Tale of the Tape: Streaming Video War Fees

With the streaming video market beginning to resemble a heavyweight prize fight involving numerous contenders, a “tale of the tape” analysis is in order to better understand costs associated with each “fighter” (service).

Apple launched Apple TV+ on Nov.1 for $4.99 — arguably the lowest-priced SVOD service on the market. The service is considered a significant threat to Netflix ($8.99) due to the Apple name and star-studded content (“The Morning Show,” starring Jennifer Aniston, Steve Carey and Reese Witherspoon).

Wedbush Securities contends Apple TV+ can generate 100 million subs in the next four years due in part to a global iPhone install base of around 900 million users.

“While this is an obvious threat to Netflix, Apple TV+ only has a handful of shows at launch,” analyst Michael Pachter wrote in a note.

The Nov. 12 launch of Disney+ ($6.99) could cost Netflix 25% of total viewing hours as much Disney/Fox content migrates from the SVOD pioneer to Disney+, according to Wedbush.

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Disney/Fox controls all of Netflix’s cancelled Marvel Defenders Universe series (“Daredevil,” “Jessica Jones,” “The Punisher,” “Luke Cage” and “Iron Fist”) and Disney+’s upcoming Marvel Defenders Universe series (“The Falcon and the Winter Soldier,” “Wanda Vision,” “Loki,” “What If…?,” and “Hawkeye”), popular series such as “The Simpsons,” and an unrivalled film library.

“We estimate that by the end of 2021, Netflix will have virtually no content from Disney, Fox, Warner Bros. or NBC Universal, and we think its efforts to replace that content with originals will only partially succeed,” Pachter wrote.

Disney earlier this year agreed to purchase Comcast’s stake in Hulu ($5.99) for about $5.8 billion by 2024. While Hulu continues to lose billions, which amount to the excess license fees paid to corporate owners over the revenue it generates, Pachter contends if Disney can grow Hulu’s subscriber base, it should be able to achieve breakeven and manage to gain market share from Netflix.

Disney is offering a subscription package with Disney+, ESPN+ and Hulu to drive greater subscriber adoption of all services.

As Netflix has developed more than 100 original series seasons outside of the U.S., it has relied on ‘second window’ content for the bulk of its viewing hours, according to Pachter.

“We estimate that fully 90% of viewing hours on Netflix are consumed by second window shows, and we estimate that Disney, Fox, Warner Bros. and NBC Universal account for 65% of total Netflix viewing hours,” he wrote.

Pachter estimates that by the end of 2021, Netflix will have virtually no content from Disney, Fox, Warner Bros. or NBC Universal.

“The company’s licensing of ‘Seinfeld,’ beginning in 2021 will help to soften the blow, and we expect [the show] to account for 5% or more of Netflix viewing hours,” wrote the analyst.

In 2015, Amazon Prime Channels began partnering with various third-party SVOD services offering domestic Prime members access to curated groups of content.

Monthly fees vary from $2.99 to $9.95 following a free trial period lasting between seven and thirty days. Showtime and Starz are priced at $8.99 each. Amazon has since added more channels, including HBO for $14.99 and Cinemax for $9.99.

AT&T TV Now: $135.00 Ultimate – 125+ live channels $124.00 Xtra – 105+ live channels $110.00 Choice – 85+ live channels $93.00 Entertainment – 65+ live channels $86.00 Optimo Más – 90+ live channels $70.00 Max – 50+ live channels, include HBO and Cinemax $50.00 Plus – 40+ live channels, includes HBO.

Hulu with Live TV: $50.99 No commercials plus live TV $44.99 Limited commercials plus live TV.

YouTube TV: $50.00 YouTube TV – stream live TV from 50+ networks $11.99 YouTube Premium – ad-free and offline video and music.

Sling TV: $25.00 Sling Orange – 34 channels of live shows, sports, and news $25.00 Sling Blue – 47 channels of local tv, regional sports, and live shows, sports, and news.

