Is Roku Getting Promoted To the G-Suite?

Rumor mill: Could Google buy Roku?

Roku market capitalization:
1) 
Today – $17B
2) 
Projected by 2026  – $90B

The bull case for Google buying Roku: Google has a market capitalization of ≈ $1T and ended 2020-Q1 with $117B in cash, meaning they could afford the transaction.

The bear case: Roku grew ad revenue by 78% in 2019 and may not be in a hurry to sell.

Roku advertising revenue (YoY growth):
1) 2017 – $225M
2) 2018 – $417M (↑ 85%)
3) 2019 – $741M (↑ 78%)

More: Roku Touts Flexibility to Woo Ad Dollars From Linear to Streaming

Now More Than Ever, Networks Need A Big Score From NFL Broadcasts

Bottom line: No NFL = trouble for TV networks.

Why this matters: The NFL accounted for 41 of the 50 most-watched TV programs in 2019 and is a significant driver for advertising revenue.

Quote from John Kosner – President @ Kosner Media:
“It’s practically the only thing on the minds of the networks. If you lost an NFL season, you’re looking at a financial hemorrhage.”

Advertising revenue by the network from NFL (% of total) according to iSpot:
1) Fox – $2.0B (40%)
2) CBS – $1.5B (25%)
3) NBC – $1.5B (20%)
4) ESPN – $500M (20%)

Advertising revenue by league:
1) 
NFL – $5.5B
2) 
NBA – $1.5B
3) 
MLB – $700M

Big question #1: Does the NFL need fans in the stadium to survey financially?

Quick answer: No. Stadium revenue accounts for ≈ 30% of the leagues $15B in revenue.

NFL average TV ratings for the regular season (YoY change):
1) 
2015 – 18.7M
2) 
2016 – 16.5M (↓ 12%)
3) 2017 – 15.0M (↓ 9%)
4) 2018 – 15.8M (↑ 6%)
5) 2019 – 16.5M (↑ 4%)

Quick math on NFL advertising revenue YoY (2018-19):
1) 
Viewership – ↑ 4%
2) Ad spend – ↑ 10%
3) # of spots – ↑ 2%
4) $/spot – ↑ 9%

More #1: If NFL can pull off playing 2020 season despite hurdles, expect the world to watch like never before

More #2: How NFL is set, if needed, to shake up its schedule

More #3: Meet the Magician of NFL Broadcasts

Full Circle: Streaming TV Prices Approach Cable Packages They Seek To Replace

Big news: YouTube TV and Fubo raised their live-TV prices to $65 per month.

Why this matters: Streaming pay-TV packages (vMVPDs) launched with low prices, but have increased steadily.

Key passage from Protocol:
“Let’s just call this what it is: cable! Sure, the apps are better and it’s easier to cancel…but this is just cable TV. Because it turns out, for all the tech companies’ wherewithal and leverage, they couldn’t break the way the TV business works.”

Bottom line #1: YouTube TV is losing money even after this increase due to its programming costs.  For example, the chart below shows a leaked example of programming costs from 2019.

Bottom line #2: Streaming pay-TV services cannot offer channels a la carte, which causes the base package price to increase as channels are added.

YouTube TV prices (YoY growth):
1) 2017 – $35
2) 2018 – $40 (↑ 14%)
3) 2019 – $50 (↑ 25%)
4) 2020 – $65  (↑ 30%)

YouTube TV subscribers (YoY growth):
1) 2017-Q4 – 300K
2) 2018-Q4 – 1M (↑ 233%)
3) 2019-Q4 – 2M  (↑ 100%)

Interesting: YouTube TV was already seeing a deceleration in sign-ups before the price increase.

More #1: RIP YouTube TV, you’ll make a great case study

More #2: Here are more streaming choices than ever — why are prices going up? 

Special Delivery? Amazon Looks To Add Live TV To Prime Video Empire

Big news #1: Several job posts by Amazon are fueling rumors that some form of live TV is coming to Prime Video.

Why this matters: Live TV combined with Amazon’s current on-demand service would give consumers more reason to become Prime members.

Quote from Amazon Prime Video job posting via LinkedIn:
“Although video on demand is on the rise, the global viewing hours weighs in favor of live or scheduled TV.”

Big news #2: A recent analysis from Needham estimated that Amazon’s media business is worth $500B or ≈ 4% of its total market capitalization.

