VideoNuze Posts

I’m pleased to present the 498th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

On this week’s podcast, we do a deep dive into Netflix’s Q4 ’19 results (reported earlier this week), and what they imply for 2020. Colin mostly focuses his comments on the decelerating growth rate in international subscriber additions and the ARPU squeeze that’s coming this year.

My focus is on the all-important domestic or “UCAN” (U.S. + Canada) region. Based solely on Netflix’s prior results and its own Q1 ’20 global subscriber addition forecast of 7 million, I think there’s at least a 50-50 chance Netflix will lose subscribers in UCAN in Q1 ’20. Just two years ago, this would have been an unimaginable thing to say; remember in Q1 ’18 it gained 2.28 million U.S. subscribers and in Q1 ’19 it gained 1.74 million.

That’s all before talking about Q2 ’20 where it will almost certainly lose UCAN subscribers, at a multiple of the 130K it lost in Q2 ’19, given the new competitive landscape. Netflix really needs to launch a lower-priced ad-supported tier, but yet again Netflix management rejected the idea, this time for inexplicable reasons.

Add it all up and Netflix is in for a bumpy ride in 2020. Meanwhile, since announcing its results on Tuesday after the market’s close, Netflix stock is up over $30 (about 10%, or around $15 billion extra market capitalization), once again proving that speculators simply can’t quit the stock regardless of the company’s actual performance or prospects.
 
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Netflix reported its Q4 ’19 and full year results yesterday, exposing the cold hard reality it is facing in the U.S. While the company gained 8.8 million subscribers globally (ahead of its 7.6 million forecast), it gained just 420K in the U.S. specifically (compared to 600K forecast). To put the 420K into more context, it’s by far the lowest Q4 US sub add since Q4 ’11 following the Qwikster debacle. It’s the first time since then that U.S. sub additions have fallen below 1 million in the seasonally strong Q4. And it’s down a whopping 79% vs. just 2 years ago, in Q4 ’17 when Netflix added 1.98 million U.S. subscribers.

Now some will say the “law of large numbers” is catching up with Netflix and that’s true to an extent; it’s a lot harder to add a million subscribers off a base of 60 million than it is off a base of 20 million. But this explanation just scratches the surface of what’s happening now at Netflix.

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I’m pleased to present the 497th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

This week Colin and I share our initial impressions of Peacock, NBCU’s new streaming service. Our impressions are based on watching the investor day presentations yesterday. We break down our discussion into covering Peacock’s economics, release plan and user experience. Again these are all our first impressions and not meant to be an exhaustive analysis.

Perhaps the most interesting thing to me is that Peacock’s Premium tier viewer monetization is below its two nearest ad-supported comparables, Hulu and CBS All Access. Both charge $6 per month while Peacock is $5 per month. Peacock is also ensuring maximum ad load of just 5 minutes per hour, which it forecast would amount to $6-7 per viewer, compared to the $7-10 per viewer Hulu is currently generating.

Peacock’s pricing and financial projections remind me why I still believe Comcast should have bought the remaining 70% of Hulu it didn’t own, as I wrote in May, 2018. It feels like an even bigger missed opportunity now. It probably would have cost Comcast around $12-$14 billion to do so, a fraction of the  $39 billion it paid to acquire Sky - and it would have been more strategic.
 
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This afternoon at 4pm ET, Comcast will host an Investor Meeting to share details about NBCUniversal’s upcoming Peacock streaming service. It is a session comparable to what Disney and Apple did last year for Disney+ and Apple TV+ respectively (and what AT&T/WarnerMedia will do for HBO Max). So we all get to learn all the official information about Peacock: pricing, availability, content, overall strategy/fit with existing businesses, marketing, etc.

Following the format of other investor days, we will hear from senior NBCU and Peacock executives, and likely someone from Comcast. Matt Strauss, an old friend of mine, who was moved over from Comcast to become Chairman of Peacock and NBCUniversal Digital Enterprises late last year, will no doubt be the maestro of this afternoon’s session.  All the dribs and drabs of information that have been shared by the company previously will be reconciled with all of the rumors and speculation that have gurgled up from around the web.

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There was nothing surprising when I read last week’s coverage of FX CEO John Landgraf’s tally of original productions in 2019. According to Landgraf, the number of original dramas, comedies and limited series across all SVOD and TV networks in the U.S. reached a new high of 532 (approximately what he previously predicted). That was up from 495 in 2018, 487 in 2017 and just 182 in the pre-SVOD days of 2002.

