Posts for 'MoffettNathanson LLC'

In this week’s podcast we discuss the overlapping “doom loops” that are crushing the TV industry. These were first articulated by MoffettNathanson, and built upon by Colin. The doom loops include 1) TV networks shifting investment/focus from linear TV to streaming, in turn driving more cord-cutting, 2) Fewer remaining pay-TV subscribers available to shoulder the cost of sports TV networks, in turn leading to more cord-cutting, 3) Audience shifts away from traditional TV driving ad dollars to follow, further pressuring traditional TV’s revenue.

Yet another more doom loop could be added with news this week that Disney is finally pushing forward with a direct-to-consumer model for ESPN. Given how expensive that DTC service is likely to be, it’s ultimate adoption probably won’t extend much beyond hard-core sports fans.

But it will cause the unintended consequence of raising the visibility of the multibillion dollar per year “sports tax” non-sports fans have long been paying, which Major League Baseball Commissioner Rob Manfred explicated at a Paley Center event last month when he said, “It’s a great business model when a whole bunch of people pay for something they don’t really care if they have or not, which is what the cable bundle did for us. It’s hard to replicate that.”

So it’s safe to say that ESPN’s DTC service will also drive up cord-cutting.

The “doom loops” are now on display for all to see, prompting Colin and I to wonder truly, what the remaining life span of pay-TV is?

Before we get started, we give a quick overview of Wurl’s new ContentDiscovery offering, for which Colin and I wrote an accompanying white paper.

Listen to the podcast to learn more (35 minutes, 28 seconds)

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The following video was recorded at VideoNuze's Connected TV Advertising Brand Suitability Summit virtual on November 16, 2021.

How the Tectonic Plates of the TV and Advertising Industries Are Shifting
The tectonic plates of the TV and advertising industries are shifting in front of our eyes. Every single bedrock industry assumption from as recently as 10 years ago is now up for grabs as streaming services, CTVs, cord-cutting and mobile disrupt the long-time, yet delicate, equilibrium. Learn the details of the shifts and the quantitative impact already being felt throughout the industries from one of the world’s savviest media analysts. Look ahead to 2022 and beyond for what to expect down the road.

- Michael Nathanson - Founding Partner, Senior Research Analyst, MoffettNathanson
- Will Richmond – Editor and Publisher, VideoNuze (interviewer)

Watch the session video now!

Welcome to the 555th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.  

This week we discuss new data from FreeWheel and Nielsen highlighting gains in connected TV usage. Higher usage directly translates to ongoing CTV advertising revenue gains. One example of how this usage translates was a bullish new forecast from MoffettNathanson which pegs YouTube/AVOD ad revenue growing to $53 billion in the U.S. alone by 2025. MN sees a new “mid-top layer” of the traditional marketing funnel emerging that blends the long-form video experience being driven by CTVs with better targeting and conversion.

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Advertising on YouTube and ad-supported video-on-demand (AVOD) services will grow from approximately $19 billion in 2021 to approximately $53 billion in 2025 in the U.S., a 29% compound annual growth rate, according to a new report from analysts MoffettNathanson. MN sees 67% of the 2025 spending, or approximately $35.5 billion, going to YouTube alone, with other AVOD providers splitting the remaining 33% or $17.5 billion, just about how spending is allocated currently.

MN characterizes the YouTube/AVOD ad spending as a new “mid-top layer” of the traditional marketing funnel, sitting below top-of-funnel brand advertising traditionally dominated by TV spending which MN forecasts will stay roughly flat by 2025 at around $70 billion. It sees total top-of-funnel spending declining from $108 billion in 2021 to around $99 billion in 2025. Below the YouTube/AVOD layer is middle-of-the-funnel digital/social media (except search) which will increase from an estimated $64 billion in 2021 to an estimated $137 billion in 2025, a 21% CAGR.

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The Wall Street Journal is reporting that the fees CBS, Fox, NBC and ESPN each pay to broadcast NFL games will double or more in new long-term agreements currently being finalized. Once again we are presented with the incongruity that sports rights are escalating even as the pay-TV subscriber audience able to watch these networks is shrinking.

As the Q4 earnings season wrapped up, the contraction of pay-TV was again in the news this week as analysts tallied the final losses for 2020. MoffettNathanson pegged the subscriber loss in 2020 among traditional cable, satellite and telco operators at approximately 6 million, with virtual operators (e.g. YouTube TV, Hulu, etc.) offsetting it by adding approximately 2 million subscribers.

