Streaming TV services hope that better ad targeting will lead to profits

Streaming pay-TV services (vMVPD) have surpassed 6M subscribers.

Loss leader? JPMorgan recently estimated that DirecTV Now, Hulu Live, and YouTube TV lose $6, $3, and $8 monthly before marketing and operating expenses.


How do they plan to make money? YouTube expects to generate $15–16 per subscriber/month from advertising which would make the service profitable.

Advertising revenue per subscriber in 2018-Q2:
1) Comcast — $30.14
2) Charter — $20.94

Flashback #1: What AT&T’s advertising platform will look like

Quote from John Stephens — CFO @ AT&T:
“Taking the viewership data, the data insights that we know that comes off our networks because we’re the delivery system. We deliver it, so we know what goes to the homes, what’s there. And on our addressable advertising, we’re getting close to $35, $40 CPMs. On our average, on our regular total advertising, it’s probably closer to $12, $13, so 3x that amount. That’s the reason for excitement. We’re getting that today, albeit as a distributor, you get 4 commercial slots an hour. As a content owner, you get 24 commercial slots an hour.”

Flashback #2: Sling TV Hikes Price of Disney-ESPN Bundle to $25 Monthly, Launches Free Content for Ex-Subscribers

The streaming wars monthly cost w/ increase since launch:
1) Hulu Live — $40
2) DirecTV Now — $40 (↑ $5)
3) Sling TV — $25 (↑ $5)
4) PlayStation Vue — $45 (↑ $5)
5) YouTube TV — $40 (↑ $5)
6) Verizon — TBD
7) Charter Spectrum TV Stream — $22
8) CenturyLink — $15
9) Comcast Instant TV — $18
10)
Philo — $16
11) Spectrum Choice — $25
12) AT&T WatchTV — $15
13) DirecTV TBD — $80

Streaming pay-TV providers by subscriber numbers (% of total):
1) Sling TV — 2.3M (39%)
2) DirecTV Now — 1.5M (25%)
3) Hulu Live — 800K (14%)
4) PlayStation Vue — 600K (10%)
5) YouTube TV — 300K (5%)
6) Other — 300K (4%)
7) fuboTV — 200K (3%)
8) Philo — 100K (1%)

More #1: comScore, Hulu Team For New OTT Ratings System: All Major Nets Will Beta Test It

More #2: Three Big Misconceptions About Addressable TV Advertising

More #3: AMC Networks To Offer Addressable TV Inventory

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