PARQOR Monday AM Briefing #36
The stories and trends in OTT streaming you *need* to know for this morning & the week ahead
You are receiving this week’s Monday AM Briefing from Substack (and not Mailchimp) because I will be sending all PARQOR mailings from this Substack - parqor.substack.com - for the next two to three months (Apologies to readers of Mic Drop #16 for having to read this again).
The short, non-technical reason is because the existing WordPress backend for PARQOR.com is creating too many pain points and inefficiencies for me to list. With the saying, “never let a good crisis go to waste”, I am going to rebuild PARQOR.com.
How will this move impact you?
Positively, because you will get more content as part of this Substack subscription:
The Monday AM Briefing
Tuesdays or Wednesdays Member Mailings (the intro paragraphs, full access for members); and
Friday Mic Drop
Also, a single destination for all mailings is easier for subscribers.
All PARQOR Members will be getting the full Member Mailings for free from this Substack as part of their paid subscription, for as long as they continue as monthly or annual Members. Members will now be able to read the entire mailing both in their email inboxes and online at parqor.substack.com
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The heavy lifting will be on my end, managing paid Member subscriptions and any changes to Monday AM Briefing subscriptions .
My guess is if there is anything I will need to ask for your understanding and assistance with, it will be reconciling the back-ends of Substack and Memberful.
Lats, I created a coupon 90DAYS on both Substack and Memberful that will give a 33% discount for one year or $33.50/month, to any subscribers wanting to upgrade to Member Mailings.
A quick essay on Hulu after Q1 FY21
Disney’s Q1 Fiscal Year 2021 earnings brought us the news it is reaching 95MM subscribers (NOTE: I believed they would announced they crossed the 100MM threshold), and that its Average Revenue per User (ARPU) is trending lower, primarily because 30% of its user base is from India.
The other notable headline was Hulu SVOD’s quarterly growth, up ~11% to 35.4MM from 32.5MM in Q3. Why was it notable? Because it was lower than both Disney+’s growth (up 29% to 94.9MM from 72.7MM) and ESPN+’s growth (up 17% to 12.1MM from 10.3MM). But, it is growing.
On the one year anniversary of Hulu’s release of High Fidelity, it is worth taking note where Hulu sits at Disney. The reality is, Hulu is and will remain a U.S.-only service. There will be no global distribution of the Hulu app, or of original and library content owned by Disney via the Fox acquisition on Hulu. Instead, that content will be distributed globally through Disney’s new Star and Star Plus services.
Comcast still owns 33% of Hulu, and has the option to sell that share in 2024 at a total-company valuation of $27.5B or whatever Hulu is appraised at in 2024. That means, Disney is financially and strategically dis-incentivized to grow Hulu outside of the U.S., while Disney is incentivized to grow Star.
I focus on High Fidelity because it was the first of Disney’s adult streaming fare to go to market directly on Hulu. Despite a big star turn from Zoe Kravitz, critical praise, and some strong writing, High Fidelity was not renewed for a second season. As I wrote to Observer’s Brandon Katz in November for this article:
In Disney's hands, the production got caught up in a debate about how family-friendly Disney+ should be and which content should be distributed. It lost that debate, was distributed on Hulu instead, but the marketing never seemed to communicate why High Fidelity was a must-watch on Hulu's platform. High Fidelity in Netflix's or even pre-Disney Hulu's hands probably would have had edited in post-production more for social sharing (which Hulu has): more GIF-able moments, more clips to share on YouTube, and more marketing of the characters so that social audiences identified with different characters as entry points. Neither Disney nor Hulu never communicated that it was fully invested in getting audiences engaged with the show, they didn't really engage with it, and it was not renewed for a second season.
I don’t recall an instance of Netflix undermining the marketing of its own content (…but it’s not clear how we would know that if it ever happened?), and Netflix aims for wins or “big messy losses where we learn how to succeed better the next time” (as Co-CEO Ted Sarandos is quoted in Co-CEO Reed Hastings’ No Rules Rules).
