Posts for 'Cable TV Operators'

Bloomberg’s Screentime 2024 conference in LA offered opportunities to hear directly from a variety of industry executives about their companies’ streaming initiatives and results (all video interviews here). Colin and I were especially interested in interviews with Comcast’s Chairman and CEO Brian Roberts and Amazon’s SVP of Prime Video and Amazon MGM Studios Mike Hopkins.

As we discuss, the interviews highlight the companies’ divergent future as premium video distributors. Amazon is ascendant, having become by far the dominant distributor of third-party streaming services in the US. Meanwhile, Comcast, long the biggest cable TV operator in the US, has seen cord-cutting erode its subscriber base.

However, as Roberts articulates, Comcast is using its formidable broadband presence and Peacock to re-position the company for future success. Meanwhile Hopkins underscores how Amazon’s vast resources allow it to invest aggressively in technologies like AI to continually improve the viewer experience and partner value proposition.

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Four topics for this week’s podcast:

Last week IAB released its new 2024 advertising outlook report based on a survey of media professionals. CTV advertising was at the top of expected gains, revised upward from a 14.5% lift vs. 2023 in IAB’s prior report to 18.4% now. It’s another positive sign for CTV ads and we discuss how big a role political ad spending is playing.

Next up, Comcast’s president shared insights about NBCU’s position in movies and PVOD which were relatively upbeat. While NBCU has had a strong year, as we review, movies still face stiff headwinds.

Third, Charter and AMC signed a new distribution deal that gives many Charter TV subscribers access to the ad-supported version of AMC+. While the deal averts a blackout like the one happening with DIRECTV and Disney currently, Colin and I question whether the deal is sufficiently forward-looking for AMC.

Finally, Colin explains the significance of Amazon introducing TVs that support the NextGen TV standard.

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Blackouts have been commonplace in the pay-TV industry when operators and TV network owners are unable to come to terms on renewal terms. While the current dispute between Charter and Disney includes typical challenges like pricing and bundling, it also includes Charter’s desire to see its subscribers receive complimentary access to Disney’s DTC apps.

Disney is of course reluctant to do so because it is trying to build a parallel revenue stream as pay-TV declines. Yet, the “pay once, access anywhere” approach was at the heart of the TV Everywhere initiative from years ago, which was meant to provide an elegant solution for subscribers. But that industry effort faltered and TV networks have since invested billions in DTC.

Colin and I discuss what this dispute means for the future on the big TV bundle.

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In Q2 ’23 Comcast lost 543K domestic video subscribers, up from a loss of 521K a year earlier. In total, for the past 6 quarters, Comcast has lost almost 3.2 million subscribers, or nearly 18% of the 18.2 million subscribers it had on December 31, 2021, to bring it to just under 15 million currently.

On the brighter side, Peacock continues to make progress, adding another 2 million subscribers to reach 24 million. Comcast said some of Peacock’s gains are coming from Comcast video and broadband subscribers who lost complimentary access to Peacock.

Colin and I discuss these various moving pieces, along with the impact of the writers’ and actors’ strikes on both of the businesses.

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Netflix has begun rolling out its account sharing limitations in the U.S.. The rollout effectively puts an end to one of the most-loved features of Netflix subscriptions - the ability to share log-in credentials with family members and others. For years Netflix “looked the other way” on this activity as it sought to bake Netflix usage into as many viewers’ lives as possible.  

But all good things come to an end. With subscriber growth slowing as the market matures, Netflix has flipped its approach, linking a subscription to a household, meaning anyone that who doesn’t live under the same roof does not qualify. Those people will need to start an “extra member” account, being offered for $8 per month. We discuss the pricing decision as well, and how it relates to the $8 per month ad-supported plan.

We also discuss the launch of Comcast’s new streaming service NOW TV. Neither of us believes there’s much value and will likely have only limited appeal. We explain why.

At the beginning of the podcast I also mention a new report released by the Goteborg Film Festival, the largest festival in the Nordics, called the “Nostradamus Report: Everything Changing All At Once.” I was among a small group of industry professionals interviewed for the report, which is extremely well-done and comprehensive. It’s free and for anyone looking to get a strong overview of our evolving industry, I highly recommend downloading it.

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Pay-TV providers lost another 7 million subscribers (approximately) in 2022 as losses accelerated from 2021. The losses span those actually cutting the cord, plus those that simply don’t take on a pay-TV subscription in the first place.

