Tag: Netflix

WandaVision and Coming 2 America Both Smash the Streaming Competition – The Streaming Ratings Report for 7-April-2021

If you’ve been reading my “Steaming Ratings Report” for the last few weeks, you might have noticed it has been fairly Netflix-centric. Netflix is the 600 pound gorilla in the streaming wars. Heck, it is more like a Mighty Joe Young or Rampage-sized super gorilla, marauding over the globe, buying sequel rights for half a billion at a pop. 

But if the movies have taught us anything about super gorillas, it is that nature always finds a way…to give them a worthy foe. In King Kong’s case, Godzilla. In Netflix’s case, that’s HBO Max, Disney+ and, this week, Prime Video, dropping formerly intended-for-theaters now straight-to-streaming blockbusters. Like Coming 2 America and Raya and the Last Dragon, which was Disney+’s latest “Premier Access” video.

Today, we’ll look at Coming 2 America in depth, and tomorrow I’ll do a special article on Raya over at my website. In addition to Coming 2 America, I have some unique insights on WandaVision now that it has finished its run.

(Reminder: The streaming ratings report primarily covers data from Nielsen’s latest report, which covers the week of March 1st to 7th and is United States-focused. However, we also consider Netflix datecdotes, daily top ten lists, Google Trends and IMDb data in evaluating content. Also, to get this report in your inbox, sign up for my newsletter.)

Film

IMAGE 1 - First Film

Let’s start with the good news for Prime Video, which was that their film did really, really well. It broke the “20 million hours” of total viewing threshold, which only three other films have done on their opening weekend going back to March of 2020.

Here’s the first week numbers for all films on Nielsen, going back to March 2020:

Screen Shot 2021-04-07 at 3.35.17 PMIMAGE 3 - Chart

What’s the biggest takeaway from this? That Disney+, HBO Max and Prime Video can compete for viewership as high as anything Netflix can deliver for a single film. Impressively, Coming 2 America joins this list as a film released on a “Friday” meaning it only had 3 days of viewership in the Nielsen ranking.

Of course, blockbusters aren’t made just by opening weekends, but staying power. What can we expect from Coming 2 America in its first full week of release?

According to the Nielsen data, the average film loses 63% viewership per day from week one to week two. Meaning, if Coming 2 America performs to the average, it will have 15.1 million hours of total viewership next week. Anything over that means its decay rate is beating expectations; anything lower means it is decaying faster than streaming films on average. You could convince me either way: on the one hand, Prime Video doesn’t release nearly as much content as Netflix, so folks may keep watching it; on the other, folks don’t watch Prime Video as regularly. In our one Prime Video data point, One Night in Miami decayed by 70% week over week.

All of which leads to the question, “Was this a good investment for Prime Video?” Industry reports put the price tag for Coming 2 America at $125 million for Amazon. In general, you’d have to say it is pretty good to get nearly as much viewership on an adult comedy like this compared to what Disney and HBO spent on their top two titles in December. (Both of which run into the hundreds of millions of dollars, versus the merely $125 million price tag of Coming 2 America, a film which cost $60 million to make.)

Or think of it like this: Prime Video spent about 33% more, reportedly, on Coming 2 America ($125 vs $80 million) than Borat, but got more than twice as much viewership. 

Tentatively, yeah I’d say this deal worked out for Amazon, though I still think that Coming 2 America would have done pretty well at theaters, a counter-factual we’ll never find the answer to.

Other Quick Notes on Film

– Fare thee well to Nomadland and The United States versus Billie Holiday on the film list. I was hoping this could be the week that we feature four different colors on the same top ten, but we’ll have to wait, maybe until Nielsen adds HBO Max viewing to their tracking.

IMAGE 4 - Nielsen Top 30

– What about Raya and the Last Dragon? Well, it was in the 17th spot on the top 30 list, which has to be a disappointment for Disney. (Mulan, for context, was 10th.) But not a huge disappointment, because getting folks to buy a movie for $30 is fundamentally more valuable than just watching it! But this is a complicated topic, so I wrote an entire article on it for tomorrow.

Bigfoot Family is a good example for why looking at both “total hours” and “viewership per day” is instructive. (The latter is also a metric you’ll only find here!) It actually rose in total viewership week-over-week (going from 5.6 million hours to 6.1) but still decreased in per day viewership by 52%.

– Netflix had some other new films make the list, including Moxie from Amy Poehler and Biggie: I Got a Story to Tell, a documentary, at 4.3 million and 3.4 million hours, respectively.

Television

IMAGE 5 - TV Ratings Last Six(Spoiler warning: I intend to make some jokes about WandaVision’s plot.)

We spent a lot of time on film today, since it was pretty fun, but you know what? We have a fun story with TV to tell too. Specifically, today is the day that WandaVision gets its turn in the spotlight (or should I say “reality altering bubble”).

As you can see above, WandaVision is unique compared to most streaming shows because it actually grew viewership week-over-week. It debuted a new episode weekly and grew the audience along with it. Now that the series has ended, we can compare viewership during its entire run to the entire run of some other Netflix series. The total viewership of WandaVision actually compares favorably to other shows on Netflix. Over 8 weeks of time, as opposed to one weekend, WandaVision was the twelfth most watched show in my data set:

IMAGE 6 - Total Viewerhsip

(This chart was made by sorting all “first run original” series on their respective streamer, through the first 8 weeks of viewing.)

But let’s not stop there. It isn’t very fair to compare WandaVision with only 9 episodes released over 8 weeks to some of these shows, like The Crown, Ozark or Cobra Kai which have 40, 30 or 30 episodes released to date. So let’s trot out our “viewership per episode” metric I’ve been using. And we get this…

IMAGE 7 - VPE

Suddenly, WandaVision and The Mandalorian are now up to the fourth and fifth most popular shows according to this bespoke measurement. And these would probably hold up even if we had more data from 2020. (The Queen’s Gambit likely would have added additional viewership during its weeks seven and eight, if we had the current reporting system of three top ten lists.) 

Admittedly, this metric biases for series that have recently launched, since they tend to have many fewer episodes. Still, among that class of show, WandaVision and The Mandalorian likely outperformed most Netflix Originals.

But can we go one step further? As long as we’ve taken over an entire town via mind control, we may as well bring back our dead robot-husband, right? 

Let’s magic into existence one more metric. Unlike the other shows on this list, WnadaVision episodes were short. The first episode was only 30 minutes. Half an hour! And a lot of the run time is just dubbing credits. (Literally, like five minutes worth.)

So could we account for that? A “viewership per available hour” metric, meaning it accounts for the total viewership for the total amount of content folks could watch? Why yes we could!

IMAGE 8 - VPAH

There you have it. An analysis of the Nielsen data you won’t find anywhere else. And yes, in this metric, WandaVision leaps to the top spot. The meaning? I believe that more unique viewers likely tuned into this show than any other Netflix Original released this year, except for maybe Bridgerton. Or The Mandalorian and maybe The Queen’s Gambit in Q4 of 2020.

By the way, this shouldn’t be too surprising! The two most popular franchises in America—after Knives Out of course—are Marvel and Star Wars. And when you look at Google Trends, yep, these are our two highest ranked shows for longest. First, without The Mandalorian, and then with it:

IMAGE 9 - Without Mando

Image 10 - With Mando

So I just dropped three different, totally valid, metrics to judge TV show performances. (Technically four with Google Trends.) Which metric is “best” to judge a show? Well, that depends! Entertainment isn’t like sports, which have clear winners and losers. Instead, it depends on what your business metrics are how the various shows support those metrics.

For Disney, these numbers are fantastic. It means using their weekly release model, they really can drive as much subscriber tune in as the top Netflix series. Of course, Netflix in some cases is launching four or five series at this level every quarter. Really it is a question of tradeoffs: is it better for one series each quarter to keep people subscribed, or multiple series every month that drive higher usage? That’s a business strategy question we’ll see play out this year.

Other Quick Notes on TV

-As I speculated last week, Ginny & Georgia went on to grab the top spot in the streaming ratings. If the weekly top ten list is to be believed, it could hold onto that spot for a few weeks.

– The latest crime documentary is Murder Among the Mormons, which launched to 9.8 million hours viewed. Which is good, but behind some other recent launches.

– Since Nielsen separates out “originals” into their own top ten list, we’ve seen some older Netflix originals finally show up in the top ten viewing. The latest is Orange is the New Black, with 4 million hours of viewing.

Competition

The most popular piece of non-streaming content during the week of March 1st was fairly clearly the Meghan Markle-Oprah interview that aired on Sunday March 7th. Unfortunately, Paramount+ isn’t tracked by Nielsen, so we don’t have streaming ratings. But 17.1 million people tuned in live for this one show, which shows you how much room some the streamers still have to grow.

Coming Soon! 

– The big story of the week, to continue the gorilla theme, is that HBO Max is out touting that Godzilla vs Kong did very well for them. Which is notably more than they said about Snyder Cut. (Others said that the new Justice League did well, but not HBO PR.) Fingers crossed we’ll get more data on this in a few weeks, though so far Nielsen hasn’t released any HBO data since Wonder Woman 1984.

Netflix Claims the Top Spots While Disney+/Hulu Dominate the Film List: The Streaming Ratings Report for 31-Mar-2021

Last week, the Nielsen Top Ten lists broke new ground when Hulu had its first title earn a spot on one of the three lists. This week, Hulu doubled its performance, earning two spots!

IMAGE 1 - T30

As always, caveats abound. In particular, the top films have much less “total viewership” than TV series, since they simply aren’t as long, almost by definition. (A film is 2 hours, whereas most drama series are at least 4 hours, often 10 hours long.) This point is worth keeping in mind as the theme of this week, especially as we check in on how “competitive” the streaming wars are in top content.

(Reminder: The streaming ratings report primarily covers data from Nielsen’s latest report, which covers the week of February 22nd to 28th and is United States-focused. However, we also consider Netflix datecdotes, daily top ten lists, Google Trends and IMDb data in evaluating content.)

Television

IMAGE 2 - TV Ratings Last Six Weeks

As usual, the top spot on our weekly top 30 list is from Netflix, but close on its heels is the indefatigable WandaVision, whose penultimate episode powered its way to the second place spot on the “Top Ten Originals” list by Nielsen. (Along with a new record in viewing.) Based on Google Trends interest, we can rightly bet that the finale will go even higher. We’ll have to wait to see if it takes the top spot next week. 

