I hope any of my readers impacted by the ongoing wildfires in California are okay. This is a problem as a community California/America/the globe needs to address, but that’s not the subject of this column.
The Most Important Story of the Week – The Streaming Revolution Will Be Metricized
The news story is that Nielsen added Amazon viewing to its data collection on streaming. Last December, I wrote that “measurement” and Nielsen aren’t sexy topics for news outlets, unless they involve popular movies or TV series. Indeed, I hadn’t written about them since. For executives, though, this is a classic “most important story you may have missed”; data will be the currency of the streaming wars just as it was for the broadcast wars; good data will enable you to make better decisions.
So let’s understand it with a few thoughts. (Full disclosure I trial ballooned some of these thoughts on Twitter here.)
1/ Here’s my #WedNFLXday thoughts, but inspired by Amazon getting their ratings released by #Nielsen. #Netflix @Netflix
— The Entertainment Strategy Guy (@EntStrategyGuy) October 23, 2019
Thought 1: The limits of Nielsen’s streaming data.
Nielsen only collects “Living Room TV” viewership in the United States. Alternatively, when Netflix releases their household viewership numbers, that’s every device globally. That’s a pretty clear difference we need to account for if we want to make numbers “apples-to-apples”.
The other measurement services have similar limitations. Some only cover desktop viewership, like Jumpshot, whose article on viewership I linked to last weekend. This, though, isn’t as big of a problem as it seems. If you know how to weigh the size of a distribution platform, given the behavior of customers is mostly the same across devices, knowing just one part of the ecosystem can allow for pretty accurate estimates across services. Device usage doesn’t tend to skew demographically too much in any direction, meaning it’s fairly representative.
Thought 2: Speaking of…there are more and more companies in this space.
Last year, writing quickly on this, I referenced a few companies like Nielsen, Hub Research and TV Time trying to crack the streaming ratings game. Now we can add Parrot Analytics, JumpShot, and 7Park to this group. Some companies like Second Measure have tangentially related data (sign up rates).
Why so many? Well, unlike Nielsen in the golden age of TV, who had to send surveys out to folks in every market who had to hand write down their TV viewing, nowadays, every way you watch TV can be captured in digital data. It requires some partnerships and permissions, but once it is set up you can draw lots of data insights as long as you have a representative sample, which is really these companies secret sauce.
I’ll add, the hope is that if these companies go global, we may have more, better data than ever before. As I’ve hit on a bunch recently, when it comes to second windows of theatrical movies, we really don’t know what their global viewership looks like. So 25 million may be a good number for Netflix, but how does it compare to Jurassic World? Or Avengers: Endgame? Until we have comparisons, we don’t really know.
Thought 3: Hey, this isn’t too inaccurate.
To show this, let’s look at the latest datecdote from our friends and Netflix and Nielsen. Nielsen said 6.5 million folks watched El Camino (the Breaking Bad spinoff film). Meanwhile, Netflix said 25.7 million watched. Knowing that Nielsen only measures US, and making the conservative assumption that 50% of that viewing was on living room TVs…then the measurements line up! (Scroll down to data to see where the 50% comes from.) Again, the data isn’t perfectly correlated, but we shouldn’t expect it to be, especially if we have to estimate the US versus international split.
Thought 4: Really, the difference here isn’t measurement, but publicizing the rating.
For a bit, I’ve wondered why NBC and other broadcasters let Nielsen publish their viewership. Imagine that: you wake up one Monday morning and every trade is prohibited from releasing any viewership numbers. Imagine if NBC insisted that Nielsen couldn’t distribute its ratings to its competitors either!
How would we know what is what?
Essentially, in a bid to increase their streaming subscriptions, Nielsen and other competitors are aping Netflix’s strategy of just releasing PR-friendly data points like on El Camino or The Boys, then asking for big companies to sign up to see the rest. Which is mostly fine since I assume most streamers have access to the data and as I just said, directionally it’s pretty accurate.
The bummer is more for the general public and folks like me who don’t have access to the data. Moreover, the more data stays hidden for the streamers, versus the publicly available data for the broadcasters, the worse it looks for them, even as we don’t quite know the true story.
The Future?
Here’s what I wrote last December, about Nielsen and the (hashtag) streaming wars:
It’s tempting to make exaggerated predictions going either way on this:
Exaggeration 1: Nielsen will die and we will have no measurements!
Exaggeration 2: Netflix and Amazon watch out, someone will figure out all your measurements!…
The future is likely somewhere in between…So we will have the visibility into some of the viewership metrics that Netflix and Amazon fear….And we also will have less clarity because the era of a dominant researcher providing universally accepted metrics–Nielsen–will end, which means firms can cherry pick from the different measurement services even more in the future.
I think that’s too negative in hindsight. In other words, I’m much closer to believing exaggeration #2 will come true than I was last year. For two reasons. First, it’s so easy to get into this space that likely as consolidation occurs at some point, Nielsen or someone will start providing comprehensive ratings on a regular basis. Second, eventually someone will begin publishing lots more data on a regular basis in the trades in a race to win the publicity battle.
Other Contenders for Most Important Story
Hulu Live TV Crashes During MLB Playoffs and NBA Tip-Off
Clearly, I love basketball and went all in on the return of the Lakers. I went to my brother’s house–we share the love of purple-and-gold–to watch using his Hulu Live TV. So guess what? Halfway through the game, the game started freezing and crashing.
This was a bad user experience!
