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January Twenty Seven

Subscriptions & Churn                                                                           
 
Our research and our discussion at our newtv event confirmed that 3 players dominate streaming right now - Netflix, Amazon and Disney. 
 
Netflx drives culture with their relentless release programme and amazing PR - right now Lupin and Call My Agent dominate my conversations about what to watch. So for most people this is a must have. Amazon is essential for many, both for the benefits of Prime and their Premier League coverage. And if you have kids, Disney seems a must have. If you don’t, then the other players come into contention.
 
In some new Nielsen research on Streaming in 2020, Netflix dominate the Top 10 for both Original Series and Acquired Series but Disney take 7 of the Top 10 movies  - which are all quite kid related, so probably get watched again and again.
 
But as we have discussed, people are not necessarily long term customers. They are becoming hoppers - pay for a month to access a particular show and binge it, then cancel. A new Deloitte report notes this behaviour is growing fast;
 
In our January 2020 survey, only 20% of respondents who subscribed to a streaming video service had cut a service in the previous 12 months, but by October, 46% had cut at least one in just the previous six months.
 
As cost is a key issue, the smaller ad supported services are doing well. The CW is a joint venture between CBS and Warner and they are getting their moment in the spotlight - topping the app chart as new shows became available.
 
The complicated ownership means many of the CW shows will end up on HBO, but a free ad supported service can still do well.
 
Customer Acquisition
 
Before you worry about churn you need to attract subscribers in the first place. Partnerships and free trials are effective  - but expensive. And how many of the O2 customers, who have enjoyed 6 months of Disney+ for free, convert to paying subscribers? Discovery is still key for most of the new services - and they will lead with promoting content. Our friends at Tubular make the case for organic social clips as a great way to build interest and at our first event Dave Morgan predicted that a major category of newTV adspend will be promoting new shows and services on other streaming services.
 
Samsung confirm that media and entertainment are early adopters of newTV and believe that attribution will be critical
 
Advertising
 
A new report from Pubmatic looks at how CTV is faring in major European markets - with 60 interviews across the buy side and the sell side. It finds the UK is clearly leading the way and that other markets are very local - making it hard for brands to build scale. It’s a useful resource and a good reminder that - despite the energy and influence of the US players - European growth will be driven by local markets and local players.
 
One topic hardly mentioned though is Creative. What does a Streaming TV ad look like?
 
The other big issue in newTV is fraud - the bad actors from adtech are increasingly focused on newTV - as this good article from one of our event panelists explains.
 
Asia
 
A topic we covered in the second of our events was the importance of Asia in newTV.  The huge audiences in China are a significant factor in the economics of Hollywood - as data on the Pixar Christmas movie Soul shows. With no domestic (US) release because of it’s streaming debut on Christmas Day, worldwide revenues were $71m - of which $48m came from China. Some more good analysis of the Chinese market and Soul here.
 
The Chinese market is also important for the UK Premier League but their dispute with a Chinese broadcaster PPL continues - with lawsuits flying around. The Premier League signed a replacement deal with Tencent so games are getting shown, but the revenue is much reduced. 
 
It’s not just China. Japan is a big market for western content but also a strong producer. Of the top 25 most valuable media properties globally, 11 are Japanese. The chart is topped by Pokemon and Hello Kitty. Another of our event panelists is a Sony exec and she talked about the strength of the Anime market (worth $24bn). The latest Anime hit Demon Slayer: Kimetsu no Yaiba, has made $300m at the Japanese box office. 
 
Netflx, Amazon and HBO are all investing in Anime content but Sony believe their ownership of the Demon Slayer franchise will help their global ambitions. After all they were the first Tech firm to invest in content ( buying Coke out of their Hollywood studio)
 
Cinema
 
The major cinema chain AMC is raising more cash to fight off bankruptcy. Their CEO seems like a remarkable character and this NYT profile of him is a good read. This quotes sums up the challenge for him and his industry.
 
“...sometimes you have to stare change in the face, recognize that it has or soon will arrive, and reshape it to one’s own benefit.”
 
Again we talked about this at our event and I feel people will go back to the cinema, eventually. Popcorn, Pale Ale and a blockbuster at Hackney Picturehouse is a great pleasure.
 
