Archive for SVOD – Page 2

SVODs can’t skip their churn

tablet with SVOD service appsThe Wall Street Journal highlights a story that really shouldn’t surprise anyone with experience in media business – a high level of SVOD subscribers only sign up for the months in which their favorite series are released. “Churn” has been around along as HBO or other premium channels have existed. But, it does seem to bring surprise to SVOD/OTT companies and digital investors who again may have skipped over a lesson which traditional TV has for them.

That churn is at all a surprise is almost as laughable as a recent conference marketing piece. This promotes a keynote by an SVOD representative who will discuss how “TV is becoming the center of our culture.” Becoming??? I realize SVOD companies are young, but do they really have no idea that TV has been the primary shaper of culture since the late 1950s? But I digress…

One of the main drawbacks of the “full season release” strategy in use by many SVOD services is there is no incentive to stay around longer than the month of release. By enabling total bingeing, these services also make it easy for their subs to watch a whole season over one weekend. And if the subs are willing to wait, they can knock off several series in one month. As our local ShopRite stores used to say, “why pay more?”.

Perhaps not by coincidence, Amazon announced last week that it was raising the one-month Prime subscription by 20 percent (keeping the annual subscription the same). Although not directly mentioned, this move no doubt is at least a partial reaction to people dipping into Prime Video month-by-month.

Churn, churn, churn

A certain number of people will always search out ways to reduce their costs. Others can’t be bothered and keep subscriptions forever, even when it’s not being used – making the subscription model work. The digital media services will need to learn to live with this, just like old media has had to for many decades.

David Tice is the principal of TiceVision LLC, a media research consultancy.
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What those PwC-Netflix stories yesterday didn’t mention

Please note the TiceVision blog is on a reduced publication schedule through Jan 2.

Yesterday, there were a raft of stories about a new PwC report that claimed Netflix now equaled pay TV subscribers. This seemed a bit off to me, based on my own research done earlier this year, and my recall of Netflix’s own numbers. For Q3 2017, Netflix reported 53 million US subscribers – roughly 20% of the 250 million adults in the US or, if you assume one sub per home, 40% of US households. Even accounting for churn over a survey period and people sharing passwords, how did, as these articles reported, PwC end up with 73% of Americans being Netflix users?

I decided to dig a little deeper, which many of the reporters seem unwilling – or not aware enough – to do. The digging showed a different picture than painted in many of the articles.

Sample

The first big consideration is that on the PwC page describing the study, it does clearly state that the sample are people age 18-59 who have a household income over $40,000/year – far from a representative sample of all Americans or all households. Perhaps some reporters may have mentioned that, but none of the half dozen articles I read had made that distinction. This is important, since that age range and income bracket would be much more likely to subscribe to have internet in the home and thus able to subscribe to Netflix.

Method

Another aspect not discussed anywhere in PwC’s landing page for the report or the downloaded report itself is the methodology or sample used. I’ll presume it was an online sample. Again, this would not be representative of Americans as a whole and since by definition online sample consists of only internet users, this sample would of course more likely to subscribe to or use Netflix. And no mention anywhere if Spanish-dominant persons were interviewed to be inclusive of “all” Americans.

Terminology

Another issue in the press articles is that the terms Netflix “subscribers” and “users” were used indiscriminately – some used one of those terms, some the other. The PwC report specifically has the term “users” – an important distinction the reporters for some articles missed, as users may or may not be subscribers (in past research I found about 15% of Netflix users say they use other people’s logins). But by using “subscribers,” some of the reporters add to the misinterpretation of the data. And in neither the articles nor the PwC supporting material is how “users” are defined – are these Netflix people “ever” users, regular users, or so forth? Or what is the difference in time spent for Netflix versus pay TV channels?

Always consider the limitations of any report

Words have meaning. Methods have consequences. Firms that publish – and the press that covers – reports such as these should keep that in mind. While this PwC study may show some interesting trends for the slice of the US public to which it applies, it should not be confused as a definitive profile of Americans’ access or usage, which is how many of the press articles presented it.

David Tice is the principal of TiceVision LLC, a media research consultancy.
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WWE beefing up content output

WWE Logo

I took a double-take reading a recent headline “WWE Studios Expands into Scripted Series…”. I mean, isn’t wrestling by definition scripted? What’s the big deal?