On this week’s podcast Colin and I discuss pay-TV’s melting iceberg, and among its consequences, what’s it mean for sports teams’ valuations and players’ salaries. Since cord-cutting came along, there’s always been a notion of sports providing a “firewall” bottom on pay-TV subscribers. But with so many sports rights now leaking into the streaming domain - having been snapped up by Big Tech - the paradigm-busting question looms larger.

Another, related consequence of pay-TV’s implosion is the demise of regional sports networks (RSNs). They’re also experiencing financial turmoil due to bad deal-making, disconnects with audiences and sub-par demand. Even mighty ESPN has been the subject of M&A rumormongering as newly restored CEO Bob Iger has to pick his priorities.

All of this is to say that the economics of the sports business are changing in front of our eyes. If sports networks’ financial viability is impaired, rendering them unable to competitively bid for rights, then the question becomes, will Big Tech step in as a backstop, building on their current commitment? As I assert in the podcast, I think their commitment to becoming a viable backstop will only become known as the ultimate CTV ad monetization opportunity crystallizes. Specifically, if CTV can legitimately become full/lower funnel - bringing in buckets of cash with it - then backstop viability is far more likely. Absent that it’s jump ball. We’ll see.

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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.

On Comcast’s Q3 ’21 earnings call, management was vague about how Peacock is performing. In Corporate America, not highlighting numbers is typically a sign that things are not going as well as hoped and/or the numbers are not as impressive, comparably speaking, as those of competitors. A round of speculation about Peacock’s performance and what might happen next has ensued.

On this week’s podcast, Colin and I try to explain what we think is happening. The hard truth for Peacock is that it came to market very late and that it is competing against well-funded and highly aggressive competitors which are spending heavily on originals and on promotions - a commitment that Comcast/NBCUniversal have not publicly committed to match. Another issue - at least relative to Paramount+/Showtime, which gained 4.3 million subscribers in Q3 - is that Peacock doesn’t include NBC’s linear feed, and also doesn’t specialize in mature content, which has a strong draw. These two benefits (and “Star Trek”) have no doubt helped Paramount+/Showtime. Yet another issue is that popular NBC programming continues to be available in Hulu.

All of these factors, and others, are limiting Peacock’s appeal. As if that wasn’t enough, Comcast has mixed incentives related to Hulu, because it still has a 30% stake that is getting more valuable by the day, as Netflix stock hits new highs. Comcast is financially disincented from harming Hulu by pulling programming to help Peacock (all of this would have been moot if only Comcast had acquired Hulu when it had the chance back in 2018). Comcast has missed out on billions in additional revenue and value creation.

In short, Comcast/NBCU are now facing a dilemma with Peacock that can be boiled down to: Go Big or Go Home. Either commit to spending what's required to compete effectively (either at the AVOD or SVOD level), or recognize Peacock is going to keep treading water and will likely never break out. It’s a tough decision, but it reflects the penalty late entrants face, especially when squaring off against competitors like Netflix, Amazon, Disney, HBO Max, etc.

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Last Thursday, when I received an email from Comcast PR with a release attached, announcing that Hulu + Live TV would now be available for Comcast’s broadband and Flex users, I did a double-take.

Of course, it is no secret that Comcast has long emphasized its broadband business over its traditional pay-TV business. Between a benign competitive environment and most recently the Covid catalyst, Comcast had soared to 28.8 million residential broadband subscribers at the end of Q1 ’21, up another 448K, while residential video subscribers fell by 404K to 18.6 million. The 10.2 million difference is the largest yet. It reflects macro-changes around cord-cutting and cord-nevering that have swept through the industry unabated and the rise of streaming and CTV.

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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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I’m pleased to present the 539th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.  

Despite gloomy predictions, the pay-TV industry in the U.S. turned in a relatively healthy third quarter in 2020, likely gaining subscribers. This was due to robust additions by virtual pay-TV providers (led by Hulu + Live TV and YouTube TV) and moderating losses by traditional providers (especially AT&T which had a huge loss in Q3 ’19).

Colin and I discuss how a big reason for Q3’s gains was the return of all major sports. Except for the NFL, major sports aren’t available in Q4. That means churn is likely to be up in Q4, though it could be offset by the pandemic keeping people indoors more.

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Large pay-TV providers lost a total of nearly 2.1 million video subscribers in Q1, according to data compiled by Leichtman Research Group. The 2.1 million is more than double the approximately 1 million video subscriber loss sustained in Q1 ’19 and a record for the industry.

No doubt Q1 reflected ongoing challenges the industry has faced for years: high pricing relative to SVOD services, subpar linear viewing experiences interrupted by too many ads, a proliferation of connected TV devices enabling myriad competitive OTT services to be viewed on the big screen, etc. But the tail end of Q1 also saw the first impacts of Covid-19: the loss of live sports which has been a pay-TV’s firewall for years and the economic crisis that’s leading to consumer belt-tightening.

