With all the earnings news last week–including reports from Amazon, Google, Apple, Comcast, Discovery and more–you’d think we’d have gotten really juicy news. But I didn’t see it. Lots of “interesting” stuff, but nothing truly groundbreaking. However, two separate product announcements drew my attention. And I’ll be honest, I think both plans have big flaws.
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Most Important Story of the Week – Two Worrying Product Announcements in the Streaming and Podcast Wars
Launching new products is tough. So let’s be clear: my armchair quarterbacking benefits from hindsight and the knowledge that I don’t have to make these decisions.
But while it’s tough to launch new products, it’s often easy to point out bad launches. That’s because the tool to diagnose bad product launches is so easy to apply. For my money, there is nothing better than the “marketing framework” as taught in most business schools, 3C–STP–4P. (Which are Customers, Company, Competitors–Segment, Targeting, Positioning–Product, Placement, Pricing and Promotion.)
Products (or companies) can fail in two ways. First, they have a bad strategy. That means they fail to diagnose the strategic situation, or fail to target the right segment. (Or often, they fail to target any segment.) In this case, it doesn’t matter if your “4P” marketing mix is bad, the strategy underlying it isn’t sound.
The second failure is having the right strategy, but failing to execute it with the right decisions. The two failures this week are of the second variety. In both cases, I like what the companies are trying to do, strategically. The problem is the implementation of the 4Ps. Fortunately, mistakes like this can be fixed more easily.
Apple Launching a New Podcast Subscription Product, but Still Has Bad UX for Podcasts
The news is that Apple has decided to enter the “podcast wars” with the ability to subscribe to podcasts.
Overall, I like this strategy. Apple doesn’t currently take a cut of any of the advertising airing on podcasts on its platform. It designed podcasts to be creator forward, meaning anyone with a Podcast RSS feed can be featured on iTunes, and millions of podcasts have taken advantage. But given that they don’t control the advertising ecosystem, they are way behind Spotify in terms of monetization and likely can’t catch up. Letting podcasters sell subscriptions makes sense strategically, then.
The challenge for Apple is getting the product right. In this case, Apple released another update to their iOS, and it again jumbles up how folks can simply download and subscribe to podcasts. For years, Apple has neglected the podcast app, but in their hurry to catch up, Apple is mimicking features from Spotify, Youtube and even social platforms. Apple is treating podcasts the way Twitter embraces followers or Youtube uses video, which is as social content. You can even see this in their press release, which touts “discovery” and following creators. Of course, this means algorithms trying to surface buzzy content.
That’s a mismatch between product and strategy.
Specifically, I still don’t think Apple understands heavy podcast users. Most folks listen to the same set of podcasts on a daily or weekly basis. Think the hardcore followers of Joe Rogan, NY Times the Daily or Bill Simmons. These folks listen to every episode, not a social feed a la Facebook. Few hardcore podcast listeners are actually struggling with a lack of new content. If anything, most heavy podcast listeners have more podcasts than they’ll ever know what to do with. What they want is a simple, easy way to see what new episodes from their favorite creators are available. But they also want to listen, in some cases, to all the episodes of a creator, not just the latest. Apple’s latest redesign seems destined to irritate these streamers.
So my judgement? While Apple identified a smart segment to target–folks looking to subscribe for ad-free listening–their product does match what customers actually want. The good news? Well the next company did much worse…
AT&T/Warner Media’s HBO-Max with Ads for $10
AT&T, on the other hand, is getting another P wrong, price. They identified that customers who cut the cord for financial reasons want cheap content. And they aren’t wrong. Witness the boom in free ad-supported streamers to see this growth in real time. (Of course, one could cynically ask if AT&T is truly targeting this segment, or simply listening to their ad-sales team…)
So fair enough. AT&T identified a need, and developed an advertising product to match it. Then they offer it for…checks notes…$10 a month?!?!?
(According to a leak from CNBC’s Alex Sherman.)
That feels way too high to me. So many ad-supported streamers are free (Pluto, Tubi, Xumo, ad infinitum) or the other streamers with ads are much cheaper (Hulu is $6 with ads and Peacock is $5 with ads). If you’re offering ads, customers immediately expect a big discount. AT&T, though, is stuck between their cable distributors and retail customers, so $10 is a compromise to appease both sides, and it may end up still pissing off both: cable distributors will take a hair cut, and customers won’t see the value in $10.
Further, there will be some confusion with the offering. Apparently HBO content won’t have ads in the new plan, which sounds like a good deal if it lasts, but the new HBO day-and-date movies won’t be included. So AT&T is risking lots of customer confusion and irritation. Or the new price is so good, that everyone shifts to it and AT&T has fundamentally lowered their ARPU. Pricing of all the Ps may be the hardest to get right, but I’ll say I think HBO Max is more likely wrong than right at this price.
(By the way, there was one additional product announcement this week, or a leak of one. Netflix is testing out a new “Play Next” feature to handle folks who scroll and can’t find anything to watch. I’ll discuss that in a future column, or when it is announced officially.)