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I’m pleased to present the 524th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia. As always we wish our listeners all the best and hope everyone is staying well.

With the pandemic accelerating a shift from linear TV, sports and pay-TV, AVOD is poised for significant growth in both viewership and ad revenues. Earlier this week, MoffettNathanson forecast AVOD growing from $3 billion in 2019 to $14 billion in 2024, compensating for most of the $14 billion decline in traditional TV ad revenues expected over that same time period.

On this week’s podcast Colin and I dig into all the factors behind AVOD’s rise and these coming changes.

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I’m pleased to present the 518th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia. We hope all of our listeners are staying safe and healthy.

This week Colin and I dig into a range of different data and forecasts about changing SVOD viewership patterns as the pandemic continues. These include data about co-viewing from Nielsen and average viewing minutes for major SVOD services from 7Park.

We also highlight new survey data from Magid how sports fans may shift from SVOD when sports returns. Finally we touch on a new forecast from MoffettNathanson that U.S. pay-TV subscribers will drop by 22 million by 2024, with SVOD benefiting.

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It’s been just 6 1/2 years since Netflix debuted its breakout original series “House of Cards” and new research from MoffettNathanson and HarrisX show just how much progress the company has made since: 15 out of the top 19 most popular TV shows are now original, with the remaining 4 acquired (the research credits “movies” as the 3rd most popular).

The most popular show is “Orange is the New Black” followed by “Stranger Things.” #4 is "Ozak" and #5 "Grace and Frankie." Of the acquired shows, “The Office” (which is moving to NBCU’s streaming service) is #9, while “Friends” (which is moving to WarnerMedia’s streaming service) is #10. “Supernatural” (#12) and “Breaking Bad” (#20) are the only other acquired shows in the top 20. Somewhat surprisingly, originals accounted for 13 of the top 19 shows on Amazon Prime Video (movies were #6). For Hulu, just 5 of its top 19 were original, with the majority of acquired shows coming from Disney/Fox (movies were #10).

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Major pay-TV operators made it through another quarter without any substantial acceleration in cord-cutting, according to industry data tallied by analysts MoffettNathanson. In Q2 ’16, pay-TV operators lost an estimated 757K subscribers, compared with a loss of 683K subscribers in Q2 ’15. Note also that the second quarter is always the seasonally weakest. When estimated Sling TV subscribers are added in, the loss declines to 708K in Q2 ’16 vs. 613K lost in Q2 ’15.

In a continuing trend, cable operators again picked up market share at the expense of telcos and satellite providers. Cable’s loss in Q2 ’16 declined to 242K subscribers from 404K lost in Q2 ’15, while telcos swung from a gain of 5K subscribers in Q2 ’15 to a loss of 526K subscribers in Q2 ’15. AT&T accounted for the vast majority of that loss (minus 391K) as it transitioned U-Verse subscribers to DirecTV. Verizon had a loss 41K vs. a gain of 26K a year earlier as it experienced an employee work stoppage.

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Cord-cutting accelerated in 2015. Once again, It dominated headlines about the pay-TV industry, portending its imminent demise, as SVOD awareness and original content investments skyrocketed. But despite all of that, top Wall Street analyst Craig Moffett of MoffettNathanson (who has participated in many VideoNuze events) issued a bullish note this morning on cable TV operators’ prospects in 2016.

Craig’s analysis highlights the subtleties of the pay-TV industry’s dynamics that are too often glossed over in generic media coverage about cord-cutting’s ascent. The nub of his argument is that while the overall pay-TV industry is indeed pressured in many ways, cable operators’ distinct product and technology advantages vs. its primary competitors (satellite and telcos) have led to cable operators taking market share, helping insulate them from macro issues.

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U.S. pay-TV operators lost 31K video subscribers in Q1 '15, compared to a gain of 271K in Q1 '14, according to analysts MoffettNathanson. The loss was the first time the industry has ever lost subscribers in a first quarter, and signals an acceleration of cord-cutting (or cord-nevering, since it's hard to pull the two apart), contributing to a .5% industry contraction over the past 4 quarters (461K subscribers).

