ViacomCBS Eyes Super Bowl LV as Major Paramount+ Marketing Tool

Ahead of Super Bowl LV on Feb. 7, in Tampa Bay, Fla., ViacomCBS is expanding the big game’s streaming reach across its digital properties. While the game will be broadcast on CBS Sports, it will also be available on CBSSports.com, CBS Sports app, in addition to Yahoo Sports, and ESPN digital properties.

The game, which will feature the first-ever female official (Down Judge Sarah Thomas), will also be live-streamed on CBS All Access, the SVOD platform that is rebranding to Paramount+ on March 4. As such, expect to see multiple tie-ins across ViacomCBS properties marketing the pending change, including AVOD platform Pluto TV.

Separate data from digital marketing agency Adtaxi found that 68% of survey respondents said they would forgo attending a Super Bowl party to watch the game at home alone.

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Last year’s Super Bowl LIV contest between the Kansas City Chiefs and San Francisco 49ers saw 3.4 million people live-stream the game per minute, which was 30% more than the 2.6 million per minute who live-streamed Super Bowl LIII in 2019; and 103% more than the 1.7 million per minute who live-streamed Super Bowl LI in 2017.

“We’re excited to broaden the availability of our Super Bowl LV stream this year, and we look forward to building on the incredibly strong momentum NFL football is driving on CBS All Access as a cornerstone of the extensive live sports offerings available on the service,” Jeff Gerttula, EVP and GM, CBS Sports Digital, said in a statement.

Regardless, the Super Bowl remains a broadcast TV mainstay. The annual broadcast remains the single-day highest rated TV program with more than 100 million people tuning in.

CBS All Access Expands Kids Programming

SVOD platform CBS All Access Dec. 9 announced new product features for families and the addition of Nickelodeon and Nick Jr. library programming, of its upcoming rebrand to Paramount+ in 2021.

The new family-friendly features include the ability to create up to six profiles per account and manage each profile using “Kids Mode,” which allows parents to create profiles that limit content to older children or younger children based on content ratings. The service’s existing parental PIN controls’ option for mature content, which locks access to certain content based on its content rating, will also still be available to use across profiles.

“With today’s new product enhancements, like ‘Kids Mode’ and multiple profiles, we can create customized experiences for each member of the household, while giving our subscribers even more opportunities to discover and watch family programming together, and allowing parents additional peace of mind with the ability to further customize what programming is available to their kids,” Rob Gelick, EVP and GM, streaming services and chief product officer, ViacomCBS Streaming, said in a statement.

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In addition, CBS All Access introduced nearly 800 more episodes of children’s programming to the service, including select past seasons of Nick Jr. favorites “Paw Patrol,” “Blaze and the Monster Machines,” “Blue’s Clues,” “Bubble Guppies,” “Dora the Explorer” and “Shimmer and Shine,” among others.

All Access children’s programming is available commercial-free. The new library content being added to the service joins an already robust roster of more than 1,000 episodes of library and original children’s programming, including the service’s previously launched original children’s series, WildBrain’s “Cloudy With a Chance of Meatballs,” Boat Rocker’s new “Danger Mouse” and new editions of “Lassie,” “George of the Jungle” and “Mr. Magoo” from DreamWorks Animation’s Classic Media.

Original children’s programming on the service will continue to expand with the first spinoff from one of ViacomCBS’s biggest global franchises, Nickelodeon’s “SpongeBob SquarePants,” when new series “Kamp Koral” premieres in early 2021. The service will also be the exclusive home to The SpongeBob Movie: Sponge on the Run, the upcoming feature film that follows “SpongeBob,” his best friend Patrick Star, and the rest of the gang from Bikini Bottom in the first-ever all CGI SpongeBob motion picture event.

ViacomCBS CEO: Monthly Pluto TV Users to Reach 40 Million Globally, 19 Million SVOD Subs by Year’s End

ViacomCBS is ending 2020 with some good news. The company expects 40 million average global monthly users of its ad-supported Pluto TV platform, and 19 million combined SVOD subscribers for CBS All Access and Showtime OTT. The updated numbers were disclosed Dec. 8 by CEO Bob Bakish on the virtual UBS Global Investor event.

“We now see domestic streaming and digital revenue, which does include some ad sales, at an annual run rate in Q4 of $3 billion dollars,” Bakish said, adding that the tally is up from the $2.8 billion projected on the previous fiscal call. “That implies over 50% growth in the [fourth] quarter.”

ViacomCBS CEO Bob Bakish

Bakish said the revenue projection underscores his positivity around streaming video as a major future for the company. ViacomCBS plans to hold an investor event in early 2021 to discuss the company’s streaming strategy, which includes further details on the rollout of the rebooted CBS All Access service as Paramount+.

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“We’ll give an update on our entire streaming ecosystem, which includes Pluto TV and Showtime OTT, and how we’re using the great assets of the company to pursue a global streaming strategy,” Bakish said.

Notably, Bakish said ViacomCBS would look to differentiate content offerings across ad-supported Pluto TV, Paramount+ and Showtime OTT, underscoring the fact the latter service would remain separate from Paramount+ in 2021. Bakish said Pluto would act as a link toward the company’s SVOD channels.

“I think it’s fair to say the world is quickly embracing free streaming, which is why Pluto TV is key to our strategy,” he said, adding that streaming video — driven by an average of more than three services in the average U.S. home — represents a global opportunity for the media company.

“It’s definitely a growing category,” Bakish said.

Indeed, Paramount+ will look to combine live sports, breaking news and a “deep roster” of exclusive originals and content franchises for “every audience,” according to Bakish.

“This is a cross-demographic product,” he said.

