Tag: Prime Video

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.

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.

(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 – 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!

“The Mandalorian vs The Queen’s Gambit: Who Won November” at Decider

In what is now a recurring column, over at Decider I took a look at all the ratings data I could find to declare the streaming winner in the US for November. This one is packed with with charts, tables and data.

(If you’re curious for the older editions, here’s September and July.)

Also, I discuss the latest Nielsen streaming data in this thread:

Is Prime Video Fifth Place in the Streaming Wars?: Explaining the EntStrategyGuy’s US Paid Streaming Subscriber Estimates- Part II

(This is the last article in a three part series estimating how many US paid streaming subscribers there are in the US. Read the numbers here, and the first half of the explanation here.)

If you’re wondering, yes, I deliberately wrote three (almost) contradictory headlines for the last two days. In one, Netflix is clearly winning the streaming wars. In the other, Disney is almost winning. In the third, the often second place streamer, Prime Video, got ranked in fifth place. What’s the reality?

Somewhere in between. Or somewhere else entirely.

That’s what the point is for these articles the last two days. Not just to see the current subscriber totals, but to understand the nuances between them. To understand how the numbers interact so we can not just figure out not just who is winning the streaming wars, but what could happen as they get more competitive in the next few years.

Today, I’ll continue explaining how I estimated each streamer’s subscribers, but let’s start with why I did this analysis. At the end, I’ll put some fun charts that summarize this analysis.

The Reasons I Did This Deep Dive 

As I’ve been analyzing the streaming wars, it’s been increasingly clear that this is a war fought on a country-by-country basis. Netflix’s global growth is incredible, but it is only one, likely overrated, part of the story. The actual battles are in individual countries. 

Given how big and important the U.S. market is, it makes sense to start there. Since I’ve been evaluating who is “winning” the streaming wars, I needed to know how everyone is doing in America. Subscribers are one of those key metrics. However, if you search the interwebs, you won’t find a reliable estimate for each streamer. Thus, I needed to build these numbers myself and if I was going to do the work, I should share it here. 

Not to mention, I have a bias against using other folk’s numbers. My rule of thumb is that I don’t trust anyone. Especially if the source of a number is vague/uncertain/biased.

Lastly, I can do this analysis because I’m freed of some journalistic conventions. This website features my thoughts and analysis. Most journalists can only cite specific facts via companies or well-established consultancies/investment research. That’s what leaves most estimates wanting. Since I’m allowed to print whatever I want, I can mix estimates with facts. But I’ll just tell you the difference.

Analysis Continued: How I Determined Each Number

Prime Video

Time for some guesswork. 

As I wrote Wednesday, this will require an estimate of an estimate of an estimate. Or a guess.

First, we have to find the number of Prime subscribers globally. (Itself unknown.)

Second, we have to figure out the proportion who are in the US.

Third, we have to figure out how many actually use Prime Video.

Fourth, we have to guess of those who use Prime Video, how many use it and would pay for it?

Like I said, some guess work!

To start, I looked for US estimates of Amazon Prime subscribers and couldn’t find any numbers I loved. One firm does an annual survey, but they estimated 126 million US subscribers the same month Amazon announced 150 million worldwide Prime subscribers. That’s way too high then. However, the estimate isn’t for Prime subscribers, but folks with access to Prime. (Always ask “What is the ‘what’ in this statistic?”) So you could divide their number by 2.2 (for the number of people per household), and get the potential number of subscribers of around 50 million Prime subscribers in the US. That’s a floor.

On the other end, you could assume Prime membership is related to sales in a given country. Since Amazon breaks out revenue by United States versus Rest of World, we can see that here:

IMAGE 8 - AMazon Rvenue

If that’s the high and low ranges, then what I’ll do is take Amazon’s announced membership in January (150 million), and use some nice round numbers. (And yes, I didn’t model any Amazon growth this year, so yeah, more unknowns on top of unknowns.) 

The next question is how many folks actually use Prime Video. We could use third party sources for that—hang on a moment—but it’s worth building out the sensitivity table just to see how wide the range could be. I made a “Monthly Active” users sensitivity table to give myself a range.

