PARQOR Monday AM Briefing #45
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.
The 90-day window for the offer expires next month on May 16. Click below for discounted access to last week’s Member Mailing, “An Evolving Tension Between Data and Context in AVOD”, and all educational resources on the Five Frameworks.
A Short Essay on Apple TV+
In last week’s Monday AM Briefing, I highlighted Kara Swisher’s interview with Apple CEO Tim Cook on the Sway podcast as one of three “must-listen” podcast interviews.1
I have been watching an unusual amount of Apple TV+ lately, which started with a second viewing of The Morning Show, and I just started the second season of For All Mankind. I loved Ted Lasso, and I am excited for the special episode of Mythic Quest, a show I enjoyed and wrote about last year.
I enjoyed The Morning Show more the second time. Oddly. I found it to be a better show because I understood the characters better from having watched it the first time.2
I am enjoying For All Mankind as a special, once-in-a-generation show. Its imagination is extraordinary, and the History major in me is fascinated by the decisions the writers made when creating an alternate history of the U.S. with “what if” scenarios had the Soviets indeed beat the U.S. to land astronauts on the moon.
Recently, I have been trying to reconcile my enjoyment of these shows with my Curse of the Mogul take on Apple TV+. If $6B in annual spend is resulting in objectively great shows and movies (75+ as of this month) with Hollywood stars like Reese Witherspoon (The Morning Show), Jason Momoa (See), Tom Hanks (Greyhound), and Tom Holland (Cherry), then why are they not disclosing either TV+ subscribers/Monthly Active Users? Why are they not breaking out TV+ revenues in Services Revenues ($15.8B in Q4 2020)?
Apple’s story for TV+ does not involve any traditional strategic, financial or management appraisals. Instead, it repeatedly highlights the intangibles of its star-studded, award-winning content library.
They recently extended one-year free trials given out with hardware purchases through July, after those trials were set to expire between February and June. The service is effectively free now, and likely for the foreseeable future.
On this point it is worth revisiting what Cook told Swisher about TV+:
Kara Swisher
Right, how do you compete, though, against a Netflix? And you’ve got all these streamers, while HBO Max is making all this content. You have money. That’s what you have the most of, I think, compared to all of them.
Tim Cook
Well, hopefully, we have good ideas. But Kara, I don’t see it as a zero sum game. I don’t see that if a given user buys Netflix, that they can’t also buy Apple.
Kara Swisher
And you think content is critical as an area of focus for Apple.
Tim Cook
Yes, and we’re putting all of ourselves into it. It is not a hobby. It is not a dip your toe in. Because it’s an original focus, we don’t instantly have a catalog with 500 things in it. We’re going to build over time. We’ve gotten over 300 nominations now for awards and have won 80.
I think this sounds and reads like a reasonable answer to critiques of TV+: Apple is taking their time building out a library of original content (they just hired Jessie Henderson, former executive vice president of feature films for WarnerMedia’s HBO Max, to “ramp up” these efforts), and they can point to success with awards nominations and wins.
But, I still can’t reconcile these answers with the marketing of Apple TV+. Its best marketing message to date is that it is free, and that it will continue to be effectively free for the foreseeable future (NOTE: I imagine they will extend the trial after July, too, simply because they don’t have the catalog, yet.)
The catalog is already quite good on its own - and in the cases of Ted Lasso and For All Mankind exceptionally good - even if currently at 15% of its stated objective of 500 titles. With former HBO CEO Richard Plepler signed to a five-year deal with Apple, and an exceptional lineup of content on the way, odds are the catalog will only get bigger and better and users like me will be chatting more about the service.
There is a red flag, though: as much as Apple understands how to market hardware to consumers unusually well, it does not seem to understand how to market content to consumers. The open question is, will Apple ever figure out content marketing for TV+?
I am skeptical because of something Netflix Co-CEO Ted Sarandos said in his interview with the SmartLess podcast when comparing network TV production business logic to Netflix’s production business logic [00:32:23]:
And sometimes, you know, relative to what it costs to make a TV show or movie, sometimes you don't get enough people to watch it. And eventually, if you do that too often, you don't have enough money to make new shows. So the balance of this is just relative to what it costs. Can we get people to show up? Maybe what's unique about this relative to TV is, you know, it costs X amount of money to make a half hour of network television, and everyone has to like it.
And this has got to be like, you know, we can make a show for a couple hundred thousand people if it's economically sensible. We can make a show for one hundred million people if it's economically sensible. One thing that we get to look at sometimes it's super helpful is among the people who push play. There's a million reasons that sometimes the show does doesn't connect with the public. And everybody, everyone missed a great show. But among the people who push play, did they like it?
And then they like it enough to watch the whole thing that they watched four episodes of one night because they couldn't go to sleep. They loved it so much. Those are really positive signals, even if the big audience didn't show up in the first season that we used to make that second season.
And compare it to this lone mention of Apple TV+ from Apple CFO Luca Maestri in its Q1 2021 earnings call:
Our new service offerings, Apple TV+, Apple Arcade, Apple News+, Apple Card, Apple Fitness+, as well as the Apple One bundle are also contributing to overall services growth and continue to add users, content, and features.