But Netflix’s model is built to find audiences for its content, both on-platform and off-platform (“ubiquitous access”). This is true with content it did not produce but licensed after that content underperformed elsewhere (e.g., Her from Lifetime, Cobra Kai from YouTube Premium, and now Kingdom from DirectTV).
With Disney-owned adult content now being distributed on Star, one has to wonder whether High Fidelity will have a Netflix-like success story via Star, like Cobra Kai on Netflix. Meaning, High Fidelity will perform better because Zoe Kravitz may be a bigger star globally than in the U.S. because she has been in so many hit movies globally (Mad Max: Fury Road, Big Little Lies, Fantastic Beasts: The Crimes of Grindelwald, The Lego Batman Movie, The Batman (upcoming))?
We won’t have many data sources for High Fidelity’s performance on Star, except for social chatter, third-party analytics companies, and the trending section of the Star app. But if High Fidelity emerges in this section, it will offer two valuable signals:
Disney has learned its lesson from the shortcomings of High Fidelity’s U.S.-only roll-out, and
In addition to being at 50% of Netflix’s global scale with Disney+, it will also be closer to Netflix’s “ubiquitous access” model.
Must-Read Monday AM Articles
In Mic Drop #16 I wrote about the news that Game of Thrones writers David Benioff and D.B. Weiss will be producing the adaptation of Pulitzer Prize-winning novel The Overstory for Netflix, and what it implies for their “jinxed” production of The Three-Body Problem in China after the murder of the lead producer by poisoning in December.
Back to Disney, Business Insider’s Travis Clark has a good post on franchise building at the biggest media companies in the streaming era. As I published PARQOR's "Learnings from OTT streaming in 2020, Predictions for 2021", PDF here), Netflix’s inability to establish franchises, to date, remains the pain point on which it seems most focused. There was one big announcement on that front: Brian Jacques’ Redwall books are being adapted into a feature film and TV series in a new rights deal between Netflix and Penguin Random House Children. The fantasy novels have sold 30 million copies globally.
CNBC wrote about how Hasbro’s toy business has been benefiting off of Disney+ streaming at a time when blockbuster movies in theaters would otherwise be driving toy sales.
Tara LaChappelle at Bloomberg focuses on Disney+’s declining ARPU and asks, “Disney+ Can Compete, But Can It Make Money?”. Meanwhile, Tom Dotan at The Information wrote that in Netflix’s annual 10-K filing, “Netflix revealed that the company slashed spending on advertising to $1.45 billion from $1.88 billion globally in 2020”. ($ - paywalled) In other words, Netflix can slash spending and still grow.
Variety has a good piece on the challenges of customer acquisition at legacy media companies as they shift from being media companies to Silicon Valley-type tech companies. Notably, it highlights how “there’s a strong feeling” on Wall Street “that clear winners (beyond Disney Plus) and losers will emerge in short order.”
Both CNN’s Frank Pallotta and Vulture’s Joe Adalian wrote about the threat of churn in the customer acquisition equation. Pallotta asks, “is paying for a slew of services economical, or have we hit a streaming saturation point?”. Adalian focuses on the discount deals being offered by Disney+, HBO Max, ViacomCBS, and Discovery, and wonders “we are quite possibly living through what will soon be known as the good old days of streaming discounts”. Forbes’ Paul Tassi writes that with Disney+’s weekly rollout schedule, “soon enough, I know I may never go a week without [not using Disney+ for a few weeks], given what’s to come.”
Speaking of bundles, there was confusion around ViacomCBS’s announcement for Paramount+, specifically its distribution on Apple TV. First, 9to5Mac reported the CBS and Showtime bundle no longer available through Apple TV app. But then Paramount+ ran the ad below over the weekend. ViacomCBS is facing lots of questions about its Paramount+ launch, this doesn’t help. Bloomberg wrote about how “the new Paramount+ has some holes”, and this confusion is another one of them.