IMAGE 10 - MAUs

If someone uses a service monthly, they are much more willingly to keep paying for it if they have to. (ie. if Amazon some how took Prime Video out of the Prime membership.) I also took a look at “annual active users”, but the range was too wide to be useful.

But I had one other piece of data floating around in my head. See, various streamers like Nielsen and Comscore track streaming usage. And Prime Video and Hulu have been remarkably close over the years. 

IMAGE 11 - Nielsen Total Mins copy

That image is from earlier this year, when I wrote that “Netflix Is a Broadcast Channel”. In other words, if Prime Video has about the same usage as Hulu, it stands to reason it will have about the same number of folks willing to subscribe (at a $6 price point). Prime Video looks like it has grown a bit compared to Hulu over the last few years, but in general, they have about the same amount of usage.

What about the range? Well, you could convince me of anything. For my table above, I could see literally as few folks as CBS All-Access (say about 12 million). On the other hand, maybe folks do value Prime Video more than Hulu. So I could see it up to say 50 million US subscribers. (I just can’t imagine it is as valuable as Netflix when few folks watch nearly as many Prime Video shows.)

Starz

Starz, on the other hand, provided us all facts. In fact, some of the best facts of any of the streamers. While they have changed definitions a few time, they straight list out their past numbers. See?

IMAGE 12 - Starz IR

Kudos for the transparency!

However, like HBO Max, the number of potential “streaming” subscribers is somewhere between the total of all linear and OTT subscribers, and the OTT subscribers only. You can decide where you think that falls, but I count them all for now.

Apple TV+

Now back to the guess work!

Apple has had a good year for Apple TV+, but they refuse to release any numbers on its performance. Complicating things, Apple TV+ is also available globally. This was the same problem we ran into with Disney+, only with less data. The last leak we had was from Bloomberg in February, which estimated that about 10 million folks worldwide are signed up for Apple TV+, with the caveat that maybe half are actually using the service. 

Time for the proxies. Since Apple TV+ is mainly for folks buying new devices, we’ll start there. If you want to analyze potential subscribers by iPhone sales, the best proxy for penetration, here’s the non-China iPhone sales numbers from 2017, according to Business Insider:

IMAGE 13 - iPhone Sales

My logic for Apple TV+ was to take that rough percentage, and boost it slightly for the US, given that most Apple TV+ content is US focused. Then we’d add a 35% “Covid bump”. (Roughly what Starz and CBS All-Access saw this year.) Bingo, we get our guess of 6.8 million customers. 

What about the range? Like Amazon, you could convince me of anything. The high could be all 10 million leaked customers were US based (or nearly so) and the Covid bump got it to 13.5 million. The low would be 2 million folks, all of whom are Ted Lasso fans. (The buzziest show among entertainment business Twitter after Succession.) 

AMC

More facts from AMC. They’ve leaked that they expect their portfolio of streaming services to end the year at around 4 million US paid subscribers. To be clear, this is me cheating slightly since their premiere service AMC+ (which includes content from their other streaming services) may not have passed the 2 million threshold. I’m counting all their streaming subscribers, when you could argue they belong with the “niche” services. Still, they expect to pass the 5.5 million mark by the end of the year. So that’s the high point, with 4 million being the low. 

(I haven’t written on AMC+ yet, but I am bullish on it as a “second tier” player. More to come.)

Peacock

Last guess. Peacock has 22 million “sign-ups”, up from 10 million at their first earnings report after Peacock’s launch. So how many of those are paying? 

I have no clue. None. Zip. Zilch.

But it’s likely small. Given that Peacock is advertising forward, the vast majority of users are likely interacting with it that way. (Of all the companies, I’d love this data point most of all. Well, maybe Apple TV+, then this one.) So I built a sensitivity table, and picked 15% as the number that made sense to me. I’d say the floor is 2 million (just making this list) and up to about 20% of subscribers, or 4.4 million subscribers, if folks are beating my estimates.

The Comparison Table

So with that, let’s make a few final fun tables. First, here’s the chart of my ranges of each estimate. In a lot of ways, this is more valuable than yesterday’s chart:

IMAGE 14 - Min Max Table

These ranges really tell us how wide the potential options are. Hopefully, we learn more over time, but you can see that the premium linear to streaming conversion will be an important statistic to monitor.