From a consumer perspective, even if Apple and Netflix are not competitors, only Netflix communicates a business logic that reflects how much it cares for content that audiences love. Even if Apple’s content ambitions are promising and exciting, filled with and fueled by Hollywood star talent, both the Tim Cook interview and the Q1 earnings call don’t have a powerful message about why audiences should care.
Instead, it all suggests corporate hubris from Apple. The Curse of the Mogul framework is about the hubris of a company believing that the media industry is not subject to traditional strategic, financial or management appraisals, and therefore the market will respond more favorably to disclosures involving intangibles like creative talent and artistic product. Apple’s story for TV+ has been only about the intangibles of its star-studded, award-winning content library, and how these intangibles contribute to “overall services growth”.
But the popular and critical successes of recent shows like Ted Lasso, Mythic Quest, and For All Mankind suggest they understand something tangible about their streaming audiences. Netflix, and even Disney, continue to communicate by both word and deed that the best streaming model focuses on understanding and empathizing with target audiences thoroughly, and producing and distributing the content that audiences will love.
Apple’s message is it has an exciting line-up of content for consumers, but none of the messaging suggests why consumers should be excited. 1.6B device users in 100+ countries worldwide saying little to nothing about Apple TV+ shows when the service costs them $0/month at least and $4.99/month at most reflects an ongoing disconnect.
The longer this disconnect between Apple and its consumers continues, the real loss will be for consumers who continue to miss out on the library of content Apple is building at TV+.
Why doesn’t Apple understand which content its audiences love?
Must-Read Monday AM Articles
The biggest news last week - which I will be diving into for Members tomorrow - was the announced Univision-Televisa merger. The Hollywood Reporter has a good summary of Univision CEO Wade Davis’s call with analysts to break down the thinking behind the deal, and its objective of building a global Spanish language streaming platform.
The Hollywood Reporter also offered a good behind-the-scenes of Netflix’s deal with Sony, and IGN’s Julia Alexander offered a good behind-the-scenes of why Lionsgate and STARZ walked away from the deal.
This TV[REV] opinion piece argues that for Netflix, the deal “is absolutely a steal, even with the billion-dollar pricetag.” Matthew Ball argues “Underreported in the Sony-Netflix film deal is that PlayStation is probably the most successful creator of new global IP over the last twenty years, and is now leaning hard into film/TV adaptations.”
What’s On Netflix’s Kasey Moore dove into all of the big movie studios and where their first window rights have ended up and which ones Netflix could possibly get. Observer’s Brandon Katz dove into various scenarios of future consolidation, too, and “who may be the eventual winners of the so-called streaming wars”.
Netflix also visually upgraded its Kids profiles, and announced “a crop of upcoming projects in Spain”. according to this piece in Variety, “Streaming giants have prompted a fundamental shift towards non-English scripted content conquering more global eyeballs”. South Korean film and Japanese anime are are emerging as two key content categories streamers are investing more into.
Last Bridgerton showrunner Shonda Rhimes previewed Bridgerton Seasons 3 and 4 for Vanity Fair, and reacted to the uproar over the departure of Rege-Jean Page.
The Hollywood Reporter dove into the growing popularity of family-friendly, “teen clean” genre, and Variety dove into the “major themes influencing YA scripted production.
Amazon CEO Jeff Bezos wrote his final Letter to Shareholders as CEO last week, where he announced that Amazon Prime has 200MM subscribers. The Hollywood Reporter’s Alex Weprin dove into the 10-K annual report, found that spent $11B on video and music content last year, and estimated that $2.5B was on music, leaving $8.5B of that spend was on video.
It was also revealed that one season of Amazon’s Lord of the Rings series will cost $465MM.
The New York Post had a long dive into “Amazon’s plan to transform the sports broadcasting world”. With streaming services dropping Regional Sports Networks, it has been difficult for MLB fans to watch games. On Opening Day, 22 MLB teams were available to be watched only on one streaming service, AT&T TV, and the next largest available, eight (8), were on Fubo. Analyst Patrick Crakes argues this is a sign of “the Great Rebundling”.
Young adults are cutting back on TV time. The Streamable reports WWE fans and English Premier League fans are unhappy with the viewing experience on Peacock.
Paramount+ shed some light on its international streaming strategy to Deadline. Analysts are skeptical Paramount+ can make a dent, and some like MoffettNathanson are looking at Paramount+ and asking whether streaming can be a better business for ViacomCBS than Pay TV.
The VAB, an industry group that represents the TV networks to Madison Avenue, is demanding that Nielsen, the arbiter of TV ratings, submit to a third-party audit from Ernst and Young. The move is the next step in an ongoing pandemic-related standoff between the two over pandemic rating estimates.
Ampere Analysis estimates there are nearly 340MM streaming subscriptions, with 57% of Internet users saying that SVOD services are the main way they watch TV and movies.
Plex, a competitor to ViacomCBS’s Pluto TV and Fox’s Tubi, raised $15 million in new capital. It has more than 25MM registered users globally, but doesn’t disclose monthly active users. Forbes published a profile of the CEO of Chicken Soup For The Soul Entertainment, which has been buying up lesser known streamers, film distribution and production companies with an eye towards also becoming a player in AVOD.
The other two were Netflix Co-CEO Ted Sarandos on the SmartLess podcast, and WarnerMedia CEO Jason Kilar on Vox’s Recode Media podcast.”
Yes, that it is a back-handed compliment.