Image 3 - G Trends

The show vying to keep it off the list is Netflix’s new drama Ginny & Georgia. At first glance, its opening weekend was a bit soft, below stronger debuts from both Firefly Lane and Crime Scene: The Vanishing at the Cecil Hotel. To put this in context, here’s the first two weeks of Netflix’s first run TV series since November:

IMAGE 4 - Show one Week

I’d call a show with 30 million viewers in one week “great”, and 20-30 million “good”, and 10-20 million “meh”. (Yes, “meh” is a technical term.) Staying below is 10 million is a dud. Ginny & Georgia is currently in our “meh” tier through week one. The bad news for Ginny & Georgia is that most shows don’t increase viewership over time. Here’s a sample of first run shows that premiered since December:

Image 5 Week Decay

In this admittedly small sample size, 7 shows had smaller audiences and only two had bigger second weeks. But there is some good news for G&G. Some shows can take time find their footing, as both The Queen’s Gambit and Bridgerton showed last year. As the Google Trends chart showed, unlike most Netflix shows, Ginny & Georgia had a slower rise than most new releases. But it looks like that rise will hold; G&G nabbed the top spot in the Netflix TV like it daily top ten list, which is a good forecaster of Nielsen ratings. (More to come on this in future articles.)

Image 6 - NFLX Top Ten

The one limit to top ten data is that a show can take the top spot, but that could be more of a reflection of a light TV slate than a strong individual show. Given that it looks like G&G sticks around for a few week, I’d say it has a good chance for a strong second week. We’ll see. 

Other Quick Notes on TV

– I’m working on classifying everything into “kids” versus “adult” (but not adult meaning “pornography”, I mean like older folks). This week felt light on true kids content in the TV space, with only Cocomelon holding down the younger kids fort. Cocomelon is clearly the biggest beneficiary of kids watching and rewatching the same limited number of episodes. 

The Crew had a fairly steep drop off from a weak start, so we can officially say it bombed. Yes, that’s a bit harsh, but hey, you’re not tuning in to a ratings report for me to pull my punches, are you? Overall, sitcoms do seem to struggle in the metrics (including, datecdotes, Nielsen and weekly top ten). Either 1. Streaming doesn’t work for sitcoms or 2. Netflix doesn’t have nearly as good a track record with sitcoms as hour dramas. (Before you ask, yes I’ve considered that sitcoms have shorter episodes, but the success of some of the Netflix crime documentaries, which can be shorter than sitcom seasons, refutes that. Moreover, that should’t impact subscriber households. More to come!)

Film

IMAGE 7 - Film First and Second Run

Let’s start with the content geared towards adults first. I Care A Lot had a bigger second week than its premiere week, which has been the trend for popular films launched on a Friday. Being able to hold onto the third spot in the weekly top ten is great for a feature film, though also some evidence that the week was lighter in content overall.

Meanwhile, Nomadland stayed on the list and The United States versus Billie Holiday made it onto the top ten. For Hulu, this is good news. But they still have quite a ways to go. 

Consider this: we know Hulu has about half as many subscribers as Netflix in the US. (About 40 million for Hulu; about 65 million for Netflix.) Assuming these three films were all about the same length (they were), and everyone watched about the same amount, then roughly 1 out of every 38 Hulu subscribers watched Billie Holiday and 1 in every 20 watched Nomadland, but 1 in every 5 Netflix subscribers tuned into I Care A Lot. 

Maybe I Care A Lot is simply a better film with more inherent interest. More likely, Netflix is still the biggest player in the streaming game. That means it can drive extra viewing to its titles, which is the biggest challenge for the upstart streamers to battle.

Moving onto kids, the big player is still Disney, which placed four kids films into the top 10, including the second week of Flora & Ulysses. (Using the percentage of viewership, about 1 in 10 Disney+ subscribers watched that in its first two weeks.) Meanwhile, Disney as a whole grabbed 7 of the top ten film slots, though Netflix’s animated Bigfoot Family came in second to I Care A Lot. In other words, Disney claims the library title slots, but Netflix claims the “new release” spots. 

Other Quick Notes on Film

The Conjuring 2, a licensed title from 2016, is the latest library title to take the top spot after being a new release on Netflix. This title is owned long term by Warner Bros, so it joins the list of titles that one wonders when it will permanently move to HBO Max.

– Another good international title launch. Bigfoot Family is a Belgian-French production and it debuted to the second spot in the film top ten list. Some other foreign animated titles have done well as well, most notably the Spanish-produced Klaus. My working (and not very original) theory is that dubbing is simply easier in animation.

Competition

The theme of this week may be “let’s not get carried away” with Hulu catching up to Netflix. (And the rest of the streamers as well.) As notable as it is that Disney dominates the film list, the film list, that is frankly an easier list to dominate as a smaller service. The rule of thumb at the streamers is that “films bring customers; TV keeps them”. 

Hulu, of all the streamers, should be great at the TV side of the house, given how much day-after-air TV they have. Yet, they still haven’t really cracked these lists in TV. But they did in film. Looking at the percentage of viewing by the major streamers this year, clearly Netflix’s size is still dominant:

Image 8 - Totals

Last point: This was the lowest week in total viewing measured in the top 30 list since Nielsen began releasing it this year, with 207 million total hours compared to 290 during the Christmas break.

Coming Soon! 

– We’re starting to get hints that the Snyder cut of the Justice League really is doing the business for HBO Max. Both Antenna and Samba TV have speculated on the growth it drove. I’ll opine on this after I’ve collected all the datecdotes and, hopefully, we get Nielsen data on it. (Same for Raya and the Last Dragon, which should come next week.)

– Netflix has released a stream of datecdotes recently, but the most interesting was announcing that in addition to 33 million viewers at launch, Our Planet has had 100 million viewers over its lifetime. This number begs for context, so I’ll work on it. (That’s the third “more to come” of this column.)

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Did Netflix’s The Crew Stall Out? – The Streaming Ratings Report for 24-March-21

When I sit down each week to pull data for the “Streaming Ratings Report”, it honestly feels like Easter. (Why Easter? Well, we’re closer to that than Christmas and my eldest child is excited for candy delivered in plastic eggs.) This week, my chocolate-filled egg was a new color on the Nielsen rankings. That’s right, a new color! 

Check it out yourself:

IMAGE 1 - Top 30

For the last few weeks, the top ten has only been Netflix and Disney+. The other two big players, Hulu and Prime Video, haven’t had any shows or films make the list. Prime Video’s last entrant was One Night in Miami in January. Hulu has never made a Nielsen top ten list. Until now! Since I color code each streamer, seeing a new color in the chart made me irrationally happy.

(Reminder: The streaming ratings report primarily covers data from Nielsen’s latest report, which covers the week of February 15th to 22nd and is United States-focused. And due to an unscheduled childcare issue, this report is a day late.)

Television

IMAGE 4 - TV Ratings Last 6

This week was a down week for Netflix on the TV side. The two big series we covered last time had their expected week 2 and week 3 drop-offs, which the weekly top ten data indicated. Moreover, the two new releases of the week would have failed to chart in Nielsen’s “top ten”, if it still combined originals, acquired and film in the same list. (That’s my current back of the envelope for whether something launched well.)

Let’s dig into one of those to put a little bit of context on Netflix’s overall viewing. Specifically, The Crew, a Kevin James helmed, NASCAR themed sitcom of 10 episodes, averaging about 27 minutes per episode. For the week, it netted 9.3 million hours in total. Which, in context, is about half of what Firefly Lane and Crime Scene did last week. Even worse, it was launched on a Monday, so it doesn’t have the “we only had three days of data” excuse.

What fascinates me, and should fascinate you, is that this is a “Kevin James” series. Sure, many reading that will be like, “Yeah, I don’t get what the deal with him is.” Fair enough but he did helm this:

King of Queen’s Nielsen Ratings via Wikipedia:

IMAGE 5 - King of Queens Data

That’s right, he was one of the building blocks of CBS’ monster sitcom and procedural lineup of the last two decades. (Also, I ride and die for the underrated Hitch.) That said, his last outing on CBS only lasted two seasons, Kevin Can Wait:

Kevin Can Wait Nielsen Ratings via Wikipedia:

IMAGE 6 - Kevin Can Wait

Let’s venture a comparison. With the tremendously huge caveat that streaming is fundamentally different than linear viewership, it is notable that The Crew had fewer than 10 million total hours viewed. We don’t have an apples-to-apples way to compare a full-season of live viewership to one week of binge viewing in a precise way, but no matter how you do it, this show likely stalled out in the middle of the streaming race.

Think of it like this, if 10 million Kevin James fans tuned in, then they watched about two episodes each. Or only 2 million tuned in and watched all ten episodes. In other words, the show either had a small initial audience or low completion rate. Or middling for both. And since this is streaming, the show will rapidly decay in viewership. This was its only shot, short of a second season, to get viewership.

In comparison, CBS can still get 7 plus million viewers to watch Young Sheldon. And that’s just one day of viewing:

IMAGE 7 - Nielsen Ratings

What tentative—and very cautiously tentative—conclusions can we draw here? The Crew likely didn’t launch due to some combination of 1. It didn’t work creatively 2. Netflix still doesn’t index well with the typical “CBS demo” and 3. Kevin James on his own isn’t enough of a draw. If I had to pick, I’d go with one, especially since Netflix released it on a Monday, which is as close as they get to “burying” a show, though explanation two intrigues me.

Other Quick Notes on TV

Good Girls—the NBC Universal owned, NBC aired—release on Netflix drove it to the top spot in TV. Want to know why Comcast/NBCU are so heavily invested in Peacock? It’s seeing viewership like this on other platforms. Shows clearly do have a second life on Netflix, and traditional channels now want to own that second life.

WandaVision had its highest week of viewership yet, breaking 12 million total hours viewed, up from around 10 million the week before. A sign of a “great” to “elite” TV series is that it can grow its audience in season 1. (Elite series then grow the audience season over season.) WandaVision is doing that, and all evidence is that it will peak with the season finale. (It is unclear if WandaVision will have a second season.)

IMAGE 8 - WandaVision

Film

IMAGE 2 - First and 2nd Run Film

The big winner this week was Netflix’s I Care A Lot. Until I build my “historical” film comps—a trickier task than you’d think—I recommend this rule of thumb: “Did a film make into the top ten?” Even better, did a film make the top ten after launching on a Friday (Extraction, Spenser Confidential, The Old Guard, The Christmas Chronicles 2)? This week, I Care A Lot joins that crew, which means it had a good launch in the US.

From there, take a gander at the film in the second spot on Nielsen’s “Top Ten Films”. (As a reminder, Nielsen releases three top ten lists each week, with their definitions of “original TV”, acquired TV and film.)