Netflix: $15.99 Four-screen ultra-high definition streaming $12.99 Two-screen high definition streaming $8.99 Single-screen standard definition streaming.

HBO Now: $14.99 Standalone subscription to stream HBO on demand.

HBO Max: $14.99 Arriving May 2020; new home of HBO and WarnerMedia (Warner Bros., New Line, DC Entertainment, CNN, TNT, TBS, truTV, The CW, Turner Classic Movies, Cartoon Network, Adult Swim, Crunchyroll, Rooster Teeth, Looney Tunes, and more. Will have original programming, exclusive streaming rights to Friends, Fresh Prince of Bel Air, and Pretty Little Liars.

Cinemax: $9.99 Max Go – Standalone subscription to stream Cinemax on demand.

Amazon Prime Video: $12.99 Monthly Prime membership $9.92 Annual Prime membership for $119/year $8.99 standalone video subscription.

Hulu: $5.99, $11.99 No commercials subscription option for all non-live content.

Showtime: $10.99 Standalone subscription to stream Showtime on demand.

Starz: $8.99 Standalone subscription to stream Starz on demand.

Apple TV+: $4.99 Ad-free monthly subscription for original content, launching in Fall 2019; TV App includes access to subscribed cable content and most stand-alone SVOD subscriptions.

Disney+: $6.99 Standalone subscription to stream Disney, Pixar, Marvel, Star Wars, National Geographic, and some Fox content (Simpons); Will be offered in a bundle with Hulu and ESPN+.

Peacock: Price not disclosed. Expect a standalone subscription from Comcast to stream NBC Universal content to be launched mid-2020.

The Roku Channel: Ad-supported service for accessing live content, movies, and series on demand provided by partners; accessible via Roku device or web browser.

IMDb TV: Ad-supported service for accessing movies and series on demand provided by partners; accessible via IMDB.com or any Fire TV devices.

Crackle: Ad-supported service for accessing movies and series on demand provided by Sony Pictures and content partners, accessible via most connected devices.

Report: Disney+ to Reach Less Than 50% of Netflix Sub Total by 2025

On the eve of the high-profile launch of the Disney+ streaming video platform, subscriber projections continue unabated.

New data from Digital TV Research suggests Disney+ will attract 101 million subs by 2025 — less than half of Netflix’s projected 228 million worldwide tally. The SVOD pioneer is expected to gain 70 million subs, including 6 million in the United States. Disney will grow subs significantly after launching service in Western Europe on March 31, 2020.

With Apple TV+ (with 27 million), Disney+ and WarnerMedia’s HBO Max (30 million) relying on promotions and partnerships to jumpstart subscriber retention in the U.S., subscriber gains abroad will be key, according to analyst Simon Murray.

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“Only 29% of Netflix’s subscribers will be in the U.S. by 2025,” Murray said in a statement. “The proportion will be as high as 80% for the younger HBO Max.”

Regardless, DTVR contends the five global services (including Amazon Prime Video and excluding domestic-based Hulu) will comprise 529 million subs by 2025.

“Competition is intense, with several platforms ‘reclaiming’ content from others and with price wars in place,” Murray said, adding the mature U.S. market remains the most important for all services.

 

Disney+ Launching in Western Europe March 31, 2020

Disney’s high-profile subscription streaming video service is launching in the United States, Canada and Holland on Nov. 12. The platform will be rolled out across Western Europe (United Kingdom, France, Germany, Italy and Spain) on March 31, 2020.

CEO Bob Iger made the announcement during the company Nov. 7 fiscal webcast, saying test runs in Holland had proved successful.

“Even without access to our full library or any original content, the service connected with users across all four quadrants, male and female, adults and kids, driven by the breadth of our content and the affinity people of all ages have for it,” Iger said about the previously disclosed Dutch tests.

