Posts for 'Disney'

First up on this week’s podcast we discuss Fubo CEO David Gandler’s statement that the company is in a “duel to the death” with Spulu, the new sports JV from Disney, WBD and Fox. He makes a good point that if the 3 companies allow the JV access to their sports networks without requiring the JV to also pay for non-sports networks as companies do with typical pay-TV deals, this would put the JV at a cost advantage compared to pay-TV operators like Fubo.

Next, Variety reported Apple spent $700 million on just 3 movies last year, a bet that Colin and I both believe is far too concentrated for a streaming service that is struggling with high churn and badly needs catalog depth. Finally, both Max and Disney+ are trying to emulate Netflix in cracking down on password sharing and on improving churn. Can they catch up with the clear market leader?

Finally, all the session videos from last week’s VideoNuze CTV Advertising PREVIEW: 2024 virtual are available.

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This week we look through all the buzz around the new Disney/Fox/WBD sports JV to understand the service’s opportunity and likely impact on the TV market.

Two key questions we consider: 1) How big is the target market of sports super-fans for the JV who haven’t maintained their pay-TV subscription (since sports has been a firewall to cord-cutting)? And 2) With ESPN’s own direct-to-consumer service launching in 2025, how will it differentiate itself given ESPN will also be included in the JV’s offering?

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Big TV manufacturers made news at CES with new models and improved viewer experiences. Meanwhile NBCUniversal and Disney stepped up their ad games with announcements of many new initiatives. Separate, Netflix said it now has 23 million monthly active users, up 8 million in the past couple of months. Lastly, Amazon announced broad headcount cuts to Prime Video, MGM and Twitch.

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This week on Inside the Stream we discuss our top 10 streaming video stories of 2023. As longtime listeners know, the top 10 countdown is our tradition for the final podcast of the year.

In 2023, our top picks include the rise of smart TVs, the Actors and Writers strikes, TV OS wars, CTV advertising, traditional TV’s continued fall, Disney acquiring the rest of Hulu, YouTube’s growth, SVODs drive for profitability, sports migration to online and Netflix remaining the king of SVOD. We dive into all of them and explain why each is significant. Let us know what you think of our top 10 - did we miss anything?

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It’s earnings season, and on this week’s podcast, Colin and I discuss results from Disney, Roku, WB Discovery and Dish. The four companies’ subscriber counts, profitability and shifting business models all provide insights into larger industry trends and challenges.

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Disney has officially begun buying out Comcast’s 33% ownership in Hulu, for at least $8.6 billion. Hulu will become a centerpiece of Disney’s strategy to appeal to a broad range of audiences. Coincidentally former Hulu CEO Jason Kilar recently shared his recommendations for how media companies can succeed in streaming. Can Disney’s big Hulu bet deliver on Kilar’s vision?

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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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Most media and technology companies have now reported Q1 ’23 results. We dig into who’s up, who’s down and who’s pick ‘em, and where they all might be headed. We share all this with the caveat that one quarter’s results are not the final word on a company’s ability to survive and thrive going forward. We hope we’re not in any way contributing to the short-term, quarterly performance myopia so common on Wall Street.

Rather, we’re looking at these companies’ results in the context of prior results, the competitive landscape and their particular products’/services’ positioning. All while trying to do some basic “pattern recognition” - what have we seen before and how is this likely to play out in TV and video. Our discussion is primarily focused on Netflix, Roku, Amazon, AMC, Disney, Comcast, Vizio, YouTube, The Trade Desk, Paramount, Diamond Sports Group, Tegna, Dish and how they’re sorting themselves in the up, down and pick ‘em categories.

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Disney reported its fiscal 2023 first quarter this week, the first since Bob Iger returned to the CEO role. While other parts of the business are doing reasonably well, for Direct-to-Consumer, which includes Disney+, Hulu and ESPN+, subscriber gains were weak and ARPU was down. Iger also shared that Disney will cut its content spending by $3 billion this year. For Colin and me, all of that makes Disney’s DTC future seem murky.