IMAGE 3 - Nielsen Top 10 Films

Flora & Ulysses beat my expectation and made it onto the top ten list, but only with 4 million hours viewed. Back in 2019, I predicted that Disney could cut into Netflix’s then dominant streaming position with kids. The performance of Flora & Ulysses, along with the library titles like Frozen and Moana is what I meant. Though let’s not get too crazy. At only 4 million total hours viewed, F&U is clearly a kids title, not a four quadrant blockbuster. 

What about Nomadland, the other new entry? Well, it was pretty far from making the top ten list. For an Oscar nominated film—not at the time, but now—this isn’t terrible. Most “prestige/critically-acclaimed/awards-contending” dramas simply have limited upside. Still, at least Hulu finally had a piece of content make the “top 30” list. It will be fascinating to see if The Handmaid’s tale fourth season will crack the TV list this April.

Other quick notes on Film 

– Want some back of the envelope logic? Well, we know that Hulu’s Run opened Friday November 20th, and Hulu touted it as their “most watched” film of all time. They didn’t make the same claim for Nomadland. Thus, Nomadland is Run’s total viewership “floor” at 2.3 million hours and 7.6 million (the lowest total on Nielsen’s top ten from the week of November 16th by NCIS) is its “ceiling” in total minutes viewed. In other words, between 2.3 and 7.6 million people watched Run in its opening weekend.

War Dogs had the second week decay we expected and will likely drop off the top ten next week.

– The presence of Avengers: Endgame is not an accident. It is Marvel’s highest grossing box office title of all time, and it is the first MCU film to make the Nielsen top ten list. As for what’s driving this? Who knows. It could be WandaVision motivating some fans or just the general weakness in the film slates across the streamers. But as for a point I will often make: box office predicts popularity in the long term. Thus, if you were to guess the most popular Marvel film on Disney+, guessing the highest US box office grosser of all time would be the correct guess.

– Oh fine, is there a Netflix point with the Avengers: Endgame performance? Sure, this is 2 million hours of viewing that previously would have lived on Netflix. Moreover, I remain convinced that the top library titles on Netflix were Disney films of some sort or another. Avengers: Infinity War, likely, was a huge title on Netflix in 2019 when Endgame was first released in theaters.

– At the end of each quarter, after their earnings report, I’ll dig deep into Netflix’s “datecdotes”, when they provide the number of subscribers (“households”) who watched two minutes or more of a given show or film. They’ve released a few this quarter so far, but the most notable American example is Yes Day starring Jennifer Garner, which was seen by 53 million households globally in its first 28 days.

Coming Soon! 

– Battle of the Superheroes! Last weekend, The Falcon and Winter Soldier went head to head with The Snyder Cut remix of 2017’s Justice League. Given the buzz, both will likely make the Nielsen top ten when it is released in four weeks, if Nielsen is tracking HBO Max by then. The caveat is that the buzz was definitely for Justice League, so it may have over-indexed in buzz that didn’t translate to viewership:

IMAGE 8 G TRends

– Speaking of Nomadland, the Oscars announced their candidates for “the year without films, the 2020 Academy Awards”. Closer to the show, we’ll review the available data to figure out how popular these films were. (Another reason we need a “streaming box office” report.)

The Odds and Ends of the NFL Media Rights Deals – Most Important Story of the Week – 19 Mar 21

Last week the NFL media rights story went from “potential” to “actual” news. (The latter happens, the former is rumors.) Not to toot my own horn, but I wrote last week that the Disney-NHL deal would set the template for the NFL deal (and all future rights deals). And I was right.

That’s our story of the week. Which is a bit delayed because, frankly, March Madness basketball slowed me down.

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Most Important Story of the Week – The NFL Media Rights Grow 5.9% Per Year and Go Digital

Editorially, the NFL didn’t help me out. I had hoped the NFL would take a few more weeks to finish these deals, so my weekly column wouldn’t cover sports two weeks in a row. Last week’s column explored the strategic issues for all parts of the digital video value chain. This week, I’d like to provide a bit of context to the specific numbers for the NFL, speculate about the two remaining wild cards in the NFL media rights package, and give my overall thesis. In short, a bit of an “odds and ends” column.

Bottom Line: This Deal Isn’t “Earth Shattering”, But “Evolutionary”.

The NFL signed a big rights deal that we all knew was coming, and most observers assumed that all the major linear channels (Viacom, Fox and Disney) would insist on digital rights as well. Which is the deal we got. Did this stop some outlets from hyperventilating that this deal would “end the bundle as we know it”? 

Of course not.

Will it? Not really. If “earth shattering” means to figuratively have the Earth break apart like Alderaan in Star Wars, then this deal is not that. Unfortunately for narratives, most business trends resemble the slow but steady movement of the continents rather than earth-destroying super lasers.

For the vast majority of customers, they can (and will) watch TV mostly how they have before. Amidst this, TV consumption is slowly changing, as more Americans cut the cord. More but not all. As I often remind readers, though, this rate is still in the single digits percentage-wise. In 2021, cable “only” lost 6 million subscribers. Yes, this is a shrinking business, but the majority of TV viewers use cable or satellite to access TV.

This deal matches that slow evolution, not the online narrative. Since many customers are digital only, the NFL needs to reach them and ESPN+, Paramount, Prime video and Tubi provide that reach. But there are still so many traditional customers that the NFL can’t blow up the linear bundle entirely. Again, think “tectonic shifts” not “earth shattering”. 

(This is the “aggressively moderate” take versus the “headline grabbing soundbite” take.)

Whither Sunday Ticket?

Partly, I’m a bit disappointed that Sunday Ticket, the subscription service that lets DirecTV customers watch every NFL game, hasn’t been awarded to a suitor. Given the sorry state of DirecTV’s finances–they were just spun off from AT&T–it is unlikely they will renew this extremely expensive and exclusive contract.

So who grabs it? Amazon is often rumored, but likely the NFL has concerns that Amazon alone doesn’t have the reach to justify a deal. Neither would any one cable company, since no one cable company covers all of America. (That’s why the deal made so much sense for DirecTV, since every house was a potential customer.)

Hence Sunday Ticket is a “wildcard”. I think that the NFL could actually generate more revenue by letting multiple MVPDs and OTTs sell it as an add-on, for a given up front fee and splitting per customer revenue. (Say ESPN+, Apple TV+, Peacock, and Prime Video, plus any cable provider.) But that is much riskier for the NFL overall. The NFL prefers a big upfront paycheck, which may lend itself to one big (likely tech) player going all in. We’ll see which way they go.

Whither NFL Network?

One of the rumored sticking points in Thursday Night Football to Amazon was whether the deal was totally “exclusive”, meaning on every platform, or “digital exclusive”, meaning the only digital provider, as it was the last few years. The answer is the former, as TNF will leave its sometime home on the NFL Network. Losing an actual live sporting event will hurt the NFL Network’s negotiating position in the future, so conceding the point likely means the NFL knows the smaller linear sports channels days are numbered. Plus Amazon doubled the price tag, which likely makes up for the loss.

That said, there is the caveat that in their Press Release, the NFL said the NFL Network will carry some games. Hmmm. It will be fascinating to see what and how often these games show up on the calendar:

Screen Shot 2021-03-23 at 12.55.46 PM

Amazon Will Syndicate Airings to Local Broadcasters

That said, here’s a fun point: Amazon must syndicate rights to local markets for Thursday Night Football. That’s a footnote with big implications I didn’t see highlighted in the coverage!

Screen Shot 2021-03-23 at 12.56.17 PM

In other words, if hypothetically the Los Angeles Rams play the Kansas City Chiefs, a local broadcaster like KTLA could buy the rights for Los Angeles. In fact, Amazon must sell the rights to someone. Same for Kansas City. Everywhere else? They have to go to Prime Video to watch that week’s games.

How much does this decrease the overall value? Somewhat. Diehard NFL fans will tune in to Prime Video.  But the casual fans who only follow their team will have a non-Amazon option, which does decrease the upside for Prime Video. Does this make it a bad deal for Prime Video? Probably not. They still need to convince people to use Prime Video on a regular basis, and sports offer that opportunity.

This isn’t a “108%” increase, but a “5.9%” per year increase.

Whenever a big sports deal is announced, the league loves to celebrate the huge increase in price. Often announcing it “doubled” the previous deal. What they fail to mention is that the previous deal took place ten years before, so it doubled over ten years, which is less impressive. Since 2010, the S&P 500, for example, has gone up 249%, so if a sports right deal doubled in value, that’s less impressive than the just basic growth of the stock market!

I wrote about this before, here or here. How does this apply to the NFL? Well the previous deals were signed in 2014, roughly, meaning 9 years. Using the prices per year–from this great Sportico article–the actual per year increase is from $5.67 billion to $9.46 billion. That’s a combined annual growth rate (CAGR) of 5.9%, or an average growth rate of 7%.  Still really, really good to grow revenue by 5.9% per year! But not nearly as eye popping as 108% growth sounds.

For new readers, here’s the picture of what I call the Video Value Chain in all its glory.

The last two weeks, I’ve written about the Digital Video value chain. Here is that laid out in all its glory for those who don’t know:

image-7-video-value-web-1

What did the Twitterati have to say?

Every so often I collect your thoughts on Twitter. Here are the best hot takes I found:

Context Update – Antitrust Heats Up as Biden Appoints Lina Khan to FTC

Mergers & acquisitions are fun to write about. You get to imagine two companies putting together their combined business heft and dominating a new industry, or presenting a unique new value proposition. Ignore how often the mergers fail to deliver the expected value in real life; on paper they’re fun! (Especially compared to building a real strategy, which is often much harder.)

This game was especially fun over the last four decades, as US and global regulators mostly allowed every deal to pass through. (There are a few exceptions, like Comcast and Time-Warner Cable and AT&T and Sprint, but they are vastly the exception.) But has the tide turned on antitrust? And does the business community have an accurate gauge on that yet?

Maybe not. That’s my outlier hypothesis right now. As I wrote last November, whether or not Democrats will fundamentally change antitrust enforcement (from lax to aggressive) depends on President Biden’s appointments. On this front, he has been mixed. Some appointments are traditional (meaning lax) corporate lawyers. Others are strong advocates for renewed antitrust enforcement. Some advocates for stronger antitrust enforcement were disappointed when Biden nominated Rohit Chopra for head of the Consumer Financial Protection Bureau, since he was very aggressive on antitrust as a member of the Federal Trade Commission. Then Biden nominated Lina Khan to the FTC. She’s just as fierce of a critic, and a protege to Chopra, . Khan helped write the House Subcommittee on Antitrust report on Big Tech last year, and is a rising star. She’ll likely be a strong advocate for increased scrutiny on future mergers and acquisitions. 

