VideoNuze Posts

New research from Inscape analyzing the viewing behavior of 23 million opted-in VIZIO smart TV owners reveals streaming’s ascendance. In Q1 ’24, fully 58% of these viewers only streamed content, up 3 percentage points since Q4 ’23. 38% watched both streaming and pay-TV (cable, satellite and OTA), and just 3% only watched pay-TV. The streaming-only group has increased from 45% in Q4 ’21. We discuss these and other key findings.

Then we turn our attention to Max’s immediate rate increase, announced this week. Of note, only the two ad-free tiers are getting $1 per month increases, while the “Max With Ads” tier will remain $10 per month. As we discuss, this is the latest evidence of how traditionally ad-free streaming services (e.g. Netflix, Disney+, Amazon Prime Video) are incenting subscribers to take ad-supported plans - and why CTV advertising is poised to become more valuable than ever.

Last up we review new research from the American Customer Satisfaction Index showing record-high satisfaction levels for streaming services. Neither of us are surprised, given the strength of streaming’s value proposition. This year Amazon Prime Video topped the satisfaction list, but all streamers perfumed well and were tightly clustered.

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Memorial Day weekend was a disaster for Hollywood, with approximately $128 million in box office, down 36% from 2023’s total, and the worst in decades. There are some specific reasons, such as the steep underperformance of “Furiosa: A Mad Max Saga.” But as we discuss, any poor box office performance these days must always be viewed in the context of streaming’s myriad choices for viewers. Compounding matters for the box office are streaming’s inexpensive new bundles; on last week’s podcast we noted that Xfinity subscribers in particular can now access 6 top streaming services for just $30 per month.  

Next we return to bundling topic, in light of new research from Antenna showing subscriber loyalty to top streaming services. No surprise, Netflix has the highest loyalty, which in turn begs the question: how does Netflix benefit from participating in discounted bundles? We offer our thoughts.

Also on our radar this week is FreeWheel’s latest research from its Viewer Experience Lab, focusing on factors that diminish the viewer’s ad-supported experience. The testing found that viewers were most bothered by slow or buffering ads (78%), ads that unnaturally interrupt the programming (71%) and “we’ll be right back” slates (33%). The research is important because as CTV advertising becomes an ever more critical revenue stream, delivering top-notch ad experiences will be essential for optimizing monetization.

Last up, we review new research from Horowitz Research which found that of sports viewers, 58% of 18-34 year-olds and 57% of 35-49 year-olds say they’re likely or very likely to subscribe to the new Venu Sports streaming service for $35-$40 per month. While the research validates basic interest in Venu, it still feels early to accurately estimate true demand for Venu. A big looming question for Venu’s value proposition is whether TNT is able to renew its NBA package.

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Earlier this week Comcast took the wraps off StreamSaver, its new streaming bundle available for Xfinity subscribers. For $15 per month, StreamSaver bundles Peacock Premium, Netflix Standard with ads and Apple TV+. If subscribed to separately the combined total would be $25 per month, as of July 1st when Peacock Premium’s price will rise to $8 per month. That means StreamSaver provides a bundled discount of $10 per month, or 40% off the standalone rates.

As Colin and I discuss, StreamSaver’s discount is in the same range as Disney’s Duo and Trio bundles, which fall between 35% and 44%. It also means that if Xfinity subscribers took both bundles, they would get 6 top streaming services - Netflix, Disney+, Hulu, Apple TV+, Peacock and ESPN+ for $30 per month, or an average of $5 per month per service.

From our standpoint, all this seems really appealing, especially to budget-conscious consumers. Think for a moment about the vast selection of entertainment and sports programming across these 6 services - all for $30 per month, which is far less than it would cost to take a family of 4 to a single movie, for just 2 hours of entertainment.

But as we also discuss, these discounted bundles need to perform their critical function of reducing churn and extending subscriber lifetime value. With so many different decisions required by viewers about what bundle (if any) to choose, it’s gong to be challenging to pinpoint causalities and correlations, making the elusive goal of streaming profitability ever more opaque.