Disney also plans to lay off 7,000 employees and take a $5.5 billion charge, while also stating it intends to restore its dividend by the end of the year - all a big victory for Wall Street. The layoff continues a disturbing pattern by most large tech and media companies (a topic about which I do a mini-rant during the podcast, sorry) which has put CEOs' lack of accountability on full display and smashed any delusions anyone might have had about any sort of an employer-employee "social contract" still existing (again sorry, I digress)

The most meaningful quote from Disney’s earnings call on late Wednesday was when Iger said “…the streaming business, which I believe is the future and has been growing, is not delivering basically the kind of profitability or bottom-line results that the linear business delivered for us over a few decades.”

Nor will it ever.

As Colin and I discuss this week (and as we’ve discussed ad nauseam in the past), the linear business model was based on the pay-TV multichannel bundle, which was the very definition of artificial economics. In the bundle, lots and lots of channels were delivered for a single price. The bundle’s monthly price steadily increased over the years as broadcast and cable TV networks raised their carriage fees paid by pay-TV operators.

The “elephant in the room” was that most pay-TV subscribers watched only a handful of TV networks, and yet paid for ALL of them. By far the biggest beneficiaries of pay-TV’s artificial economics were sports networks, with ESPN at the very top of the list. I first wrote about the “sports tax” 12 years ago in “Not a Sports Fan? Then You're Getting Sacked For At Least $2 Billion Per Year.” Things have only gotten worse for non-sports fans since. However, with streaming’s rise, the elephant is now fully visible, and has driven cord-cutting to record levels.

And just as the Internet has ruthlessly rationalized the economics of practically every other industry, it is now doing the same to the TV industry. The Internet allows zero room for artificial economics and anyone who violates this precept is an ostrich with their heads fully underground. Iger understands this, and his quote should fairly be seen as a signal to Wall Street that Disney is extremely unlikely to ever achieve historical financial performance in its TV businesses.

As if all of that weren’t enough, Iger then went on CNBC’s “Squawk Box” yesterday and told David Faber that “Everything is on the table…" with respect to Hulu’s eventual ownership resolution (reminder, Disney has a deal in which Comcast can force Disney to buy its 30% stake for a set minimum price that would translate into around $9 billion).

Iger’s comments basically turned Hulu into a hot potato. Really dedicated VideoNuze readers will recall that almost 5 years ago, in March, 2018 I wrote “Why Comcast Should Take Control of Hulu.” Then, subsequent to Comcast’s Peacock reveal in January, 2020, I followed up with “Quick Math Shows Comcast Missed Out On Almost $6 Billion in Revenue By Not Buying the Rest of Hulu.”

Instead, Comcast/NBCU launched Peacock and will have lost over $5.5 billion on it just between 2022-2023. If Comcast does come back in and buy Disney’s 70% stake in Hulu it will rank as the #1 irony in all the years I’ve been in the industry.

And it would make Disney’s DTC future even murkier still.

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Cord-cutting is accelerating. Deep-pocketed Big Tech (Amazon, Apple, Google) are scooping up marquee sports rights in an effort to add value to their services businesses. Linear TV viewing is collapsing. Consumers' attention is fragmenting as myriad social media and other activities beckon for eyeballs.

As Colin and I discuss on this week’s episode, ESPN finds itself at the center of this storm, as the venerable TV network gets squeezed from all sides. Adding urgency to the problem, and as we also explore this week, Sinclair's Diamond Sports Group, which owns Bally Sports, a big collection of Regional Sports Networks (RSNs) acquired from Disney as part of its Fox deal, is edging toward declaring bankruptcy.

While Diamond’s demise is closely tied to the debt it incurred by overpaying for the Fox RSNs in 2019, it raises more consequential questions about the health of the sports TV ecosystem - and therefore the value of sports broadcasting rights themselves. These rights have been funded primarily through the “sports tax” on pay-TV subscribers who are not sports fans (see “Not a Sports Fan, Then You’re Getting Sacked for At Least $2 Billion Per Year,” which I wrote back in February, 2011). Non-sports fans are getting soaked for far more than this in 2023, with huge - and mostly unknown - sums embedded in their monthly pay-TV bills (partly contributing to escalating cord-cutting).

Net, net, the delicate equilibrium in the sports TV ecosystem is under major pressure. With respect to ESPN, newly reinstated Disney CEO Bob Iger has a pressing - yet until recently unimaginable - question to address: long-term, is ESPN still a good business? And if it’s not, should Disney keep the network anyway, or seek to sell it off?