And now the confidence ranking table.

IMAGE 15 - Confidence Table in Rank

In other words, you can quickly see who provides clear numbes, who we can confidently estimate and who is the guess work.

Lastly, here’s my full table with the definitions and calculations explained:

Table - Full US Sub Estimates

So this provides a short hand way to know how I calculated the numbers.

Hope you enjoyed and again provide your estimates or feedback in the comments or on Twitter.

Netflix Has as Many Subscribers as Disney+ and Prime Video Put Together In the United States – Visual of the Week

Let me tell you a pet peeve of mine. It’s folks citing how many Amazon Prime Video subscribers Amazon has. 

Because they don’t know.

What you know, or have been told once, is how many Amazon Prime subscribers there are. With Prime comes access to Prime Video. We don’t know how many members actually use that service or, more importantly, know how many value the service enough to pay for it on a recurring basis. (What a subscription is, by definition.)

But here’s what’s crazier: we don’t even know how many Amazon Prime subscribers there are by country. They could have 50 million US Prime members…or 125 million. Literally no one knows. (In fact, we haven’t gotten an update on Prime membership since January.)

This is indicative of a larger phenomenon of the “streaming wars”. The streamers have barely told us how well they are doing. By my estimates, only 4 of the 12 biggest streamers have shared actual US subscriber numbers! (Hulu, ESPN+, HBO Max and Starz)

That’s right, due to non-disclosure, global-only numbers, or definitional craziness, we really can’t compare the streamers to each other in the United States.

Well no more!

I’ve decided to fix this glaring mistake. What I’m going to do is provide the EntStrategyGuy Definitive Estimate for all the major streamers US subscriber base. Today, I’ll provide my table, chart and some notes, then tomorrow I’ll provide the longer, gory details. First, here’s the chart:

Chart - US Paid Streaming SubscribersAnd the table, which I’ll explain tomorrow:

Screen Shot 2020-11-18 at 9.03.01 AM

About That Headline

If the internet weren’t a cesspool of clickbait, I could have just explained what this article is, “My estimate of US subscribers for the streamers.” But that doesn’t get the clicks. A flashy headline on Netflix? That does.

Tomorrow, like I will say multiple times, is where I’ll really provide insights into this process and data. For now, though, if you have one takeaway, it should be that the streaming wars are messy. They are filled with nuance. The more that someone online pushes a simplistic narrative (Netflix has already won; Disney+ will kill Netflix; TV is dead) the less you should listen. There are no simple narratives.

So my headline is 100% true, and building this chart makes that clear. When it comes to one single streamer in the United States, Netflix is about twice as far ahead as its nearest competitors. Really, they are in the first tier by themselves. Then there is a second tier of services with about 35 million subscribers (Disney+, Hulu, HBO Max and Prime Video). Then a third tier of folks trying to break into that second tier (Apple, Peacock, Starz, CBS, Showtime, maybe AMC+). 

Yet, this look is in many ways a backwards looking view. The three oldest services happen to be the three biggest. The difficulty is forecasting what comes next. If we’re looking at growth, Netflix at the top was flat last quarter and down earlier in the year. And likely would have stayed that way all year in America except for Covid. Meanwhile, can the new streamers add subscribers? I think they can.

At least now, we/I have a common fact set to evaluate the United States performance of the streamers.

Quick FAQs

– What about global? I’m just focusing on the United States since many of these streamers are US-only. And we have the best data for this country. As the streaming wars continue, though, I’ll do a similar look for worldwide. (Though comparing global numbers to US only numbers is not a good method to do that.)

– How did you get that Amazon number? It’s an estimate of an estimate of an estimate, which makes it a guess. I’ll explain tomorrow.

– Why didn’t “smaller streamer TBD” make the list? I set the cut off at roughly 2 million subscribers. Anything smaller would have made the chart difficult to read. Again, I’ll explain my rules tomorrow.

– What if you disagree? Well, tomorrow I’ll explain how I calculated each one, so if you want to adjust the estimates you can. That will allow you to disagree, but within the right zone of possible answers.

– [From Corporate PR] You got our numbers all wrong! One, if you don’t put them out, then no I didn’t. If any company wants to correct my math, send me three years of financial data and I’ll happily provide an exclusive update.