It turns out the WWE (World Wrestling Entertainment) is expanding its studio operations to try and take advantage of “peak video.” Moving beyond TV wrestling-related fare, it hopes to  expand into more prestige content. It hopes to do this while still keeping a connection to its roster of stars and the “squared circle.”

This includes a couple of prestige projects. These include a documentary on Andre the Giant for HBO, and a feature starring Dwayne Johnson (aka former WWE star The Rock) that is to be written and directed by Stephen Merchant. A tag team alliance between WWE and powerhouse Hollywood agency WME helps drive this endeavor.

Although not directly mentioned, the WWE’s own SVOD service, The WWE Network, may also be a factor. At a relatively hefty $9.99/month, the service may be finding out what a lot of cable channels have: playing in a very specific niche is difficult, even considering the avid WWE fans who subscribe. Just a few examples are Spike (created as a men’s network), MTV (24/7 music), and Oxygen (women). All had to broaden their content and dilute their niche base to keep growing.

Doubleteam for the win?

While WWE Studios, and the WWE Network, may never go beyond an outer ring of wrestling, they can diversify their content while not tagging out of the wrestling connection completely.

David Tice is the principal of TiceVision LLC, a media research consultancy.
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O Canada, home of a la carte?

Roku with Canadian flag skinThe Hollywood Reporter just published an eye-opening story on the attempt in Canada to push “a la carte” channel subscriptions. In what should be no surprise – but it probably is to some people – the uptake on a la carte has not been impressive. Consumers are put off by increased pricing for their broadband, required equipment, and per-channel fees.

This is an enlightening case study for the USA. In conversations with folks outside our business, and too many within it, the opening assumption is that a skinny bundle with 20 channels should only cost something like 1/10 of a regular, 200 channel pay TV subscription. But there are a couple of things that few tend to consider…

First, in the the case of internet-based skinny bundles, cancelling the “triple play” pay TV subscription to go “broadband only” will result in a much higher fee for broadband service. For instance, Comcast’s low-end Performance broadband-only service has a list price of $75/month (potentially lower for the first 12 months via promos). This doesn’t include any required equipment fees, etc.

By comparison, Comcast offers a base level triple play, with 140 channels, higher speed broadband than the above, and unlimited calling for just $90/month. So a cord-cutter doesn’t “save” $90 a month by switching to a la carte, he or she only saves a small portion of that because of the loss of the bundling discount.

Second, unbundling networks either for pay TV or online skinny bundles means the consumer has to pay the full value of each network. If one uses CBS All Access, which costs $5.99 a month, as a benchmark for a upper tier entertainment network, then six top networks would run a consumer $36 a month. Interested in sports? Those networks are likely to be even more expensive.

Thus for the sake of argument, let’s say a ballpark cost for a broadband-only, a la carte, self-bundled TV service of six top tier networks would run something like $110 a month. Add in perhaps two of the three main SVOD services – Netflix, Hulu, or Amazon Prime @ $15/month each – and now one is at $140 a month. The consumer is able to get exactly what they want, but it’s not saving them much money on a net basis.

Just like buying pizza by the slice, or buying the individual items of a McDonald’s value meal, buying the elements of a bundled product will always cost more than the bundle. This economic logic seems to escape people when it comes to a la carte TV – maybe it’s because TV is such a personal service, or people don’t really consider how they receive TV until they actually do try to unbundle.

Unbundling the future

All that being said, I expect there to be an “a la carte” world ahead – for some people. It may even go down to a la carte at the series level. But I think for many people, “TV” (or premium video, or whatever you want to name it) will continue to be a bundled product, whether it’s provided by the evolved versions of today’s MVPDs or dMVPDs. Most consumers don’t want to worry about 20 separate subscriptions and trying to figure out what streaming service they need to turn on to watch a particular program. There will always be a place in the market for services that make consumers’ lives easier.

David Tice is the principal of TiceVision LLC, a media research consultancy.
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Philo & free equals good reception?

philo logo

Reading the coverage of the launch of Philo’s OTT service in about a half dozen articles, there were plenty of mentions of the lack of having broadcast networks on the service. But none mentioned that – at least on a TV set – it should be quite easy enough to receive those networks in almost any home in the US using an over-the-air antenna. This means Philo subscribers with a TV should be able to replicate most of a basic cable package, with four broadcast nets, PBS, and up to 36 cable networks.