Bakish outlined a few original series, including limited series “The Offer,” about the making of The Godfather; new SpongeBob kids series “Camp Coral,” which drops after the debut of movie SpongeBob: Sponge on the Run on Paramount+; and a  new series from “Yellowstone” creator Taylor Sheridan.

“There’s no question in my mind that our streaming strategy is working,” Bakish said.

CBS All Access Coming to Comcast’s Xfinity X1 Pay-TV Platform

Comcast Cable Dec. 7 announced that the ViacomCBS subscription streaming video service CBS All Access will be available on the Xfinity X1 platform this week, following the launch of the app on Xfinity Flex earlier this year. Xfinity is the first pay-TV provider to offer CBS’s branded streaming service, which is changing to Paramount+ in 2021. The platform joins Netflix and YouTube as major third-party SVOD services available directly to Xfinity subs.

The partnership is notable considering NBCUniversal operates SVOD competitor Peacock, which launched nationwide this summer.

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X1 subs will be able to All Access’ offering of more than 20,000 episodes and movies from BET, CBS, Comedy Central, MTV, Nickelodeon and Paramount Pictures, in addition to original series like “Star Trek: Discovery,” with new episodes dropping weekly on Thursdays; the upcoming limited event series “The Stand,” premiering Dec. 17 and based on Stephen King’s best-selling novel; as well as the recently debuted docuseries “Texas 6,” and many more.

All Access also offers live streaming access to major sports, including some of the world’s biggest soccer leagues, along with CBSN for 24/7 news, CBS Sports HQ for sports news and analysis, and ET Live for entertainment coverage. For Flex customers, All Access enables them to stream local CBS-affiliate stations live, including CBS Sports broadcasts.

To launch the app and access the streaming service over the Internet, X1 customers can say “CBS All Access” into the Xfinity Voice Remote. They can also say the title of an All Access Originals or browse All Access programming within collections curated by Xfinity’s team of TV editors, such as “Explore CBS All Access” and “December Premieres.” X1 subs can also find All Access children’s programming, which includes more than 1,000 episodes, including new seasons of “Cloudy With A Chance of Meatballs,” “Danger Mouse,” and related series from Nickelodeon. X1 and Flex customers will continue to All Access availability when the service is rebranded as Paramount+ early next year.

‘The Stand’ Top New, ‘Attack on Titan’ Top Returning Shows on TV Time Anticipated Series Charts for December

CBS All Access’s “The Stand” was the most anticipated new show, while “Attack on Titan” was the top anticipated returning show on the TV Time charts for December.

“The Stand,” a limited series based on the Stephen King novel, is a nine-episode production starring Whoopi Goldberg and Alexander Skarsgard. The series chronicles King’s apocalyptic vision of a world decimated by plague and embroiled in an elemental struggle between good and evil. The fate of mankind rests on the shoulders of the 108-year-old Mother Abagail (Goldberg) and a handful of survivors. Their worst nightmares are embodied in a man with a lethal smile and unspeakable powers: Randall Flagg (Skarsgard), the Dark Man.

The fourth and final season of anime series “Attack on Titan” is streaming on various services around the world beginning Dec. 7. The series based on the manga is set in a world where humanity lives within cities surrounded by enormous walls that protect them from gigantic man-eating humanoids referred to as Titans.

Taking the silver on the anticipated new series chart was Netflix’s “Bridgerton,” hitting screens on Christmas. The romance series is produced by Shonda Rhimes and is based on Julia Quinn’s bestsellers about eight close-knit siblings of the Bridgerton family looking for love and happiness in London high society.

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Coming in at No. 2 on the returning shows chart was the adult animation series “Big Mouth,” season four of which debuted Dec. 4. The series follows a group of kids facing the horrors and delights of puberty.

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Most Anticipated New Shows for December:

  1. “The Stand” (CBS All Access) — Dec. 17
  2. “Bridgerton” (Netflix) — Dec. 25
  3. “Your Honor” (Showtime) — Dec. 6
  4. “The Wilds” (Amazon Prime Video) — Dec. 11
  5. “Tiny Pretty Things” (Netflix) — Dec. 14

 

Most Anticipated Returning Shows for December:

  1. “Attack on Titan” — Dec. 7
  2. “Big Mouth” (Netflix) — Dec. 4
  3. “Shameless” (Showtime) — Dec. 6
  4. “Home for Christmas” (Netflix) — Dec. 18
  5. “The Expanse” (Amazon Prime Video) — Dec. 16

Streaming Wars: Big-Money Upstarts Battle Established Leaders

It has been a calamitous year on many fronts due to COVID-19. And yet the global pandemic, with its stay-at-home orders and shuttering of movie theaters, has been a boon for streaming video services such as Netflix and Disney+, the two leaders of opposing factions now doing battle for viewership — and subscriber dollars.

There are now seven major subscription VOD services, counting the rebranding of ViacomCBS’s CBS All Access into Paramount+ early next year.

Netflix, along with Amazon Prime Video and Hulu, represent the old guard, established streamers with healthy track records and steady, progressive growth. Disney+, which only launched in November 2019, leads a quartet of high-profile newcomers — Apple TV+, HBO Max, NBCUniversal’s Peacock and, soon, Paramount+ — seeking to unseat the incumbents by grabbing a dominant share of the spoils.

And the SVOD pie is getting bigger. Hub Entertainment Research found the average person is accessing 60% more streaming video services in 2020 than they did in 2018, while 90% of households with children living at home subscribe to more than one OTT video service.

“We’ve seen the number of providers per [survey] respondent rise to an all-time high during the pandemic,” analyst Jon Giegengack said. “The average respondent had 4.8 services. That was going up anyway, but the pandemic turbocharged it.”

Leading the way: Netflix. Long a favorite on Wall Street, the SVOD market co-creator (with Roku) again this year quieted would be critics with outsized subscriber growth (projected 34 million additions through the end of the year), strong financials (revenue up 25% to $18.35 billion through the first nine months of this year) and weekly chart-topping content.