(This is the first article in a three part series estimating how many US paid streaming subscribers there are in the US. Read about how I calculated the numbers here or here.)

Who Will Win the Battle for the next “Game of Thrones”?: How “People” Change the Odds of Success

(This is another entry to a multi-part series answering the question: “Who will win the battle to make the next Game of Thrones?” Previous articles are here:

Part I: The Introduction and POCD Framework
Appendix: Licensed, Co-Productions and Wholly-Owned Television Shows…Explained!
Appendix: TV Series Business Models…Explained! Part 1
Appendix: TV Series Business Models…Explained Part 2
Appendix: Subscription Video Economics…Explained Part 1
Where We’ve Been)

Two weeks ago, we checked back in on the news about the contenders vying to be the “next Game of Thrones”. Let’s keep the momentum going and get right into the “People” portion of our framework. At the end, I’ll unveil my current working model for evaluating TV series.

Why “People” Matter In Every Deal

The “people” in a typical venture capital deal are the leaders of a start-up. This means the founders and the soon-to-be chief officers. Is the CEO a great technology guy, but not great at scaling? Or an operations guy who has a dynamite CTO already in place, but no marketing experience? Conversely, is the product great and so is the opportunity, but you need to replace the leadership to make the company truly succeed? (Uber/WeWork much?)

In a real world example, lots of investors in Quibi invested because of the team of Jeffrey Katzenberg and Meg Whitman. He could handle content; she’d handle everything else. (Only later did we find out they couldn’t work well together.)

As I use the “POCD framework” for evaluating TV series—a concept I dabbled with at my previous job—I’ve found the “People” portion to be extremely important. Who is the showrunner? Who is the creator? Are they the same person? Or do you need to bring in a more established showrunner to replace the creator’s vision? Does the showrunner have the ability to manager a team, or will they do it all themselves? Can the writers work with the directors to bring their vision to bring the show? Are the producers able to corral the showrunner and bring things in on-time and on-budget?

Hopefully, the answer to all those questions are positive. Meaning the creator has a great vision, the showrunner can deliver on their vision, the writers room writes great content, the directors can film it, and the production team will run everything well. The reason this is important is because, if a studio can hire the right people more consistently than competitors, they can achieve outsized returns.

Those outsized returns fall into two rough buckets. The first bucket is the “quality” bucket: Can the show runner make a good nee great show?

Well it depends. Unfortunately, most showrunners and creators are…average.

Average isn’t bad, you see. It just means that while all showrunners are great people—and indeed highly skilled at what they do—their “hit rate” is average. Which means that most of the time the shows and films they make are bombs/duds and a few times they are blockbusters. (About 1 in ten.) That’s just the math. That’s right, logarithmic distribution of returns applies to the people making shows too:

Slide03 copyAt the far right end, some showrunners can buck this trend to reliably churn out hits, but they are few and far between. Think Greg Berlanti, Shonda Rhimes, Mark Burnett or Chuck Lorre. Even then, they have more duds than you initially remember when you scan their IMDb. If either Game of Thrones or Lord of the Rings had a top tier showrunner attached, it would increase the likelihood that a show becomes a “hit” or “the next GoT/superstar” in our model. (Or if they had a top tier development exec with a similar track record. No streamer does yet.)

The converse to good showrunners is a chaotic leadership situation. If a show has lots of creators moving in and out and lots of directorial turnover, that’s a bad thing. (Though not always. The Walking Dead did just fine and it’s on its fourth showrunner.) 

My model also punishes showrunners with extensive mediocre track records. Which unfortunately is quite a few showrunners out there. For all its admiration of experimentation, Hollywood is surprisingly conservative at decision-making. Development executives hire the same writers and directors instead of trying someone new because it’s “safer”. These showrunners produce a show for a few years that is mostly “Meh” (a technical term), and then move on to another pitch/job. In the model, if I saw a fantasy series had that type of showrunner, it would increase the likelihood that a show is another also ran TV show, not the next Game of Thrones.

The second outcome is the “logistics” bucket. Can a show come out on time and on budget?