HBO Max content chief Casey Bloys gave an in-depth, must-read interview with The Hollywood Reporter about the programming strategy for Game of Thrones and DC IP. HBO Max announced it will launch in 39 Territories In Latin America in June 2021. It also unveiled its first two original Latin American productions for HBO Max: Argentine freestyle battle series Días de Gallos and Mexico’s Bunker, billed as a half-hour acid comedy. HBO Max also debuted a new generational drama follow-up to join Euphoria with a trailer for genera+tion.
Apptopia reported that Discovery+ outpaced HBO Max in first month of mobile downloads. Discovery+ announced a content and advertising partnership with Snapchat that will bring the best Olympics content and coverage from Discovery+ and the media giant’s Eurosport network to a new Eurosport Olympics daily show on Snapchat’s Discover platform (Free - registration required). Discovery also made an interesting move with its Magnolia app with Chip and Joanna Gaines, rebranding the Magnolia app into a direct-to-consumer platform that will be a hybrid of a streaming service, online shop and MasterClass-style workshops.
Business Insider dove into how OTT brands are trying draw attention on TikTok, by blending video ad buys, sponsored influencer posts, and uploads of their own clips and "sounds" to the accounts they manage on the app. ($ - paywalled)
Sports was a big theme in headlines last week. The Super Bowl fell to its lowest lowest numbers in 15 years, and issues with CBS All-Access left Front Sports Office to conclude, “CBS was not ready for its own Super Bowl blitz”. On The Athletic, Richard Deitch attempted to answer why Super Bowl viewership declined ($ - paywalled).
Disney CEO Bob Chapek told analysts over the earnings call that Disney is cautious about its willingness to pay huge fees for a new NFL TV rights pact as negotiations heat up between the league and its incumbent network partners and ESPN. TV Answerman’s Phillip Swann dove into how the bidding will play out for the first big deal to come up, DIRECTV’s exclusive deal to carry the NFL Sunday Ticket, after the 2022 season.
Lots of activity in the European football broadcast rights. Revenues from football’s domestic broadcast rights deals are expected to fall across Europe’s top leagues this year, due to a lack of competition between broadcasters. DAZN is leading the race for rights to screen Italy’s Serie A matches over the 2021-2024 seasons in a challenge to the country’s dominant pay-TV player SKY. And, La Liga and Amazon agreed to a distribution deal that will see the Spanish soccer league’s 24/7 English-language channel made available on Prime Video Channels in the UK.
DAZN has emerged with a renewed focus on expanding to the global market, and is looking to local and niche sports streaming rights is looking to local and niche sports streaming rights.
For the next Summer Olympics, NBC plans to pre-empt an entire day of programming on the opening day , offering a telecast of the early ceremonies as they happen live on July 23, between 6:55 a.m. ET and 11 a.m. ET.
It was a big week in AVOD and CTV advertising. Fox CEO Lachlan Murdoch told investors he expects Tubi revenues to more than double and exceed $300 million in the current fiscal year. Last Friday, Tubi exclusively debuted 2020 Sundance selection "Beast Beast", in a move typically reserved for SVODS .
Mediapost offers “5 Reasons Why Apple's Limiting IDFA Is Very Good For CTV” (free - registration required), and Wired breaks down why banning ad targeting “may be the single best way to fix the internet”. London-based research firm Omdia reported that monthly active users increased for AVOD, but so did the frequency of viewing, highlighting a greater conversion rate to daily usage.
There’s a fun conversation going on over at the Dithering podcast and Daring Fireball about the future of Apple TV hardware. John Gruber has a good summary of it.
Last, Reelgood released an interesting chart about exclusive content on streaming services (below). Netflix is surprisingly high, Amazon is notably low (which makes its most recent Donald Glover, Phoebe Waller-Bridge Mr & Mrs. Smith series announcement particularly notable).