“We’ve been doing high 20s [in millions of net adds per year] for four years,” co-CEO Reed Hastings said on the company’s most recent fiscal webcast. “And this year [we are] setting all kinds of records,” he noted, adding that increased revenue translates into more content spending, which “tends to generate more sub growth over time.”

Indeed, while Netflix may have fallen short of its own sub growth projections in the quarter ended Sept. 30, in many ways Q3 was a solid quarter, particularly in terms of retention, according to Parrot Analytics. The data analytics company said the effects of the “extraordinary” operating conditions caused by the pandemic are still benefiting Netflix.

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Several demand metrics relevant to subscriber retention, such as the demand decay rate, are trending upward, according to Parrot. This shows that Netflix is improving on measures that keep subscribers coming back for more. Netflix, in its shareholder letter, noted that “retention remains healthy.”

A study by Bank of America Securities found churn among Netflix subs (not renewing) during the pandemic has dropped significantly. That is an improvement from the 4% monthly churn Netflix experienced prior to the coronavirus.

“Viewer loyalties are shifting as subscriptions to traditional pay-TV services decline,” said Steven Nason, research director at Bank of America Securities. “The average Netflix subscriber has had the service over 50 months … all other services have much shorter subscription histories.”

That loyalty was tested following backlash to Cuties, an award-winning French movie about pre-teen girls in a Paris dance troupe, which threatened to explode Netflix churn, and worse. The service continues to find itself in the crosshairs of a criminal prosecution in the state of Texas.

“It’s a film that is very misunderstood with some audiences, uniquely within the United States,” co-CEO Ted Sarandos said during the virtual French MIPCOM confab in October. “The film speaks for itself. It’s a very personal coming-of-age film; it’s the director’s story and the film has obviously played very well at Sundance without any of this controversy, and played in theaters throughout Europe without any of this controversy.”

Wells Fargo analyst Steven Cahall said he believes that while the controversy may have cost Netflix 2 million North American subs in Q3, the decline was short-lived.

“We think the [issue] and elevated churn was essentially a flash in the pan,” Cahall wrote.

Wedbush Securities media analyst Michael Pachter called the criminal indictment “idiotic,” arguing the case is a First Amendment issue that
Netflix should win easily.

“The case has no merit at all,” Pachter said.

Indeed, the day after the district attorney in Tyler County, Texas, issued a statement explaining his motive for filing charges against Netflix, shares of the company increased nearly 6%.

“Netflix should remain the dominant SVOD player for the foreseeable future,” wrote Pivotal analyst Jeffrey Wlodarczak.

Naturally, Hastings agrees. The executive characterized the pandemic’s impact on the OTT video industry as a one-time phenomenon. Hastings said Netflix continues to compete against myriad other entertainment distractions, including TikTok, YouTube and video games, among others. He said Netflix user engagement, subscriber churn and related trends remain on par with what management expected a year ago.

“There was temporary learning when there was no [live] sports, but it’s like, well, it [wasn’t] really that interesting of a finding because it’s just not relevant to the [non-pandemic] world,” Hastings said. “Now we’re back in a world with partial [TV] sports and that’s fine and we’re [still] growing.”

In November, Netflix began testing a linear channel in France streaming original programs like an old-school TV channel without a DVR. Available only to subscribers and on the website, the channel could be Netflix’s eventual foray into ad-supported content. With nearly 200 million subs worldwide, Netflix’s challenge is to sustain viewer interest.

“The limiter for us is what’s the quality of our service, how many nights can you say, ‘Oh my God, I want to go to Netflix and watch the next show?’” Hastings said.

Rising Tide Lifts All Streamers

To put Netflix’s meteoric year into perspective is to understand that 2020 has been a banner year for OTT video, including ad-supported VOD. That’s because there’s been a wave of opportunity spurred by a captive audience sequestered at home. The year saw the table set among streaming competitors with Fox Corp.’s $440 million acquisition of AVOD service Tubi and the launches of WarnerMedia’s HBO Max and NBCUniversal’s Peacock.

ViacomCBS will launch a reboot of CBS All Access, dubbed Paramount+, for global access in 2021. Peacock became the first SVOD platform to offer a free ad-supported VOD option at launch. Max is slated to bow an AVOD option in 2021.

ViacomCBS CEO Bob Bakish said Paramount+ would separate itself from other SVOD services by streaming the NFL, SEC college football, UEFA soccer, PGA Golf, live national CBS News and local affiliates, as well as news show “60 Minutes,” among others.

“It’s going to be a truly differentiated and compelling offering that’s unlike anything that’s really out there today,” Bakish said.

The lone anomaly: Quibi, the mobile-streaming SVOD app launched in early April by DreamWorks Animation founder Jeffrey Katzenberg and former HP boss Meg Whitman that lasted just six months before it was announced it was shutting down. The service targeted mobile-device users with original programming from five minutes to 10 minutes in length — and was backed by a $1.75 billion war chest. Despite the hype and big-name talent (Anna Kendrick, Chrissy Teigen, Christoph Waltz and Liam Hemsworth, among others) associated with content production, few consumers opted in beyond the free trial period.

Analysts suggested just 8% of initial free Quibi trial users converted to paying subs in the first month. Katzenberg, in media interviews over the summer, attributed the sluggish start to the coronavirus pandemic, maintaining that many potential subscribers were stuck at home watching TV instead of streaming video on their mobile devices. Quibi didn’t help itself at launch when content was available only on portable devices and not televisions.

The app lasted just a fraction as long as Verizon Communications’ $1 billion mobile-based video misstep, go90, which shuttered in 2018 after three underwhelming years.