When it comes to making blockbusters, this is less important. However, if you’re running a business, given that 95% of showrunners are average, this can be the difference between profit and loss. This can be forecast, with the right data, pretty reliably. I, for example, knew that certain showrunners and directors who worked regularly with our streamer would be late or over budget when we hired them, because they were late or over budget previously. Unfortunately, this type of data isn’t public available—studios don’t make a habit of sharing when they go over budget—so I can’t use it in this series.

It is worth noting that this was part of the genius of HBO and Game of Thrones. They managed to keep that show on every single year while being the most expensive show on television. But an incredibly efficient expensive show, if that makes sense. 

(The great production houses out there—Jason Blum, HBO the last two decades, Marvel this decade—really do deliver on time and on budget, while hitting high quality bars. That’s not an accident.)

Meanwhile, most of the streamers struggle to get second seasons out within 18 months of big shows. We don’t know if these shows are “on budget” but with the way Netflix spends money, probably not? While this is important, it won’t make the model because we won’t know about financial/timing trouble until it happens.

The Results

With that explanation in mind, I’m going to be fairly conservative on evaluating these leadership teams. While picking people is really important, the benefits don’t show up on an individual show, but on a long-term/portfolio level.

Thus, I’m more worried about overvaluing “noise” than true signal in evaluating these leadership teams. (Long term, I hope to do more data analysis to better judge creative hires, but I don’t have those databases yet.) As a result, I’ll default to the “null hypothesis” more than usual.

Let’s go show by show.

Read More

Who Will Win the Battle for the next “Game of Thrones”? : Where We’ve Been

 

(This is another entry to a multi-part series answering the question: “Who will win the battle to make the next Game of Thrones?” Previous articles are here:

Part I: The Introduction and POCD Framework
Appendix: Licensed, Co-Productions and Wholly-Owned Television Shows…Explained!
Appendix: TV Series Business Models…Explained! Part 1
Appendix: TV Series Business Models…Explained Part 2
Appendix: Subscription Video Economics…Explained Part 1
)

A trope of genre fiction is the character with unfinished business. The lone wolf who harbors a grudge against someone or something that harmed his family, destroyed his life or stole his (or her) kingdom. 

July was “unfinished business” month at The Entertainment Strategy Guy headquarters. I’ve started quite a few series and let news or time distract me from finishing them.  Having checked back in on “Should Your Film Go Straight to Netflix?”, “Coronavirus Impact on Entertainment” and “The Star Wars 2019 Business Report”, it’s time to return to a series that’s over a year old, diving into a deliciously provocative topic: which TV series will make the most money for its streamer, the next Game of Thrones or the next Lord of The Rings?

Why didn’t this series get finished? Two reasons. First, I got severely distracted by explaining all the math behind my models as I was building them. This resulted in five articles that were essentially “appendices”. (Seriously, if you want to understand the economics of streaming TV, check them out.) Second, pulling the data on past fantasy TV series and movies took longer than I anticipated.

No more! Today I’ll review:

– A summary of this series so far.
– An update on the news in “fantasy TV” since last summer.

Summary of Where We Were

Cue the narrator voice for a genre series returning after a two year hiatus: “Previously, on GoT vs LoTR vs Narnia”. My challenge is about as difficult: explain a several thousand word series in a few hundred words. 

This series was inspired by the general rise in fantasy programming at all the streamers. It wasn’t just Amazon that wanted the next Game of Thrones, so did Netflix and Disney+ and even HBO itself. I framed the question as:

Which franchise will make the most money for its streamer in the future, Game of Thrones, Lord of the Rings or Chronicles of Narnia?

My initial assessment—what I call a “Blink” look—is that HBO will win. Frankly, they paid way less than Amazon. (Initially described as a $250 million dollar deal for Amazon.) Then I heard that Amazon guaranteed 5 seasons! That’s at least $1.25 billion, and maybe more. That only gives the edge even further to HBO. At first, I didn’t really consider Netflix a viable competitor. (I was wrong.)

Then I moved onto the analysis. Which means building models to see what they tell us. The basic formula is pretty simple:

(The probability of success X The revenue upside in success ) — Costs = Likelihood of money made

The tricky part is calculating all that. To explain it, I’m using the “POCD” framework: 

People
Opportunity
Context
Deal

It’s a framework from the venture capital world, but I’m applying it uniquely to TV series. Essentially, people, opportunity and context describe how much revenue a company can make, and the deal explains the costs. 

