Charter/Spectrum Narrows Q2 Pay-TV Sub Loss, Ups Broadband Customers

Charter Communications, which operates the Spectrum media brand, July 28 reported a loss of 200,000 net Spectrum video subscribers (including small business) in the second quarter (ended June 30). That was down almost 12% from a net loss of 226,000 subs in the prior-year period. Spectrum ended the fiscal period with 14.7 million video subscribers, down more than 5% from 15.5 million in the previous-year period.

Charter CEO Chris Winfrey

Meanwhile, Spectrum high-speed internet added 77,000 broadband subs, compared with a loss of 21,000 subs in the prior-year period. The company ended the quarter with almost 30.6 million broadband subs (including small business), up 1.1% from 30.25 million subs last year.

Spectrum ended the quarter as the No. 2 pay-TV, broadband operator in the country behind Comcast.

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“We are growing our business by providing differentiated and valuable products,” CEO Chris Winfrey said in a statement. “We are also executing well on our evolution and expansion initiatives, and these strategic investments will lead to further customer and financial growth, creating long-term value for shareholders.”

Roku Narrows Q2 Loss, Ups Active Accounts 16% to 73.5 Million

Roku July 27 reported a second-quarter (ended June 30) net loss of $126 million on revenue of $847.2 million. The loss was down 15% from a loss of $147 million in the previous-year period. Revenue grew 16% from $764.4 million in the previous-year period.

The subscription streaming VOD market pioneer reported that it ended the quarter with 73.5 million active users, up 16% from 63.1 million active users in the previous-year period. Active users represent consumers using a Roku device to access proprietary and third-party internet content. Users streamed more than 25.1 billion hours of content in the quarter, up 21% from 20.1 billion hours a year ago.

In May, the Roku Channel generated 1.1% of the U.S. household television streaming market, behind streaming leaders YouTube (8.5%) and Netflix (7.9%), according to Nielsen.

Streaming device sales increased 9% to $103.4 million from $95.2 million, while platform revenue, which includes the Roku Channel, increased 11% to $743.8 million from $669.3 million last year. Roku in the quarter renamed
the Player segment to the Devices segment, which now includes licensing arrangements with service operators and TV brands in addition to sales of streaming players, audio products, smart home products and services, and
starting this year, Roku-branded TV sales.

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“Overall, trends that we observed in Q1 played out in Q2, and we expect them to continue throughout the year,” founder/CEO Anthony Wood and CFO Dan Jedda wrote in the shareholder letter. “While consumer spend is showing some modest growth, macro concerns and uncertainty remain.”

Verizon Cools Q2 Pay-TV Sub Losses, Ups Broadband Customers

Verizon Communications July 25 reported a loss of 69,000 Fios TV subscribers in the second quarter (ended June 30). That was down from a loss of 86,000 pay-TV subs in the previous-year period. Through half of the fiscal year, pay-TV subscriptions are down 143,000 compared with a decrease of 164,000 subs during the previous-year period. Verizon ended the quarter with just over 3 million Fios TV subs, down from more than 3.4 million a year earlier.

On the flipside, consumer demand for high-speed internet access — the lifeline for household streaming, transactional VOD and AVOD, shows no signs of slowing.

Verizon added 51,000 Fios internet subscriber in the quarter, upping the first half-year additions to 114,000, up from 30,000 and 85,000 subscriber additions, respectively, in the prior-year. The company added another 384,000 wireless broadband subscribers in the quarter, up from 256,000 subs in the prior-year period.

“In the second quarter, we showed progress in our key priorities of growing wireless service revenue, delivering healthy consolidated adjusted pre-tax earnings and increasing free cash flow,” CEO Hans Vestberg said in a statement.

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Netflix Tops Subscriber Growth Projections With Nearly 5.9 Million New Q2 Subs

Netflix July 19 reported a global gain of nearly 5.9 million new subscribers, to finish the second-quarter (ended June 30) with more than 238 million subs worldwide. The result, which is twice industry estimates, marks a turnaround from a year earlier when Netflix reported a net loss of 1 million subs worldwide.

Netflix added 1.17 million subs in North America; 2.43 million subs in Europe and the Middle East; 1.22 million subs in Latin America; and 1 million subs in Asia Pacific.

Earlier today, Netflix announced it was stopping its basic ad-free subscription plan for new and returning subscribers. Existing subs on the plan can continue accessing service unless they cancel service. All new subs are being directed either to the lower-priced ad-supported tier, or the standard and premium options, priced at $15.49 and $19.99, respectively.

The SVOD pioneer said it has now launched paid sharing in more than 100-plus countries, representing more than 80% of its revenue base. Revenue in each region is now higher than pre-launch, with sign-ups already exceeding cancellations, according to the streamer. Netflix is rolling out paid sharing to most of the remaining countries.