Trendsetters

Like most markets, first movers typically hold the advantage. OTT video is no different as viewership on Netflix, YouTube and Amazon Prime Video accounted for 64% of the time consumers spent on Internet-connected TVs in July, according to Comscore. When adding Hulu and Disney+ to the mix, the five apps accounted for 83% of all streaming video consumption. The data underscores the fact that the TV ecosystem has embraced digital platforms, with streaming video at the center of an ever-more-dynamic path to content distribution.

There’s more good news ahead. Despite approaching market saturation, the number of U.S. SVOD subscriptions is projected to climb from 203 million in 2019 to 317 million by 2025, according to Digital TV Research. Even Netflix, with 12 years of service under its belt, is projected to add 10 million domestic subs in the period. This growth is overshadowed by projected gains at newcomer Disney+ (27 million sub additions) and Hulu’s expanding profile (22 million). Peacock, HBO Max and CBS All Access/Paramount+ will each add more subs than Netflix during the period, according to DTV Research. The six platforms will account for 82% of the 114 million total U.S. subscriber additions. Separately, All Access and sister service Showtime OTT ended the Sept. 30 fiscal period with nearly 18 million combined subs — up 72% year-over-year from 10.4 million.

“The depth of choice in the U.S. will not be replicated in any other country,” said analyst Simon Murray. “Eight U.S. platforms will have more than 10 million paying subs each by 2025.”

Murray predicts that SVOD subscriptions will increase by 529 million worldwide through 2025 to 1.17 billion. By 2025, one-third of the world’s TV households will have at least one SVOD subscription — up from a quarter at the end of 2019. China and the United States together will account for 51% of the global total. This is down from 63% in 2019 — suggesting SVOD growth in other countries is growing quickly.

Direct-to-Consumer Push

Disney in its Nov. 12 fiscal call reported that Disney+ had reached  73.7 million global subs, well ahead of company projections on the one-year anniversary of the service’s launch. It had passed 60 million in August. Thanks to a global brand, the service is expected to be the biggest SVOD mover in subscriber growth over the next five years, generating 142 million subs between 2019 and 2025 to reach 172 million, according to Digital TV Research. Netflix, by comparison, will add 91 million subscribers to total 263 million.

“We believe that Disney+ will have a huge impact,” said analyst Simon Murray.

At the same time, Murray lowered his Disney+ sub forecast through 2025 by 30 million, contending the streamer’s June results showed a deceleration of sub additions following international launches in the United Kingdom, Ireland, Germany, Austria, Italy, France, Spain and Switzerland. The service is also available in Australia, New Zealand, Holland and Puerto Rico.
Disney+ will roll out in Latin America beginning on Nov. 17.

“We expect this trend to be repeated elsewhere,” Murray said.

Indeed, with Disney+ now a year old, many subscribers who received free 12-month service deals as part of a Verizon promotion will have to start paying or cancel the service. Some analysts contend the Verizon promotion accounts for 15% of Disney’s subscribers. To stave off a possible uptick in churn, Disney just launched the second season of “Star Wars” spinoff “The Mandalorian,” in addition to original series “The Right Stuff” and The Lego Star Wars Holiday Special movie, among other content.

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Keeping consumers interested in Disney+ remains a priority for CEO Bob Chapek and key investors as much of the company’s business units remain idle due to the coronavirus pandemic. In a recent letter to Chapek, minority stake holder Dan Loeb said he wanted the board to re-direct annual dividends to content spending on Hulu, ESPN+ and Disney+.

“By reallocating a dividend of a few dollars per share, Disney could more than double its Disney+ original content budget,” Loeb wrote Chapek. “The ability to drive subscriber growth, reduce churn and increase pricing present the opportunity to create tens of billions of dollars in incremental value for Disney shareholders in short order, and hundreds of billions once the platform reaches larger scale.”

Chapek continues to put digital distribution at the core of his corporate strategy. In October, Chapek formed a new Media and Entertainment Distribution group, led by Kareem Daniel, that is tasked with putting a “focus on developing and producing original content for the company’s streaming services.”

That move was preceded by Disney moving erstwhile Pixar Animation feature film Soul from the theatrical slate to Disney+ for Dec. 25 access. The film was previously scheduled for theatrical release on Nov. 20. Mulan, another Disney release intended for theaters, became the studio’s first “premier access” VOD experiment, affording Disney+ subs the ability to pay $29.99 to access the film months before it was due to become available on the service.

In crossing the PVOD line in the sand, Chapek dealt a major blow to exhibitors who had come to count on Disney movies luring moviegoers and concession sales. It was just over a year ago that Disney’s market share of the domestic movie box office reached 35% ($1.88 billion) — surpassing the next two studios combined.

“Over the last six months, marketplace conditions created by the ongoing pandemic, while difficult in so many ways, have also provided an opportunity for innovation in approaches to content distribution,” Disney said in a statement. “The Disney+ platform is an ideal destination for families and fans to enjoy a marquee Pixar film in their own homes like never before.”

Separately, ESPN+ added 6.8 million subs in the quarter to bring its total to 10.3 million. Hulu added 6.9 million subs to reach 32.5 million, up 27% from the previous-year period. Online TV service Hulu with Live TV added 1.2 million subs to end the period with 4.1 million. Disney ended the period with 120.6 million combined subscribers to its OTT platforms.

“The real bright spot has been our direct-to-consumer business, which is key to the future of our company,” Chapek said.

Hulu Eyeing Disney+ Future?

Long a runner-up to Netflix and Amazon Prime Video, Hulu has quietly increased subscribers while majority-owner Disney directs much of its focus to Disney+. More than three-quarters (78%) of all U.S. households have a subscription to Netflix, Prime Video and/or Hulu, according to the Leichtman Research Group. That’s up from 69% in 2018, and 52% in 2015. More than half (55%) of U.S. households now have more than one of these SVOD services, an increase from 43% in 2018 and 20% in 2015.