I’ll make a bespoke model for every series under consideration using the various POCD inputs to change the probabilities or potential revenue/costs. I explained the TV profit model here and here, and also explained the tricky nature of streaming video economics here. (Those last two articles laid the ground work for my series on “The Great Irishman Project”.)

Then came the distraction. Since I had built this kick-ass TV series business model, I decided to use it on the original Game of Thrones. In a big piece published on Decider, I estimated how much money I thought GoT had brought in for HBO. (A whopping $2 billion plus.) This provides terrific context for the “upside” of all these fantasy series. (I wrote a few “director’s commentaries” for this article too.)

So that’s where my series left off. But the news didn’t end just because the series was delayed.

All The News Since Last Summer

When I started this series, I focused on three fantasy series based on arguably the three most influential fantasy books of all time…

Game of Thrones prequel (HBO)
Lord of the Rings prequel (Amazon)
Chronicles of Narnia (Netflix)

 Since then a few fantasy series have come out…

The Dark Crystal: Age of Resistance (Netflix)
Carnival Row (Amazon)
His Dark Materials (HBO)
The Witcher (Netflix)

And more have been developed or are in production…

The Wheel of Time (Prime Video)
Sandman (Netflix)
– Untitled Beauty and the Beast (Disney+)

If all those qualify for this battle, we’re up to 10 potential contenders for the replacement for Game of Thrones. And that doesn’t include potential series (Disney’s Book of Enchantments and Lionsgate’s The Kingkiller Chronicles) that died in development. And I haven’t even looked at Syfy’s lineup to see what else could qualify. (The incomparable Magicians just ended after their fifth season. Pay attention to that data point for later.) 

The Specific Updates

HBO and Game of Thrones prequel

In one of the more fascinating single day development moves, HBO both cancelled one prequel series (The Long Night/Bloodmoon) and announced another prequel series about the Targaryens (set about 300 years before GoT) called House of Dragons. I could spin this as good or bad for HBO, but either way their series is still happening. Right now, HBO is saying the prequel will arrive in 2022.

Amazon and Lord of the Rings prequel

Amazon meanwhile is furthest ahead, having started production this spring in New Zealand, only to be another Covid-19 casualty. (Though I believe production is set to start production soon or already has.) Amazon was under time pressure to get a TV series in production within two years, and that appears to have motivated the streamer.

Netflix and Chronicles of Narnia

If you search for Chronicles of Narnia and Netflix, you run into a series of articles asking, “Is this thing still happening?” And no one really knows. Netflix insists it is, and Entertainment One has hired a “creative architect”, but there is no release date or known shooting schedule. Which means we’re going to drop this series from our main contenders for another lower down.

The Dark Crystal and Carnival Row 

I’d describe these two series and “came and went” at Netflix and Amazon (respectively). Like the Magicians, these two series demonstrate that not every fantasy series is a guaranteed blockbuster. Though the former was arguably more popular due to the “Netflix Effect”. Still, neither is set to be the next Game of Thrones. 

HBO and His Dark Materials

As one of HBO’s first “Monday premieres”, this series was overwhelmed by Watchmen in terms of buzz. It has a better chance than either of the two previous series at being a future Game of Thrones, but the odds of that are pretty low.

The Witcher on Netflix

And now we have a legitimate contender! Lots of folks pointed out that I should have dropped Narnia for The Witcher when I first started this series. Indeed, The Witcher may have single handedly helped Netflix meet subscriber targets by releasing right at the end of 2019. It is arguably Netflix’s first or second biggest show currently on the air. (With the acknowledgement that “on the air” is an anachronism.) In other words, The Witcher has a great chance to be the next Game of Thrones.

Meanwhile, I’m going to monitor every other fantasy series that pops up in development or production. (For example, Amazon’s Wheel of Time series has promise.)

Now that we know where we’ve been, and what’s happened since, we can move into our four-part framework for predicting which of these series will win the battle. Tomorrow, we’ll continue with the first letter in our framework, P for People.