Toss in economist Tim Wu joining the White House Council of Economic Advisors, Chopra’s commitment to enforcing rules at the CFPB, and the Senate weighing new antitrust bills that may–but likely won’t–have bipartisan support, and I see a changing landscape. Heck, when a Republican Senator writes an op-ed in favor of unions, anything is possible!

Yet the business community isn’t ready for this outcome. After a down year in deal-making due to Covid 19, they’re ready to get back on the merger train. (Speaking of, two big train companies want to merge.) Writing in his newsletter, Matt Stoller noted:

Screen Shot 2021-03-23 at 1.06.32 PM

So what is the most likely outcome? Well, deal making won’t slow down until the Biden Administration sends even clearer signals that it will stop deals from happening. I expect this will start first with increased scrutiny on “megadeals”, those over $5 billion in value. 

As for entertainment, this biggest potential impact is that Big Tech will be a pinch more worried. (Big Tech being at least Apple, Google, Facebook and Amazon, maybe Microsoft, maybe Netflix.) Sure, maybe increased antitrust scrutiny won’t come for train companies, but clearly Big Tech is in the crossfire. This could hamper the long hoped for M&A spree of Big Tech on smaller media companies. That would change a lot of potential strategy.

Other Contenders for Most Important Story

Netflix May (Huge May) Crack Down on Password Sharing

To continue the game of the last two weeks, is this “actual or potential” news? Every few months something about password sharing and Netflix circulates on the Twitter (and then news websites) rumor mill.

Is this one different? Maybe. On the actual side, Netflix is genuinely running test messages telling customers to not share passwords. On the potential side, Netflix hasn’t actually limited password sharing to one household yet either.

Tubi May Produce Original Programming

Because of course they will. Everyone is making originals. However, paired with the news that Tubi will carry Fox NFL games, clearly the remaining pieces of Fox post-merger with Disney (Fox broadcast, Fox Sports and Fox News) see Tubi as the future.

Alibaba May Have to Sell Media Businesses

For a perfect example of a “potential” news story, see this Alibaba news out of China. Sources say that Alibaba may have to spin off media businesses to stay on the Chinese government’s good side. Let’s wait until this actually happens, but China seems to be cracking down on media consolidation by Big Tech in their backyard.

Walmart Considering a Smart TV Device

Walmart has a confusing approach to the Digital Video/Big Tech “dust up”, as The Economist recently described it. (Tech is having a dust up whereas entertainment is having a war.) A year after buying Vudu and then selling it to Comcast, Walmart is back exploring if they should manufacture/brand a streaming stick under their brand.

The WME IPO is Back!

Buried in the news coverage was the return of the WME IPO, derailed by Covid-19 and a weak economy last year. Will it stick this time?

Lots of News with No News – March Madness

I’m sure I’ll stumble across articles either bemoaning, celebrating, worrying or any other emotion over the ratings for March Madness this year. Whatever they are, folks will likely use them to justify their preexisting beliefs on the future of TV, digital videos and the streaming wars. (Apply this to awards shows too if you’d like.)

I, meanwhile, will enjoy the tournament and how well the Pac-12 is dominating, especially my Bruins. Let’s hope they don’t delay any more columns!

How Big Were Firefly Lane and Crime Scene for Netflix? – The Streaming Ratings Report for 17-March-21

As often happens in scientific/data endeavors, sometimes you work for hours/days on a project with no results, then, all of a sudden, it comes together and you make tons of progress rapidly. And usually the “tons of progress” doesn’t happen without the days of drudgery. 

That’s what happened to me over the last week or so. After a few days of struggle, yesterday morning I had a breakthrough. Which delayed publishing this article. Unfortunately, most of the benefits won’t be immediately obvious, as they’re updates to my backend system to help me analyze more data better and faster. (Don’t worry, a few juicy tidbits make sneak in this week.)

(Reminder: The streaming ratings report primarily covers data from Nielsen’s latest report, which covers the week of February 8th to 14th and is US viewing only.)

Television

IMAGE 1 - Nielsen TV Ratings Last Six

If three words define my goal for this report, they are “Context, Context, Context”. You can go to the trades to find a summary of Nielsen’s data. This week you would have learned that the top two series (again for the week of February 8th to 14th) on Netflix were Firefly Lane and Crime Scene: The Vanishing at the Cecil Hotel with nearly identical 21.4 and 21.5 million total hours viewed.

So the question is: are those good or bad numbers?

Well, thanks to the data work of the last week or so, I think we can start to provide some answers. Context!

Let’s start with the new launch. Using my Nielsen database, I collected all Netflix “first run”—meaning Netflix Originals—series in my database going back to March 2020. Why season one/limited series only? Because it just isn’t “apples-to-apples” to compare The Crown, which has 40 episodes as of this writing, to a show with only four. (This was only one of the data projects of the last week.)

According to Nielsen’s data, 23 TV series netted a spot on a weekly top ten (in 2020) or top ten “originals” spot (in 2021). Of those, Crime Scene did phenomenal. It had the third strongest opening in total hours viewed and the second strongest opening for series in the “viewership per episode” metric I also calculate. Here’s the total viewership of those 23 series:

IMAGE 2 - total by day week dayPretty good!

But there’s a catch. (With data, there always is.) In addition to the “season” launched, I added the day of the week. Thus, I can cut the data in quite a few different ways. In this case, see if you can spot my thesis:

IMAGE 3 - Table by DayYep, I arranged the new series by release day of the week.

Why does this matter? Nielsen’s data covers a week worth of viewing, but that means that shows released earlier in the week have, by dint of time period measured, more of a chance to succeed in the rankings. Thus, we need a new metric, one I’ve used before called “average viewership per day”. Here’s that look in chart form:

IMAGE 4 - Chart Viewership by DayTakeaways? Well, yeah Crime Scene is one of Netflix’s bigger hits. More impressively, it did that with a very small number of episodes. But the extra few days of viewing definitely helped. Toss in the small number of episodes, and it will likely decay quickly. (As have past true crime documentaries.) We’ll watch for that. That said, Netflix does have a true crime niche that clearly is working. And it is likely much cheaper to make true crime docs than big budget scripted TV.

What about our second big series, Firefly Lane? It had a big second week. Again, the question is, how good is 21.4 million viewers in the second weekend? 

To answer this, I pulled the second week of data for the 30 first run Netflix series with Nielsen data in their first or second week of release. That gave me this table:

IMAGE 5 - Drop Off TableOf the 15 new series (season 1 or limited) launched since March 2020, Firefly Lane had the eighth best second weekend. However, unlike many other series which grow their audience into the second weekend, Firefly Lane was essentially flat. Using “viewership per day”, it declined 30%, when the average series drops only 23%. Bottom line? It is a good show, and maybe a great one. But it isn’t “elite”, like Bridgerton.

(For those who are curious, I have data for 33 first-run TV series. 7 series in the data set had an opening weekend in the top ten, but then dropped off week 2 and 8 series didn’t make the list in their first week, but did for the second. Two didn’t have numbers until week 3 and one series I don’t have data for its second weekend, Tiger King.)

Also, using the weekly top ten data, do we think these two shows will hold on? For Firefly Lane, yes; for Crime Scene, no. Crime Scene could, though, outperform Firefly Lane during the week of February 15th.

IMAGE 6 - Weekly Top Ten 2 SeriesAs I said above, we’re just scratching the surface here. As Nielsen continues to publish three weekly top ten lists, our ability to judge successful launches (and bombs/busts) will only grow.

Other Quick Notes on TV

WandaVision added it’s sixth episode, and grew its total viewership to 9.9 million hours from 9.8 million the week before. That’s impressive, and it will be fascinating to see if Falcon and Winter Soldier mimics that growth. In other words, part of my thinks that something like 7-9 million folks are watching just one episode on Disney+, which would make it one of the most watched series by unique viewers.

– In the sign of a down week besides the top of the charts, Lucifer made its first appearance on a top ten since new episodes came in August, showing up as the tenth series in the “Originals” top ten list, with 3.2 million hours viewed.

– Looking at the releases by weekday, you can see above that Wednesday really is “true crime” documentary day on Netflix, with releases like Fear City, Jeffrey Epstein: Filthy Rich, Night Stalkers and Crime Scene.

– Regret the Error 1: When new episodes of Cobra Kai premiered, I changed the label from “second run”, meaning episodes premiered on Youtube TV first, to “first run”, because new episodes premiered on Netflix first. But I didn’t update weeks three to five, so my data table made it look like it dropped to zero. That’s been fixed this week.

Film

IMAGE 7 - Film First and Second Run

The big Netflix original launch for this week was the third part of To All The Boys I Loved Before. I’m not ready to deliver as much context for film as TV this week—trust me, we’re getting close—but since Netflix released it on a Friday, To All The Boys will likely take the top spot in next week’s Nielsen rankings. (For this week, I cut all films released in 2020 to focus on new releases in 2021 so far.)

As for the third weekends of the two films we monitored last week—The Dig and Finding ‘Ohana—both are still on the list, but decaying week over week as expected.

As for films we didn’t expect, the top film on streaming wars…checks notes…looks it up on Wikipedia…squints eyes in confusion…checks notes again…War Dogs. Yes, the Miles Teller and Jonah Hill helmed, Todd Phillips directed, drama from 2016. It was new to the platform and got the “new to Netflix” bump.

Here’s the consolidated top 30, which shows how light film was compared to TV this week:

IMAGE 8 - Nielsen Top 30

Other Quick Notes on Film:

– We had another international film to make the top ten film list, Space Sweepers from South Korea with 2.3 million hours viewed. According to my data, this is the first South Korean film to make the Nielsen rankings.

– Oh, and we have one of the first non-kids Disney+ films to make the list, Avengers: Endgame, also with 2.3 minion hours viewed. This reinforces one of my working theories that, when they were on Netflix as part of that huge output deal, the Disney films drove tons of repeat viewership.

– Regret the Error 2: I jumped the gun on Malcolm & Marie (M&M), but luckily I wasn’t too wrong. During Super Bowl weekend, I made a note to myself that M&M was going up against that big sporting event. But then, researching for my database, I saw on Wikipedia that M&M had a limited release in theaters on January 29th, and somehow recorded that as its release. In reality, Netflix released it on February 5th, the Friday before the Super Bowl. Thus the Nielsen ratings from February 8th-14th cover M&M’s second weekend of release and I previously wrote that Super Bowl weekend was its second weekend of release.