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He said Disney has spent the last few years “completely transforming” the company through strategic acquisitions [i.e. BAMTech, 20th Century Fox, Hulu] and organizational changes to focus the resources and creativity across the entire company on delivering an “extraordinary” DTC experience.

Disney’s direct-to-consumer segment is projected to lose upwards of $850 million in the current first quarter through ongoing investments in Disney+ and consolidation of Hulu — the latter ending the fiscal year with 28.5 million subscribers.

“We’re making a huge statement about the future of media and entertainment and our continued ability to thrive in this new era,” Iger said.

Disney+ Going to Amazon Fire TV, Samsung, LG Smart TVs; FX Upping Production for Hulu

In a major PR boost for its over-the-top platforms, Disney CEO Bob Iger Nov. 7 said the company’s pending SVOD service, Disney+, would be available on Amazon Fire TV, in addition to Samsung and LG smart televisions when the service launches on Nov. 12.

Separately, Iger said the FX Network would begin to stream original and catalog programs on Hulu as Disney plans to expand the SVOD service overseas.

The FX catalog includes about 40 original series earmarked for Hulu, with new episodes available to stream the day after airing on the FX Network.

This is the first time a cable network has made its programming available for streaming just hours after initial broadcast.

“This is a watershed moment,” analyst Richard Greenfield with LightShed Partners, said on Twitter.

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FX will continue to honor existing distribution deals with Netflix and Amazon Prime Video before migrating them to Hulu.

Other FX shows include “Atlanta,” “Better Things,” “Fargo,” “Mayans,” “Pose,” “Snowfall” and “What We Do in the Shadows.” New titles include “The Last Man” and “Breeders.”

Iger said cable network FX programming, such as “American Horror Story,” “The Americans,” “American Crime Story,” “A Teacher,” “The Old Man,” and “Devs,” would feature significantly on Hulu.

Twentieth Century Fox’s super hero franchise “Deadpool” will also stream on Hulu.

Iger said Fox Searchlight would also produce original programming for Hulu — despite the studio’s existing output deal with HBO. The CEO hinted that agreement may be changed in the near-term to facilitate Hulu’s planned expansion into the United Kingdom.

Disney Doubles Direct-to-Consumer Segment Loss to $740 Million

Acquiring control of Hulu and launching a branded subscription streaming video service is expensive.

Disney Nov. 7 reported it lost $740 million in its nascent direct-to-consumer (DTC) business unit in the fourth quarter (ended Sept. 30) — more than double the $340 million operating loss in the previous-year period.

DTC oversees Disney’s foray into over-the-top video distribution, which includes the acquisition of backend support technology provider BAMTech.

The segment generated revenue of $3.4 billion compared to revenue of $825 million last year. For the fiscal year, DTC revenue topped $9.3 billion compared to revenue of $3.4 billion in the previous period.

Operating loss skyrocketed to $1.8 billion in the fiscal year compared to an operating loss of $738 million last year.

The increase was due to the consolidation of Hulu (from Comcast), costs associated with the upcoming launch of Disney+ and ongoing investment in ESPN+, which was launched in April 2018 and has more than 3.5 million paid subscribers. The losses were partially offset by a benefit from the inclusion of the 20th Century Fox businesses driven by income at Star India.

Disney+, which launches on Nov. 12, is not expected to turn a profit until 2024.

CFO Christine McCarthy said Disney’s direct-to-consumer segment is projected to lose upwards of $850 million in the current first quarter through ongoing investments in Disney+ and consolidation of Hulu — the latter ending the fiscal year with 28.5 million subscribers.

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Separately, Disney said studio revenue increased 52% to $3.3 billion and segment operating income increased 79% to $1.07 billion.

Higher operating income was due to an increase in theatrical distribution results, partially offset by a loss from the consolidation of the Fox businesses. The increase in theatrical distribution results was due to the performance of The Lion King, Toy Story 4 and Aladdin in the current quarter compared to Incredibles 2 and Ant-Man And The Wasp in the prior-year quarter.