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Although Disney gained a healthy 14.6 million direct-to-consumer subscribers in its fiscal fourth quarter reported this week, it also lost nearly $1.5 billion in the segment. That raised its annual DTC loss for fiscal 2022 to over $4 billion, more than twice the $1.7 billion it lost in fiscal 2021. Disney reiterated that it expects DTC losses will decrease going forward and that Disney+ specifically will achieve profitability in fiscal 2024, absent a “meaningful shift in the economic climate.”

On this week’s edition of Inside the Stream, nScreenMedia’s Colin Dixon and I examine the various cross-currents impacting Disney’s DTC business going forward. These include declining ARPU at Disney+ domestically and Disney+ Hotstar, upcoming price increases, SVOD and FAST competition, content costs and more. The stakes are high for Disney to turn the corner on DTC profitability but it isn’t clear when or how that will happen.

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On the podcast this week nScreenMedia’s Colin Dixon and I dig into four topics that have caught our attention: Disney’s rumored membership program, Netflix’s plan to charge advertisers CPMs of up to $65, Paramount’s bundling of Paramount+ and Showtime, and how “diginet” channels and FAST linear services are converging.  

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On this week’s episode of Inside the Stream nScreenMedia’s Colin Dixon and I discuss Disney’s direct-to-consumer (D2C) performance in its fiscal third quarter, ending July 2, 2022 and the impact of upcoming price increases across all of its streaming services. Disney now has over 221 million streaming subscribers of which 152.1 million are Disney+ subscribers (up 14.4 million in the quarter).

But these Disney+ subscribers will see their monthly fee increase by 38% in December, from $7.99 to $10.99, no doubt causing higher churn. Disney hopes to offset this with its new ad-supported “Disney+ Basic” tier which will run $7.99 per month. Hulu will increase by $1 per month to $7.99 and ESPN+ will increase by $3 per month to $9.99 as previously announced. Colin and I explore all these changes and what impact they’re likely to have (and Colin has a nice recap of the changes).

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Late last week Disney told its Hulu + Live TV subscribers that Disney+ and ESPN+ would be bundled starting Dec. 21st, and that their rate would be increasing by $5 per month. Coming off an anemic fiscal Q4 ’21 in which Disney+ added just 2.1 million subscribers, the lowest by far since launching in late 2019, the intra-company move meant the automatic addition of 4 million Hulu + Live TV subscribers to Disney+’s total in one magical wave of CEO Bob Chapek’s wand.

I received a number of emails from VideoNuze readers to the effect of “that kind of corporate trickery doesn’t feel like a positive sign for Disney+.” I don’t dispute that there’s merit to that line of thinking, but I’d discount it. The step up in Disney+ subscribers in fiscal Q1 ’22 will be so delineated that it means Wall Street won’t give Disney+ any credit for it because investors are tunnel-visioned on Disney+’s organic growth heading in 2022 (that’s kind of what happens when an SVOD service goes from a standing start to 118 million subscribers in less than two years…expectations become quite high).

I’d assert that the tunnel vision on Disney+’s growth is causing under appreciation of what may be a far more important driver of Disney’s decision to bundle Disney+: Hulu’s burgeoning opportunity in connected TV advertising.

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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.

This week Colin and I parse Disney’s “Black Widow” opening weekend numbers, building on my analysis from yesterday. We agree that it is premature to extrapolate much from “Black Widow” and anyone doing so is on slippery ground. On the one hand, Disney getting 45% of its opening weekend from Disney+ PVOD is very impressive; on the other hand, it is far from definitive proof that streaming’s role will be robust in the first release window going forward.

The backdrop to all of this is of course consumers’ decision-making about whether to stay home and watch any of the myriad streaming originals available in the current “Peak TV” era, or choose to return to the theater. Inevitably, we observe the sizable role that quality plays in this decision-making process. Sadly, streaming TV and movies are going in completely opposite directions on this front, with the former getting relentlessly better and the latter getting relentlessly worse. I believe this alone is a key contributor to consumers choosing to stay home, as I wrote last week in “5 Reasons Going to the Movies is Facing an Irreversible Demise.”

