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.
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.
Categories: Skinny Bundles
Topics: YouTube TV
I’m pleased to present the 522nd edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia. For all our listeners especially in states seeing a spike in Covid, we hope you’re staying safe.
There were several examples this week of how linear TV is continuing to adapt in the OTT/CTV era which Colin and I discuss. Top on the list is Comcast’s decision to offer the Sling TV app for its Xfinity Flex broadband-only users. Comcast has been adding broadband subscribers and losing video subscribers for a while and the move seems to signal Comcast wants to enhance the competitiveness of Flex, giving cord-cutters an inexpensive option to rejoin the pay-TV world.
The bar for Flex is getting higher partly due to Fire TV which this week unveiled content discovery integrations with YouTube TV, Hulu with Live TV and Sling TV. The integrations make accessing linear TV seamless within one UI, and will drive virtual pay-TV subscriptions within the Fire TV base.
Listen in to learn more about how linear and “virtual linear” TV are adapting to find viewers!
Click here to listen to the podcast (24 minutes, 18 seconds)
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)
Click here to listen to the podcast (22 minutes, 39 seconds)
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.
There are so many dramas playing out in the TV/video business these days it’s hard to keep up. Cord-cutting, M&A, reorganizations, high-profile executive departures, product launches, discounted pricing, eye-popping A-lister salaries….the list goes on and on.
But one particularly intriguing drama that’s been catching my eye lately revolves around YouTube TV and the YES Network. As with everything in the TV/video business, the background is complicated, so here’s the high level cheat sheet:
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:
On Tuesday PBS announced that over 100 of its member stations, covering 75% of U.S. households, have been activated for live streaming on YouTube TV. Previous to the launch PBS content was available across many devices through its own apps and the web. Incorporating the stations’ live feeds directly into YouTube TV means that users can seamlessly access them alongside other channels, use YouTube TV’s unlimited DVR feature to record PBS programs/watch later, etc.
It’s a smart move by both PBS and YouTube TV. PBS viewers skew older, and are therefore more likely to retain traditional pay-TV services, which have always carried PBS stations. But younger audiences are more likely to be cord-cutters or cord-nevers, relying instead on CTVs, mobile devices and OTT services. By not being a part of a virtual pay-TV operator, PBS’s exposure to critical younger audiences was being limited.
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!
Click here to listen to the podcast (23 minutes, 20 seconds)
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.
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.
Categories: Skinny Bundles
Topics: YouTube TV
Perhaps the most noteworthy thing about Netflix’s solid Q4 subscriber growth was the company’s ongoing success with a pure ad-free subscription model. Netflix is becoming even more unicorn’ish among big video providers in completely eschewing ads. Virtually every other major video provider (aside from established premium TV networks like HBO, Showtime, etc.) is reliant, at least in part, on advertising (Amazon’s ad-free approach gets an asterisk because of the outsized role Prime/free-shipping still plays - and even Amazon is now integrating ads in various ways, see below).
In fact, though we’re barely a month into 2019, there are signs everywhere of advertising’s growing role in the future of the video industry.
Consider just the following:
I’m pleased to present the 448th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.
Continuing our tradition for our final podcast of the year, this week Colin and I discuss the top 10 video stories of 2018 - at least in our humble opinions. Once again it has been a very active 12 months, with lots of innovation and change. Colin and I have had a great time analyzing and discussing the critical industry trends each week and we hope you’ve enjoyed listening to our thoughts in 2018.
Let us know what you think of our choices, whether you agree or disagree!
Listen in to learn more!
Click here to listen to the podcast (37 minutes, 16 seconds)
Pay-TV operators took a drubbing in Q3 ’18 as the boost the industry has gotten from consumers migrating to virtual MVPDs or “skinny bundles” mostly evaporated. According to Leichtman Research Group, the industry as a whole lost about 975K traditional subscribers (its worst ever). Subtracting estimated gains for skinny bundles the Q3 loss would have topped a million.