Operating results at the Fox businesses reflected a loss from theatrical distribution driven by the performance of Ad Astra, Art of Racing In The Rain and Dark Phoenix, partially offset by income from TV/SVOD distribution.

“We’ve spent the last few years completely transforming The Walt Disney Company to focus the resources and immense creativity across the entire company on delivering an extraordinary direct-to-consumer experience,” CEO Bob Iger said in a statement. “We’re excited for the launch of Disney+.”

‘Stranger Things’ Spends 19th Week Atop Parrot Analytics’ TV Demand Charts

Netflix’s “Stranger Things” remained No. 1 on not only Parrot Analytics’ digital originals rankings the week ended Nov. 2, but also the data firm’s overall list of TV series from any platform, including broadcast and cable, for the 19th straight week.

A “digital original” is a multi-episode series in which the most recent season was first made available on a streaming platform such as Netflix, Amazon Prime Video or Hulu.

For the week, “Stranger Things” registered 81 million average daily Demand Expressions, the proprietary metric used by Parrot Analytics to measure global demand for TV content. That was up 2.8% in expressions compared with the previous week.

DC Universe’s “Titans” held onto the No. 2 spot on the digital originals chart, with expressions up 4.4% to 51.2 million. The show is in the midst of its second season.

Jumping up to No. 3, from No. 22 the previous week, was Netflix’s “BoJack Horseman.” With the first part of the show’s sixth and final season released Oct. 25, demand was up 96.2% to 34.9 million expressions.

Hulu’s “Castle Rock” moved up four slots to No. 4. The show’s demand expressions were up 22.9% to 30.3 million.

Netflix’s “Lucifer” slid a spot to No. 5, with expressions down 0.6% to 27.6 million.

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The Demand Expressions metric draws from a wide variety of data sources, including video streaming, social media activity, photo sharing, blogging, commenting on fan and critic rating platforms, and downloading and streaming via peer-to-peer protocols and file sharing sites.

Media Play News has teamed with Parrot Analytics to provide readers with a weekly top 10 of the most popular digital original TV series in the United States, based on the firm’s  proprietary metric called Demand Expressions, which measures global demand for TV content through a wide variety of data sources, including video streaming, social media activity, photo sharing, blogging, commenting on fan and critic rating platforms, and downloading and streaming via peer-to-peer protocols and file sharing sites.

Hulu Adds Download Feature for Android, Fire Devices

Hulu announced an added a treat to its features on Halloween.

Hulu subscribers to the ad-free service can now download content for Android and Fire (FireOS) devices for offline viewing. The download feature had previously only been available with iOS devices.

The announcement came just before the streaming wars heat up with the launches of Apple TV+ (Nov. 1) and Disney+ (Nov. 12).

Hulu launched the download feature for iOS devices in early October.

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‘Stranger Things’ Spends 18th Week Atop Parrot Analytics’ TV Demand Charts

Netflix’s “Stranger Things” remained No. 1 on not only Parrot Analytics’ digital originals rankings the week ended Oct. 26, but also the data firm’s overall list of TV series from any platform, including broadcast and cable, for the 18th straight week.

A “digital original” is a multi-episode series in which the most recent season was first made available on a streaming platform such as Netflix, Amazon Prime Video or Hulu.

For the week, “Stranger Things” registered 78.8 million average daily Demand Expressions, the proprietary metric used by Parrot Analytics to measure global demand for TV content. That was down 7.1% in expressions compared with the previous week.

DC Universe’s “Titans” held onto the No. 2 spot on the digital originals chart, with expressions down 6.7% to 49 million. The show is in the midst of its second season.

Staying at No. 3 on the digital originals chart was Netflix’s “Big Mouth,” with expressions down 26.4% to 29.2 million.