Two points about this. First, when it comes to “user experience”–a topic I think we as a community still don’t quite get, based maybe a pinch too much on my personal experience at a streamer–I think “failure” is probably the most important criteria to judge UX. If a video fails to load, that’s a failure. If a live stream stops live streaming, that’s a failure. If a program on the iPad crashes, that’s a failure.
While we love to talk about algorithms, search bars and design, really the “failures” will determine streaming video success or failure. (So Disney+, watch out for this! Apple TV+ too!).
Second, right when you think sports is dead, you remember, oh yeah, folks love, love, love their sports. If Hulu Live TV was crashing for a rerun of House Hunters, no story. But for big events–this previously happened with the Democratic National Debate–then outrage. Just another data point that shows the power of live events like sports for TV.
TCM Moves Off Basic Package for Comcast
On the surface, Comcast moving TCM to a higher tier sports package will NOT move tons of needles. But it speaks to a few themes I’ve seen again and again as the streaming wars heat up:
– First, conglomerate-launching-streamer on conglomerate-launching-streamer crimes. Comcast, who is launching Peacock, tells AT&T, who is launching HBO Max, they won’t keep paying for TCM, banking that not enough customers will complain. They may be right, but this won’t be the last tit-for-tat in the war between distributors to keep costs down.
– Second, the ever shifting value of “classic movies”. As Andrew Rosen is fond of pointing out, The Criterion Collection wasn’t enough to prop up FilmStruck, which AT&T shut down last year. Yet, classic movies and collections like Criterion continue to shift from streamer-to-streamer as the perceived value stays high, but the costs seem too much. I have a feeling that for all the hopes for classic films, outside of a handful of truly valuable films, most older films don’t generate the ROI to keep these pricey deals going.
– Third, yet, there may be some value that may not show up in usage metrics. There is that old anecdote that Netflix saw that folks kept “classic” DVDs in their queue like Citizen Kane, even if they never actually rented them. They just planned to watch at some point because classic movies are the “broccoli” of videos. This, my friends, is a tough data problem: how to value films folks don’t even interact with. (Meaning the presence of a film or TV series may be valuable to customers, even if they aren’t currently interacting with it.)
Disney and Verizon Deal
Disney signed a deal with Verizon, where Verizon will offer 12 months free Disney+ to its cellular subscribers. As I wrote last August, nothing shows the power of oligopolist subscriptions better than these free video giveaways. In layman’s terms, Verizon, Sprint, AT&T and T-Mobile make so much off your cellular bill each month that these giveaways barely show up in the bottom line.
To watch for, though, is the exclusivity piece going forward. AT&T will focus on HBO Max, because they own them. T-Mobile offers “Netflix on Us” (plus my update below) and Sprint sells Amazon subscriptions and offers Hulu for free. So Peacock likely won’t have a cellular partnership option, unless all the cellular companies offer multiple free giveaways or make it the subscriber’s choice, which I doubt. (Apple TV+ is also essentially the give away for its own devices, but likely won’t make any of the cellular deals either lest it offend the other carriers.) Honestly, I’d love to see/write a rigorous rundown on this topic.
Data of the Week – Living Room TV is Biggest Device for Streaming
By the way, my “data of the week” doesn’t have to be current! I missed this article from Recode at the time, but apparently at one of their journalist soirees, Netflix revealed some usage data. Specifically, how people watch, and it’s overwhelmingly living room TV. Even Youtube has more and more viewing on living room TVs. Which, if you’re about to launch a mobile-only subscription video service would be a pinch worrying.
M&A Updates – Banijay May Acquire Endemol
Here comes the M&A tidal wave. Two indie–as in non-Hollywood, specifically European–production companies could merge. This could be a $2.2 billion dollar deal, but most of that would be Banijay acquiring Endemol’s debt. (The article does a good job laying out the facts.) This is the type of “content arms dealer” that would benefit the most from leaning into the streaming wars–they don’t own distribution currently–though it also shows the limitations from a profit perspective of that approach: if you don’t make hits, you aren’t as valuable. (Also, somehow Disney owns part of Endemol, because of course they do.)
Entertainment Strategy Guy Update – Quibi, Quibi, Quibi
Two news stories on Quibi, which launches next April. First, Quibi sold out its advertising inventory of $150 million. This is a great example of why you should have “priors” before you judge news like this. Is $150 million a good number? I don’t know. $500 million would be better, $50 million would be worse. Meanwhile, if Quibi doesn’t have subscribers, none of the advertising commitments matter because they’ll have to be returned.
Also, Quibi has T-Mobile as a launch partner. Which again is fine. Probably not as good as Verizon, but they went with Disney+.
Lots of News with No News
Netflix and Password Sharing
If you read the actual transcript, Netflix had nothing new to announce on password sharing. This has been a misreported story. Netflix is not cracking down on password sharing.
On one hand, we obsess about Netflix. On the other, with their cash flow, this was totally expected and seemed to go off without a hitch.
All the conferences (Vanity Fair New Establishment; WSJ Tech Live)
I didn’t get invited to any fancy conferences, mostly because as an independent, anonymous writer I choose not to pay for them. Still, the amount of actual news seemed fairly sparse from the two dueling (Wall Street Journal vs Vanity Fair) conferences.
Management Advice – Try a Five Hour Work Day
Scroll down to the end of Matt Levine’s latest column or read the full thing at the Wall Street Journal for some terrific anecdotes about a unique German workplace. Essentially, the average human has about 5 great hours of work in them, and if they focus on those they’re more productive. Which aligns with the theories about Deep Work from Cal Newport. So a German compnay only has employees come in for 5 hours, and you can’t get distracted during those five hours. I love it.
Again, ask yourself: Is your work productive (adding value) or work?