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[UPDATED]

Netflix revealed at its Upfront this week that it now has 40 million monthly active users on its lower-priced ad-supported tier. It’s not clear how monthly active users and subscribers relate to each other. But I think it’s probably fair to assume that closer to around 10% of Netflix’s 270 million global subscribers are now ad-tier subscribers (Colin and I will clarify this further on next week's podcast). Not too shabby since the ad tier only officially launched in November, 2022. No surprise, Netflix is also creating its own ad-tech stack with partners.

In addition Hub Research released survey data showing that 15% of respondents cited Netflix as the brand that would most likely make them sign up for a bundle (Amazon followed with 12%, followed by AT&T with 10%).

As Colin and I discuss, all of this nicely positions Netflix to play a lead role in the “streaming bundles” age that has already begun (note that Comcast announced a Netflix-Peacock-Apple TV+ bundle this week, pricing TBD). And with the Netflix app ubiquitously available, it could be a key “on ramp” to targeted streaming bundles, based on viewers’ demonstrated interests. Given Netflix’s newfound scale in CTV ads, a bundling play could also find Netflix with a lead role in selling/managing ads across bundled services.

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According to new data from Hub Entertainment Research, Amazon’s Prime Video now has the highest percentage any major SVOD provider taking its ad-supported tier. And it happened by Amazon simply flipping a switch at Prime Video to make ads the default for all subscribers. Perhaps most interesting is that two other major SVOD providers - Netflix and Disney+ used completely different strategies in introducing their ad tiers. Colin and I discuss why Amazon’s move is so significant for the company and the broader streaming industry.

Meanwhile this week Disney reported a $47 million profit in fiscal Q2 ’24 in its DTC segment, which includes Disney+ and Hulu. Profitability hadn’t been forecast until 6 months from now. It also added 8 million D+ subscribers domestically in the quarter. But as Colin details, closer analysis shows that Disney’s recent deal with Charter somewhat obscures the gains. There’s also the pressing question of whether DTC can be sustainably profitable.

We tackle lots of other juicy topics this week too: Tubi’s continued growth, advertising’s increasingly important role in supporting the streaming ecosystem, WBD’s cost-cutting and bundling plans with Disney, plus more.

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This week’s NewFronts highlighted three key and interlocking themes: TV OEMs’ emphasis on FASTs, AI’s role in driving video ads’ value, and CTV evolving to full funnel. We discuss each of these and how specific NewFront presentations addressed these points.

All of these feed a broader belief I’ve had for while: the value of a CTV ad - as measured by the financial return derived from gaining a unit of the viewer’s time - is only going to increase in the years ahead. Ads will continue to be more targeted and personalized, and also drive KPIs across the full funnel as viewers’ opportunities to engage soar.

Separate from video ads, I share highlights from IAB’s three-part session on Monday afternoon called “Spotlight On: News” which focused on the value of news media for brands and society. Huge credit to IAB for convening numerous C-level news executives to discuss the important role of trusted news in democracy and why it is good business for advertisers to be involved.

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This week we’re delighted to interview Wurl’s CEO Ron Gutman who discusses the company’s new AI-powered BrandDiscovery product that allows ads to be aligned with content in real time.

Ron explains the eight key emotional reactions to specific scenes in entertainment programming, and how ads that are consistent with these emotions deliver far higher conversion. He also details the critical role AI plays in enabling improved personalization and targeting. The discussion further demonstrates how units of advertising are going to become ever more valuable as technology enriches them.

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Colin was at NABShow for a couple days and on this week’s Inside the Stream we discuss some of his top takeaways. No surprise AI was everywhere at NAB, as was blockchain. We discuss companies including Moments Lab, Obvious Future, LivePeer and others. Finally Colin learned some neat tricks for all of us to be greener with our big screen TVs, which he shares.  

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