Monday AM Briefing #56
The stories and trends in OTT streaming you *need* to know for this morning & the week ahead
A Short Essay on Loki, Starz and “Pull Forward Impact” in Q2
Two weeks ago I wrote about how the “pull-forward impact” of the pandemic was leading to growing market chatter about churn in streaming. This past week we saw different market chatter, less about churn and more about subscriber demand for individual shows.
There were a handful of notable developments from Starz and from Disney suggesting that one market trend to emerge as the “pull-forward impact” recedes is “pause” becoming an increasing user behavior. Meaning, users are not necessarily churning out of streaming services at scale, but they are willing to “pause” their subscriptions for months at a time.
Parrot Analytics reported that over 12 months ending June 19, a STARZ original series:
attracts over 5x the US audience demand of an average TV series and 5.38x the global TV series demand average;
a STARZ original is 6.1% more demanded internationally than it is domestically; and,
on a global scale, the average STARZ original is 12.6% ahead of the next-best performing platform’s average original series.
The data supports my frequent “genre wars” lens on Starz. As I wrote in Mic Drop #15: STARZ's finds wins in the "Genre Wars” back in February:
…Netflix’s bets on genre and target audiences are more complex than a head-to-head battle in a “genre war”. This allows the smaller services like STARZ and AMC and Shudder [to] find strategic and financial wins by being genre- and target-audience-focused. Notably, neither of the smaller services is betting on the Romance genre.
Netflix and STARZ are not engaged in “streaming wars”, they are engaged in infrequent “genre wars”. STARZ is proving genre to defensible territory and a good business to be in within the streaming marketplace.
Parrot’s data is strong evidence that services like Starz and AMC Networks can find wins despite Netflix’s dominance with genre- and audience-focused strategies.
Disney+ & Loki
Disney also has had success with its bets on more niche Marvel characters like The Scarlet Witch, The Falcon, and now Loki. Those characters service a passionate, post-Avengers Marvel audience.
But, Samba TV found that:
Loki “started out with numbers greater than previous Marvel Studios outings “WandaVision” (759,000 first-day viewers) and “The Falcon and The Winter Soldier” (655,000 day-one viewers), but seems to have quickly lost steam.”
There is a caveat to these numbers, as The Streamable’s Jeff Kotuby writes:
Granted, these figures can be taken with a grain of salt — they are only indicative of TVs that have Samba’s third-party software enabled — which only covers a fraction of the Disney+ subscriber base.
That said, this wasn’t the only piece of research to emerge suggesting that viewership has stagnated with Disney’s Loki. Wayne Ma and Jessica Toonkel of The Information reported:
U.S. subscriber growth at Disney’s Disney+ streaming service slowed sharply in the past few months, according to internal data reviewed by The Information, with most of the growth in the service this year coming from India and Latin America.
The implication is that the past four episodes of Loki have done little to excite existing and new Disney+ subscribers worldwide.
But, there was some data pointing to Loki having a positive impact for Disney+, reported by Bloomberg:
Disney+ recorded a 39% increase in app downloads, and its 1.11 million downloads were the largest total of the week. It also led with an 11% jump in streaming sessions, or users launching its mobile app, in the week ended June 27.
If the signals for Starz’s bets on more niche content in streaming are strong, the signals Disney’s have been strong but veering into mixed.
Starz, Loki & Churn
I highlight these two developments because they hint less at a story of a service under-performing and more about “pause” (which I wrote about back in December 2019). “Pause“ happens when subscribers churn out for short periods of time because their target demographics are loyal to the content, first, but are not loyal to the streaming service.
Starz has openly discussed and embraced “pause” as a challenge with its subscription base in its fiscal Q4 earnings call, and one which they are solving for with the strategy of “layer[ing] in multiple shows on every week, week-to-week, all the 52 weeks.”
Disney has yet to do so but the data, above, on Loki and Disney+ sign-ups suggest symptoms of pause.
A story of “pause” is not a terrible one for Disney, if it’s managed well. But “pause” is a very different story of consumer engagement than the low-churn story Disney has told to date. Pause is not growth and it’s not churn, either.
Pause is definitely not Disney’s story of a runaway streaming success projected to hit 230MM to 260MM subscribers by 2024.
Five years after launching its OTT app, Starz has figured out what pause is and how to solve for it.
As the “pull-forward impact” of the pandemic recedes, Disney may be telling investors how it is figuring out “pause” in subscribers’ behaviors, and it may not be the only streaming service in that position in Q3.
Must-Read Monday AM Articles
Over the past month and a half, streaming to the TV viewing has more than doubled in the U.S. and L.A.-based E-Poll Market Research found that more Americans say they expect to keep watching more TV and streaming services after the coronavirus crisis is over.
The success of Formula 1: Drive to Survive on Netflix isn’t reflected in Nielsen weekly SVOD ratings, but Nielsen Sports data shows interest in the series last year grew by 73 million in ten of the F1’s key markets.
Web Smith of 2pm Commerce wrote about how “Netflix is Formula 1’s unsung hero and it may succeed in changing the landscape of America’s niche sports interests”. Formula 1 recently signed a $100MM cryptocurrency sponsorship.
Other analysts are starting to speculate that annual net adds will become “a decelerating percentage on the growing base”.
Netflix, HBO and YouTube face the prospect of having to allocate 1.5% of their income in Spain to help fund the public broadcaster RTVE. Netflix now leads in European scripted content, according to Ampere Analysis.
After robust upfronts for Disney, ViacomCBS, WarnerMedia. and NBCU, all who saw heightened demand for streaming, “attentiveness to commercial cadence has taken on new importance.”
A Media Operator’s Jacob Cohen Donnelly argues that now that Google has delayed its own self-imposed deadline for getting off the cookie, legacy media publishers now have more time to get first-party data right.
Amazon’s new Fire TV head Daniel Rausch told Protocol’s Janko Roettgers, “When you look at the whole Prime Day period, including the lead up and then through those days, [we sold] more TVs than we've ever sold before.”
Sony and IMDb TV have an agreement for a limited, monthlong run of the first two seasons of cancelled ABC show For Life. Based on how it does, For Life could potentially get an order for a third season as an IMDb TV original.
Observer’s Brandon Katz wrote about the difficult choices facing studios with both a faltering franchise and a lack of fresh billion dollar properties.
Wonder Woman 1984 director Patty Jenkins opined on day-and-date releases in an interview: ““Streaming is great, but everybody is chasing it for financial reasons, and I don’t think the financial support is there to hold up the industry the way that it is”.
Alex Sherman of CNBC wrote about the implications of moves by TikTok and Instagram to blur their competitive barriers with Roku, YouTube and streaming services.
The Secret Life of Pets 2 is leaving Netflix as perhaps as its most popular movie, as “no other movie since the Top 10 list’s inception has spent as much time on the list.”
For the upcoming 48th annual Daytime Emmy Awards, Netflix has walked away with the most kids programming nods (56 ), Disney has 35, followed by Apple TV+ (16), Nickelodeon (13) and HBO Max (12).
Last, Sinclair Broadcasting Group has made an offer to acquire NBCUniversal’s seven regional sports networks (RSNs), but won’t bid on Mets broadcast channel SNY. It’s like part of the $600MM debt raise I wrote about for Members last week.