Basic package cost by streaming cable provider: Hulu Live — $40 DirecTV Now — $35 Sling TV — $20 PlayStation Vue — $40 YouTube TV — $35
Fox News has the highest prime time ratings on cable (2.5m) and costs the average cable subscriber $1.55/month. ESPN averages 1.9m in primetime and costs $7.86. The average cable subscriber pays 5X more per month for a channel that they are 30% less likely to watch.
What happens when the cable news channels start asking for highly monthly fees based on their increased ratings?
Chart — I posted this on Twitter which shows the pricing difference between the average cable bundle ($103) and the proposed non-sports bundle ($20).
Cord cutting vs. cord shaving — Most of the focus has been on consumers that cut the cord (no pay TV), but cord shaving (cheaper bundle) could be a bigger issue. What happens to the budget for content as consumers choose the $20 monthly price tag over the $103 version?
Sports is the primary focus here because networks have placed big bets on content as consumer media habits are changing. For example, the CBS/NBC/Fox are already locked up with the NFL through 2023. How do these networks monetize this investment if ratings slowly decline annually? Link
Chart — I posted this on Twitter which shows the amount each network pays per year to air various NFL games.
ESPN is the big dog — They account for 35% of the total for all networks and near double the next closest (Fox — Sunday NFC).
$80/year — That is how much the average cable subscriber in the United States pays for ESPN in 2017. As of August 2016, there were 88.8Msubscribers which mean that ESPN makes $7.1B/yearin subscriber fees or $592M/month.
100.1M subscribers — That is the peak total for ESPN back in 2011 which has fallen 11.3M (11%).
The Trend — NFL rights fees for ESPN (since 2013) ↑ 70% while subscription revenue from consumers (since 2011) ↓ 11%. The model for a network like ESPN was always to grow revenue (subscriptions, etc.) at a greater rate than content costs. The big question is whether they can find alternative revenue streams (advertising, OTT, etc.) to accomplish this goal. Link
1.9m dropped pay TV in 2016. This trend is accelerating both in terms of raw number (1.1m in 2015) and as a percentage of total subscribers (2% in 2016 vs. 1% in 2015).
The good news. Streaming services (Hulu, etc.) added 900k subscribers in 2016.
The bad news. Even with the additional subscriptions from streaming, there were 1m net pay TV subscribers who cut the cord. Also, the average cable bill is $103/month which is well above most streaming packages.
The Trend. Average cable bill ↑ 4% ($103 vs. $99) and total pay TV subscribers ↓ 2% (95m vs. 97m). Cable TV still has inelastic demand, but price increases are starting to drive cord cutting. Link
Quote from Glenn Hower — Senior Analyst @ Parks Associates. “The churn numbers tend to be pretty high, indicating there are a substantial number of consumers subscribing to a service for a short time and then bailing out,”
Customer retention for streaming services: 1) Average — ≈ 1 year 2) Netflix — 3.5 years
Other key pay-per-view numbers: 1)$500m from U.S. 2)$200m from outside U.S. 3)$700m in Total
The fight was also in movie theatres on 532 screens: 1) $40 average ticket 2) 65k tickets sold 3) $2.6m in total $
The fight was the 3rd most watched movie theatre event on Saturday night: 1) Lionsgate’s The Hitman’s Bodyguard— $3.9m 2) New Line/Warner Bros.’ Annabelle: Creation— $2.8m 3) Mayweather-McGregor— $2.6m