PARQOR Monday AM Briefing #38
The stories and trends in OTT streaming you *need* to know for this morning & the week ahead
Good morning,
First, a reminder that 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.
Second, 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 Short Essay on Paramount+
Observer’s Brandon Katz interviewed me for two pieces this past week, one of which was for an initial reaction to ViacomCBS’s Investor Day Paramount+ presentation. I was active on Twitter during the presentation (here is my “harshest” take), and Brandon does a good summarizing our exchange on it.
The article concludes with this quote from me:
“Sports plus breaking news plus kids plus Pluto is a business,” Rosen surmised. “Everything else they’re better off selling to Netflix.”
After I read this published online, I had that instinctual gut check and wondered whether this was a quote I might regret.
Then I remembered my Member Mailing from two weeks back, when I wrote about Hulu’s A Teacher, as the source of that strong opinion. I was bothered, then, by how A Teacher is a Golden Globes nominee about which Hulu refuses to share any data, despite having 39.4MM subscribers. Hulu has only told us A Teacher is “FX on Hulu’s most-watched original”.
I concluded:
…it is reasonable to wonder whether distribution on Star will help find a bigger audience for A Teacher, or whether there are deeper issues at Disney around marketing this type of content to more adult audiences. The degree to which Disney will share the success of Hulu shows on Star will be a helpful indicator in understanding whether Disney indeed has a pain point with adult-oriented content in streaming.
The Paramount+ presentation delivered a three-hour tidal wave of adult-oriented movies and series (excluding the Nickelodeon part, of course). Over 50 original series will premiere on Paramount+ over the next two years.
A key challenge for ViacomCBS, to date, has been finding target audiences at scale for riskier bets with original, adult-oriented content on CBS All-Access (one big bet, Strange Angel in 2018, was canceled after two seasons). This all pointed to a logical question:
if Hulu isn’t sharing data on successful adult-oriented content at its current scale of 39MM subscribers on a sophisticated platform, and
if Paramount+ is launching off of CBS All-Access’s less sophisticated platform, at a fraction of that scale (9-10MM est.), and without sharing data, either;
is adult-oriented content too risky a bet for Paramount+ to make?
One answer emerges from looking at Paramount+’s competition - Disney’s Hulu and Star, and HBO Max - who also are currently navigating and learning whether riskier adult fare can scale on their respective platforms. I concluded in the Member Mailing that, for those three services:
…we are entering a critical few months for Disney’s Hulu and Star, and AT&T’s HBO Max. These months are critical not in life-or-death terms - because both will grow - but rather in terms of whether these platforms can prove to be better at finding target audiences, at scale, for riskier bets on original content.
At 10MM subscribers, Paramount+ faces the exact same challenge with adult-oriented content as HBO Max and Hulu are both wrestling with, each at 4x the scale of Paramount+, and with no guarantees of success for either.1 For all of these services, a lack of transparency seems to be a reliable “tell”.
Because data transparency from market leader Netflix with 200MM+ subscribers informs us that when a riskier, adult-oriented, and Hollywood-produced content that underperforms, like Ryan Murphy’s Ratched, it can still reach 48MM households worldwide. We also know from Netflix that they will share data on foreign originals that have reached the lowest-sized audience that it has disclosed to date, like Japan’s Alice in Borderland at 18MM households.
Riskier bets on adult-oriented content seem better off on Netflix because Netflix has told us with data that they will be, and no other service seems to be figuring out a good data story for their riskier bets on adult-oriented content. As Nielsen’s Top 10 streaming data for acquired shows tells us, even third-party content seems better off on Netflix. This includes ViacomCBS’s Criminal Minds, which is currently #1 on Nielsen, and a revival is in development at Paramount+.
My quote most reflected my surprise that ViacomCBS has not learned from its competition, and pivoted away from these riskier bets on adult-oriented original content.
If streaming services that have greater scale than Paramount+ are struggling with whether to share the data about risky bets on adult-oriented content, ViacomCBS needs to have an answer for how and why Paramount+ will not struggle with the same decisions.
Netflix’s transparency is a market signal that they have figured out how to scale distribution of riskier, adult-oriented content. ViacomCBS’s ongoing reluctance to share data on its adult-oriented series, including at the Streaming Investor Event, seems to be a tacit admission they do not have a similar solution.
If the competition is any indication, they may not have a solution for scaled distribution of riskier, adult-oriented content anytime soon.
Must-Read Monday AM Articles
I also was quoted in this terrific piece from Brandon Katz, diving into “Why Amazon Prime Video Doesn’t Need to Beat Netflix or Disney+”.
Two stories on transparency emerged last week. First, The Hollywood Reporter reported that“More and more Hollywood studios are concealing their box office grosses amid the pandemic and ongoing theater closures, saying they don't want to be unfairly judged for numbers that, in "normal" times, would be considered anywhere from tepid to abysmal”.
Second, Discovery told investors in its Q4 earnings that it has 12MM DTC subscribers. The coverage assumed this meant Discovery+ has 12MM subscribers, but that coverage missed that there were caveats baked in, as I tweeted and as succinctly summed up by Endeavor’s Tavish Zausner-Mannes (below). David Bloom of TVREV also had a good skeptical take on Discovery’s future with Discovery+.
It is also worth noting that Disney CFO Christine McCarthy told investors three weeks ago that Disney “no longer intend to update our DTC subscriber numbers as of our earnings dates” but will continue to provide quarter-end subs.
Dish Network chairman Charlie Ergen told investors his reaction to Discovery+ rollout is “A lot of our customers don't watch Discovery, should we burden every customer with Discovery if they can get it somewhere else?” In other words, as this Deadline piece breaks down, Ergen’s warning is that Discovery+ could affect carriage negotiations.
