The Streaming Video-on-Demand War Is Going to Get Bloody 

The streaming wars are heating up with each player developing a strategy for attracting new customers while reducing customer churn.

Average annual churn rate:
1) Traditional pay-TV – 4%
2) Netflix – 7%

Quote from Tim Nollen – Analyst @ Macquarie Group:
“Netflix is very far ahead of the game with so much popular content and a brand name and a position in people’s lives…If there’s anyone traditional media company that can compete with Netflix, it’s Disney. They have consumer awareness and content that people will pay for. That doesn’t mean Disney wins and Netflix loses. It means that Disney is one of the few that can successfully play that same game.”

Quick reminder: This is who owns everything in Big Media today.

Streaming pay-TV market share in 2022 according to UBS:
1) 
Hulu – 35%
2) 
YouTube TV – 21%
3) 
Sling TV – 14%
4) 
DirecTV Now – 14%
5) 
Cable OTT – 10%
6) 
Other – 5%
7) 
PlayStation Vue – 1%

More #1: Netflix is not a tech company

More #2: The Golden Age of Cord-Cutting Is Over. Now What?

More #3: Americans Want to Pay $21 for All Their Streaming Services Combined, Poll Finds

Comcast Spotlight: The [TV] Viewership Report (Q1 2019)

Worth your time: Comcast Spotlight has pulled together viewership data from 17M HH.

Interesting: The average household watched 34 different networks over the quarter, and 70% of all viewing occurred outside the top 5 (ESPN, etc.).  Also, 304 different networks were the “most-watched” in at least 1 HH out of the 17M.

Average daily TV viewing hours according to Comcast Spotlight (YoY growth):
1) 
2018-Q1 – 6h 4m
2) 
2019-Q1 – 6h 25m (↑ 6%)

Average daily live TV viewing hours (YoY growth):
1) 
2018-Q1 – 5h 19m
2) 
2019-Q1 – 5h 32m (↑ 4%)

Average daily VOD/DVR TV viewing hours (YoY growth):
1) 
2018-Q1 – 0h 45m
2) 
2019-Q1 – 0h 53m (↑ 18%)

Share of viewing hours for live vs. time-shifted in 2019-Q1:
1) 
Live – 86%
2) 
VOD/DVR – 14%

Share of viewing hours by channel type in 2019-Q1:
1) 
Cable – 65%
2) 
Broadcast – 30%
3) 
Premium (HBO, etc.) – 5%

Unique VOD titles watched per month (YoY growth):
1) 2016 – 53K
2) 2017 – 76K (↑ 44%)
3) 2018 – 83K (↑ 9%)
4) 2019 – 105K (↑ 27%)

TV blackouts are the new normal

A new record: There are still five months remaining in 2019, but we already have a record number of television blackouts.

Television blackouts by year according to The American Television Alliance (ATVA):
1) 
2010 – 8
2) 
2011 – 42
3) 
2012 – 90
4) 
2013 – 119
5) 
2014 – 94
6) 
2015 – 193
7) 
2016 – 104
8) 
2017 – 213
9) 
2018 – 165
10) 
2019 – 213+

The latest: CBS local stations in 14 markets including New York, Los Angeles, Chicago, and San Francisco have been dark on AT&T since July 20th.  This impacts roughly 6.5M AT&T customers in those markets.

What the fight is about: AT&T currently pays ≈ $2/subscriber/month to carry CBS local stations.  CBS is reportedly seeking a 50% increase to $3.  It is estimated that local retransmission fees generate $8B/year for broadcast stations.

Leverage for CBS: The NFL kicks off its 2019 season on September 8th and, CBS plans to air a half a dozen matchups.

Leverage for AT&T: It is now easier than ever to get broadcast TV OTA (over the air) through a service like Locast.

Who wins?  It is in neither parties interest for the local stations to be excluded from a pay-TV package. The final monthly subscriber cost will be a good judge of who wins.

What is Locast?  Locast is a non-profit streaming service offering local, over-the-air television.  They are currently in 13markets reaching 30M TV households with ≈ 250K registered users.

Locast markets:
1) Baltimore
2) Boston
3) Chicago
4) Dallas
5) Denver
6) Houston
7) Los Angeles
8) New York City
9) Philadelphia
10) Rapid City
11) San Francisco
12) Sioux Falls
13) Washington, D.C.

Shots fired #1: AT&T recently made a $500K donation to Locast.

Shots fired #2: AT&T put up the following message when customers tried to access their local CBS station.

More #1: CBS Goes Dark on AT&T Amid a Dispute

More #2: Locast, a Free App Streaming Network TV, Would Love to Get Sued

Facebook stepped up warnings that its hockey-stick growth is poised to slow down as regulation and privacy laws kick in

Facebook advertising revenue (YoY growth):
1) 
2015-Q2 – $3.8B
2) 
2016-Q2 – $6.2B (↑ 63%)
3) 2017-Q2 – $9.2B (↑ 47%)
4) 2018-Q2 – $13.0B (↑ 42%)
5) 2019-Q2 – $16.6B (↑ 28%)

Wow: Facebook is still growing at a rate that is higher than digital advertising as a whole!