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“Now that we’ve launched paid sharing broadly, we have increased confidence in our financial outlook,” wrote co-CEOs Ted Sarandos and Greg Peters and CFO Spence Neumann in the shareholder letter. “We expect revenue growth will accelerate in the second half of 2023 as monetization grows from our most recent paid sharing launch and we expand our initiative across nearly all remaining countries plus the continued steady growth in our ad-supported plan.”

Analyst: Netflix to Top Fiscal Q2 Results Guidance, Including Adding 2 Million Global Subs

Analyst Michael Pachter, with Wedbush Securities in Los Angeles, remains bullish on Netflix heading into its July 19 second-quarter fiscal results report.

Citing a commissioned third-party survey, Pachter says there is improved consumer awareness and uptake of Netflix’s lower-priced advertising subscription tier, in addition to a positive overall reception to the SVOD behemoth’s password-sharing crackdown.

Michael Pachter

Pachter said he believes Netflix will add 2 million global subs, ahead of industry guidance of 1.75 million new subs. The analyst is projecting 200,000 new subs in North America, along with $8.242 billion in quarterly revenue vs. Wall Street consensus of $8.276 billion.

“We think there could be meaningful upside to our estimates and guidance with what appears to be solid uptake of Netflix’s proposed family plans after its recent password-sharing crackdown,” Pachter wrote in a July 14 note. “We think Netflix’s Q2 earnings results will meet or exceed Street expectations, and we expect shares to rise.”

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Specifically, the analyst believes Netflix could see an additional $8 in average revenue per user (ARPU) through the addition of both the ad-supported tier and shared-password crackdown.

“We think Netflix is well-positioned in this murky environment as streamers are shifting strategy, and should be valued as an immensely profitable, slow-growth company,” Pachter wrote. “Even while the ad-supported tier is not yet directly accretive, the ad-tier should continue to reduce churn and draw new subscribers to the service.”

Microsoft Q2 Xbox Gaming (TVOD) Revenue Drops 13%, Game Pass Subs Hit Record High

Microsoft Jan. 24 reported its second-quarter (ended Dec. 31, 2022) Xbox gaming segment revenue decreased $684 million (13%) to $4.76 billion, from $5.44 billion in the prior-year period, driven by declines in Xbox content, services and Xbox hardware — which includes Microsoft Movies & TV content transactions.

Xbox is part of Microsoft’s “More Personal Computing” business segment, which saw Q2 revenue drop almost 19% to $14.2 billion, from $17.5 billion in the previous-year period.

Microsoft attributed the content and services revenue decline due to strong prior-year revenue from first-party game launches, undermined by drops in first-party content and a lower rate of monetization in third-party content, and a 13% decrease in Xbox hardware revenue, offset in part by growth in Xbox Game Pass subscriptions.

On the positive side, Xbox Game Pass subscriptions hit a record 120 million monthly active users during the quarter.

“We saw new highs for Game Pass subscriptions, game streaming hours, and monthly active devices,” CEO Satya Nadella said on the fiscal webcast.

Through six months of the fiscal year, overall gaming revenue is down $667 million, or 7%, driven by declines in content and services and Xbox hardware. Xbox content and services revenue decreased 8%, driven by declines in first-party content and in third-party content, with lower rate of monetization and engagement hours, offset in part by growth in Xbox Game Pass subscriptions. Xbox hardware revenue decreased 5% driven by lower price of consoles sold.

Microsft, which said it plans to cancel 10,000 company positions in 2023, said it recorded $800 million in severance related costs in 2022.

Cinedigm Ups Q2 Streaming Revenue 78%, SVOD Subs Top 1 Million

Cinedigm Nov. 14 reported second-quarter (ended Sept. 30) revenue of $14 million, which is up almost 39% from revenue of $10.1 million in the prior-year period. The net loss ballooned to $5.8 million, compared with net loss of $300,000 in the prior year quarter. This was driven by the reduction in the company’s legacy digital cinema equipment sales (projectors) and a non-operating charge of $600,000 for the company’s investment in A Metaverse Company (f/k/a Starrise Media Holdings Ltd.), as well as the previously mentioned increased direct and SG&A costs immediately following first-quarter acquisition activity.

The quarter’s revenue does not include theatrical revenue from Terrifier 2, the slasher movie sequel distributed by Cinedign business unit Bloody Disgusting. The movie has proven to be a box office hit with high margins.

The Los Angeles-based home entertainment distributor said streaming revenue reached $8 million, which is 78% higher than streaming revenue of $4.5 million during the previous-year period. Total subscribers topped 1 million, up 48% from 716,216 subs a year ago. Streaming minutes viewed in the quarter were 2.17 billion, up 78% over the prior year quarter at 1.21 billion minutes a year ago.

The company’s increased focus on ad-supported streaming video saw streaming revenue more than double versus last year, thanks to management’s pivot into the AVOD and FAST businesses years ago.