To compound the mistakes, my article last week was confusing in that I transitioned from a bullet point on M&M into a bullet point on The Little Things, without clarifying that I had switched films. For clarity: Malcolm & Marie was a Netflix film, but starred the talent from HBO’s Euphoria (lead actor and director). Meanwhile, The Little Things was Warner Bros’ second release on HBO Max and theaters simultaneously. With that context, here’s the Google Trends chart I showed last week:

IMAGE 9 - Film Trends

The unfortunate thing is that we don’t have data on either film—Malcolm & Marie on Netflix and The Little Things on HBO Max. Nielsen doesn’t track HBO Max yet and M&M likely didn’t have enough viewership. We can extrapolate that for M&M its interest/buzz (as shown by Google Trends) clearly exceeded its actual performance (as shown by the lack of Nielsen data).

ESPN Grabs NHL Rights, Setting the Sports Media Rights Template – Most Important Story of the Week – 12 Mar 21

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I love when a weekly column like this ends up having a “theme”. This week, that’s the difference between “actual” and “potential” news stories. The former are things that happen: a movie opens, a company launches a new product, or a studio head steps down. “Potential” news stories are all the things in the news that may happen: a company may be putting itself up for sale, a studio head is considering leaving or, most commonly and consequently, two companies are negotiating and are close to announcing a deal.

In the last few weeks, we’ve seen the difference between actual and potential stories play out with sports rights in particular. The NFL had quite a few “potential” stories, from a potential deal with Amazon (still not finalized) to potentially poor negotiations with Disney for Monday Night Football (also not finalized as of this Monday morning the 15th of March). Then, in the middle of last week, with no forewarning–that I saw–Disney and associated sports entities (ESPN, ABC, Hulu and ESPN+) and the NHL announced a 7 year, 2.8 billion sports rights deal with the NHL. That’s actual news! And it’s our…

Most Important Story of the Week – ESPN Grabs NHL Rights for Pay TV and Digital

Gosh I love this story. It combines sports with almost every part of the “digital video value chain”. First, I’ll go over the basics–if you missed them–and then the ramifications, from the most disrupting digital to the most disrupted linear.

First, Andrew Marchand delivered the basic facts in a tweet:

Marchand later adds that Disney is going to raise the price of their bundle from $13 per month to $14 upcoming, partially my guess is to pay for this deal. As John Ourand points out, this deal only covers some of the NHL’s content output. Potentially up for grabs are the NHL Network, NHL.TV, their digital OTT service, more national games for broadcast (about 20) and whatever happens to regional sports networks (RSNs).

The remarkable thing, overall, is how close this deal is to what I expected for the next round of sports rights. The rights are shared between linear and digital. And the deal is with a partner who can offer both linear and digital distribution, Disney. Some games will air exclusively on digital, but the crown jewel playoffs will air on ABC (and maybe simulcast ESPN+). Moreover, the rights aren’t on a league-owned platform, but part of the Disney bundle.

I can imagine that some of you won’t think the NHL is that big of a deal. But frankly, it is one of the four major sports leagues in the US, even if it is clearly fourth. Or fifth if you put college football ahead of it. Which is barely amateurism anyways. (Commentary!)

Let’s review the impact on each part of the value chain and speculate about what this deal may say about the future of sports rights.

Digital Streamers – ESPN+ is the first third-party streamer to grab sports rights for a major professional sports league. 

The non-NFL professional sports leagues had dabbled with owning their own streaming sports applications and channels “over the top”. Indeed, an MLB subsidiary, MLBAM, created the application for baseball.  The MLB then spun off this into BAMTech, which Disney bought to become the backbone for Disney’s streaming business. However, most of those league-owned applications are niche streamers at best. Because the true power of sports is in a bundle of sports in a bundle of content. 

Clearly, ESPN wants to deliver that sports bundle in the 21st century, the way they delivered that content for linear cable in the 2000s. I expect this trend to continue and most league-owned streamers will eventually fold or get purchased by larger sports streamers, as ESPN and Peacock have already done.

Traditional Broadcast – Still Not Dead…Yet.

I thought the sports leagues would avoid going “digital only” because the risk is that you lose quite a bit of eyeballs in the process of collecting extra revenue. As I wrote when Peacock secured the WWE streaming network, the risk of any league is that if only the hardcore fans follow you to a very small channel, your brand suffers as casual fans drop out. 

Hence, most leagues are looking for a partner who can offer both digital natives and traditional viewers content. As big as cord cutting is–a point I’ll make repeatedly–more folks have traditional cable than do not have cable in America. (See below) As a result, the traditional players still seem best positioned to secure sports rights for this round of negotiations. 

A traditional player and Big Tech company could partner to offer both digital and linear rights. But given that Comcast, CBS, AT&T and Disney all own streaming platforms, they won’t partner with a tech platform. That leaves Fox. The challenge then is “exclusivity”. Since having exclusive content drives so much of the value, splitting rights doesn’t traditionally work. Even then, it would make more sense for DAZN or Amazon to buy a linear channel than vice versa.

By the end of the decade, this could change. For now? I’d keep betting on most major sports deals to happen with the traditional players, but with digital rights included.

Traditional Cable – ESPN is still the behemoth.

ESPN was a must carry channel in the cable ecosystem. As such, it commanded the highest prices for customers in the traditional bundle. When it added the SEC Network and Longhorns network, it only entrenched this position further.

Traditionally, the focus is on the value of games. What is more fascinating is how ESPN did and does drive coverage outside of games. Frankly, with the NHL owned fully by NBC, ESPN downplayed its coverage of hockey. It covered Stanley Cups and the playoffs, but highlights took a backseat to the other sports. Some have speculated that this hurt the NHL’s brand and I agree. Will ESPN’s coverage of hockey increase after his deal? Probably.

As a result, any league, professional or amateur, needs to have some presence on ESPN. To have that share of voice. That said, I like having a second partner as well to keep prices honest. Take the NHL on NBC. That still gets a ton of publicity from NBC to drive the coverage. If I were advising sports leagues, I’d say your best bet is to be on ESPN in some capacity, but have a back up partner who is incentivized to drive your product, like either NBC/Peacock or TNT/HBO Max.

The NHL Network – At risk.

John Ourand covered this best, so I don’t want to steal his point and will just quote him:

…if you read between the lines, the future of that network does not look so rosy, especially since Disney’s high-respected affiliate team no longer will be handling its carriage deals.”

Meaning it could go away. Speaking of disappearing cable channels…

Regional Sports Networks – Unclear, but potentially very bad.

A big wild card for me is what happens to the regional sports networks now. Most  NHL, NBA and MLB teams own their local viewership rights. (The NFL controls national broadcasts since their supply is much more limited.) Regional sports networks first disrupted local broadcast channels by buying these rights, with some college rights throughout the 2000s. Ultimately, several teams disrupted the RSN disruptors and launched their own channels. (The Yankees and Lakers being arguably the two biggest.) As the bundle starts to collapse, RSNs will likely be one of the first casualties. (Though don’t guess when. Predicting the future can be easy, predicting when is very, very hard.)

My question about this deal is how many of these ESPN+ games are inventory previously dedicated to RSNs. If the answer is “all of them”, that’s a lot of lost content for RSNs to lose. My guess is that ESPN+ will have out-of-market rights. That obviously dampens a lot of the value for customers, since most fans still care about their local team first and foremost.

Was this a good price?

Uh, I don’t know? It was definitely a jump in price, the way all multi-year deals are. Specifically, the deal from 2013 with NBC was for about $200 million per year for seven years. This price alone doubles that price, and the NHL still has more games to sell. Overall, though, I’d say this is inline with past price increases. As for whether ESPN+ can make that back for Disney, maybe, but not by itself. Meaning this is a stepping stone deal in some ways.

What’s Next?

First, ESPN+ has a head start on everyone, including DAZN. They’ve managed to leverage their power position as ESPN to start securing OTT rights. That’s a big deal. But they can’t and likely won’t stop here.

Second, all eyes turn back to the NFL. Seriously guys, make a deal for something! My best guess is Disney and the NFL do a similar deal for Monday Night Football, and it likely mimics the key components of this deal, with digital and linear rights. Though don’t put it past Disney and friends to do something crazy with NFL Sunday Ticket.

Third, Amazon still wants NFL rights. The most likely outcome is they get more Thursday Night Football, but they could be the first digital only deal. But I doubt it. The NFL Network is more valuable than the NHL Network, and the NFL doesn’t want to hurt that value prematurely. Likely, a split-deal (not exclusive to digital) is still the likeliest outcome.

Fourth, since most biz executives are naturally conservative–in temperament, not political leaning–I expect most leagues will copy the NHL and ultimate NFL deals in their rights deals. However, between Disney, Comcast, AT&T, ViacomCBS, DAZN, Amazon and any wildcards I may have missed, the leagues should all drive higher prices for their content.

Lastly, customers will see all this in their digital streaming bills. As Andrew Marchand pointed out, the Disney bundle will be up to $14 after this deal is done, for Hulu with ads. In other words, as Disney bundles sports, some of that cost will be passed along to customers.

Entertainment Strategy Guy Update – Should Netflix License Its Content?

If you want a perfect example for why I wait to call a story news until it actually happens, here’s a headline from this very website last May I stumbled upon this week as I was updating my website:

Screen Shot 2021-03-15 at 3.07.04 PM

But you’ll notice, since that headline, Apple hasn’t actually bought a library. I jumped the gun. The premise was so sexy, I wrote an entire column on it. But I was wrong! (The strategic logic though is still spot on.)

I feel the same way for the huge headline dropped by The Information this week:

Screen Shot 2021-03-15 at 11.51.14 AM

First, The Information is definitely filling the void by the general move of the trades away from breaking stories. Since The Information is subscription-driven, not FYC advertising driven, they can drop a few bigger tidbits every so often. Credit to them for this scoop in a series of scoops.

That said, I don’t want to go too far in calling this actual news, since, notably, we haven’t actually seen the goods. Netflix may ultimately license their wholly-owned series into second windows, or they may not. Or this story may be something less groundbreaking, but still interesting. Until we see a big series arrive on another streamer and/or linear channel, this is just a “potential” story.

But I had some quick thoughts.

– This may be cover to explain why some “Netflix Originals” will end up on other services/channels. For example, Orange is the New Black. That’s a show owned by Lionsgate. Essentially, Netflix has to pay to keep it streaming after a certain number of years pass. (We don’t know specifically.) Earlier shows like OiTNB had shorter hold back than some recent series, so it’s a show I’m keeping my eye on. Netflix could have leaked this story to help explain why more and more licensed shows end up elsewhere.