Part of the reason Philo doesn’t carry broadcast is the cost to license those channels on a “live” basis, and also that the media conglomerates that control the broadcast nets also want to package up their various cable networks in the deal. But if subscribers can receive the broadcast nets over-the-air, what are they really missing?

Disney – Freeform and the Disney Kids channels. Presumably ESPN isn’t of interest since the subscriber is choosing a non-sports service. Philo offers Nick for kids’ content, and there is a fair amount of Disney Kids content available to stream without authentication.
CBS – only Showtime (which has an SVOD service of its own)
FOX – The FX networks, Fox News Channel, and the National Geographic networks. FS1, FS2 are sports so don’t matter.
NBC – has the largest stable of cable networks among the broadcast net owners, so this is the biggest loss in terms of number of channels (on the other hand, can you name one series on its highest-rated network, USA?).

Of course over-the-air reception of broadcast networks won’t help if someone is buying this package to predominantly watch via streaming on a non-TV device – a phone, tablet, or laptop. And they’d have to buy a stand-alone DVR to enable time-shifted viewing for broadcast. But it’s not a terrible solution for people who by getting Philo are already signaling they only want a limited number of TV options at a low price point.

Nielsen recently reported that 90 percent of OTT viewing is on a TV set. And TV sets are still found in almost all homes (98% of US homes overall, even in about 85% of cord-never homes), so a streaming-broadcast TV solution should not unreasonable for many homes.

The Long Term Play?

There are the seeds of Philo being a viable player in the OTT space using a combination of streaming and broadcast. But when the benchmark for this type of skinny-bundle service is getting maybe half a percent of homes as subscribers, it’s less a recipe for long term success but more of positioning for the wave of consolidations and roll-ups to come.

David Tice is the principal of TiceVision LLC, a media research consultancy.
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It’s a rough SVOD world

Comic-Con HQ logo

courtesy Comic-Con HQ

The latest victim in the winnowing of SVOD services is Comic-Con HQ, which Lionsgate is winding down. The content will no longer be sold as a service but licensed to other streaming platforms. Even with a presumed built-in rabid audience of comic convention attendees (whether San Diego, New York, or one of myriad hosted elsewhere), the service barely lasted 18 months. It appeared to be in decline for a number of months.

Comic-Con HQ seemed to have been priced reasonably ($5/month or $50/year) for a niche service. The simple answer seems to have been that the channel – get this – didn’t show any content from this year’s Comic-Con in San Diego, the convention from which the channel derived its logo and its credibility.  It relied on catalog content from Lionsgate and a couple of original programs.

Not having watched it myself, I can’t comment on the quality of the service; it may be that the service was never viable. But having a few high level comic book nerds as friends (I can only claim minor nerd-ship), I know that they have pretty substantial monthly budgets for their comic subscriptions and related ephemera. Given their fan-ship and willingness to invest in their favorite content, it would seem this was a wasted opportunity.

In a world of more than 100 – and growing – SVOD services, there is little room for error in serving the end audience, no matter how captive they may seem by their interests. Five dollars a month may not seem like much, but when consumers have to self-bundle a variety of services, the total budget can add up quickly. VRV, recently profiled by nscreenmedia, is a good example of a streaming video service that has been agile enough to address issues among its existing and potential subscribers.

David Tice is the principal of TiceVision LLC, a media research consultancy.
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Will Movies Anywhere go anywhere?

Last week’s announcement of the “Movies Anywhere” app, by Disney and four of the five other major studios, is a welcome collaboration in the digital space among competitors from traditional media. But is it really only an exercise in closing the barn door after the horse has already bolted?

Movies Anywhere logoConsumers already voted with a yawn or confusion to Ultraviolet (launched in 2011) and Disney Movies Anywhere (2014), if they were even aware of them. For example, in a report I did for former employer GfK in Spring 2016, only four percent of digital movie buyers report ever using Ultraviolet.

In many ways, this is similar to what’s been seen in the past in the pay TV world. In that case, the implementation and marketing of video-on-demand (VOD) and TV Everywhere, potential game changers in that market, were not well executed. The former contributed to the rapid rise to dominance of Netflix’ streaming service, and the latter to the rise of the new entrants in the SVOD space.

VOD was not well understood by consumers, particularly suffering from a lack of consistency in marketing exacerbated by every cable operator giving VOD its own branding. Despite being first in market with arguably better content, VOD stalled because people did not understand it and it had a challenging consumer interface.  In many ways, TV Everywhere via pay TV operators suffered the same fate: conflicting branding and lack of consumer education, particularly about authentication. In this case, CTAM did bring together cable operators in 2014 to use a single logo and language, but still these services seem to have only recently improved their competitive position.