Amazon’s media business includes:
1) 
Prime Video
2) Prime Music
3) Twitch
4) Advertising

Below is a recent pitch slide from Amazon Advertising:

Amazon advertising revenue (YoY growth) according to eMarketer:
1) 
2017 – $3.3B (↑ 186%)
2) 2018 – $7.4B (↑ 123%)
3) 2019P – $11.3B (↑ 53%)
4) 2020P – $15.0B (↑ 33%)
5) 2021P – $19.2B (↑ 28%)

FYI: Fire TV is coming to your car…

More #1: Amazon Just Made a Big Hire From Ad Agency Dentsu to Help It Take a Share of the $70 Billion TV-Advertising Business

More #2: Amazon Prime Video is Beta Testing a Watch Party Feature

More #3: Amazon Prime Video: Everything You Need to Know About the Most Powerful Empire in Video Streaming

OTT Peak Engagement Levels Here To Stay (At Least For Now)

CTV/OTT viewing households by year (YoY growth) according to Comscore:
1) 
2016 – 44.0M
2) 2017 – 50.8M (↑ 15%)
3) 2018 – 59.2M (↑ 17%)
4) 2019 – 64.0M (↑ 7%)
5) 2019 – 70.2M (↑ 10%)

YoY change in reach by platform:
1) 
CTV/OTT – ↑ 6.1M (↑ 10%)
2) VOD – ↑ 1.9M (↑ 7%)
3) Live TV – ↓ 1.2M (↓ 1%)
4) DVR – ↓ 3.0M (↓ 4%)

YoY change in total monthly hours viewed:
1) 
CTV/OTT – ↑ 1.4B (↑ 27%)
2) Live TV – ↑ 792M (↑ 3%)
3) VOD – ↑ 97.4M (↑ 27%)
4) DVR – ↓ 12.4M (↓ 0%)

YoY change in monthly hours viewed per household:
1) 
Live TV – ↑ 30 (↑ 12%)
2) DVR – ↑ 12 (↑ 14%)
2) CTV/OTT – ↑ 8 (↑ 12%)
4) VOD – ↑ 2 (↑ 14%)

YoY change in reach by revenue model:
1) 
Ad-supported – ↑ 4.8M (↑ 9%)
2) Subscription – ↑ 2.8M (↑ 5%)

Share of Smart TV market by manufacture:
1) Samsung – 32%
2) TCL – 14%
3) Vizio – 13%
4) LG – 12%
5) Hisense – 5%
6) Insignia – 5%
7) Sony – 3%
8) Sharp – 3%
9) Other – 13%

More: Comscore: The State of OTT (June 2020)

Converting to Convergence: 83% of Ad Buyers Now Plan TV and Digital Together

Share of buying firms that have converged video buying into a single team according to the IAB:
1) 
2017 – 40%
2) 
2018 – 46%
3) 
2019 – 61%

Share of video buying/planning functions that have converged into a single team:
1) 
Planning – 83%
2) 
Optimization – 74%
3) 
Reporting/Insights – 67%
4) 
Buying/Execution – 66%

Benefits of video ad buying/planning convergence:
1) Cost-efficient – 57%
2) 
Optimization – 47%
3) 
Cross-Screen measurement – 44%
4) 
Incremental reach – 43%

Challenges facing video ad buying/planning convergence:
1) 
Tracking/reporting – 38%
2) 
No single reach/frequency – 31%
3) 
Buyer/Seller silos – 29%

More: IAB: CTV Ad Spend Unfazed By COVID; Addressable Also Set To Benefit

You’ve Shared Your Netflix Password With Your Entire Family. Now You Can’t Watch Netflix.

Password123: Roughly 1/3 of SVOD subscribers have shared their password with someone outside of their household.

Flashback: Cable TV’s Password-Sharing Crackdown Is Coming

Wow: 1 Spectrum username had 30K simultaneous streams!

Share of SVOD subscribers who shared their password outside of household according to HUB Research Group:
1) 13-24 – 64%
2) 35+ – 16%
3) All subscribers – 31%

Streaming services with the highest rate of password sharing:
1) 
Netflix – 56%
2) 
Disney+ – 31%
3) 
Hulu – 30%
4) 
Apple TV+ – 17%
5) 
Amazon – 14%

Big question #1: How much is password sharing costing companies?

Loss of revenue due to password sharing, according to Parks Associates:
1) 
2019 – $9.1B
2) 
2024P – $12.5B

Big question #2: Who pays for the various video services?

More #1: Now you can share your Netflix account just by sending a link

More #2: Subscription Mooching & Streaming Media

Pluto TV Expects to Reach 30 Million Users This Year

PlutoTV monthly viewers (YoY growth):
1) 
2016 – 5M
2) 
2018 – 12M
3) 
2019 – 22M (↑ 87%)
4) 2020P – 30M (↑ 34%)

Quote from Andrew Rosen – Founder @ PARQOR:
“My two cents is AVOD service PlutoTV is one of the smartest investments Viacom ever made, perhaps THE smartest digital media investment it has ever made (NOTE: I say this as someone who worked on operationally integrating major digital acquisitions like AtomFilms and Shockwave, and gaming freeware instant messaging service Xfire, at Viacom 15 years ago). I also think CBS Interactive CEO Marc Debevoise is one of the smartest executives in the streaming space, and both CBS All-Access and Pluto TV are therefore in unusually capable hands.”