The annual growth rate in the U.S. for digital advertising according to eMarketer:
1) Facebook – ↑ 28%
2) The entire industry – ↑ 18%

Facebook advertising revenue per user in the U.S. and Canada (YoY growth):
1) 
2015-Q2 – $8.63
2) 
2016-Q2 – $13.74 (↑ 59%)
3) 2017-Q2 – $18.93 (↑ 38%)
4) 2018-Q2 – $25.43 (↑ 34%)
5) 2019-Q2 – $32.60 (↑ 28%)

Facebook daily active users in the U.S. & Canada (YoY growth):
1) 2015-Q2 – 164M
2) 
2016-Q2 – 175M (↑ 7%)
3) 2017-Q2 – 183M (↑ 5%)
4) 2018-Q2 – 185M (↑ 1%)
5) 2019-Q2 – 187M (↑ 1%)

Video: The most popular social media networks each year, gloriously animated

More #1: The Secret To Facebook’s $67 Billion Ad Machine

More #2: Facebook Advertising in 2021

More #3: ‘Burden of proof’: Inside Facebook’s bid to compete for advertisers’ upfront budgets

‘To sell more TVs, we need to have better TV content’: Why Vizio is trying to standardize addressable TV advertising

The big shift: Smart TV manufacturers such as Vizio and Samsung are creating ad-supported streaming channels in their OS to compete with Roku and Amazon.

Share of U.S. TV households with a smart TV according to Nielsen:
1) 
2018 – 39%
2) 
2019 – 47%

The goal for Smart TV manufacturers: The profit margin on a smart-TV is roughly 6% (ex: $30 of profit on a $500 smart TV) which is leading the manufacturers toward other revenue streams such as addressable advertising.

The benefit for consumers: Cheaper smart TVs and more free video content that is supported through advertising.

The benefit for advertisers: More addressable advertising inventory to reach consumers.

Quote from William Wang – CEO @ Vizio:
“For us to sell more TVs, we need to have better TV content. We need to have more free content,”

TV content + digital attribution: Addressable advertising through a smart TV is able to provide digital like attribution (purchases, store visits, etc.) through a technology called ACR.

What is ACR? Automatic Content Recognition (ACR) is a technology that identifies the content that is playing (TV show, etc.) based on what it hears. It is alternative to collecting viewership through panels (Nielsen, etc.) and/or set-top box data (ComScore, etc.).

The players in ACR:
1) 
Nielsen Gracenote
2) Inscape
3) Samsung Ads
4) Roku
5) Alphonso
6) Samba TV

Advertiser plans for advanced TV over the next 12 months according to the IAB:
1) 
Increase – 59%
2) 
Stay the Same – 38%
3) 
Decrease – 3%

Podcast: How We Get To Better Measurement

More #1: Waiting For Addressable: Why It’s Taking So Long For The Industry To Get Its Act Together

More #2: Paul Haddad Explains How a4 Is Inventing the Way Advertising Works

The Mind-Blowing Amount of Time Americans Spend Watching TV

Annual minutes viewed on Netflix in 2018:
1) 
The Office – 52.1B
2) 
Friends – 32.6B

Quick math on Netflix viewership for The Office:
1) 56.6M 
subscribers (average for 2018)
2) 52.1B minutes of viewing
3) 868M hours of viewing
4) 36M days of viewing
5) 99K years of viewing

Crazy: Americans spent more than 437B minutes watching college/NFL football on TV last year!

Quick math on football viewership on TV:
1) 120M 
TV households
2) 437B minutes of viewing
3) 7.3B hours of viewing
4) 303M days of viewing
5) 831K years of viewing
6) The average TV household watched 61 hours of college/NFL football last year

More #1: NBC Wins Season TV Ratings, But Broadcast Nets Lose Ground Overall

More #2: NBC Wins the Season in the 18-49 Demo for the Third Straight Year

Netflix, Welcome to Ratings Hell

Netflix subscriber growth in 2019-Q2:
1) 
Projected – 5.0M
2) 
Actual – 2.7M

Netflix subscriber total in the U.S.:
1) 
2019-Q1 – 60.2M
2) 
2019-Q2 – 60.1M (↓ 100K)

This is their first net subscriber loss since 2011.

Netflix monthly cost for a standard plan in the U.S.:
1) 
Oct-2017 – $11
2) 
Jan-2019 – $13 (↑ 18%)

Hold the panic: Great take from Matthew Ball on why this subscriber drop is overblown.

Our take: Any business would gladly take a 0.1% drop in customers if they could increase prices by 18%!