Hulu, over the summer, began offering a new discounted yearly plan for current subscribers to its $5.99 per month plan. Subscribers to that ad-supported plan have the option to get a one-year subscription for $59.99, or 12 months for the price of 10. The option will roll out to new ad-supported Hulu subscribers later this year, the company announced.

But to what end? Disney, under former CEO Bob Iger, had planned to expand Hulu overseas. But with Disney+ already doing that — including launching co-branded service with Disney-owned Star in India in 2021, Hulu’s international trajectory seems unsure. Indeed, a planned Hulu strategy meeting regarding international expansion was never held, according to Bloomberg, which cited sources familiar with the situation.

“In terms of the general entertainment offering internationally, we want to mirror our successful Disney+ strategy by using our Disney+ technical platform, bringing in content we already own and distributing it under a successful international brand that we also already own, which is, of course, Star,” Chapek told investors in August.

‘Coming 2’ Free Shipping

Amazon Prime Video made news in October when it reportedly paid $125 million to Paramount Pictures for streaming rights to the Eddie Murphy sequel Coming 2 America. The movie, featuring original headliners Murphy and Arsenio Hall, in addition to co-stars Tracy Morgan, Wesley Snipes, Leslie Jones and Jay Pharaoh, is slated to bow on Prime Video March 5, 2021. The 1988 original Coming to America was a blockbuster for Paramount, generating $128 million at domestic screens and $288 million worldwide, just behind Who Framed Roger Rabbit and Rain Man.

Amazon has been relatively quiet on content spending in 2020 compared with rivals Netflix, Disney+, HBO Max and Apple — reportedly on the hook for “only” $6 billion this year before the coronavirus hit. The Paramount deal represented another high-profile transaction for Amazon Studios under the direction of Jennifer Salke, following agreements for Sasha Baron Cohen’s second “Borat” flick and Dave Bautista’s My Spy.

Yet the movies mask an original content slate that saw just seven TV shows trickle out of Amazon through three fiscal quarters, including, most recently, the dystopian drama “Utopia.” By comparison, Netflix released more than 70 original programs through Oct. 9.

“The pace in which Amazon releases content does not place it in close competition with other streaming services,” Wedbush Securities’ Michael Pachter wrote in a note. “However, most of the 105 million Prime members did not sign up specifically for video content, but rather for the free shipping, and to enjoy movies and TV shows as an added perk to the service.”

Speaking on a recent fiscal call, CFO Brian Olsavsky said the number of Prime members who stream Prime Video outside the U.S. grew by more than 80% year-over-year in the third quarter, and international customers more than doubled the hours of content they watched on Prime video compared with last year. Prime Video expanded globally in 2016 to more than 200 countries.

While Prime Video, like Netflix, remains ad-free, Amazon is not turning its back on ad-supported content and incremental revenue opportunities. The company owns and operates ad-supported IMDb TV and is working with third-party apps on Fire TV for advertising opportunities.

“We’re seeing some good momentum with [AVOD],” Olsavsky said. “I won’t say too much about what we’ll look like next year, but that gives you kind of sense of priorities where we’re spending our time and focused on.”

‘Max’ Challenges

Backed by a $4.8 billion content war chest, HBO Max aims to expand the HBO brand beyond its usual offering of niche series such as “True Detective” and “Game of Thrones,” with the “Harry Potter” movies; cartoon libraries from Looney Tunes, Merrie Melodies and Hanna-Barbera; original movies, TV shows and multi-topic podcasts; and re-runs of “Friends,” the iconic sitcom for which WarnerMedia “paid” itself (Warner Bros. Television) $425 million for exclusive streaming rights.

But there remains a problem. Max’s goal to secure 50 million new subscribers by 2025 remains optimistic, as app adoption among existing HBO subscribers remains sluggish. The service has generated just 8.6 million new subs through Sept. 30, despite the fact that more than 30 million existing HBO subs qualified for a free Max upgrade.

Max and HBO totaled 38 million combined subs through Sept. 30 when factoring in existing HBO subs able to access Max (for free) via third-party pay-TV operators. They had 36.2 million combined subs on July 23, exceeding the year-end goal of 36 million. Domestic HBO and Max subscribers do not include customers who are part of a free trial. The lack of sub growth at Max is glaring, considering rival Disney+ generated 22 million sign-ups in its first four weeks. A leading culprit hindering Max sub growth could be an ongoing stalemate with Roku and Amazon over placement of the Max app on their respective platforms.

The app is available on Apple, Google and Samsung devices, but not yet on Roku or Amazon Fire TV devices or connected TVs. This severely impacts Max since the two services combined are the primary way 70% of consumers connect to streaming video services, according to Comscore. Fire TV, with 40 million registered users, and Roku, with more than 43 million, are key platforms for the survival of third-party SVOD services. Indeed, Max predecessor HBO Now generated the bulk of its 8 million subs through Prime Channels, Fire TV and Roku. The platforms typically take a cut of subscription revenue, in addition to controlling user data — requirements WarnerMedia reportedly dislikes.

The imbroglio resulted in launch confusion whereby an HBO pay-TV subscriber, or HBO Now/HBO Go user, automatically upgraded to Max, but could only watch catalog content unless separately downloading and registering on the Max app.

“We believe Amazon looks at that consumer experience as subpar and overly complicated. And we agree,” Rich Greenfield, analyst with Lightshed Partners, said in a note.

Regardless, AT&T management says Max consumer engagement is 60% higher than for SVOD predecessor HBO Now.

“We continue to grow and scale Max, with total domestic HBO and Max subscribers … well ahead of our expectations for the full year,” said AT&T CEO John Stankey. The telecom giant has spent $2 billion on the launch of Max.