– The math here is pretty simple. If a show is worth more to someone else than it is to you, you sell it to them. Netflix benefitted from this for years; it was worth more to Netflix to license big movies to its service than it was for movie studios to keep them in the vault or on cable/home entertainment. 

– The converse could also be true now. Some linear channels or streamers could benefit more than Netflix by leveraging the buzz/awareness Netflix built for a show like Grace and Frankie or OiTNB to get some subscribers. Given the volume of new releases on Netflix and how most shows seem to disappear into their morass of library content, I could see content being more valuable off Netflix.

– The Marvel angle. Does everything revolve around Marvel? Maybe. The story to monitor here is when all these series with “Marvel” in front of them return to Disney, who owns them outright. Do they end up in the Marvel tab in Disney+? That’d help flesh out the Disney+ offering. I’d have said DIsney wouldn’t do this, since they could want a coherent MCU offering, but then they put the X-Men films onto Disney+, and even a Fox X-Men character–spoiler alert–in WandaVision. Given the commanding negotiating position of Disney in all negotiations, these Marvel shows could leave Netflix sooner than you’d guess.

– This article only referenced selling subsequent windows of content, but you have to wonder how far a revamped theatrical window is. Given that all the streamers have different windows, something could be worked out with one of the theater chains for some content.

If this happens, I’d call it both a big deal and the right strategy by Netflix. Clearly, this is a firm focused on cash flow positivity from here on out. Nothing is more cash flow generating than joining the content licensing biz. We’ll see if it happens.

Other Contenders for Most Important Story

Disney Investor Day: Disney Passes 100+ Million Subscribers; Will Close Some Retail Stores

The Disney streaming business chugs along, and they announced that they passed 100 million subscribers. I don’t have a lot of strategic takes on that big news, but Disney is also shutting some of their Disney stores across America. Likely, the explanation is what you think: Covid-19 crushed retail stores, especially malls. Lastly, Disney is planning to reopen Disneyland in California in April as California emerges from lock downs. Taking the balance of these two stories, theme parks have a higher upside than merchandise going forward.

Peacock Joins Hulu and Netflix in Losing Money

What if no one can actually make money in streaming? We know that Netflix lost money for a decade plus, that Hulu lost money for all its owners and all streaming is losing money for Disney. Now we know that Peacock has joined the money losing streaming crowd

Listen: all new businesses lose money at the start as they gain customers. But the key to valuations is accurately estimating how much money a business will make at full-strength. There is still the chance that streaming video is just much less lucrative than traditional cable. The sooner everyone can make money–and for Netflix go beyond just breaking even–the better for industry valuations.

Pay TV continues Its Losses According to Moffett Nathanson

Every year, Moffett Nathanson produced one of the definitive estimates of cable subscribers in the US, and recently it has highlighted the trend in cord cutting. 2020 was no different, though I will note that the potential acceleration of cord cutting presaged by Covid-19 didn’t really come to pass, as customer losses was about the same as 2019, a non-pandemic year.

AT&T Investor Day

AT&T announced they are expecting 120-150 million subscribers by 2025 and HBO Max’s AVOD option will come in the summer. The AVOD news interests me more, as it really seems like it will complicate their offering for customers. Previously, HBO Max had an easy value proposition to communicate. Well, actually they didn’t. Customers didn’t know if they had it, or if they had to pay and how. Now, customers may end up seeing a bunch of ads. So I’m hesitant to call this a good idea.

M&A Updates – Roku Acquiring Nielsen TV Advertising Biz

This is a small, but fascinating deal. Roku is acquiring Nielsen’s smallish smart advertising business. But in the acquisition, they’re also incorporating Nielsen into their TV measurement, which should make Nielsen numbers more accurate in the future. Axios has the details.

A Down Week Makes for Some Strange Ratings: The EntStrategyGuy US Streaming Ratings Report for 3-March-21

[Editor’s Note: This is the second edition of a new website feature, a weekly report on streaming ratings. One of the quirks of the streaming wars is that no one knows what shows or movies are doing well, what are doing poorly and what failed to launch. If you have any questions or data you’d like to see, let me know!]

This week’s ratings are frankly one of the weirder weeks since Nielsen started releasing their top ten lists. Since ratings were down overall, smaller and odder titles got a chance to make the list.

Television

IMAGE 1 - TV LineAs with most weeks, Netflix was the dominant performer. What makes this week strange is how it got there. 

Only two originals made the top ten in overall viewing. One of them was Bridgerton, which testifies to the incredible staying power of that show. Bridgerton is likely an “elite” series for Netflix in the United States now, along with Stranger Things, Orange is the New Black, Ozark and The Crown. Fortunately, Netflix owns Bridgerton outright, unlike OITNB, Ozark or The Crown. 

Though a hit series (without new episodes) can only drive viewing for so long, and Netflix’s end of January launches didn’t seem to hit. Season two of reality series Blown Away only had 7.3 million hours viewed, which in 2020 would not have been enough viewership to make the top ten lists most weeks. Bling Empire didn’t make the top ten originals list for a second week either. Fate: The Winx Saga did gain week over week, but it will likely fall off the list in the next week or two, judging by its top ten list performance. (It is also the latest in a line of teen dramas produced by Netflix. At some point, all Netflix series may take place in high school/boarding schools.)

The other big series were library or second run titles, including the latest season of Outlander. Here’s the top ten list if you only highlighted wholly-owned or originals:

IMAGE 3 - Nielsen 30 Originals Wholly

Which brings us to the studio/streamer dominating the film list, Disney. Many third party analytics firms continue to estimate that WandaVision is one of the most watched series in the US. (See Parrot Analytics or TVision for two examples.) So why doesn’t WandaVision perform higher in Nielsen’s ranking? The explanation is simply that series with more episodes do better in total hours viewed, as I showed last week. This trend only continued this week. WandaVision added only a single episode, but its total hours went from 6.3 million to 7.2 million.

Other Quick Notes on TV

– US viewers continue to avoid international originals, except for shows from other English speaking countries. Indeed, the most exotic series come from Canada (Schitt’s Creek, Blown Away), the UK (The Dig) or joint US/UK series (Outlander, The Crown). Notably, all English speaking series. Technically, Fate: The Winx Saga is partly from Italy, but that series is also based on a show that aired on Viacom’s Nickelodeon and is in English. The hypothesis that Netflix is able to take advantage of global scale to launch series may be true, but that’s happening despite the US, which continues to watch English language programming.
Disenchantment by Simpson’s creator Matt Groening is likely a disappointment. Premiering on January 15th, it has already dropped off the total hours list.
Longmire is the latest Netflix original to make an appearance on the bottom of the “Originals” top ten list well after its latest season dropped. Other examples from January include Designated Survivor appearing the week of December 28th and Great British Baking Show throughout January.
– As expected, Lupin with only four episodes dropped off the US top ten lists after only two weeks in the top ten.

FilmIMAGE 4 - Feature Films

Film may be even weirder than TV. The biggest film on Netflix was Lionsgate’s The Next Three Days, which was originally released 11 years ago and only grossed $67 million at the US box office. It was added on January 22nd, so what a “Netflix bump”.

Even stranger, it wasn’t like Netflix didn’t try to launch some own original films of their own. Netflix released at least three potentially big films, The Dig and Finding ‘Ohana. The Dig and Finding ‘Ohana both made the top ten list for film. All three were released on a Friday (January 29th) so they could gain steam. However, as we’ve seen repeatedly, most films usually lose viewers in their second and third weeks, especially when measuring by day.

The Netflix daily top ten lists to get an idea of where this is trending. Using FlixPatrol’s collection of this data, here’s February’s list. Finding ‘Ohana will likely gain the most:

IMAGE 2 - Weekly Releases

Other quick notes on Film

– The expanded look provided by Nielsen (three top ten lists instead of one consolidated) continues to provide additional insights as we get more data. For example, the importance of recently released films is even more important than I had thought. Of the seven new pieces of content to make one of the top ten lists for the week of January 25th, six premiered in January. And four were released in the week of January 25th, including Below Zero, Finding Ohana and The Dig.
Soul has decayed down to Mulan/Frozen II levels. I suspect that Onward likely dominated the film lists in the spring, though I don’t have data to prove it. If this is true and Soul performs similarly, then Soul will likely stay at this level until Disney has a new kids film to launch on the platform, meaning Raya and the Last Dragon after its “Premiere Access” window.
– Netflix’s library titles that are action or thrillers seem to over-perform. Of the January titles on the film list, many fit this bill, some with obscure origins like The Next Three Days, Killers, 30 Minutes or Less, The Vanished and Homefront.

Competition

Netflix dominated streaming in January. Of the forty films or series in the consolidated top ten in January, only one was not on Netflix, Soul during the week of 4-January.

Nielsen Top Ten Last 4 weeks

[Editor’s Note. I hope you enjoyed this quick look at the ratings data of the week. And trust me I know this is very “Nielsen”-heavy analysis. It won’t stay that way. I’m working on adding weekly top ten rankings, IMDb, Google Trends and other data slices to make this as comprehensive, while readable as possible. The key, though, is that I don’t want to add any data source piecemeal or anecdotally. I have to analyze, vet and understand the data before incorporating it.

By the way, if you’re an analytics firm who would like to partner or provide data, please don’t hesitate to reach out.]

Nothing Compares to Bridgerton in January: The EntStrategyGuy Streaming Ratings Report for 24-Feb-21

[Editor’s Note: Today, I am testing a new website feature, a weekly report on streaming ratings. One of the biggest pain points of the coverage of the streaming wars seems to be that no one knows what is doing well, what is doing poorly and, frankly, what customers want. For example, folks saying that here, here or here for just three examples. 

As this website enters its fourth calendar year, I’ve been looking for ways to expand my coverage. Solving the ratings problem seems like a pretty good way to do it. I’ll be explaining more in the future, but for now, I hope you enjoy and let me know what you think.]

One of the challenges in reporting on ratings is the lag time from when a show premieres to when we get actual data on it. If we rely only on Netflix, for example, we can get results sometimes after the first weekend, but sometimes delayed up to nearly eight weeks. Nielsen is the most reliable and regular reporter on streaming ratings, but they delay ratings by four weeks to double check their data.

So yes, this is a ratings report for the week of “February 24th”, but it covers mostly the data through January 24th. Confused? Yeah, welcome to the streaming wars. 

[Another Editor’s Note: My analysis will be only of the United States to start. We have the best data in the US so far. As data expands, so will my coverage.]