This dynamic, which Landgraf has dubbed “Peak TV,” is leading many, if not most, ad-supported entertainment-oriented cable TV networks onto a road to nowhere if their goal is to remain ad-supported entertainment-oriented cable TV networks in the long-term. What is far more likely is that being this type of network will become unviable and so they’ll morph into studios that provide premium original and library content, mostly for bigger platforms (e.g. Amazon, Netflix, Apple, Hulu, etc.) and sometimes for their parent companies’ direct-to-consumer OTT services.

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Early bird discounted registration is now open for VideoNuze’s Connected TV Advertising Summit on Thursday, June 11th at the Westin Times Square in NYC. Early registrants save $100 per ticket. Further discounts are available for students, startups and media partners (to be announced soon). 5-pack and 10-pack tickets are also available at further discounts.

VideoNuze’s 2020 Connected TV Advertising Summit will be the number one event for executives from brands, agencies, content providers, technology companies and other stakeholders seeking a deep-dive day of learning and networking focused on CTV advertising.

Connected TVs (CTVs*) are already used by more than three-quarters of U.S. households. eMarketer has forecast that CTV ad spending will more than double to $14 billion by 2023, a forecast that could prove conservative given the confluence of cord-cutting, ad-supported OTT services launching (e.g. Peacock, HBO Max, etc) and aggressive pricing for CTVs by leaders like Amazon and Roku.

CTV advertising has enormous potential because it combines the best of traditional TV advertising’s attributes while also offering the targeting, measurement and interactive capabilities of digital advertising.

Thousands of industry executives have attended VideoNuze events, which have been supported by dozens of industry-leading companies over the past 15 years.

If the future of your business is tied to the growth and success of CTV advertising, then the Summit is a must-attend event.

To learn more about sponsorship opportunities please contact Will Richmond.

LEARN MORE AND REGISTER NOW!

*Connected TV (CTV) refers to any TV that is connected to the Internet and can play OTT video content/ads and also display graphical ads. CTVs have the capability to return user data to device manufacturers, content providers and ad buyers. CTVs support secure transactions such as subscriptions and e-commerce.

Examples of CTVs are smart TVs as well as TVs that are connected to the Internet via streaming media players/sticks (e.g. Roku, Fire TV), gaming consoles (e.g. PlayStation, Wii), DVRs, pay-TV operators’ IP set-top boxes (e.g. X1) and other devices.

I’m pleased to present the 496th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

It’s a new year and a new decade, and on today’s podcast we discuss Quibi, the mobile video provider which, having raised $1.4 billion, is one of the industry’s most closely followed startups.

But as we discuss, Quibi’s go-to-market strategy seems at odds with the realities of the broader video industry, and mobile video specifically. Quibi is rolling out with a paid-only model, targeting 18-34 year-olds with expensive, original content.

With regard to content alone, it is extremely difficult to see where the “white space” is in the market. In the “Peak TV” and social media era we live in, the world hardly seems to need more long-form original TV programming nor more short-form news/information.

Net, net, Colin and I are pretty convinced Quibi will be pivoting soon after its April launch. To what though is unclear.
 
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It’s been hard to avoid reviews and prognostications about Quibi over the past 24 hours since it further pulled back the curtain on its April launch plans. Quibi is the startup mobile video service from Jeffrey Katzenberg (Disney and DreamWorks) and Meg Whitman (eBay and HP) that has raised $1.4 billion (including $400 million just announced) from virtually every Hollywood studio and others.

Quibi will charge $5/mo for its ad-supported tier, and $8/mo for its ad-free tier. Quibi will have 50-60 shows at launch, which will grow to 175 originals within a year. There are “movies told in chapters,” “episodic, unscripted and docs,” and “daily essentials.” The movie content is longest, at 7-10 minutes per clip, with the others targeted for 5-6 minutes per clip. Quibi’s aiming to launch 3 hours of content per day, with the vast majority of it being daily essentials (basically news and information).

Quibi is delivered via a mobile app with feed format. There’s no web site and no CTV apps. It’s targeted to 18-34 year-olds. The big tech innovation is called “Turnstyle” which lets users toggle seamlessly between portrait or landscape mode; all video be shot in each mode, with the same soundtrack overlaid. I haven’t seen the demo but here’s I size things up so far:

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