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.

Starz

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.


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