Key details for Quibi revenue model: 1) $5/month w/ ads; $8/month without ads 2)1 pre-roll ad per episode (<5m video = 10s ad; 5-10m video = 15s ad) 3) 2.5m of advertising per hour 4) 20M subscribers by 2024 5) 75%of users will have ad-supported tier 6) They are seeking $15-25M upfront advertising commitments from companies such as P&G 7)$150M+ in upfront ad commitments
Quick math on Quibi advertising: 1) 20m paid users by 2024 2)50% w/ ads 3)15m paid users w/ ads 4)2.5m of advertising per hour 5)$35 CPM for 15s ad 6)10 15s spots/hour 7)$0.40 in ad revenue/hour 8) $665M revenue from advertising 9) $44.33/user/year in ad revenue 10) $3.69/user/month in ad revenue 11) 127 hours/year of viewing w/ ads/user 12) 11 hours/month of viewing w/ ads/user
Key details for Quibi content:
1) 7-10m per episode 2) 7K pieces of content at launch 3) 25+ episodes added daily 4) $100K/minute average development cost w/ a maximum of $6M/hour
What happens next: TV Buyers are being rebranded as video investment teams, and digital buyers are going to school on TV metrics.
The future: The term “digital buyer” and “TV buyer” will go away, and there will just be “video buyers.” Everyone cannot be great at everything, so some buyers will be stronger in TV or digital, but the future is cross screen.
Who wins: The winners will be whichever side learns the other side’s piece first and integrates it into a holistic video offering.
Comparison of annual deal size between Netflix and Warner: 1) Netflix deal #1 (2014–18) – $30M 2) Netflix deal #2 (2019) – $80M 3) HBO Max deal #1 (2020-24) – $85M
Quick math #1 for Friends and HBO Max: 1) Domestic subscriber target – 75M 2) The annual cost to license Friends – $85M 3) HBO Max would be paying $0.09 per month for each domestic subscriber to license the show.
Quick math #2 for Friends and HBO Max: 1) The annual cost to license Friends – $85M 2) # of seasons – 10 3) # of episodes – 236 4) $/season to license – $8.5M 5) $/episode to license – $360K
1) CTV will be the battleground for control of video advertising dollars – TV buyers are rebranding themselves as video investment teams, and digital buyers believe that CTV should fall under them. Control of the video ad budget is up for grabs, which will be key when linear TV falls below 50% of video spend in the next 4-6 years.
2) Political will set the pace for cross screen video advertising – The 2020 political video ad market will be $5.8B accounting for ≈ 4-5% of the entire U.S. market. Politics has consistently led the way with regards to audience targeting, and we believe that cross screen planning/buying will be added to the mix in 2020.
3) Ad-supported streaming will emerge as a sustainable business model – The success of platforms such as Tubi, Pluto TV, and the Roku Channel will continue in 2020 along with new entrants such as NBCUniversal’s Peacock. These platforms are popular with advertisers because they combine the reach/quality of linear TV with the targeting/measurement of digital. Ad-supported streaming will carry a lower ad load compared to linear TV, which will lead to an overall drop in TV ad impressions.
Since it’s always fun to publically grade last year’s NYE resolutions, we decided to do the same with our predictions…
1) OTT/CTV will converge TV/digital skills – For the most part, new digital video formats (pre-roll, social, etc.) have stayed in the digital skills camp. OTT/CTV is the first format that is being claimed by both the TV and digital sides, even if both are attacking from different angles (demo vs. audiences, etc.). Both sides see a huge market and will continue to claim it belongs in their media plan. Another reason why brands, agencies, and networks need to overcome silos with cross screen teams.
Verdict: Silios on both the buy and sell-side persist, but this is still a mega trend and one to watch in the years ahead.
2) Local will lead the way in advanced TV measurement – Breaking Nielsen’s national panel down into 210 individual markets causes major issues on the sampling side, and those involved in local marketing are incentivized to adopt alternative currencies faster than national advertisers. This will have the side benefit of ushering in audience buying since these would allow for custom audiences. This trend has already started with announcements from groups like Scripps and Gray.
Verdict: Slow out of the gate. There was significant momentum late in the year, and we anticipate that the 2020 election will set the standard in advanced TV.
3) Disney+ will be a success – The Disney catalog of content will provide a compelling reason for subscriber adoption, and this service will get traction. However, Wall Street may take a different view of Netflix’s 59M+domestic subscribers are used as a benchmark.
Verdict: This was not a tough one to see coming, but the overall execution from Disney has been impressive to watch.
This year will be hard to top, and we owe it all to our friends and family in the Screens community!
Quick math on SOTS growth in 2019:
1) 53 editions 2) 41,296words 3) Estimated reading time: 207 minutes 4) 210 blog posts at StateOfTheScreens.com 5)↑ 202% YoY growth in the size of the community 6) We now have subscribers from 20+ different countries!
Key details for Hallmark’s Countdown to Christmas:
1) Hallmark started airing Christmas movies in 2002 2) They will make 103 movies this year, and 43 (41%) are about Christmas 3) The channel goes 24/7 Christmas between October and January 4) 72M people watched Christmas programming on the Hallmark Channel in 2018 5) The Hallmark Channel is #1 in both women (18-49) and (25-54) in Q4
No joke: The only thing that can get Granny Screens to clear old reruns of Matlock off of the DVR is Hallmark’s Countdown to Christmas so these numbers are no surprise and why Santa Screens may be leaving this in her stocking!