The common wisdom of the Coronavirus may have calmed down slightly. The hyperbolic take that “Everything has changed”–see Politico here. Or Deal Book this week. Or countless others–has given way to the narrative that, “Recessions/pandemics accelerate trends that were already occurring.”
At first, I bought into this little bit of folk wisdom. Then, as I reflected, I realized I was basing a lot of assumptions on a bit of common sense that frankly, has no evidence to support it. It’s rebutted mainly with this key question:
Wait, what data/research/experiments/history have shown that recessions or pandemics accelerate trends?
My goal is to arm folks with antidotes to narrative-based thinking. Sometimes that just means calling it out when I see it. The above narrative absolutely falls into that category. Just because some trends may get accelerated in a recession doesn’t all trends do. Then, consider that we don’t have enough data points to justify this thinking. (We’ve had two pandemics and only a handful of recessions in the last fifty years. 5 data points does not a trend make.) Finally, since we don’t actually have any data to support this, it’s mainly used as a tool to reinforce pre-existing biases. (If you’ve long predicted tech/digital will disrupt everything, the above saying simply reinforces your priors without any additional evidence.)
If some of the thinkers/forecasters/soothsayers out there led their pronouncements with “I believe this will accelerate trends”, then I’d have less of an issue. But instead, it’s put as if it’s a proven law, “Since we all know recessions accelerate underlying trends…”
Now more than ever, predicting the future is incredibly hard. So be careful out there folks. Especially when you come across fortune tellers disguised as experts. On to the story of the week.
Most Important Story of the Week – Quibi Launches. Success or Failure TBD.
Over the last two weeks, if you squint through the news, you could just make out a front page of a website that entirely ignores Covid-19. For example, this week I was able to stack up a series of important stories, none of which are directly Coronavirus related.
The most important story this week has to be Quibi, a big bet in a time when everyone is making huge bets in an age of tremendous disruption. You almost (but don’t) feel bad for Jeffrey Katzenberg and Meg Whitman when they planned a huge $1.7 billion content war chest…and then Apple just quadrupled that on a TV service that is their sixth most important priority.
Yet, this week we all finally got a look at Quibi. And I read a ton of great takes. Here are my favorite insights I came across:
My Favorite Insights from the Interwebs
Quibi has news…which could be an edge by @TZM
Here’s that thought in Tweet form:
After 48 hours, I’m slightly more optimistic on Quibi. Production quality is clear to see, and there is a wide range of content. Daily news shows differentiate from other SVODs and can build consumer habits. 1/
— Tavish ZM (@TZM_TMT) April 8, 2020
As I wrote in my column on live TV a few weeks back, television is a bundle of five different types of programming: scripted TV, reality, news, sports and kids. Actually, scripted TV, reality TV and films all serve roughly the same purpose: general entertainment. Most streamers are entirely focused on general entertainment and kids.
Which leaves a gap for sports and news.
This is another sub-tweet at Netflix. “Neverflix”, as I’ve called them before, has decided that certain content categories will never appear on the service. Like news and sports. Which means there is white space for people to carve time into consumers viewing habits. Quibi having a good supply of quality news could help drive customer adoption. (Peacock could benefit from this too.)
Quibi Needs to Be On TVs by Variety (and others)
Everything in the subscription game comes down to “total addressable market”, an often wildly inflated estimate used to justify skyhigh valuations. Quibi could point to everyone who owns a smartphone and say, “That’s our addressable market.” This would be wrong.
The addressable market is really people who watch TV. BUT! People tend to watch on certain devices. And despite the rise in mobile viewing, a huge majority of TV viewing is still via television screen. Even for kids! This means that the actual targeted segment for Quibi is a fraction of the total addressable market compared to every other streamer. That’s a huge disadvantage right out of the gate. Why artificially shrink your addressable market?
(BTW, this problem just plagued Spectrum, which rebooted Mad About You and plagued AT&T’s Audience Network. And it doomed Microsoft Studios before it started.)
My benefit-of-the-doubt guess is that Quibi prioritized launching on mobile only (Android, iOS) before providing functionality to all living room viewing. Again, I hope that’s the explanation. But it still feels like a miss.
Is Quibi’s 90 Day Free Trial is Too Long? by Kirby Grines
Yes! Especially since all their content is particularly short to begin with, there’s a very good chance customers will be able to watch all they want in those 90 days. Churn is the name of the game in subscription streaming. Notably, Netflix is moving away from free trials globally.
This seems risky.
It’s Too Soon to Bury Quibi by Andrew Freedman/Alison Herman
I’m giving Quibi a shot and putting them in my ten part acronym for the streaming wars:
NPv-HD-CA-HPQ-Y
Why? Because with the content spend and hype, I think they have a chance. Should they be above Showtime and Starz? Maybe not. But those apps don’t seem to be gaining in customers. Honestly, my upside case for Quibi is 5 million subscribers in a year. Or they could run out of money well before then. Or get acquired. But it is too early to bury them. They have a shot.
