assembled. But timing and execution are critical to its success.

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