MoffettNathanson has always tried to put pay-TV results in context with both occupied housing net additions and new household net additions. In Q1, the former declined by 407K, but the latter increased by 1.3 million, suggesting around 900K households were added in the U.S. Despite the gain the industry still lost subscribers.

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So-called "skinny bundles" of TV networks face long odds of success given the dispersion of actual TV viewership, cross-ownership of broadcast-cable TV networks by media conglomerates and underlying economic realities, according to a new analysis by MoffettNathanson.

The conclusions align with points I made in last Friday's podcast and previously, as I've asserted that the "Swiss cheese" channel lineups found in skinny bundles will lack broad appeal. This was a central finding from recent Bernstein research as well. Conversely, bulking up channel lineups with more TV networks (as Sony has done with its new PlayStation Vue service) eliminates the opportunity for a cost-savings value proposition that would resonate most with would-be cord-cutters or cord-nevers.

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Despite all the talk of massive cord-cutting being just around the corner, evidence continues to demonstrate that the U.S. pay-TV business remains relatively healthy. The latest, from Leichtman Research Group, shows that the 13 largest U.S. pay-TV operators, which together account for 95% of the market, lost just 125K subscribers in 2014. That was basically even with the 95K they lost in 2013 (see chart below).

LRG president and principal analyst Bruce Leichtman noted that the 220K subscribers lost over the past 2 years represents just about .2% of the operators' total subscriber base. Of course no business ever wants to lose customers, but given the dramatic rise in OTT usage and subscriber levels, along with the vast array of viewing options, losing just .2% over 2 years seems like a pretty good level of stability (consider that Netflix alone added 5.7 million U.S. subscribers in '14).

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Netflix made waves in its recent Q4 earnings report by announcing a massive acceleration of its international rollout, with its goal to now be in 200 countries by the end of 2016, up from 50 today (note there's some murkiness around counting to 200 countries as well). One of the keys to Netflix's successful international expansion is offering a robust content library, which in turn means owning the worldwide distribution rights to marquee programming.

But a new note from analysts MoffettNathanson observes that studios are increasingly resisting Netflix's proposed global license fee structure, which only allows for a 20-30% markup on the actual cost of producing the shows. Instead, studios are biased to retain international distribution rights because of the potential for far more lucrative distribution deals.

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I'm pleased to present the 249th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

This week we tackle a topic that has gained a lot of recent attention - whether SVOD services (e.g. Netflix, Amazon, Hulu, etc.) are starting to bite into broadcast and cable TV networks' ratings and advertising revenues. The mantra from TV network executives and their studio brethren over the past few years has been that SVOD licensing revenue was purely incremental to their ad revenue.

But a slew of Q3 data, including large declines in C3 viewing (especially among under 49 year-olds), flat-to-down TV ad revenues being reported by TV networks and excellent new analysis from researchers at Bernstein, MoffettNathanson and elsewhere suggest that we may actually be at the beginning of structural audience shift from linear/TV to SVOD, with TV advertising dollars leaking over to digital and online video.

This would obviously be significant new challenge for TV networks/studios, all the more so because their own content licensing deals are the key enabler of SVOD services' appeal in the first place - and thus the shift.

It's a fascinating topic with many long-term implications…listen in to learn more!

(And note, we will dig deep into this topic at the Dec. 4th VideoSchmooze NYC in our opening session with Nielsen's SVP, Client Insights Dounia Turrill and Leichtman Research Group's President and Principal Analyst Bruce Leichtman. Register now to save and to win a TiVo Roamio Plus with Lifetime service!)

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September is here and that means summer 2014 is in the rear-view mirror. For online video and the broader video ecosystem, it was another busy few months, as viewers around the world continue to shift their consumption patterns, with many companies scrambling to keep pace. Below I've distilled my list of the 10 biggest online video stories of the summer - read on and let me know if I've missed something!

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There are a lot of wild headlines these days proclaiming the death of TV and the prevalence of cord-cutting. But in a session I moderated at the recent VideoSchmooze event in NYC, Bruce Leichtman and Craig Moffett, two of the top video analysts around, shared their current data, which systematically debunks these mythologies. For anyone interested in what's really happening in the video business today, the session's video is a must-watch.

Bruce and Craig believe that both technology and mainstream media are ginning up these mythologies because they make great headlines. In fact, both cited instances where their data said "x" but the media coverage ended up being "y." All of this underscores how important it is to read media coverage of the industry with a very critical eye.

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