WaPo’s Lesson For Big TV, Roku Just Can’t Win

1. WaPo’s Lesson For Big TV

For those of you not following American politics, something very unusual happened over the past two weeks. The Washington Post, one of the Big Three newspapers in the US opted not to endorse a presidential candidate this year, the first time they had not done so in many decades.

The stated reason was not that they could not decide, but rather, that they thought it was not the place of a newspaper to make endorsements.?

Alarm bells went off all over MediaWorld at the obvious bullshitishness of that statement, especially given that The Post had, in fact, already endorsed several candidates in this year’s state and local elections.

As the week went on, we learned that there had in fact been an endorsement of Kamala Harris that had been scheduled to run and that said endorsement was quashed by Amazon founder Jeff Bezos, who has owned the paper since 2013.

Chaos ensued.?

Several members of the Editorial Board resigned. Many current and former WaPo staffers issued strongly worded condemnations. (For the sake of those not following the US election, the presumption was that Bezos was acting preemptively to avoid the wrath of Trump, who had promised to put the media under greater scrutiny/quash a free press in an authoritarian Orbanesque manner, depending on your view of him. There was also a presumption that Bezos was acting in self-interest as a billionaire whose taxes would go down in a Trump Restoration.)

But that is not what I am going to discuss.

What I am going to discuss is why over 250,000 people, a bit more than 10 percent of the Post’s subscriber base, canceled their subscriptions last week and what that means for television and the greater media industry in particular.

Why It Matters

When Elon Musk took over Twitter, it did not lose 10% of its audience in just one week. More importantly, despite the fact that many of them proclaim their massive disdain for Musk, it did not lose most of the left-leaning journalists and other nattering nabobs who more or less live on the platform. (I believe “very online” is the correct euphemism.)

So why did more than 250,000 people (as per NPR) give up their Washington Post subscriptions?

I can only but conclude that a Washington Post subscription meant very little to them. That there was no real sense of loyalty to or love for the brand. That they only subscribed to the paper out of a sense of duty—it was something they?should?do—or that they had, as my friend Ian Schafer suggested, stumbled on an article they wanted to read, got paywalled, saw they could subscribe for just a few dollars a month as part of an introductory offer, and then sort of forgot about it.

My greater point here being that they saw nothing of value in having a Post subscription.

Which is a fair observation.?

Say what you will about the New York Times (and my BFF, the?Pitchbot, has plenty to say) they have successfully branched out beyond the news into areas like gaming, podcasts, cooking and sports (the latter two are even sold as separate publications within the NYT subscription umbrella.)?

And that’s in addition to areas like the Book Review, cultural criticism, Real Estate, Styles and similar for which they’ve long had a sizable and passionate audience.

They may not be especially happy about the popularity of some of the new sections—there was a whole kerfuffle when SNL host Colin Jost made a joke at the White House Correspondents’ Dinner this year (“Wordle is here tonight. Sorry, I mean the New York Times. I forgot they do stuff in addition to puzzles.”) after which the Times’ critic Jason Zinoman panned Jost’s performance as “muted, vanilla, less assured than usual” which caused many DC insiders to claim the poor review was a direct response to the slam on the overly sensitive NYT.

But point being, they have created multiple reasons for people to subscribe to the paper that go way beyond their news coverage and that, as a result, it’s unlikely that a full ten percent of their subscriber base would cancel in the course of a week over something like a missing endorsement.

Which brings us to TV. (You knew I’d get here eventually.)

It has never been quite so easy to churn out of subscriptions as it is today. Nor have viewers ever been quite so willing to indulge in this behavior. Meaning you need to make sure they always have a reason to keep subscribing. A strong reason they won’t click “unsubscribe” at the end of the month.

For many, it will be sports. Which cannot be binged in the course of a week or downloaded for a long plane flight.

For others, it will be a consistent flow of shows that viewers want to watch. Which, as Netflix has discovered, means shows that are unlikely to be the subject of Talmudic discourse in the aforementioned NYT, but which will continue to keep large numbers of more mainstream viewers subscribing month after month.?

“Mainstream” being the key word in the above sentence.

What You Need To Do About It

If you are a streaming service or a media company that owns a streaming service, do not rest on your laurels. Remember the old adage that you are only as relevant as your last hit and keep up the momentum.

You’ll also want to think about year-long subscription offers as those will get people out of the habit of churning.

Which probably means longer 25-episode nine month-long seasons like the ones that dominated the linear TV of yore.

You’ll also want to avoid WaPo’s mistake of providing too many low-cost introductory subscriptions. People don’t value those and will often get rid of them when the time is up. Or when they notice the charge on their credit card bill—whichever comes first.

Finally, you’ll want to look for people who have ideas about how to expand your business, create new offerings that take advantage of the digital nature of streaming and the blurring line between different types of content. So think AI, think interactive, think shopping. (Anything more, I’m charging my hourly rate for.)

Or, to put it another way, there’s a reason why CNN recently hired Mark Thompson, the man who is generally credited for turning the NYT into Wordle and thus keeping them profitable, relevant and cancel-proof.

Something to think about.

2. ?Roku Just Can’t Win

In further proof that no good deed goes unpunished, Roku announced its first quarter with over $1 billion in revenue and that they would follow Netflix’s lead and begin reporting streaming hours versus number of subscribers, a metric the industry considers more transparent, accurate and useful at a time when most households are streaming households.

At which point Wall Street sent the stock tumbling by around 16% as of the time I am writing this.

Why It Matters

Wall Street has never really gotten Roku. I have had way too many conversations over the years trying to explain how they can sell both devices and advertising only to be met with “Wait! They’re a floor wax AND a dessert topping???” type incredulity.?

Mostly though, it seems that Wall Street was upset that Roku did not meet projections and had not given them any advance warning that they were not going to meet projections. To wit, Roku estimated gross profit this quarter would net out at $465 million, with adjusted EBITDA at $30 million. That was below Wall Street’s expectations of $477 million in gross profit and $36.2 million in adjusted EBITDA.

So there’s that, but what’s more important here is the decision to focus on streaming hours rather than subscriber numbers, the former being, as noted, a far more useful metric, especially now that Netflix is going down that path as well.

Streaming hours—the actual number of hours people are watching, is a far better measure of how well a service is doing, given, as per the first part of today’s roundup, people often keep subscriptions for services they don’t watch very often. Since Roku is not a subscription service, the number of hours viewed on The Roku Channel is bound to offer a far more accurate picture for advertisers than the number of households who have the service.

And if Netflix and Roku are doing it (Roku having somewhere between 40 and 50 percent of all US households in their clutches), then the hope is other streaming services will go down that road too. Cough, Disney, cough.

What You Need To Do About It

If you are a Wall Street investor, educate yourself on Roku and on the TV OS market in general. It’s not as straightforward as Netflix, but it’s already a big deal, it’s going to be a bigger one, and if you sleep on it you’ll be sorry.

Roku is not without issues—its inability to break into the European market, for instance. But in the US they are kicking ass way more than you give them credit for.

If you are Roku, stop thinking that Wall Street is going to wake up, and instead, work on educating them. Don’t surprise them with numbers that freak them out. Help them to understand your value and your place in the market. You may be doing all that already, but you need to do it differently because it is clearly not working.

If you’ve invested in Roku… play the long game. At some point everyone else will figure it out. That, or someone will buy them, thus ending the industry’s longest-running parlor game.

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