Last week’s news was notable for how much “lots of news with no news” that came across my inbox. In other words, part of me thinks that following the news closely last week probably resulted in more misunderstanding than wisdom. Which we’ll get to, but first, a few companies reported quarterly or annual earnings recently with some genuine news, and we’ll run through the highlights.
(Catch my most important story of the week about Jeff Bezos stepping down as CEO here.)
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Other Contenders for Most Important Story – Earnings Galore
The general theme of earnings continues to be that big tech is making oodles and oodles of billions. How much of that comes from video? Well, we haven’t the foggiest, except for one company…
As advertising revenue has rebounded from the Q2 Covid dip, Google has benefited. They control half of the internet advertising market, and returning ad dollars have gone digital. Notably for entertainment, YouTube drove huge growth in the fourth quarter. For all our focus on the subscription streaming wars, Google’s lead in the advertising streaming wars is considerable. (And I think more sustainable than Netflix’s streaming lead.)
Also, since I didn’t mention it last earnings season, YouTube TV is up to 3 million paid subscribers, even after raising prices, up from 2.2 million last February. Also, the number of YouTube Music/Premium subscribers grew from 20 million to 30 million.
Lionsgate is notable for being one of the most upfront entertainment companies in terms of their overall performance in the streaming wars. Specifically, they release their actual subscribers, for both linear and OTT for Starz. The story there is that growth in linear is flat (not surprising), while OTT grew from 9.2 million subs to 9.5 (which is fine). The rest of Lionsgate suffered from, you guessed it, the pandemic. Overall, Starz on its own probably isn’t big enough to survive the streaming wars. But at least they provide subscriber numbers!
The headline is that Peacock grew its sign-ups from 22 million, as of the last earnings report, to 33 million. They still haven’t reported actual paying subscribers, though even if they did, it would be fairly complicated to unpack, sort of like HBO’s confusing org chart of definitions. This doesn’t bother me as much as it bothers some others. As long as they keep their definitions the same–and keep reporting them–we can monitor their growth. In that sense, the growth seems roughly on the same path as Disney. It’s just less valuable growth. (Paying subscribers are much more valuable than “sign-ups”. If Disney+ were free, who knows how many sign-ups they’d have!)
Outside of Peacock, the NBCUniversal story was one of losses–like other studios–because theaters and theme parks are still closed. Clearly, a VOD-only window won’t be enough to offset the revenue theaters provided. Meanwhile, while Comcast lost video subscribers for the year, it grew its broadband subscriber base overall. (Interestingly, Charter reported that its video subscriber growth was flat in the last year.)
The Netflix of music also had a great year for subscriber growth. Running the Netflix playbook in music, they added tons of users/subscribers, but are only just eking by profit/cash flow. One difference is that Spotify’s profit accounting is much closer to their cash flow. Of that cash flow, for 155 million users, Spotify lost $74 million Euros. Which isn’t the world’s largest deficit financing, but they still seem some ways away from making huge cash flows. And, if anything, competition in music is even tougher than in the streaming wars.
(Fierce Video has a great running story of all earnings if you want to dig deeper.)
Lots of News with No News
Apple and Amazon Earnings
As for Apple and Amazon? They continue to impress by their ability to spend billions on content, but provide next to nothing in terms of performance.
The Golden Globes
To steal a thought from Richard Rushfield, we’re really going to pretend to give out awards to movies when we had a year without movies?
TV awards are a bit more reasonable since everyone was streaming everything. However, I still don’t put stock in awards as a signifier of business trends, which makes me fairly unique among the entertainment observer class. When the body of voters is small and easily targeted–read into that what you will–awards say more about the willingness to spend than about the quality of the underlying shows.
Did Advertisers Pull Out of the Super Bowl?
When I saw the initial “Advertisers pull out from the Super Bowl” headlines, this was trending to be my story for the week. A Super Bowl without Coca Cola? Pepsi? And Budweiser? What’s happening?
Well, reading past the headline, I found out that while “Budweiser” wasn’t advertising in the Super Bowl, “Bud Light” was. Which felt like a distinction without difference. And then Pepsi still sponsored the halftime show, so it’s not like they abandoned it completely. Really, only Coca Cola was missing. Meanwhile, ads still went for $5.5 million per spot, up from $4.4 million as of 2016. And CBS sold out all their spots (while selling quite a few to themselves, see next section).
As an explanation, some commentators speculated that brands were potentially wary about the “national mood” and how comedy would play. To which I say: hogwash. The funny ads in the Super Bowl did just fine. In fact, if your marketing consultants told you something had fundamentally changed in the last year, well, they were probably wrong. When in doubt, things change much slower than we usually think, and that goes for funny commercials. In all, this was lots of news with little news.
(Bonus forecast lots of news with no news: There will be the usual gnashing of teeth over Super Bowl ratings. Don’t listen to it, either good or bad. One data point is not a trend and has huge variance.)
Paramount+ Super Bowl Ad Campaign
The joys of synergy meant CBS aired a lot of ads for Paramount+ during the Super Bowl. I’d caution folks from taking too much away from any one ad or campaign spot–I still remember forecasts that Disney+ wasn’t resonating with Americans based on their ads–because your personal opinion usually doesn’t represent America.
Though we can take away this: ViacomCBS finally seems to be “all in” on streaming if advertising spend is the metric to judge.
Data of the Week – We Reached Peak TV!
The news is that, according to the FX Research department, the number of scripted series finally dipped year over year. If this holds, we’ll have peaked in 2019 at 532 new scripted series.
(Source: FX Networks via Axios data team.)
Of course, Hollywood did this by accident. Or precisely, because of the “Covid Caveat”. As many productions were struggling to resume shooting even in July of last year, we naturally aired less new scripted series.
Could 2021 come roaring back? Definitely, but not for certain. It really depends on how fast traditional studios transition broadcast/cable production to the streamers and whether Netflix pulls back on content spending. (Netflix in particular has such a long post-production period for dubbing that their first half of 2021 may be notably slow.) More likely, 2022 will be the next peak.
Best Amazon Hot Takes
On Twitter, I called for the best hot takes on Amazon in honor of Jeff Bezos’ role change. To start, here’s a fun content release strategy, likely tied to Disney’s carriage on Fire TV:
Interesting to consider how Disney struck deal to get their streaming app on Amazon Fire devices
Since launch, 2 Disney films have shown up every month on Prime Video— ones like Return to Snowy River not yet on Disney+
Same deal with Roku, giving 2 films to Roku Channel monthly
— Josh M Shepherd (@JoshMShep) February 4, 2021
Then two similar thoughts about Amazon’s lack of consumer products for kids:
The thing to watch for is not necessarily prime video itself, but the channels you can get through Amazon. Also, the fact that they have yet to create a direct show to merchandise pipeline is mind-boggling.
— Kris Longfield (@KrisLongfield) February 4, 2021
They have a D2C media business and a D2C retail business. Why in the eff have they not capitalised on this with a killer kids franchise? They’ve taken content as marketing to the nth degree and now give less of a sh about content as they did about marketing…. SAD!
— Emily Horgan (@emohorgan) February 4, 2021
Lastly, a good reminder that Amazon is the everything store of video:
With all the focus on SVOD people forget what a big share Amazon have of EST and rental VOD – that and physical home ent and licensee CP sales gives them additional power to what has been mentioned here.
And apparently it's an awful place to work
— Poppins (@wisdomofpoppins) February 4, 2021