Netflix’s “Lucifer” rose three spots to No. 4, with expressions up 9.5% to 27.8 million after a photo of the upcoming fifth and final season was revealed.

Amazon Prime Video’s “The Boys” dropped to No. 5, with expressions down 1.3% to 27.8 million, just 952 fewer expressions than “Lucifer.”

Making a big rise to No. 8, from No. 22 the previous week, was Hulu’s “Castle Rock,” after the first three episodes of season two were released Oct. 23. The show’s demand expressions were up 44% to 24.6 million for the week, from 17.1 million the previous week.

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The Demand Expressions metric draws from a wide variety of data sources, including video streaming, social media activity, photo sharing, blogging, commenting on fan and critic rating platforms, and downloading and streaming via peer-to-peer protocols and file sharing sites.

Media Play News has teamed with Parrot Analytics to provide readers with a weekly top 10 of the most popular digital original TV series in the United States, based on the firm’s  proprietary metric called Demand Expressions, which measures global demand for TV content through a wide variety of data sources, including video streaming, social media activity, photo sharing, blogging, commenting on fan and critic rating platforms, and downloading and streaming via peer-to-peer protocols and file sharing sites.

High-Profile SVOD Newcomers Spearhead Crowding Market

As widely reported, Apple and Disney are launching separate high-profile branded SVOD services next month, with NBC Universal slated to do the same next year.

The moves prompted AT&T to announce a public unveiling on Oct. 29 of WarnerMedia’s subscription streaming video platform HBO Max — months before its early 2020 launch.

Each new service has a lot riding as parent media/tech companies forge full-steam ahead into crowding over-the-top video waters heretofore controlled by Netflix, Amazon Prime Video and Disney-owned Hulu domestically.

On the retail end, consumers now face myriad inexpensive SVOD services delivering original and non-exclusive content. When combined, the choices can be overwhelming and expensive.

“Options are great for consumers when it comes to deciding what to watch,” said Peter Katsingris, SVP of audience insight at Nielsen. “But they’re also decidedly complicated for an industry that continues to fragment and search for unique ways to influence their behavior and perhaps steer eyeballs toward their network, program, service or brand.”

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Indeed, Disney CEO Bob Iger calls the pending $6.99 Disney+ service “the most important product the company has launched” in his 14 years as chief executive.

Disney expects to attract 60 million-to-90 million subscribers for Disney+ through 2024, which would be more than half of Netflix’s current 158 million global subs. It is giving away the service to Verizon’s unlimited data subs as part of a promotion.

Apple is targeting more than 900 million iPhone users worldwide through various incentives for the $4.99 Apple TV+.

Short-form video competitor Quibi ($4.99) from DreamWorks Animation founder Jeffrey Katzenberg and former Hewlett-Packard CEO Meg Whitman, inked a partnership with T-Mobile, securing access to the telecom’s 83 million subscribers.

The crush of pending streaming video services prompted Netflix CEO Reed Hastings last month to tell a British audience to expect “a whole new world starting in November” following the SVOD invasion, which includes Hulu’s U.K. market expansion.

“Scale will be key in the [direct-to-consumer] space, but clearly the coming year is just the first phase in this era,” David Sidebottom, analyst with Futuresource Consulting, told the IBC365 platform. “D2C services will likely evolve, with their parent companies continuing to evaluate the benefits of D2C vs. third party [content license] agreements.”

“This will be particularly the case as services expand on an international basis, where legacy agreements, existing scale distribution partners and differing levels of SVOD uptake will be factors in their evolving D2C strategy,” he said.

Michael Pachter, media analyst at Wed bush Securities in Los Angeles, believes that with the surge of original content and catalog exclusives such as “Friends” and “The Office” migrating online, consumers have more reasons to choose OTT.

“If all that was happening was incremental services being offered, consumers might feel bamboozled,” Pachter said. “Instead, so much content is shifting to OTT services that many consumers will opt to subscribe to more than one service.”