But Your Movie Is About to Be…Delayed, Again
 
Plus
 
Samsung’s Peacock Standoff with NBCUniversal Shows Power of TV Makers
 
What is Letterboxd? The Social Media Platform Going Mainstream
 
Netflix 'instant' play goes global
 
Take a look at NBA Top Shots - a blockchain driven version of Sports Cards but with video clips. Your chance to Own The Best Moments From NBA History

The growth of Streaming hits actors and producers in the wallet.
  
Reprise - in case you missed our coverage of newTV in the last couple of Fixes
 
And both our Events went well and  we had great feedback. You can watch both webinars here;
January 12
January 19
 

newTV - January 22
 
Our second newTV event on Tuesday went really well. We focused on distribution - the balance between cinema viewing and streaming that is going to dictate the fortunes of all the players. Our guests were able to give great insight - Yvonne from Sony is operating right at the heart of this, Mary Jane works with Lord Putnam amongst others and Maureen from our friends at FTI had great data to share. You can watch the full event video here.
 
We are thinking about a third event and, like these two, intend to use the Fix community to source great speakers and our audience - so if you are interested in getting involved let me know.
 
There is no shortage of topics for another event. The new report from Moffett Nathanson covers many of the issues we did, but I liked this point on the new imbalance between the distribution and the talent;
 
Massive media entities control the pipes through which content is self-produced and distributed, reaping more benefits than the creators and middlemen. In the traditional distribution models, box office revenues and television ratings were clear indicators of success (or failure), ensuring talent was properly compensated for their work. On the film side, movies going to streaming services day-and-date immediately cannibalizes the box office, negatively impacting downstream revenues and limiting profit participation for creators while benefiting media companies in the form of direct-to-consumer subscriber growth and retention
 
More on the talent in this Bloomberg article - Studios are being generous in compensating talent likely to be impacted by switching films to streaming but is there a longer term effect? Will talent choose future partners based on how their movie will get shown?
 
The latest Netflix figures support the idea that size really matters - increasing subscriber numbers and increasing prices make them think they can self finance their colossal content production bill. But the competition is intense and in the UK Amazon gained more subscribers over Q4 - helped by their Live Premier League coverage. How sustainable that is can be questioned, as the current televising of all matches will come to an end - but do the benefits of Prime help minimise churn? 
 
The same research shows how well Disney has done and the FTI research confirmed our thinking that these 3 (Netflix, Amazon and Disney) dominate. But those O2 free deals for Disney are expiring, so we will see how well they convert customers to paying. 
 
A US firm also believes in the rule of 3, and has good analysis of the bundling & unbundling that is going on with subscriptions. There is one big difference between the US and Europe. Cord cutting in the US frees up considerable household budget that can be reinvested in streaming subscriptions. In Europe, Sky (and others) don’t see these levels of churn and have been smart about bundling in new services.
 
Some good thinking on how Netflix re package their content to make it appeal to more people - which reminded me of this idea that some of the programming is ambient - designed to be in the background. It’s what happened to music - once it was something you sat and listened to and now it is something you hear whilst you do something else.
 
newTV January 15
 
Great reaction to our first newTV webinar New Economics of newTV; How Streaming changes everything. Tuesday's session looked at the businesses driving the change and at business models. The second session next Tuesday is focused on the content and how people will access blockbusters - back to cinemas?, premium PPV? or a blend? Get your free ticket here.
 
I wrote a bit about the first session in this weeks Deep Dive on newTV - catch up here - and there are links to get the webinar video and charts.
 
The new Trade Desk report on CTV came out after our session. It has some great data and this resonated with me;
 
CTV inspires new ad creativity - A growing number of brands and agencies are approaching advertising on CTV with a different mindset when compared to running commercials on its older, linear counterpart. Shorter ads and the ability to adjust in-flight are top of mind for over half of TV media buyers (59% and 53% respectively).
 
Another topic we touched upon was bundling as a way to deal with both discovery and the balkanisation of TV content. So Struum looks interesting -a Class Pass model for the long tail of streaming services. 
 
One of our panel used to run All4 but we didn't get a chance to discuss the new CEOs view that C4s future is streaming. 
 
On Cinemas we see the owners of Odeon are looking for new financing.

Making the simple complicated is commonplace;  Making the complicated simple, awesomely simple, that's creativity - Charles Mingus

I'm with Charles. Too many people make things overly complicated.
I look for the patterns that unlock opportunities. How could I help you?


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