(Sign up for my newsletter to get all my writings and my favorite entertainment business picks from the last 2 weeks or so. Next issue goes out early next week.)

Television

IMAGE 1 - TV Ratings Last Six Weeks

The biggest winner of January is Bridgerton, which continued its dominance of the Netflix top ratings charts. Notably, new releases such as Cobra Kai, Disenchanted, and Lupin all failed to knock Bridgerton from the top spot in the US. This type of performance is really what separates truly “elite” TV series from simply “good” series.

As for competition, Disney+ remains the best competitor to Netlfix in streaming. (Since the fall, Disney has had two original series on the list, and the last non-Disney was Prime Video’s The Boys.) And the total viewing hours might actually undersell how popular the Disney shows are. For example, here’s the January release chart by “Hours viewed per episode”. 

IMAGE 2 - Hours Viewed per Episode

Hours viewed per episode is a temporary metric I’ve been using to gauge how well new series are launching. It isn’t perfect—for example, WandaVision is half as long as some of these other series, so arguably this even undercounts WandaVision viewers—but for now it works as a proxy for demand per episode. The takeaway continues to be, like The Mandalorian, Disney has high “bang for the buck” when it comes to viewers per series.

[Another Editor Note: Yes, this first edition is Nielsen heavy. Going forward, I will add additional data sources to my analysis, including top ten ratings, Google Trends, and new metrics/scores for how well content is doing. It will be a process.]

Other Quick Notes on TV

– Library TV series continue to do well on Netflix, but the departure of The Office provided an opening for other series. For example, Jenni Rivera: Mariposa del Barrio made the top ten list, and that’s a licensed show (originally from Telemundo, produced by NBC Universal) that has been on Netlfix since 2017. New Girl also seems to be a regular feature on the acquired TV list.
– New content still drives Netflix viewership, showing that even more than library, customers flock to what’s recently premiered. Henry Danger for kids and L.A.’s Finest are examples of library or second run content doing well in January.
Lupin is the first French title to make a Nielsen list, but it wouldn’t have made the top ten in either week. Given that Netflix announced it will have an estimated 70 million global viewers in the first four weeks, this is another data point that international titles just don’t perform as well in the US as they do abroad, despite narratives otherwise.

Film

IMAGE 3 - Film first and second

Outside the Wire is Netflix’s latest big action film and it bucked the trend of big declines from the first opening weekend to the second. However, it also launched much smaller than Extraction (18.5 million hours) or The Old Guard (16 million). We’ll see if it can sustain this into a third weekend. 

Otherwise, the story is similar to the one I described in my last “visual of the week” in that the film list is the home from kids content. Frozen 2, Moana and Soul look set to stay well streamed going forward. A fun question will be if We Can Be Heroes drops down like other Netflix titles or acts more like the Disney stalwarts.

Other quick notes on Film

– Amazon Prime Video’s Oscar candidate One Night in Miami didn’t have a big opening, but it did have minimal week-over-week decay. The question going forward is whether all Amazon titles act like this (due to a smaller catalogue, hence more promotion on the home page) or if this represents some genuine growth via word of mouth praise.
Pieces of a Woman on Netflix did experience the likely expected big decay from its opening weekend, dropping off the list after it’s opening weekend.
The White Tiger actually got a Netflix datecdote with an estimated 27 million global viewers in the first four weeks. With presumably 1-2 million or so viewers in the US—dividing the two hour run time with a 70% watch rate—this likely shows that the film under-indexed in US viewing, as most intentional titles do.

[Yet Another Editor Note: My goal with this weekly report is to keep it to 800-1,200 words, which is short for me.]

Competition

My big question for the streaming wars this year is simple: will this fight be competitive?

Looking at the last year, you’d say it isn’t a fair fight. Netflix is far and away the biggest streamer in America, whether you measure by subscriber or by total usage. That’s why I’ll be tracking a few metrics to determine whether Netflix is pulling away from the pack, or whether the pack is catching up to Netflix.

Here are the top ten pieces of content in film or TV series by streamer going back through the last six weeks:

IMAGE 4 - Streamrs Share Top Ten

The good news if you’re not Netflix? Well, when the traditional studios went all in, they took quite a bit of market share from Netflix. Christmas was the Soul/Wonder Woman 1984 deluge, and frankly it got a lot of eyeballs to Disney+ and HBO Max.

The good news if you are Netflix? As soon as the studios stopped releasing their big guns, Netflix went back to owning the entire list. For example, in the past a show like WandaVision, with only 3 episodes generating 6.3 million hours watched, would have dropped off our radar. 

IMAGE 5 - Top 30 List

The goal for the Amazons and Disneys of the world is to move up from owning the “film” portion of this list to owning more spots on the top ten and fifteen. We’ll see if they can do it.

[Last editor note: I hope you enjoyed the first installment of the EntStrategyGuy ratings report. I’d love to hear from you on what you liked, what you didn’t and what you want more of. Thanks in advance!]

Kids Programming is “Easy Strategy” – Most Important Story of the Week – 19-Feb-21

Last week got away from me. Fine, I got away from it by diving down a data hole. Specifically, a Covid-19 data problem. For all the forecasting being done, few people are answering the query, “Hey, when will all this end?” I’ve seen answers ranging from “Never” to “2022” to “maybe a few weeks”. Hence I dove deep into the data to make my own guess, especially as it relates to theaters. Check it out here.

It was a good week to be distracted, since the week felt light on big news. (Unlike this week, which is already trending upwards in big stories.) The most consequential story was actually spread out between a few different streamers, who all announced new forays into producing kids programming.

(Sign up for my newsletter to get all my writings and my favorite entertainment business picks from the last 2 weeks or so. Next issue goes out early next week.)

Most Important Story of the Week – Why Every Streamer is Investing in Kids Programming

Take a gander at these headlines:

“Apple/Skydance Animation Set Multi-Year Feature & TV Deal”
“Warner Media Kids Debut Cartoonito Preschool Programming Block”
“Youtube Announces 2021 Slate of More than 30 Kids Originals”
“Netflix Plans Six Animated Feature Films Per Year”

That’s a lot of kids content. And with it a lot of hyperbolic headlines and coverage. Kids content is a key part of the streaming wars, but it deserves more nuance than most coverage provides.

Consider an actual war. Many battles are important, but they aren’t all equally important. In the Civil War–since I use too many World War II analogies–the main event was the Army of the Potomac fighting the Confederate Army of Northern Virginia. That’s the adult content battlefield. The main event. The showdown that truly decided the war. But the campaigns to retake the Mississippi River, Sherman’s March through Georgia and the naval blockade of the South were all crucial to winning the war as well. All were important, but none were the main event.

Why Kids Content is a Pinch Overrated

Often, explanations for why a company gets into kids programming is treated as obvious. As if it’s a no-brainer decision that every streamer is right to pursue it. I don’t buy that for a few reasons that don’t get nearly as much press:

– First, there are way less kids than adults. This seems obvious, and yet it’s worth pointing out to make it explicit. Given that I just pulled a bunch of demographic data, it’s worth reminding everyone that these are the number of kids in America. In other words, if the “total addressable market” for adult TV in the United States is 130 million households, by definition the market for kids is a fraction of that. If you target preschoolers–5 and under–then your market is, by definition, 6% as large as the entire US viewing market.

IMAGE Kids

– Second, licensed consumer products (toys, shirts, what not) aren’t as lucrative as some casual observations make it seem. In the past, I’ve said that on average they make up 5-10% of a film’s total revenue. Further, it’s not like licensed products are a growth industry. If anything it’s the opposite. There are a few factors driving this, from Disney’s dominance on one end to consolidation in sellers (Amazon, Walmart and Target) on the other to disruption by digital in the middle. In all, yes, if you have a Spongebob, Mickey Mouse or Peppa Pig, you can generate billions in retail sales, of which you keep 5%. But if you aren’t in that top tier, you make much, much less. Toy sales alone cannot justify kids programming.

– Third, competition is fierce, as the headlines suggest. There are a lot of folks competing for a limited number of kids eyeballs.

– Fourth, replacements for TV are legion, from video games to social media, which makes it even harder to compete.

Add those four variables up, and it doesn’t scream out that kids content is a business you want to be in. It seems as competitive as adult competition, with only marginally better upside. Using Porter’s Five Forces analysis, arguably every variable is against you. It’s easy for competitors to enter, the competition is fierce within the field, sellers of toys offer poor margins, and there are lots of replacements to kids TV competing with you as well!

As a result, we probably have too many firms competing for kids’ attention right now. There is an old saw that there are always six major film studios. They may change names, but there are always six. (I’ve been meaning to write an article on this since I launched.) Well, given the smaller market size, then I’d say there are only 3-4 major kids content producers. In the 1980s, this was Disney with the three broadcast channels. By the 1990s to 2000s, this shifted to Disney/Dreamworks in movies and Disney Channel, Nickelodeon and Cartoon Network. (PBS also has had a place for preschoolers. Again, it’s complicated.) As streaming took kids attention, this has shifted to Disney, Universal (Dreamworks/Illumination), Netflix and Youtube.

Can HBO Max, Viacom CBS, Prime Video and Apple all break/rebreak into that and succeed? Probably not.

Why Kids Content is Valuable

Still, I’ve presented a bit of a conundrum. Clearly kids content is a tough biz to be in, yet everyone wants in! What do they see that I don’t?

Going back to the Five Forces, it’s not an insurmountably tough business to be in. In technical terms, the barriers to entry are low, especially once you’ve set up a streamer. The marginal costs of adding kids programming to general entertainment is fairly low, once you’ve set up a streamer in the first place. Animation tends to be much cheaper than producing full-episodes of live-action television. Moreover, kids, especially preschoolers, don’t know what legacy brands are. Except for Mickey Mouse, new preschool brands can and do break it. Just look at Peppa Pig.

And if it works, it’s sticky. Sure, kids are a small population, but they’re influential to their parent’s decision-making process. If kids want the content, and the content passes the parental approval test, it can be very sticky. The kids who watched Frozen every week weren’t going to just stop watching it when it left Netflix.

However, if I’m being cynical–and if you’ve read me for any length of time you know I am–then partly it’s an easy strategy. Which isn’t “good strategy”. Easy strategy is when there is an opportunity in front of a company and they take it simply because they can. It can sometimes allow business leaders to “empire build” as well. Going into kids programming lets you hire a brand new direct report and team of people. That’s easy strategy, like mergers & acquisitions or getting into original content.

Who Will Win The Kids Space?