Stranger Things viewers over the first four days of release:
1) 
Season 2 (Oct-2017) – 10.6M
2) 
Season 3 (Jul-2019) – 12.8M (↑ 21%)

Video: All growth opportunities for Netflix are going to be coming from abroad, says Axios’ media reporter

Podcast #1: Recode’s Peter Kafka: ‘Netflix is winning’

Podcast #2: The battle to dethrone Netflix

More #1: Netflix Won’t Be Felled by Recession, Bond Markets, Debt or Cash Losses (Netflix Misunderstandings, Pt. 8)

More #2: Netflix thought it would have 5 million new subscribers this quarter. Instead it added 2.7 million.

More #3: ‘The Town Hall of Hollywood.’ Welcome to the Netflix Lobby.

Emmys: HBO, ‘Game of Thrones’ Dominate Nominations

HBO and Game of Thrones both set records for most Emmy nominations in a single year.

Most Emmy nominations by network in a single year
1) 
HBO (2019) – 137
2) 
HBO (2015) – 126

2019 Emmy nominations by network:
1) 
HBO – 137
2) 
Netflix – 117
3) 
NBC – 58
4) 
Amazon Prime Video – 47
5) 
CBS – 43
6) 
FX Networks – 32
7) 
ABC – 26
8) 
Hulu – 20
9) 
Fox – 18
10) 
Showtime – 18
11) 
CNN – 17
12) 
VH1 – 14
13) 
NatGeo – 13
14) 
AMC – 11

2019 Emmy nominations by show:
1) 
Game of Thrones (HBO) – 32
2) 
The Marvelous Mrs. Maisel (Amazon) – 20
3) 
Chernobyl (HBO) – 19
4) 
Saturday Night Live (NBC) – 18
5) 
Barry (HBO) – 17
6) 
Fosse/Verdon (FX) – 17
7) 
When They See Us (Netflix) – 16

2019 Emmy nominations for Game of Thrones:
1) 
Season 8 – 32
2) 
Season 7 – 22
3) 
Season 6 – 23
4) 
Season 5 – 24
5) 
Season 4 – 19
6) 
Season 3 – 16
7) 
Season 2 – 11
8) 
Season 1 – 13

Local TV Ad Spending to Dip After Strong 2018

Local advertising will pass $155B in 2020.

Local ad spend by year according to BIA Advisory Services (YoY growth):
1) 
2018 – $145.5B
2) 
2019 – $148.8B (↑ 2%)
3) 2020 – $155.4B (↑ 4%)
4) 2021 – $158.5B (↑ 2%)
5) 2022 – $164.6B (↑ 4%)
6) 2023 – $168.4B (↑ 2%)

Local ad spend by platform (% of total):
1) 
Direct Mail – $37.2B (25%)
2) Mobile – $21.8B (15%)
3) Online/Interactive – $20.2B (14%)
4) Local TV – $18.6B (13%)
5) Local Radio – $14.5B (10%)
6) Other – $36.5B (23%)

Local video ad spend by year (YoY growth):
1) 
2018 – $29.8B
2) 
2019 – $29.5B (↓ 1%)
3) 2020 – $32.1B (↑ 9%)
4) 2021 – $31.3B (↓ 2%)
5) 2022 – $33.1B (↑ 6%)
6) 2023 – $33.0B (↓ 0%)

Quick math #1 on the political share of local broadcast advertising in 2020:
1) $18.5B 
in total spend
2) $3.3B in political spend
3) $15.2B in non-political spend
4) 18% of all local broadcast ad dollars in 2020 will come from political

Quick math #2 on the political share of local cable advertising in 2020:
1) $6.3B 
in total spend
2) $1.0B in political spend
3) $5.3B in non-political spend
4) 16% of all local cable ad dollars in 2020 will come from political

More: Local Ads To Hit $148.8 Billion In 2019, Traditional Media Share Drops

Wireless Industry Survey Shows Huge Yearly Increase In Mobile Data Usage

Mobile data usage is exploding as U.S. carriers start to roll out 5G services.

Mobile data usage in the U.S., according to The CTIA (YoY growth):
1) 
2017 – 12.9T megabytes
2) 2018 – 28.6T megabytes (↑ 82%)

U.S. smartphone users:
1) 
2009 – 50M
2) 
2018 – 285M

Why does 5G matter?  Fifth-generation wireless is coming with speeds 10–100X faster than we have today.

Flashback: How 5G wireless will change pay-TV industry virtually overnight

What this means for the pay-TV industry: More competition. Cable companies are going into wireless (see Comcast) and wireless companies are going into pay-TV (see AT&T).

Big threat: If a wireless company like Verizon is able to offer fast home broadband delivered via mobile, then the number of home broadband options jumps from 1-2 to 4-5 overnight.

Remember: The majority of profit for pay-TV providers comes from selling broadband rather than the actual pay-TV service.

More #1: Where 5G’s Impact Is Already Being Felt

More #2: Here’s what to expect from the Big 4 carriers as Verizon, AT&T, and others battle for 5G dominance

More #3: The war for your internet connection