AT&T and TPG agreed to establish a new company named New DIRECTV that will run AT&T’s video business which includes DIRECTV, AT&T TV and U-verse video services. Some video assets are not included in the deal, including its Latin American video operations, regional sports networks, U-verse network assets and AT&T’s Sky Mexico investment. Wall Street analysts are still wrapping their heads around the complexity of the deal.
Sinclair Broadcast Group also released its quarterly earnings last Thursday, sharing on an earnings call some additional details about its recent deal with Bally’s around sports betting (which the call transcript amusingly mistranscribes as “Valleys”). There was concern from analysts that Sinclair will not be able to hit performance criteria that will earn it additional options in Bally’s.
Also in sports, John Ourand of Sports Business Journal reported that Disney and the NFL reached a broad agreement on a new media rights deal that will see ESPN renew “MNF” and ABC return to the Super Bowl rotation for the first time since ‘06. The increase that Disney will pay is below the other networks — as Fox, CBS and NBC all anticipate the average annual value of their contracts double (NBC in particular).
A lawsuit in Los Angeles Superior court between Bill Nye The Science Guy and Disney revealed Disney has been keeping 80% of the revenue from older shows that it distributes to streaming platforms, leaving only 20% to be available to stars and other profit participants. Attorneys who represent performers in the profit participation lawsuit worry that Disney is “simply grabbing whatever it can based on a tortured reading of contracts that predate the streaming era”.
Lots of announcements came out of Disney last week, in some ways overwhelming the news from ViacomCBS’s investor day. The biggest news was the launch of the Star service in Europe, Canada, Australia/New Zealand (ANZ), and Singapore. The move effectively adds Hulu’s library to the Disney+ service “better monetizes things the company already owns” at no marginal cost. But, its UX needs work (something I wondered about in last week’s Mic Drop)
At TCA, Hulu announced premiere dates for Handmaid’s Tale, Marvel’s M.O.D.O.K. (which has a fun trailer), and a few other original series. Also at TCA, Marvel boss Kevin Feige shared details on the road ahead for WandaVision, Phase 4 of the MCU, and Disney+. Variety interviewed WandaVision cinematographer Jess Hall on how he navigated the script and tying the show to the broader MCU.
WandaVision continues a successful run: Variety Intelligence Platform shared data from connected-TV analytics provider TVision that WandaVision was nearly 81.3 times more viewed than the average title TVision measured across SVOD platforms in January ($ - paywalled). Frank Pallotta of CNN reported that “The rationale behind the midnight PT drop [of WandaVision] is global alignment around a time that works best for content to sunrise across all time zones”.
Disney+ also announced two new shows: first, a sequel to Stargirl, its musical YA romantic drama from last year; and For All Mankind (Apple TV+) creator Ron Moore is readying The Society of Explorers and Adventurers, the first of a potential franchise of projects that will explore characters from Disney parks and classic films. Moore also did an interview the Top Five TV podcast (transcript here).
Cross Screen Media’s Michael Beach has a terrific dive into the data and math on the future of ESPN and whether ESPN+ is a “Winner” for Disney.
PBS is in discussions to expand its product channel fit, including to a new crop of ad-supported video services, and “has plans to turn smart TVs into donation machines that could ultimately make the old-fashioned pledge drive obsolete”.
Janko Roettgers of Protocol does the math on cord-cutting and reports the five biggest pay-TV providers lost a combined 5.5 million subscribers in 2020, narrowly staying below the 5.8 million subscribers the companies collectively lost in 2019. Acxiom reported that Apple TV+ subscriptions for Millenials grew at a faster rate than some other streamers -- nearly doubling from 6.8% in May to a 12.6% share in November of its overall customers
Vice President of Content Distribution at Roku, Tedd Cittadine, spoke to NextTV about Roku’s current market position upon the launch of Paramount+. Meanwhile, Amazon Fire TV and Gaming Boss Marc Whitten has left to join Unity Technologies as general manager of its Unity Create Solutions game development division.
The IAB’s ads.txt standard, a simple method for fighting domain spoofing whereby publishers list authorized resellers of their inventory, is still having difficulty "work[ing] out the kinks specific to TV”.
Non-Fungible Tokens (NFTs) have been getting a ton of buzz. NBA Top Shots are the most prominent, where blockchain technology helps short highlight clips become virtual collectibles licensed by the NBA, folding them into a package with 3D animations and player stats. This Bleacher Report article summarizes the Top Shot marketplace unusually well, and this post is from an investor explaining why he spent $35,000 on “a Video You Can Find All Over the Internet”.
Two good articles on NFTs: one describing NFTs as “a common gathering point for creatives and developers who want to creatively represent digital scarcity, for any use case now.” A second post argues more boldly: “We’re on the precipice of a creative explosion, fueled by putting power, and the ability to generate wealth, in the hands of the people”
Last, I am going to write about AMC Networks in the Member Mailing this week, because its Q4 2020 earnings and its earnings call reflected an unusually successful quarter (year-over-year aggregate subscriber growth of 157%.) The results confirmed my “Genre Wars” hypothesis, and CEO Josh Sapan seems to be walking through most of the PARQOR four frameworks on his call. Sign up to get the Member Mailing in your inbox on Tuesday by clicking on the box below.
AMC Networks also shared that with addressable campaigns in November and December for Volkswagen and a second advertiser on its flagship cable network during national commercial time, it believes “it has overcome many of the difficulties that have kept addressable ads from gaining wider traction on TV”.
Also, ViacomCBS projected streaming subscribers will reach 65 million to 75 million by the end of 2024. This means, some point closer to 2024, Paramount+ is projected to reach Hulu’s current scale.