While Stankey put a positive spin on sub growth, activation figures underscore Max’s ongoing struggle to capture consumers. New subs were only about twice that of Netflix’s sluggish Q3 sub additions, which ended the quarter with 195 million paid subs.

WarnerMedia CEO Jason Kilar said he believes Max sub growth is not a sprint win in the first 24 hours of launch, but rather a steady progression over the course of a marathon.

“If you look at last year at where we hoped we would be at the end of 2020, which is 36 million HBO and Max subscribers … obviously the number is going up every day,” said Kilar.

The former Hulu co-founder, who was hired in April to jumpstart Max-based initiatives across Warner Bros., HBO and Turner, brought in former Hulu colleagues (Jean-Paul Colaco to head sales; Andy Forssell as GM of direct-to-consumer) while cleaning house companywide. In August, Kilar cut about 500 positions at Warner Bros., with plans to eliminate another 20% of the WarnerMedia workforce. Through it all, analysts say Max’s impasse with Amazon and Roku, and confusing consumer options stand out as missteps in a market dominated by Netflix, Disney+, Hulu and Prime Video.

“There’s a reasonable shot that AT&T management will screw up HBO Max as a SVOD competitor,” said Pivotal’s Wlodarczak.

Peacock Spreads Its Wings

When NBCUniversal’s Peacock and Roku announced an agreement enabling the former’s app placement on the Roku platform, it was a big win for the industry’s newest SVOD service. The deal followed months of  negotiations that saw Peacock (like HBO Max) enter the market without distribution on Roku and Amazon Fire TV — both must-have distribution points in the OTT video ecosystem.

“Roku customers are engaged streamers, and we know they’ll love access to a wide range of free and paid content,” Maggie McLean Suniewick, president of business development and partnerships at Peacock, said in a statement.

The agreement came on the heels of Comcast chairman and CEO Brian Roberts disclosing Peacock had attracted 15 million subscribers (without Roku distribution) since launching nationwide in July. A closer look revealed that most of the subs opted for the free ad-supported option, featuring more than 13,000 hours of content.

“That’s 50% more subs than just six weeks ago,” Roberts said in September at the virtual Goldman Sachs 29th Annual Communicopia Conference. The CEO said the convergence of entertainment distribution between media and tech companies across multiple platforms has become a reality — driven by broadband and streaming video.

“We saw this coming and feel we are one of the best companies to play offense in this environment,” Roberts said.

In addition to current-season programming from NBC and Telemundo, Peacock offers access to Universal Pictures movies and live sports, including Premier League soccer and the delayed 2020 Tokyo Olympics.
“Across the board, we’re better than expectations,” Jeff Shell, CEO of NBCUniversal, said on Comcast’s most-recent fiscal call. “We didn’t expect this many sign-ups, we didn’t expect people to come back as frequently as they’re coming back, and we didn’t expect people to watch as long as they’re watching once they come back.”

Apple TV+ Battles Negative Media Mojo

Since its launch a week before Disney+ in 2019, Apple TV+ has struggled to achieve the same media support afforded Disney’s SVOD platform. Despite Apple’s record market valuation of $2 trillion, Apple TV+ is viewed by some observers as an ongoing missed opportunity. The $4.99 monthly service was recently judged as having the worst content (60%), the least amount of variety (64%) and the most unfriendly user interface (64%), according to a Flixed.io survey of 1,300 respondents. By comparison, the same respondents hailed Netflix for the best content (89%), content variety (88%), user interface (85%) and viewing recommendations (69%).

Bernstein analyst Toni Sacconaghi estimates that fewer than 10 million people have signed up for the free 12-month Apple TV+ subscription in the company’s most-recent fiscal quarter. He characterized the tally as “surprisingly low” for a brand as well-known as Apple. The company hasn’t officially released any video subscriber data. Apple just announced it would extend the free Apple TV+ trial period 90 days through 2021 for new Apple device consumers.

Research firm Antenna said Apple realized a 10% spike in new subs from March 14 to 16 as the coronavirus spread in the United States. The firm said the increase was the lowest of any major streaming service. Apple was reported to be spending $6 billion on original content in 2020 (before COVID-19), buttressing an original slate that includes “The Morning Show,” “Dickinson,” “See,” “Ghostwriter,” “For All Mankind,” “Helpsters,” “Hala” and “Little America,” among others.

“[Apple is] still not in [OTT video] with both feet,” media executive Barry Diller told a podcast. “They’ve put some capital in, but relatively little [for Apple]. They’re not making a major effort.”

Wedbush Securities analyst Michael Pachter contends that despite a major marketing effort around Apple TV+, the finished product thus far has been wanting.

“Apple TV+ only has a handful of original shows and no catalog,” Pachter said.

AVOD Comes of Age

Subscription streaming video’s rival, advertising-supported VOD, continues to gain traction among consumers — and advertisers. New data from eMarketer suggests AVOD revenue will grow more than 25% in 2020 compared to 2019.

The AVOD market, which is spearheaded by The Roku Channel, Hulu, Peacock, Redbox TV, IMDb TV, Pluto TV and Tubi, among others, saw ad revenue leap 31% to $849 million in the most-recent quarter, according to MoffettNathanson Research.

“AVOD advertising benefited from heightened usage and a mix shift in advertising budgets to OTT platforms, growing sizably in the quarter,” Nathanson wrote in a note.

Speaking Aug. 20 on the DEG: The Digital Entertainment Group Mid-Year 2020 Digital Media Entertainment Report webcast, Nathanson called AVOD the underreported streaming video story of the year. He said AVOD’s 28% market share behind Netflix and the other services reinforces the idea free access to VOD is gaining the most traction among consumers.

“That 28% of streaming minutes is where we think the streaming wars are actually happening,” Nathanson said.