Please let us know what you think!

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I’m pleased to present the 538th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.  

Disney reported its fiscal year and Q4 results yesterday, with the highlight being that Disney+ had 73.7 million subscribers at the end of the quarter. Coincidentally, yesterday was exactly one year since Disney+ launch. Disney had initially forecast Disney+ would reach 60-90 million subscribers by 2024, so it is already at the midpoint.

Colin and I dig into the Disney+ numbers, along with its average revenue per paid subscriber, which is still relatively low by SVOD standards. We also discuss results at Hulu and ESPN+, both of which also had a strong Q4 and a strong fiscal year 2020. Overall Disney seems to have successfully pivoted to the direct-to-consumer model and is now investing heavily behind it. More details will be revealed at its investor day on December 10th.

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I’m pleased to present the 509th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia. We wish all our listeners well and hope that everyone is staying healthy.

First up this week, we discuss the success of Disney+ which now has 50 million paid subscribers, less than 5 months since launch. Both Colin and are impressed with the growth, which has been remarkably steady on an average daily basis. Disney+ is clearly way ahead of its forecast of 60-90 million subscribers in September, 2024. Colin thinks there may have been an “under-promise, over-deliver” approach in forecasting. Regardless, Disney+ looks like it’s in a strong position.

We then turn our attention to Quibi, which launched earlier this week. We both like the app and think it’s quite functional. We also recognize that we’re not in the target audience, so the content isn’t necessarily for us. The big issues are that Quibi needs to be on connected TVs to give viewers more flexibility, and also a tier of free content (past the 90-day trial), to serve as an on-ramp for subscriber acquisition. Quibi is competing against an abundance of free alternatives; while it will get many trial sign-ups, conversion to paid will be the key challenge.

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With people spending more time at home due to the virus, there has been a ton of speculation around what impact this will have on streaming consumption. For example, based on prior disruptive incidents, Nielsen estimates viewing could increase 61%. WURL released data that it saw 7%-44% regional increases on its platform last weekend. A message I received yesterday from SpotX said its experienced a 16% increase in video ad inventory across their entire global marketplace. So the data suggests increases, the range of them is pretty wide.

A sub-question within the “streaming is surging” speculation is how it affects AVOD vs. SVOD services. Even before the virus the dynamics in both categories were fluid. AVOD services are benefiting from multiple tailwinds: cord-cutting, CTV-based viewing, targeting, content proliferation, etc. SVOD services were proliferating, with new competitors like Disney+, Apple TV+, Peacock and soon HBO Max (Quibi could be included too, although its mobile-only). From my perspective, the new competition made incumbents like Netflix look vulnerable. I calculated there was a decent chance Netflix would actually lose subscribers in its US/Canada region in Q1, which would be unprecedented.

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Sorry VideoNuze readers, my head is spinning again, and this week it’s not just because of the stock market’s wild swings or the drama around the coronavirus. Rather, it’s because yesterday morning, while waiting in the doctor’s office, I read the Wall Street Journal article “Golf’s PGA Tour Gets Big Boost in TV, Streaming Rights.” The article described how ViacomCBS, Comcast and Disney are going to pay the PGA Tour over $700 million per year, up from the current $400 million per year, in a new nine-year media rights deal.

That means the total value of the deal would be $6.3 billion. Add that to the 12-year, $2 billion international rights deal the PGA announced with Discovery in June, 2018 and that’s $8.3 billion in TV money coming to the PGA over the next decade - a good chunk of which will go to its players. 

The deal essentially means leaving the status quo of CBS, NBC and Golf Channel handling live and weekend coverage, with ESPN+ taking over streaming from the PGA itself, which has worked with NBC Sports Gold and Amazon Prime. ESPN+ will provide 4,000 hours of streaming coverage per year across 36 PGA tournaments.

I realize that the PGA striking a lucrative media rights deal may not mean that much to many VideoNuze readers. But to me it does, at both a personal and professional level. I am a golf fan; I’ve been watching golf on TV and playing the game since I was 12 years old. For 99.99% of the world, watching golf on TV is akin to watching paint dry. Even for golf fans it is something that is hard to do without multi-tasking (e.g. sending emails, texts, etc.).

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