Almost Most Important Story of the Week – NHL Signs with TNT/TBS (And HBO Max)
That wasn’t the only big announcement from AT&T this week. HBO Max is getting live sports, in another fascinating turn for the streaming war for sports. The news is that TNT/TBS/HBO Max are splitting the rest of the rights for NHL hockey for the next seven years, adding to the big payday for the NHL ($600 million total per year between ESPN and TNT/TBS.)
This news is as notable for where the rights are ending up (HBO Max and friends) as for where they aren’t (Peacock and NBC’s cable channels). Given that NBC had been the home for Lord Stanely’s Cup for 16 years, most folks expected NBC to retain some rights for the NHL when the dust settled. And given that Comcast touted sports as a big piece of Peacock’s value proposition, presumably the NHL would be a part of that. But the coming death of NBC Sports channel clearly made the economics not work for NBC-Universal. Conversely, Peacock could have a limited budget for sports, and felt that current soccer rights along with the new WWE deal made more sense than the NHL. I can see taht logic, though I would have thought there would have been room for all the sports.
Conversely, AT&T needs more sports to truly play in the arena, and on paper this helps build that out. TNT/TBS (and fine HBO Max) are now essentially on par with FS1 for live sports. FS1 has baseball, college football and college basketball, but TNT/TBS now offer MLB, NBA, NHL and March Madness. That’s a pretty good collection.
Update To An Old Story – Youtube and Roku Going to Battle in Latest Bundling War
Another sneaky fun story was the latest battle in the “bundling” wars, or a scenario I’ve called “aggreggedon” for the streamers. For lack of a better analogy–who am I kidding, I love this analogy–the scenario in streaming is in a lot of ways like the two wars in Game of Thrones. The first six seasons were all about the “fun” war between humans, the War of the Five Kings. While all the human kingdoms were killing each other, another, bigger, badder threat–the White Walkers–stormed in from the North.
That’s the streaming wars in a nutshell. Disney+, Paramount, HBO Max, Discovery Plus, Prime Video and countless others are trying to replace Netflix on the streaming throne. Meanwhile, the real threat may not be other streamers at all, but the “bundlers”, the technology companies controlling TV sets. The streamers provide what you watch; the bundlers give it to you. Like cable of old, but more focused on devices or operating systems than cables in the ground. (Read one of my most popular articles on this here.)
The latest dust up comes between the king of the ad-supported streamers–Youtube–and Roku. Youtube TV went dark on Roku over the latest disagreement in streaming terms. (Though the Youtube App itself is not impacted.) As the streaming wars continue, we can expect more blackouts like this. And over topics that aren’t always about money. Roku insists the latest deal isn’t about money, but Youtube demands over hardware components.
Disney+ on Comcast’s X1 and Flex
Meanwhile, Disney+ continues its policy to debut on as many platforms as possible. The latest is Comcast’s X1 and Flex platforms/devices, which added Disney+ streaming and subscriptions. I love Comcast’s plan here. As the internet/cable goliaths see a difficult monetization environment for cable TV, they’ll rely on the internet. Comcast, though, will try to grab a piece of the revenue by selling subscriptions through their Flex devices. That’s a smart strategy, and essentially turns them into a “bundler” like Roku, Apple and Amazon.
Other Contenders for Most Important Story – Earnings Update – Subscriber Numbers
As I said in the introduction, we had quite a few companies report quarterly earnings, from Big Tech to Big Entertainment. I’ll unpack some specifics in my next column, but the most buzzy numbers are the updates to subscriber/usage numbers. Here are the highlights:
– Discovery is up to 15 million global subscribers. (Note, they don’t break out subscribers by country or territory.)
– Apple has up to 660 million global subscribers across all its businesses. (Note, they don’t break out Apple One or Apple TV+ subscribers.)
– Peacock is up to 42 million accounts, with 14 million monthly users and 24 quarterly users. (Note they don’t break out paying subscribers.)
– Prime Video had 175 million unique users in the last year. (Note, they don’t break out subscribers by country, nor monthly or quarterly users. They also announced 200 million current Prime members, but not the total Prime members over the last year.)
Lots of News with No News – Endeavor FINALLY Goes Public…And goes on a PR Blitz
This week the agency formerly known as William Morris Endeavor went public as Endeavor. Of course, that agency is now only one part of the conglomerate of entertainment products, stretching from UFC to bull riding to sports rights licensing to marketing and branding to producing films and TV to, yes, managing an agency. This is probably more news than some other stories in this section, but still going public so that the Private Equity backers could get their return was always the next step in this company’s lifespan, even if the pandemic uncertainty delayed it a year or more.
To celebrate, Endeavor made quite a number of executives eligible for interviews–where honestly not much was said–from every news outlet to newsletter across the board. About the biggest takeaway is that Endeavor’s main plan for growth is mergers & acquisitions. So expect that in the future.