With four of the five AVOD platforms owned by major media conglomerates, much of the ad growth is likely due to shifting third-party ad dollars from linear TV to connected televisions. The 31% rise in AVOD revenue among the top platforms compares with an estimated 28% decline in national broadcast and cable TV ad spending in Q2, according to eMarketer.

Eric Haggstrom, forecasting analyst at eMarketer, said he believes that while marketers are warming to AVOD, much of the revenue revolves around media giants pushing advertisers to proprietary streaming platforms.

“Some advertisers who bought ads in the TV network upfronts are shifting money within the same media company to streaming services,” Haggstrom said.

Indeed, Tubi earlier this year added all episodes of Fox’s “Gordon Ramsay’s 24 Hours to Hell and Back,” in addition to 300 hours of separate Ramsay content, which includes “Hell’s Kitchen,” “Kitchen Nightmares” and “The F Word.”

“Making this show available on Tubi, alongside Gordon’s other series, will only grow his footprint while also further promoting his programs on Fox,” said Rob Wade, president of alternative entertainment and specials at Fox Entertainment.

Tubi also added Fox’s music competition show “The Masked Singer.”

Ampere Analysis found that nearly one in five U.S. Internet users are using AVOD. Citing Q3 data, the London-based research firm said 17% of domestic Internet households used one or more AVOD services in the prior month, up from 13% in the previous-year period.

“The VOD market continues to expand and fragment, offering viewers more choice of platforms,” Minal Modha, consumer research lead at Ampere, said in a statement. “Free ad-funded platforms will find themselves well-positioned to attract an audience that is either unable or unwilling to pay for multiple subscriptions.”

The growth in AVOD seemingly contradicts some consumer sentiment about too much advertising on broadcast television. Ampere found that 44% of consumers surveyed in the U.S. said they don’t mind seeing advertising on TV.

Interestingly, Ampere doesn’t believe AVOD and SVOD are competing for the same audiences. Active AVOD users, according to Modha, tend to be older than SVOD subscribers, and are more likely to be from lower-
income households. About 25% of AVOD users are between the ages of 45 and 54, compared with 22% of SVOD viewers. And 19% of AVOD users are between the ages of 55 and 64, versus 14% of SVOD subscribers.

Nearly half of U.S. AVOD users have an annual household income of less than $30,000 per year, compared with a third of SVOD users. Almost 20% of AVOD viewers live in households with annual earnings of less than $15,000 per year.

“With distinct audiences, we believe that these two offerings aren’t competing directly with each other but rather can coexist,” Modha said. “We have seen some companies offer both a free and paid-for tier, such as Prime Video and IMDb TV, Hulu and Peacock. In the current climate, with both economic uncertainty and a greater need for people to stay at home, we expect the use of AVOD services to continue to rise as more consumers will be turning to these platforms as they seek entertainment without increasing their financial outlay.”

ViacomCBS CEO: Paramount+ to Stream Live Sports, Breaking News

In the rapidly crowding over-the-top video space, next year’s launch of SVOD platform Paramount+ by ViacomCBS could get lost in the crowd. To help prevent this,  the platform — which will be a rebranding of CBS All Access — aims to differentiate itself from Netflix, Disney+, Hulu and Amazon Prime Video, among others, by streaming live sports and breaking news.

While Netflix refuses to consider live sports programming, Prime Video currently streams NFL Thursday Night Football, and  NBCUniversal’s Peacock service offers Premier League soccer from the United Kingdom.

Bob Bakish

Speaking on the fiscal call, CEO Bob Bakish said Paramount+ would separate itself from other SVOD services, including recently launched HBO Max and NBCUniversal’s Peacock, by streaming the NFL, SEC college football, UEFA soccer, PGA Golf, live national CBS News and local affiliates; and news show “60 Minutes,” among others.

“It’s going to be a truly differentiated and compelling offering that’s unlike anything that’s really out there today,” Bakish said.

ViacomCBS is banking on Paramount+ and ad-supported sister platform Pluto TV to help drive the media giant’s over-the-top video distribution priority. In July, All Access added 3,500 episodes from Viacom brands as well as about 190 Paramount movies. Bakish said test runs of the All Access/Paramount+ service have yielded favorable reviews. All Access and Showtime OTT ended the quarter with nearly 18 million combined subscribers.

“That consumer response was strong and really served as proof-of-concept that’s given us the confidence to lean in,” he said.

More importantly, Bakish said consumer response to OTT distribution included attracting lower-age viewers.

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“The average age of new subs came down by almost 10 years, and was more diverse,” he said. “We saw material increase in time spent streaming. That included more than doubling time spent with [movies], and Viacom content becoming a strong double-digit part of overall consumption.”

ViacomCBS is adding another 10,000 hours of content to All Access leading up to the rebranding.

“The response to us selecting Paramount Plus as a brand has been overwhelmingly positive,” Bakish said. “So, lots to be excited about here around Paramount Plus, and we see substantial incremental growth ahead.”

In separate comments, CFO Naveen Chopra said ViacomCBS’s domestic streaming and digital video revenue is growing 50% on an annual run rate of $2.5 billion — underscoring the need to expand distribution.

“We see that as a really compelling case for investing to continue to support the growth,” Chopra said. “Our content investments have a lot of leverage, meaning that every dollar we spend on content can benefit us across the entire company, from streaming to linear TV to film and adjacent businesses like consumer products.”

Streaming Video Pushes ViacomCBS Fiscal Results as CBS All Access, Showtime OTT Near 18 Million Subs

Streaming video — both subscription and ad-supported — is the current endgame for ViacomCBS heading into 2021. Third-quarter fiscal results suggest that goal is already bearing fruit.