Pachter says exorbitant pay-TV contracts paved the way for OTT video, with online TV offering a less expensive premium channel option.

“I expect cord cutters to look at rabbit ears and multiple SVOD services as a substitute. That’s why DirecTV lost 2 million subs since AT&T bought them,” he said.

More importantly, Pachter says that with Netflix losing Disney/Fox, NBC Universal and Warner Bros. content, consumers will feel compelled to try new services offering recognizable programming and/or favorite shows.

Indeed, the analyst believes Netflix will lose around two-thirds of its content (measured in viewing hours) and will have a tough time replacing that with content of similarly perceived quality.

Disney+ has an enormous library of content not available anywhere (Snow White, Fantasia, etc.) that will find its way to their service; the studio is also going to put its recent movies there and take those away from Netflix.

“That tells me that Disney+ gets to 30 million subscribers relatively quickly,” Pachter said.

He believes that Apple TV+, with just 12 original shows, will struggle with non-iPhone users unwilling to pay for limited content.

“Until Apple TV+ gets critical mass, there is no way they will be competitive,” Pachter said.

The analyst is “pretty confident” the HBO Max model will work, if it transfers existing HBO Now subscribers for a free probationary period lured by original content.

“If it’s $3 to $4 per month, they’ll get 10 million subs immediately and probably get to 80% conversion [from HBO Now] in a few years,” Pachter said.

Anti-Piracy Group Adds Viacom, Comcast

The Alliance for Creativity and Entertainment, an online anti-piracy coalition whose members include Netflix, Hulu, Amazon and major studios, has added Comcast and Viacom as members.

While NBC Universal and Paramount Pictures were already ACE members, the addition of their parent companies will strengthen ACE’s comprehensive approach to disrupting a piracy ecosystem that harms creators, according to the group. Comcast is the first internet service provider (ISP) to join ACE.

“We are excited to have Comcast and Viacom join ACE,” Charles Rivkin, CEO of the Motion Picture Association of America, said in a statement. “As the parent companies of two of our original members, they have been supporters of our efforts and numerous successes, but now as members, they will strengthen the legal and operational work we’re able to do to reduce the threat of piracy and support creators.”

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ACE was founded in June 2017 by 30 companies who sought to expand ongoing, cooperative efforts to reduce the threat and prevalence of online piracy.

Last year alone, there were an estimated 5.4 billion downloads of pirated films and television shows and 21.4 billion total visits to streaming piracy sites worldwide. This conservatively costs $29.2 billion to as much as $71 billion annually in lost domestic revenues, according to a recent study from the U.S. Chamber of Commerce’s Global Innovation Policy Center.

Piracy also harms consumers. One-third of pirate sites target them with malware that can lead to a range of problems, including identify theft and financial loss, according to a report by Digital Citizens Alliance.

Since its inception, ACE has successfully litigated against piracy device sellers and providers of unauthorized content and their operators such as Vader Streams, SetTVNow, Tickbox and Dragon Box, and has collaborated with law enforcement investigations and actions around the world. ACE draws upon the global antipiracy resources of the MPAA in concert with the internal antipiracy expertise of the coalition members.

With the additions, the full roster of ACE members includes Amazon, AMC Networks, BBC Worldwide, Bell Canada and Bell Media, Canal+ Group, CBS Corp., Channel 5, Comcast, Constantin Film, Discovery, Foxtel, Grupo Globo, HBO, Hulu, Lionsgate, Metro-Goldwyn-Mayer (MGM), Millennium Media, NBCUniversal, Netflix, Paramount Pictures, SF Studios, Sky, Sony Pictures Entertainment, Star India, Studio Babelsberg, STX Entertainment, Telefe, Telemundo, Televisa, Univision Communications Inc., Viacom, Village Roadshow, Walt Disney Studios Motion Pictures, and Warner Bros. Entertainment.