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February Twenty Four

Content is King?
 
Watching how the Streaming players handle content is really interesting. Most of the headlines follow the new exclusive shows being developed - usually with a big price tag. But there are other strategies being tested. Following the success of Netflix in finding foreign language content and making it famous, Disney is adopting a similar approach.
 
As part of their Star launch in Europe, they plan to commission local content. It won’t be anywhere near the scale of Netflix - where for example French shows like Spiral, Lupin, Call my Agent etc, have done really well.
 
The library of content is also important. Star launches with Modern Family, 24 and a bunch of programmes (and films) that came with their Fox acquisition. Others are licensing content - HBO spent big to get Friends and Peacock wrote a fat cheque for The Office. 
 
The murky world of streaming metrics -both for subscribers and what they watch make it hard to say whether these were good deals - but it seems likely they have had a positive effect.
 
Losing these two major shows hasn't hurt Netflix at all but the next service to launch will rue the shows it has licensed. Paramount+ is the original home of many strong shows but over the years has licensed them to rivals (often Netflix) leaving their launch schedule a little thin. But they have some interesting ideas; seeing the lack of sports content on their rivals they have bought Champions League Rights - which with the growing popularity of soccer in the US looks smart. And they bought Tubi so they have an ad funded service to run in parallel. Given football matches are so suited to ads, that seems smart too.
 
Roku
 
The latest earnings for Roku show that a strategy around distribution can work well too. They saw revenue grow 58% to just under $1.8bn and profit grew even faster to just over $800m, with ARPU just under $29. And 38% of all smart TVs sold in the U.S. were Roku TV models.
 
Their hardware makes them a key gatekeeper to new TV and their ad business lets them print money. In fact they have two ad businesses;
 
First they work with content owners to drive audience;
 
Our biggest content partners now typically buy promotions from us on a cost-per-action (CPA) basis, and optimize on metrics like installs, subscriptions, views and retention. Machine-driven content marketing benefits not only our content partners, who benefit from more efficient advertising, but also our users who see more relevant ads.
 
And they use their ad tech to sell to general advertisers
 
In Q4, the six largest agency holding companies more than doubled their investment with Roku on a year-over-year basis, while also committing to significantly larger 2021 upfronts with Roku.
 
They are dipping their toes into content. They bought the Quibi content and are now hiring a Lead Production Attorney to work on its expanding slate of original content
 
With the share price up 600% on it’s Covid dip, the market cap is now a little over $50bn. Will someone buy Roku and consolidate their position in newTV advertising?
 
Paging Menlo Park.
 
Asia
 
In our recent newTV event we discussed how important emerging markets are in both Movies and newTV. China is now arguably the biggest Box Office for films and given their cinemas are now open again they are dominant.
 
“It looks like more and more, [the US box office] will be a supplemental income to streaming,” said Jeff Bock, longtime box office analyst for Exhibitor Relations. “[The US] may never have a weekend again that even touches on what Chinese new year does this year,” he warned.
 
Other Asian markets are important too. In the recent Disney results we heard of their success in India, even if actual revenues are low. Indonesia is a focus too, with almost 2.5m users versus 1m for Netflix. The Government has been successful in driving down piracy so the market is more attractive.
 
Sports
 
The engine of Sky growth was sport and it's a major factor in pay TV around the world. But the Streaming giants don't yet seem to have got their head around sport. Because it’s the ultimate live content, it suits a linear experience over a streaming one, but we do see it working in places. For example the Amazon coverage of the Premier League in the UK has worked well.
 
We have covered the various deals done by GAFA for sports rights and I think this will continue but the impact of Covid is changing things. The French broadcast partner has skipped town without paying leaving clubs worried about bankruptcy and Inter Milan is desperately trying to raise money
 
 A good FT event last week looked at the Business of Football and this Scoreboard: 10 takeaways is a summary of the key topics.
 
Inevitably the issue of the 2022/ 2025 TV rights for the Premier League came up and broadcasters are talking of ‘deflation’ a decline in the price paid. How does GAFA and Streaming impact this?
 
This piece goes into some detail on how Disney may be thinking about the 10 year NFL deal on the table for both ESPN and ABC - with the NFL asking for a 100% increase. Amazon are also taking an interest - which is a neat link to the story Jeff Bezos may be buying the Washington NFL team. (He is not the only tech billionaire investing in a top team - YouTube founder Chad Hurley has invested in Leeds.)
 
This analysis of ESPN shows some of the issues for Disney in the transition from cable to streaming.
 
Social Video
 
I think Creative Tech is going to grow in importance as more people realise the demise of cookies and IDFAs emasculates the digital targeting that drives ROI - meaning the advantage of creative becomes even stronger.
 
Evidence of this in the new raise of $50m for Vidmob 

Plus+

HBO Max is ordering way more kids’ content to compete with Netflix and Disney Plus
 
An hour long FT webinar on The Streaming Wars 
 
The new CEO at Tubular Labs hints at wider role for their technology
 “Brands in particular need to understand the reach and audience quality of what they’re buying. I believe Tubular’s audience ratings product is the catalyst for brands to increase digital video investments.” 
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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