Domestic streaming and digital video revenue increased to $636 in the third quarter (ended Sept. 30), up 56% year-over-year from $408 million, driven by 78% growth in subscription streaming video revenue and strong double-digit digital video (AVOD) advertising growth.

Indeed, domestic streaming subscribers reached 17.9 million, up 72% year-over-year from 10.4 million, driven by CBS All Access and Showtime OTT having significant growths in sign-ups both sequentially and year-over-year.

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ViacomCBS said CBS All Access — which will rebrand to Paramount+ in 2021 — benefited from strong demand for sports content, including UEFA soccer and the NFL, as well as a broad selection of entertainment content, including live TV, reality series, content from in-house cable brands and original programming.

Showtime OTT’s strong quarter was driven by original programming, including the third season of “The Chi,” the continued strength of “Billions” and the final season of “Homeland.” In AVOD, Pluto TV grew its domestic monthly active users to 28.4 million, up 57% year-over-year, and more than doubled its advertising revenue in the quarter. Internationally, Pluto TV monthly average users grew to 7.5 million, bringing its total global user base to nearly 36 million.

“This quarter, we achieved strong user growth across our streaming platforms as we continue to build our linked ecosystem of pay and free services,” CEO Bob Bakish said in a statement. “Our company’s transformation is ahead of schedule and we are incredibly excited by the opportunities ahead.”

Indeed, Pluto TV launched in Spain in October, ahead of upcoming launches in Brazil, France and Italy. The AVOD platform also signed new distribution agreements with LG and Sony PlayStation, extending its reach to an additional 100 million devices worldwide.

In October, ViacomCBS announced Tom Ryan as President and CEO of its new global streaming organization, integrating both its pay and free streaming businesses, while enhancing its ability to leverage its content strength and cross-company franchises.

 

Season Two of CBS All Access’ ‘Twilight Zone’ Arrives on DVD Jan. 12

CBS and Paramount Home Entertainment will release season two of streaming service CBS All Access’ reboot of anthology sci-fi/horror series “The Twilight Zone” on DVD Jan. 12.

Based on the classic series created by Rod Sterling, the updated version is hosted by Jordan Peele and features guest stars such as Kumail Nanjiani, Seth Rogen, Tracy Morgan, John Cho, Zazie Beatz and more.

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CBS Home Entertainment tweeted that a manufacture-on-demand Blu-ray of the season will be available at a later date.

ViacomCBS Ups Pluto TV CEO Tom Ryan to Head Global Streaming; Marc DeBevoise Stepping Down

In a major management shakeup underscoring the importance of streaming video to its future, ViacomCBS Oct. 20 disclosed a new leadership structure for its global free (ad-supported) and pay streaming services. Tom Ryan, currently CEO of Pluto TV, will assume the role of president/CEO of ViacomCBS Streaming, a new unit overseeing CBS All Access, which will relaunch as Paramount+ in early 2021, and Pluto TV.

The promotion means that Marc DeBevoise, chief digital officer of ViacomCBS, and president/CEO of ViacomCBS Digital, will step down and serve in an advisory capacity for the remainder of 2020. DeBevoise, who previously served as president/COO of CBS Interactive since 2016, was instrumental in the launch of CBS All Access, including original series “Star Trek: Discovery,” among others.

Tom Ryan

Ryan, who helped launch ad-supported VOD platform Pluto TV in 2014, will be tasked with overseeing the transformation of CBS All Access into Paramount+, working closely with the team on programming strategy, platform development and marketing for the enhanced streaming service. Ryan will partner with the ViacomCBS Content Council to accelerate a franchise-driven content strategy across the company’s streaming ecosystem, formalizing the role of ViacomCBS’s studios as multiplatform content providers. This will maximize the deployment of both IP and talent relationships across ViacomCBS’s streaming and other platforms.

Kelly Day, COO of ViacomCBS Networks International, will take on an expanded role as president of streaming of VCNI, overseeing all non-U.S. digital and streaming platforms in addition to her COO responsibilities. She will work with Ryan and David Lynn, president/ CEO of VCNI, on ViacomCBS’s international streaming expansion, including the debut of Paramount+ in Australia, Latin America and the Nordics in 2021, as well as the ongoing international rollout of Pluto TV.

Kelly Day

As a result, Pierluigi Gazzolo will step down from his position as president of streaming and studios at VCNI, to pursue other interests.

“As we plan for the launch of Paramount+, bringing together the leaders of our streaming platforms to create a unified global organization will enable us to execute a holistic strategy across both free and pay,” Bob Bakish, president/CEO of ViacomCBS, said in a statement. Bakish called Ryan a “pioneering streaming executive” who has demonstrated “extraordinary talent” in creating a differentiated, consumer-centric streaming video service.

Bakish credited DeBevoise and Gazzolo for their contributions to ViacomCBS’s success — adding the two had helped set the course for the company’s digital businesses and laid a strong foundation for its next phase of streaming strategy.

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As CEO of Pluto TV, Ryan helped the service reach 33 million monthly active users globally. He guided the service through its $330 million acquisition by Viacom in January 2019. Earlier in his career, Ryan served as CEO of Threadless, an online art community and e-commerce company, from 2008 to 2012. Previously he was SVP of digital strategy and business development at EMI Music and was part of the early team at Virgin Mobile USA. He also co-founded Cductive, a pioneering online music service that merged with eMusic in 1999.

Day has served as COO of VCNI since March 2020. Prior to that, she served as president of Viacom Digital Studios (VDS) since November 2017, overseeing Viacom’s digital strategy, including the expansion of Viacom’s original programming across its online video and social media platforms. She previously served as the chief business officer and chief digital officer of multi-platform media company Awesomeness, where she was responsible for international expansion, global distribution strategies and revenue across television, mobile and OTT providers, also driving the company’s product and technology investments.