The moral

The moral of the story is that pay TV had perhaps the best combined solution (VOD for current content plus TV Everywhere for older and catalog content), but the inability to bring these to market in a way consumers could easily use and understand put them permanently behind the streaming competition.

For the Movies Anywhere service, a similar fate may be in store. Coming up with a better solution six years after the launch of Ultraviolet only means that consumers now have the SVOD or PPV models of movie viewing as permanently engrained habits. Will Movies Anywhere better serve the shrinking niche market of movie buyers? Sure. But will it stem the overwhelming movement from the ownership model of video content to the rental/subscription model? Unlikely.

David Tice is the principal of TiceVision LLC, a media research consultancy.
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Apple’s not so Amazing Stories

It was revealed this week that a revival by Apple of Steven Spielberg’s Amazing Stories would be its first signature move into premium scripted video content. This appears indicative of the lack of innovation that continues to mark Apple’s forays into “television” (however you wish to define TV) over the past several years.

I remember as a young adult, 30 years ago, when Amazing Stories first came out. It was good, but not great. Even with Spielberg at the top of his popcorn-movie form in the mid-’80s, the series likely only survived as long as it did because of the two-year commitment his name elicited from NBC rather than its ratings. And his second series, The Young Indiana Jones Chronicles, following in the early 1990s, wasn’t a smash hit either.

Not Everything is Meant to be Recycled

Many of us despair over the fact that recycling old concepts seems to have become the heart of Hollywood in recent years – a result of wanting to reduce risk by using “proven” IP, creative impotence, or a combination of both. But it’s original ideas and content that drive the buzz-worthy, water-cooler, subscription-driving successes of which all premium video providers want a piece.  Game of Thrones, Orange is the New Black, The Handmaid’s Tale, and Stranger Things were all new – or new to the TV series format – and drove lots of interest in their respective video services. I know Netflix has its algorithms, but did its revivals of Full House or One Day at a Time really drive widespread interest outside their niche audiences?

Of course, there are the exceptions and Amazing Stories, being an anthology, probably has more leeway than a series with a continuous narrative across episodes. But being linked to a nearly forgotten 1980s series, even just by name, is baggage that is unneeded. Black Mirror seems to always be compared with the Twilight Zone but it still has an identity independent of that superlative series (which itself was the victim of a 1980s revival).

Apple & TV

This me-too (or me-later) attitude seems to have marked Apple’s forays into the device side as well. Despite Apple being the top brand in premium consumer tech, AppleTV has languished in the streaming device space, watching Roku set the standard and newcomers like Chromecast and FireTV quickly pass it in terms of ownership levels. As someone who has followed media technology in the home for over 20 years, it was always curious that Apple seemed to be satisfied with ceding leadership over the biggest, most-used screen to others. Steve Jobs was quoted by his biographer Walter Isaacson that he “had cracked the secret” to TV – but clearly that has not come to pass in the five years hence.

In many ways, as things stand, a breakout by Apple in television – either in content or device – seems like it would be an amazing story in and of itself.

David Tice is the principal of TiceVision LLC, a media research consultancy.
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Netflix – is $11 the last increase for its subscribers?

Netflix logo

Netflix just announced a rise in the price of its most popular offering to $11 a month – a potential inflection point in pricing.  In my final blog for GfK, I discussed insights resulting from a 3-year trend in the perceived value of Netflix, which suggested that $11 a month might be the maximum consumers are willing to pay.

As discussed in the post, the perceived maximum value of Netflix among its regular users showed very little change from 2014 to 2017 ($10.38 in April 2014, $10.82 in February 2016, and $10.81 in June 2017). The consistency of these results does seem to indicate that $11 a month is a line – perhaps only one drawn in sand – that even Netflix’ regular users may not be willing to cross, meaning future price bumps could meet increasing pushback.

While not a sophisticated pricing examination, it is certainly worth considering for those of us not in the room when Netflix makes its own analysis and decisions.

A broader discussion of OTT pricing can also be found in my recent discussion on the VideoNuze podcast, published September 29th.

More details on the GfK report – “Over-the-Top TV 2017” from The Home Technology Monitor – can be found here on the GfK website.