Going back just one quarter to Q2 ’18, the industry as a whole (both traditional pay-TV and skinny bundles) may have actually eked out a net subscriber gain, as traditional subscribers “cord-shifted” to skinny bundles. But in Q3 that short trend came to screeching halt, as both DirecTV Now and Sling TV additions slid dramatically. In Q3 ’18 the services combined to add just 75K subscribers, down from 536K a year earlier (and that’s on top of escalating subscriber losses at the core satellite services). It’s not clear how other skinny bundles performed in Q3 as they don’t publicly report their numbers.
I’m pleased to present the 442nd edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.
This week we first discuss AT&T’s recently unveiled plans to launch a new streaming service sometime later in 2019, anchored by HBO and including assets from other WarnerMedia properties. Details are still slim, but both Colin and I highlight many different challenges for this service would get executed and priced, especially with respect to HBO’s role.
We then transition to talking about YouTube TV’s winning sponsorship of this year’s World Series. As I wrote yesterday, the execution is superb and includes many creative elements. For millions of viewers, it is impossible to not be exposed to the brand, and the campaign is surely leading to many new trial subscriptions.
Listen in to learn more!
Click here to listen to the podcast (23 minutes, 4 seconds)
YouTube TV is back as this year’s World Series presenting sponsor and as with last year, Google’s skinny bundle is once again dominating. Watching the game last night (go Sox!) it was impossible to not be exposed to the brand and also some very creative elements of the “Watch like a fan” campaign.
YouTube TV renewed its World Series sponsorship for 2018 and 2019 with MLB back in March of this year. As with 2017, before the first pitch was thrown, there was a highly produced 90 second ad. At first it looked like a promo for various Fox networks, though when the Google Home demo popped in it became clear it was for YouTube TV.
Late yesterday Verizon announced that Indianapolis will be the fourth city to get 5G residential service in the second half of 2018. The other 3 initial cities are Houston, Los Angeles and Sacramento. Potentially the biggest news from Verizon yesterday was that it would include both Apple TV and YouTube TV in the initial 5G offering for subscribers in all 4 cities.
It’s not clear from Verizon’s press release exactly what these offers will be or how the terms will work for subscribers. The cheapest Apple TV is currently $149 and YouTube TV runs $40 per month. If the promotion follows others we’ve seen from telcos, Verizon will likely require a minimum commitment to qualify for the Apple TV and will offer some type of monthly discount on YouTube TV. It’s also not clear what the monthly rate will be for 5G service itself.
For all the talk about cord-cutting over the years, the most important trend in pay-TV these days isn’t consumers dropping out entirely, but rather shifting from traditional multichannel services to lower-priced virtual MVPDs or “skinny bundles.”
The trend of skinny bundle gains offsetting multichannel losses continued again in Q2 ’18 where, according to Leichtman Research Group, the top traditional services lost approximately 800K subscribers. But just the 2 publicly-reporting skinny bundles, Sling TV and DirecTV Now, gained 383K (with the latter accounting for 342K).
Traditional pay-TV operators accounting for around 95% of the market lost 305K subscribers in Q1 ’18, compared to 515K in Q1 ’17 according to Leichtman Research Group. The loss is net of 405K Sling TV and DirecTV Now skinny bundle subscribers gained in the quarter by Dish and DirecTV, compared to 265K added in Q1 ’17. Backing out the skinny bundle gains, traditional pay-TV lost 710K subscribers in Q1 ’18 vs. a loss of 710K in Q1 ’17.
I’m pleased to present the 418th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.
Earlier this week, I wrote how I’ve been rethinking the opportunity for skinny bundles. I’ve been skeptical, but I’m becoming more optimistic because of expanded local broadcast TV carriage (YouTube TV in particular has invested very heavily), parent companies’ larger strategic priorities that are motivating them to subsidize skinny bundles’ lack of profitability and the ongoing value of linear TV if priced appropriately.
On this week’s podcast, Colin and I explore all of these reasons in further depth. Skinny bundles are also benefiting from the quality of SVOD’s programming, which makes second-tier cable networks not included in skinny bundles less missed - a dynamic that could have broad consequences for pay-TV in general. We also discuss how Hulu with Live TV could be one to watch among skinny bundles as it benefits from the 20 million plus SVOD subscriber base.
It’s still extremely early days for skinny bundles but the likelihood of their success is definitely improving.
Listen in to learn more!
Click here to listen to the podcast (24 minutes, 15 seconds)
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