My Insights
Another Platform…Another Lack of Library Content
The solution to not having a library seems to be to focus on just having a lot of originals. As opposed to Apple TV+, that didn’t even have a lot of content.
From what I can tell, Quibi is going to start with lots of essentially movies. (An estimated 7,000 pieces of content in year one, but it’s unclear if that counts the 10 minute episodes or not.) If it is, that’s 1,000+ hours of content. Which is good…but that’s over one year. And up to half could be news stories, which isn’t quite the same thing. Add in the fact that lots of content won’t appeal to lots of people and I could see it running out quickly.
Mobile May Just Be a Music/Kids Platform
That was my take earlier in the week and I stand by it. If you look at this quick glimpse at Youtube’s most subscribed channels, then it seems pretty clear that mobile video is not-so-secretly “mobile music videos”.
The Content Deals…
Quibi has also let it leak that it’s deals with talent are very talent friendly. As in after a few years talent can walk away with their shows scot free. I don’t know if that’s genius or madness, but it’s one or the other.
Is the content good?
I don’t know! And honestly don’t trust any analyst who says they can tell. Critics can tell you what is critically acclaimed, but evne that doesn’t hold much sway with customers. Let’s wait a few months for the IMDb, Rotten Tomatoes and Metacritic customer ratings to roll in before we judge quality.
Other Contenders for Most Important Story
Meanwhile, there was a lot of other news!
Jason Kilar joins Warner Media
The trouble with predicting executive performance is two fold. First, there are so many variables we often fail to account for. Sometimes great executives work for terrible companies and other times terrible executives happen to work in great companies. And sometimes, it’s a bull market so everyone looks good. Second, when it comes to most executives, except for those at the tippity-top, it can be tough to figure out exactly what they did versus what they took credit for. To add a third fold, there is also the complication that some executives are great with the media, and get glowing praise regardless, and others aren’t. (So they succeed, make money for shareholders, just never get heaping praise in the press/trades.)
The hiring of Jason Kilar–of very early Hulu and then Vessel–by AT&T to run Warner Media is a big swing. He’s not a content guy, which could either be a big deal or a nothing burger. He ran Hulu well, but he was also sitting on literally the best asset of all streamers in the 2010s, day-after-air television. I could argue that the fact he didn’t keep pace with Netflix despite having that asset–and have no doubt it was/is a huge asset still–is as much an indictment as a credit.
But then the context. Sure, he had those great assets, but he was also stuck in a super messy joint venture, trying to please multiple masters in a cash burning industry that is streaming. Could many executives have thrived in that context?
Then he launched Vessel to acclaim, but it was eventually acquired by Verizon and shuttered. That point about acclaim should give us the most pause. (And a bit of worry for Quibi too!)
To top it off, well his press is too good for the accomplishments. I’ve heard his praises sung for years, but again he ran Hulu 8 years ago. Now, it could be because he is the real deal and watch out Netflix, Disney and Comcast, Kilar is coming. Or…it’s just really good press. (He could be the “Kenny Atkinson” of the NBA, for the Bill Simmons super fans.)
We’ll see. My 95% confidence interval in predicting his success or failure is pretty wide.
Disney+ Launches in Europe; India…then Gets 50 million Global Paid Subscribers
Well, Disney+ is firmly ahead of all analyst estimates. Notably, after launches in India and Europe, they’ve now passed 50 million subscribers globally. Someday, they’ll add Hulu subscribers to these numbers too.
Frankly, even as a Disney super fan I didn’t think they’d do this well this quickly.
Apple and Amazon Strike a Deal
Someone called them frenemies. I think that’s actually too close. I wouldn’t have called Russia and Germany “frenemies” in the lead up to World War II. They were just two enemies who had paused hostilities temporarily.
That’s the same situation for Apple and Amazon. Both run platforms (iTunes/Amazon Video) that sell VOD. Both have streaming TV sticks. Both have streaming platforms that want/need to be on the other’s streaming devices. And they fight like cats and dogs to take as much money from the other as possible. But for now Amazon Prime users can buy shows and movies on Apple devices. Presumably Amazon doesn’t have to pay as high of a bounty as Apple usually demands for in-app purchases. (Normally it’s 30%.)
Still, a big deal for distribution purposes. That Amazon lack of in-app purchases has been a thorn in Amazon’s side for a while. (Now we’ll see if Amazon can get the next Fire Phone right…)
M&A Updates
Sprint/T-Mobile Closed
Going from three to four cellular phone providers is a big deal for customers. (Mostly bad.) Given the role mobile plays in connecting customers to streaming–and the fact that they all provide free streamers too–this is a key move for America. We’ll see how it works out.
This happened right before all the Coronavirus news, but is worth noting, given how popular Univision is, and how far it has fallen in value. Being a broadcast only option just isn’t valued by the markets anymore, and for good reason.