“While other major streaming companies are just now scrambling to put their advertising strategies in place, we have now had 10 consecutive quarters of record ad revenue growth,” CEO Chris McGurk said in a statement.

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Content and entertainment revenue surpassed $11.4 million, up 67% from $6.8 million last year, driven by organic user growth, increasing market demand for Cinedigm’s connected-TV ad inventory, and the impact of new streaming channels versus the prior year.

As previously mentioned, Cinedigm launched the branded Cineverse platform in the quarter, showcasing a portfolio of free, ad-supported linear channels and more than 12,000 titles, alongside enhanced content discovery and social networking capabilities, among other features.

“It is the key driver toward our goal of becoming the ‘Spotify’ of independent streaming video,” McGurk said, adding that Terrifier 2 is going to provide a significant upside to Cinedigm’s fiscal Q3 financial results.

Lionsgate Q2 Motion Picture Profit Dropped 45%

Lionsgate Nov. 3 disclosed that its motion pictures business, which includes home entertainment, posted second-quarter (ended Sept. 30) operating income of $55.5 million on revenue of $224 million. That was down 45% from operating income of $101.8 million on revenue of $331 million in the previous-year period.

Motion picture revenue consists of the development and production of feature films, acquisition of North American and worldwide distribution rights, North American theatrical, home entertainment and television distribution of feature films produced and acquired, and worldwide licensing of distribution rights to feature films produced and acquired.

Segment revenue decreased to $224 million compared with $330.9 million in the prior-year quarter. Revenue and segment profit declines reflected a tough comparison with the second quarter of fiscal 2022, which benefited from strong carryover revenue from fiscal 2021 titles.

Lionsgate’s top-grossing theatrical releases in 2022 include The Unbearable Weight of Massive Talent, Moonfall, American Underdog and Prey for the Devil.

Revenue from Lionsgate’s 17,000-title film and television library was $747 million for the trailing 12 months. The company reported library revenue from digital and physical distribution of $210 million in the quarter.

Sony Pictures Home Entertainment Explodes Half-Year Revenue 57% to $422 Million

Thank goodness for superheroes, video games and anti-heroes.

All factored prominently Nov. 1 for Sony Pictures Home Entertainment, which reported second-quarter (ended Sept. 30) revenue of $140 million, which was up nearly 8% from revenue of $130 million during the previous-year period. Through half of the 2023 fiscal year, sales of digital and physical movies and TV shows topped $422 million, a 57.4% increase from $268 million in revenue during the same period a year ago.

The studio continues to be led by the retail releases of Spider-Man: No Way Home — the top-selling packaged media release in 2022 — Ghostbusters: Afterlife, Uncharted, Venom: Let There Be Carnage and Morbius, among others.

Notably, home entertainment revenue topped Sony Pictures Entertainment’s theatrical revenue, which was more than $332 million through six months. That was up 146% from box office revenue of $135 million during the same period in 2021.

Top-performing theatrical releases in the quarter included Bullet Train ($233 million), Where the Crawdads Sing ($132 million), The Woman King ($44 million) and The Invitation ($32 million). That compared with previous-year releases Escape Room: Tournament of Champions ($53 million), Don’t Breathe 2 ($50 million) and Show Me the Father ($2 million).

Streaming services revenue, which includes license revenue from third-party streaming SVOD/AVOD platforms, topped $320 million, which is down almost 25% from revenue of $431 million during the previous-year quarter. For half of the fiscal year, streaming revenue reached $671 million, down 13% from revenue of $771 million during the same period in fiscal 2022.

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Chicken Soup for the Soul Entertainment Ups Q2 Revenue, Fiscal Loss

Ad-supported VOD distributor Chicken Soup for the Soul Entertainment Aug. 11 reported a net loss of $20 million on revenue of $37.6 million during the second quarter (ended June 30). That compared with a net loss of $11 million on revenue of $22.1 million during the previous-year period.

Cos Cob, Conn.-based Chicken Soup, whose AVOD platforms include Crackle Plus, earlier in the day closed the acquisition of Redbox Entertainment.

William J. Rouhana Jr.,

William J. Rouhana Jr., chairman and CEO of Chicken Soup, said the AVOD distributor’s quarterly revenue growth reflected “terrific execution” by the company’s ad sales team, underscored by strong viewership growth, and increased user time spent on the company’s tech platform.

“[The Redbox deal] gives us immediate scale, growing our film and television library to over 51,000 titles, 36,000 [Redbox] kiosks, establishing a broad complement of AVOD, TVOD and FAST channel services reaching millions of viewers across dozens of platforms,” Rouhana Jr. said in a statement.

The executive said the collective assets of Chicken Soup and Redbox create an entertainment company that he believes would generate more than $500 million in revenue and $100 million to $150 million in pre-tax earnings on an annualized basis.

“We delivered outstanding results in our last quarter ahead of the transformational acquisition of Redbox,” Rouhana Jr. said.

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