Flashback: ViacomCBS’s Parts Might Add Up to a Greater Whole

More #1: Seeking More Control Of Its Streaming Destiny, ViacomCBS Won’t Sell Off “Critical Mass” Of Its Content, CEO Bob Bakish Asserts

More #2: Coronavirus Is Accelerating Pluto TV’s Already Massive Growth

More #3: ViacomCBS Plans to Rebrand CBS All Access and Launch International Streaming Platform

GroupM Predicts 13 Percent Decline in 2020 U.S. Ad Spend

Global ad market (YoY growth) according to GroupM:
1) 
2012 – $408.0B
2) 
2013 – $421.7B ( 3%)
3) 2014 – $437.7B ( 4%)
4) 2015 – $458.3B ( 5%)
5) 2016 – $482.9B ( 5%)
6) 2017 – $516.2B ( 7%)
7) 2018 – $552.7B ( 7%)
8) 2019 – $587.0B ( 6%)
9) 2020P – $517.5B (↓ 12%)
10) 2021P – $559.8B ( 8%)
11) 2022P – $586.4B ( 5%)
12) 2023P – $607.6B ( 4%)
13) 2024P – $633.1B ( 4%)

Global GDP vs. global ad spend according to GroupM:

YoY growth for the U.S. ad market:
1) 2009 – ↓ 16%
2) 2020 – ↓ 13%

Quote from Brian Wieser – Global President, Business Intelligence @ GroupM:
“That we ‘only’ expect a 13% decline is surprising.  We might normally expect that because the 2020 economic decline is so much worse than 2009, advertising should be much weaker.”

Flashback: Political Ads Expected to Explode, Even as Economy Tanks

Wow: The political video ad market is growing (CAGR) at a rate of 26%!

Global TV ad market (YoY growth) according to GroupM:
1) 
2012 – $154.3B
2) 
2013 – $158.8B ( 3%)
3) 2014 – $163.1B ( 3%)
4) 2015 – $164.0B ( 1%)
5) 2016 – $166.8B ( 2%)
6) 2017 – $165.2B ( 1%)
7) 2018 – $165.8B ( 0%)
8) 2019 – $164.5B ( 1%)
9) 2020P – $135.5B (↓ 18%)
10) 2021P – $143.5B ( 6%)
11) 2022P – $146.4B ( 2%)
12) 2023P – $149.2B ( 2%)
13) 2024P – $153.0B ( 3%)

Big question #1: How big of an impact is this slowdown having on ad prices?

Scatter ad prices (YoY growth) for big 3 TV networks, according to SQAD:
1) 2019-Q2 – $142K
2) 2020-Apr – $102K (↓ 28%)

Big question #2: Do buyers believe that we have hit bottom yet?

Share of buyers that believe that ad spending has bottomed out according to Pivotal Research Group:
1) April – 51%
2) May – 57%

More #1: The TV Commercial, Once Advertising’s Main Event, Suffers in the Pandemic

More #2: The History Of Advertising In A Recession

Discovery Reviews Production Costs After Saving on Low-Budget Quarantine Shows

Wow: Discovery sent video kits out to cast members’ homes and saved $300K per hour in production costs!

The home video kit included:
1) Camera
2) iPhone
3) Tripods

FYI: Discovery spent $3.3B on content last year.

Quote from Gunnar Wiedenfels – CFO @ Discovery:
“We have been creating some very successful content with very scrappy equipment.  It felt the more real and authentic the content became during the crisis, the better it worked with our audience.”

Big question: When will non-remote film and television production be able to resume?

Quick answer: California is starting to open up, but most don’t expect much until late-July.

Scripted television projects by location according to FilmLA:
1) 
California – 72
2) 
New York – 29
3) 
British Columbia – 24
4) 
Georgia – 20
5) 
Other – 22

Domestic feature films by state according to Film LA:
1) California – 62
2) 
New York – 57
3) 
Georgia – 36
4) 
Massachusetts – 10
5) 
Illinois – 8
6) 
Louisiana – 8
7) 
Nevada – 7
8) 
New Mexico – 7
9) 
Other – 62

More #1: TV Execs, Writers Grapple With COVID-19 Era Scripts: “We’re Not Going to Be Able to Shoot It, So Don’t Write It”

More #2: Coronavirus Impact on Entertainment – Film and TV Production