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Comcast shared a few data points that echoed other recent research, revealing that TV and streaming are up during the pandemic, and also that daily viewing patterns are blurring. Comcast said that since early March, daily viewership is up over 8 hours per week per household, or 14%, from approximately 57 hours per week per household to 66 hours per week per household.

Distribution of viewership has also changed. Comcast noted that whereas weekends are typically more popular days to watch TV, viewing has shifted to weekdays. In the past couple of weeks Monday viewing has surpassed Saturday viewing.

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It’s too soon to know whether 2019 will be remembered as the turning point year for the pay-TV industry - when all of the negative trends coalesced into a perfect storm that permanently diminished the industry’s place in American homes. But I’d say the odds are likely that 10-20 years from now, 2019 will likely be the top candidate for “turning point year.”

For evidence, consider new data from Leichtman Research Group, finding that major pay-TV providers which account for 95% of the market, lost 4.9 million subscribers in 2019. If 100% of providers had been counted, the losses would have been 5 million or more.

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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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Last Friday afternoon CNBC reported that NBCUniversal is “leaning toward” making the free, ad-supported version of Peacock, its upcoming streaming service, free, with everyone getting unrestricted access. This would be a change from restricting it to Comcast’s cable and broadband subscribers only, as originally intended. The ad-free version would still carry a fee.

Which direction Comcast decides to go will say a lot about whether it sees Peacock’s primary role as helping Comcast grow and defend its core cable/broadband business, or having NBCU become a bona fide competitor in the “streaming wars” developing with Netflix, Amazon, Disney, WarnerMedia, Apple, etc. How should Peacock’s value be optimized - by restricting access to serve the Comcast’s cable/broadband business, or to be guided by the market and help NBCU build Peacock into a large OTT business?

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Yesterday Comcast made a smart move by converting its Xfinity Flex service to free for its broadband-only subscribers, eliminating the $5 per month charge that was in place since its launch this past March.

Colin and I discussed Flex on our podcast back then, and while we both liked its overall value, we found the $5 per month fee to be a head-scratcher. Paying the equivalent of $60 per year for a streaming device with 10K mostly older content titles seemed limiting as other companies were competing aggressively on price and streaming sticks could easily be bought for $30 or less.

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Cord-cutting surged to a record in Q2 ’19, with pay-TV providers that account for 93% of the industry losing just over 1.5 million subscribers, according to Leichtman Research Group. The loss is up from 420K in Q2 ’18. As usual, satellite providers were responsible for the majority of the losses, with DirecTV losing 778K subscribers in the quarter and Dish losing 79K. The combined drop was nearly double the 480K lost in Q2 ’18.

The biggest seven cable TV operators lost a combined  455K subscribers in Q2 ’19 compared to a loss of 275K a year ago.

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Comcast and Disney have announced a deal under which Comcast can effectively transition out of its 33% ownership stake in Hulu beginning in January 2024. The exit can occur at either Disney’s or Comcast’s instigation and at an assessed market value of Hulu that won’t be less than $27.5 billion. That means Comcast’s 33% stake could be worth approximately $9.1 billion though that could be reduced to a minimum of $5.8 billion if Comcast doesn’t fund any of Hulu’s capital needs between now and January 2024.

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I’m pleased to present the 459th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

Comcast’s new Xfinity Flex is a little bit of a lot of things  - access to certain SVOD, AVOD and live TV services, integration of certain connected home devices, a VOD library of 10K titles though unlikely anything very recent or super-popular, access to certain music services, though not market leaders Spotify or Apple Music and a grid guide. There’s also a connected TV device and voice remote powered by X1’s software.

Of course there are lots of alternatives for consumers to easily accomplish all of the above by themselves, challenging the value of a service like Flex. But to complicated things further, Comcast hopes to use Flex - which is targeted to broadband-only  subscribers in Comcast’s footprint - to create upsell opportunities to Comcast’s multichannel video service and build value/reduce churn among broadband-only’s.

And that’s why, in an era when streaming sticks are being bought by millions of mainstream consumers for $30 or less, Comcast’s decision to charge Flex subscribers $5 per month makes the whole undertaking a head-scratcher.

In today’s podcast Colin and I dig into Flex and the various reasons it is unlikely to have much impact for Comcast. I’ve been writing for a while that Comcast does not seem to have an aggressive response to the massive changes sweeping through the industry. Today’s hyper-competitive, “land grab” video services market favors bold moves and Flex seems too tepid to stand out.

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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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