Not everyone can win in kids programming. There are only so many preschoolers and elementary schoolers to bring into your ecosystem to justify the costs. Some folks will quietly dial back their investment. Indeed, some streamers seem to have realized there is already so much kids programming out there–and again kids don’t need new content to be satisfied–that you can rent all the programming you need, instead of making originals.

Still, if you do want to win, I have two (fairly obvious) recommendations. First, building a defined brand really is a differentiator. Disney has this. Netflix does too. Quietly PBS also has one of the stronger brands (and fairly high viewership on mobile devices). Even those brands need constant renewal to stay fresh. Nickelodeon lost brand equity rapidly in the last decade. But a brand is valuable.

The second way is to make hits. It seems obvious, but sometimes the best strategy is obvious. Disney is “Disney” because of three immensely lucrative time periods, driven by three innovative development executives: Walt Disney in the 1930s and 1960s, Frank G. Wells in the 1980s and John Lasseter from the 2000s. John Lasseter, the creative force behind Pixar before he was fired and then hired by Skydance, just signed the big deal with Apple. Indeed, of all the headlines above, the Apple/Skydance partnership interest me the most.

If I had one overwhelming recommendation for everyone except Disney, really, it would be to not just produce kids content or have kids content, but to have a kids strategy. This battlefield will be fierce coming up, and simply dabbling in it won’t be enough.

Entertainment Strategy Guy Update/Lots of News with No News – Roku’s Push Into Originals?

Based on one job opening, the speculation mill was unleashed last week that Roku may be starting a big push into “Originals”. Like I said, originals are an “easy strategy”.

When they announced earnings, Roku splashed cold water on this idea. Likely they are evaluating originals as a space to be in. There is a great reason to make original content, but just as good of a reason to skip it altogether. Let’s explain each:

The Best Reason for Roku to Make Originals: To Sell Targeted Advertising

One of the profit drivers over at Roku has been The Roku Channel, which is their version of an advertising streamer. (Either AVOD or FAST, whichever acronym you prefer.) Unlike other FASTs, the genius of Roku’s platform is that they can sell advertising targeted to any streaming service’s customers. Think of it like this, you’re an advertiser. You want to sell ads to folks who watch The Queen’s Gambit. With Roku, you can do that, since Roku knows everything a customer watches.

This is why Roku is so insistent that they get advertising share for any ad-supported service on their platform. Because they can charge higher CPMs (cost per thousand) to advertisers with this unique targeting. (This demand notably held up Peacock and HBO Max launches. Amazon demands something similar.)

Of course, this genius system only works if customers aren’t watching Netflix. Which is where the free Roku Channel comes in. It’s basically a vehicle for Roku to sell extra, highly targeted ads. But it only works if folks are watching it. Hence, the need for programming. Mostly, this has been library programming.

This is where original programming could (big tentative could) come in. If the higher CPMs provide a true edge, Roku can outbid for AVOD programming since it will have higher margins. Hypothetically this could even include original content. Except…

The Best Reason for Roku NOT to Make Originals: They are limited by distribution.

Every so often some cable, satellite, cellular or device maker contemplates getting into the originals game. The logic goes: if originals work at driving customer acquisition, and since our customers are really valuable, maybe we should make originals. Think AT&T Originals, Spectrum Originals, Verizon’s Go 90 and Microsoft Studios. In the end, they all get shut down.

Why? Because unlike a streamer, who is available in at least 90% of connected households, devices and MVPDs are not as widely available. A simple thought exercise shows why. If someone wants to watch The Mandalorian, they can find a way to download Disney+ to their iPad, iPhone or connected TV. Then they can watch. Literally, almost anyone in America with broadband. On the contrary: if you didn’t live in an area with Spectrum cable, you couldn’t watch the Mad About You reboot. (Yes, they rebooted that.)

In other words, a device-based original has an upside directly tied to the market share of its device. As big as Roku is in connected devices, it’s far from a monopoly. Roku is only 30% of connected device sales in the US. If you factor in the folks not watching streaming at all, those on mobile devices, and those with connected TV sets not using Roku’s operating system, then the vast majority of TV viewing is not on Roku. That’s always going to limit Roku’s upside in producing originals, since their distribution footprint is that much smaller.

That will be the key element in whether or not Roku does get into originals: The trade off between reduced distribution (which will constrain costs) and higher CPMs with targeted ads (which could boost revenue). We’ll see which side wins out.

Other Contenders for Most Important Story

Theaters: China’s Big Theater Weekend

An Avengers: Endgame milestone–albeit a slightly obscure one–was taken down last weekend. Detective Chinatown 3 launched in China and surpassed Endgame as the biggest single country opening weekend of all time. In other words, theaters are back! (in China)

By the way, if you missed it Soul as well did really well in China too.

Streaming: Disney+ Launching First European Originals

Given that all the major streamers are US-owned (mainly), there was a concern in Europe that local productions would begin to be overtaken by foreing content. So the EU passed a law mandating that streamers would need to have a minimum amount of locally produced content available. Thus Disney+ is staying in line with this law by releasing European produced originals.

I do love the one potential ramification of this law, which is that if every country around the world passed a similar law, it would basically end global originals. If 30% of your content has to be European in Europe, and 30% has to be Brazilian in Brazil, and 30% has to be Indonesian in Indonesia (the last two are hypothetical), then Netflix would only have 10% of their content left to make for global originals! Obviously, they wouldn’t do that, but by definition a market quota will inhibit truly global footprints.

Nielsen’s New Top 30 Streaming Video Ratings…Explained! Plus a Visual of the Week

Starting last August, Nielsen began releasing a weekly American top 10 most watched list for streaming video. I’ve been using it ever since. Nielsen mixed together TV and movies, and new (“originals”), second-run and library (“acquired”) on the same list. 

In their year-end top ten list, though, Nielsen flipped the script and provided three different top ten lists. Formatting mine, with hours instead of minutes:

IMAGE 1 - Nielsen Top 10 2020

This was a sign of things to come. Starting with the week of Monday, December 28th, Nielsen is now publishing three top ten lists, one for “original” TV series, one for “licensed” TV series, and one for film. 

(Man that’s a lot of definitions. In the future, I’ll define them all. But for now, this article from 2019 has a good explanation of the definitions I use to analyze content.)

Whenever a firm changes their data definitions, I tend to get extra cautious doing analysis. For example, when Netflix went from calling a view “2 minutes watched” from “70% viewed” a lot of folks continued as if nothing had changed in the numbers. This violates the number one rule of data analysis: keeping things apples-to-apples. (My solution was to convert all the numbers to the same metric, using Netlfix’s average 35% inflation between the two numbers.)

That’s a worry here. Unless Nielsen provides me with an expanded database going back through 2020, most of our data will now be cleaved into “2020 Top Ten” data and “2021 Top 10×3” data. Thus any analysis of 2020 to 2021 data will need to factor in that it may not be “apples-to-apples”.

But…

…this is still great news.

Here is the the synthesized Nielsen top ten list for the last two weeks of Nielsen data, if Nielsen had continued the old methodology:

IMAGE 2 - Top TenIMAGE 3 - Top Ten

Now, we can compare this to the new, combined top 30 lists:

IMAGE 4 - Top 30 List

IMAGE 5 - Top 30In other words, that’s a lot more data to parse! More data means more analysis! More analysis means more insights!

Previously, any of the data from The Mandalorian on down in the week of December 28th and all the titles from The Crown from January 4th would have been invisible to us. Moreover, we can confidently say that this list is a clear top 23 list one week and a top 21 list the next. (Basically, anything above the first “10” on the list by logic is in order.) 

Overall, this expansion should greatly help our understanding of how content is performing in the streaming wars:

– Previously, original films on Netflix and Disney all dropped off the Top 10 list after two weeks. This will allow us to track film decay with greater fidelity. (For example, The Midnight Sky would have only had one week of data before.)
– We’ll also get more films on the list, being able to clarify which films underperform their openings more often. (For example, We Can Be Heroes made the list.)
– This will also let us track TV series decay as well. As we’ve written before, four of the ten top spots in this list were usually held by licensed second-run and library content on Netflix. This essentially gives us 10 or more original titles to review each week. (For example, The Mandalorian would have dropped off the week of December 28th. The Crown would have dropped off the week after.)
– More spots should potentially allow more non-Netflix series and films on the list. This will allow us to compare performance trends between the streamers as well. Right now, Disney+ and Prime Video shows dropped off after a week or two. This will enable to track their decay as well.

For example, in the past Soul would have just eked out staying on this list. (The first film to make the top ten for three weeks in a row.) But The Midnight Sky (72 million global 2 minute views, Netflix revealed in their earnings report) would have dropped off. Same with We Can Be Heroes (53 million global 2 min views) would never have made the list. Now I can make this chart:

IMAGE 6 - Feature Film Decay

Interestingly, all the films featured big drops in viewership (44% for We Can Be Heroes and 56% for The Midnight Sky), but Soul didn’t see its big drop until week two to three (61%).

As a reminder, Nielsen doesn’t track HBO Max data yet, so we don’t know how Wonder Woman 1984 fared in its second week.

Visual of the Week – Netflix Films Do Much Better Weekly; Disney+ Films Do Better All Year

When Nielsen only released a single top ten list, films only made the list when they were newly released, such as Mulan, Borat’s Subsequent Moviefilm and Netflix’s regular releases. As such, when Nielsen released a cumulative top ten list for film in 2020, the results were very skewed towards Disney’s rewatchable films:

IMAGE 7 - Nielsen Top Ten FilmWhen we look at the weekly rankings of movies, the Disney dominance isn’t quite as strong:

IMAGE 8 Various Top TenWith a now weekly top ten list, we’ll be able to get a different perspective on the competition between Disney and Netflix for, frankly, kids viewership. Some insights:

– Kids programming still dominates the film list. For this week, 11 of the top 20 are targeted at kids. And one is a teen comedy. (17 Again)
– Netflix does better in a weekly top ten, due to their size. Indeed, this shows that the split between Disney+ and Netflix is much closer in kids content than it seems. However, Diseny+ does seem to still be winning.
Rango was misidentified as being on Prime Video. It is currently on Netflix exclusively in the US. Nielsen has confirmed this.
– That said, it does look like Amazon did get one genuine film on the list with Catch Me if You Can. It’s their only entry in the three top ten lists for the last two weeks.
– Interestingly, like original TV, Netflix’s films are skewed towards new releases. Of the 13 Netflix films on the list the last two weeks, only 1 was released before December 25th, which was The Croods. Thus we can see that whereas Disney+ sustains interest in their small library of kids content, Netflix relies on recent releases, even on licensed kid content.