Weekly Digest from the West
Jean-Baptiste Piron
Cultural Attaché I Attaché culturel I Québec Office Los Angeles
-The Streaming Wars may be put on hold during quarantines as free content takes over: Back in our salad days, back when we were young and innocent, back on March 11, I wrote a column about how coronavirus quarantines could be an ideal time for subscription streamers Quibi, HBO Max and NBC’s Peacock, all of which plan to launch in some form in April and May. After all, streaming video usage would surely increase with everyone stuck at home with few other entertainment options. What I didn’t consider is just how dramatic the explosion of job losses would be, with more than 10 million Americans filing for jobless claims in two weeks and the unemployment rate jumping to its highest point since August 2017 in just one month. Those numbers are just a hint of what’s to come, as The Bureau of Labor Statistics used the week ending March 12 as its reference period, largely before nationwide shutouts kicked in. J.P. Morgan’s Jesse Edgerton estimates another 7 million new claims to be reported for the week ending April 4. That’s made me reconsider how many Americans are going to jump at spending any extra money on streaming services while they’re stuck at home. Instead of cementing subscription streaming services into daily life habits, it’s possible quarantines will actually showcase the value of free streaming — particularly user-generated content. “With so many people staying home, we’re all going to see a lot more media consumption,” Adam Mosseri, Instagram’s chief executive officer, said on The Byers Market podcast last month. “More of the new content, if staying at home lasts months, and I think it will, will come from people and not studios over time.” More people are spending watching video during quarantines, which, of course, is better for subscription streaming than the alternative. Comcast reported peak traffic is up 32% overall between March 1 to March 30. Comcast’s streaming and web video consumption is up a 38%. Verizon has experienced similar trends, with video traffic up 32% over an average day, a spokesperson told CNBC. And live sports continue to be canceled without an end in sight, making traditional pay TV seem even more expensive as a value proposition just as new streaming products hit the market. But as quarantines move into April, with no end in sight, Americans will revalue how they spend their free time, especially if they’re suddenly jobless and unable to visit friends and family. That’s likely to benefit entertainment options with personal interaction and instant response from friends, such as Internet-connected video games, Twitter, Instagram, Tiktok and YouTube. I’m not sure there’s any content I’d rather watch right now than the Marsh family’s at-home rendition of “One More Day” from “Les Miserables.” The top three applications by usage on Verizon’s wireless network in March were YouTube, Facebook and Instagam, according to a Verizon spokesperson. User-generated content is instant and fresh, documenting at-home life, while on-demand Hollywood shows will fill an escapism niche but may feel less immediate and more anachronistic as quarantines continue. “The need to connect with people you know is going to continue to exist, the need to be entertained is going to continue to exist, but the distribution time between one and the other will shift,” Mosseri said.
-The Quibi Era Begins: Will It Last? Five years after its conception and 18 months after development kicked off, Quibi launches today in the U.S. and Canada. Much has changed since founder and chairman Jeffrey Katzenberg first pitched CEO-to-be Meg Whitman over dinner on his vision of the next generation of content innovation. Some changes have boosted the short-form, mobile-only video platform. Whitman, whose Silicon Valley track record is widely viewed as an ideal yin to the yang of Katzenberg's in Hollywood, likes to point out that mobile video usage increased from six minutes a day on average in 2012 to 60 minutes in 2018. Such trends, alongside their respective rolodexes and credibility, surely helped Quibi to raise $1.75 billion over two rounds. Other developments augur less optimistically. Competition has intensified. And of course, there’s the coronavirus crisis, which among other consequences forced Quibi to cancel its glitzy launch event. One thing that appears to be business as usual, though, according to Quibi Chief Product Officer Tom Conrad, is how the company will measure success: net paid subscribers. Quibi has been quiet on its customer projections. But Laura Martin, senior analyst at investment banking and asset management firm Needham & Company, told dot.LA one way she would analyze Quibi’s goals is to consider its potential exit opportunities. "They've already invested $1.75 billion," she said. "So they'd need to get at least a $2 billion valuation. At a 10x revenue valuation, they'd have to get $200 million in revenue. What does it take to get there? ? Quibi has also been trumpeting its After Dark technology. Though not available at launch, it will supposedly allow Steven Spielberg’s upcoming project to appear on people's phones only at certain times of day. As important as Quibi's tech, if not more so, is its content. With plans to release 8,500 episodes (all 10 minutes or less) across 175 shows in year one, it debuts today with 50 shows. Five are movies-in-chapters; the first three episodes of each are now available, with new episodes meant to roll in every weekday, presumably until the story's conclusion. There are also eight documentary series, 12 unscripted shows, and 25 five-to-six-minute daily updates spanning news, weather, wellness, sports and culture. Quibi plans to release new titles on a weekly cadence. 25 new episodes will appear each day, the company says, comprising over three hours of original content. The talent that Quibi has enlisted, in front of the camera and behind, promises top-notch production value. Its partnership with T-Mobile will help drive customers, too (though these promotionally incentivized subscribers will contribute less to Quibi's bottom line). And, in the short term, so will its 90-day free trial for anyone who signs up in April.
https://dot.la/quibi-will-it-last-2645644900.html
-Pay TV Fears Even Bigger Subscriber Losses Amid Virus Crisis: With people across the U.S. stuck in their homes amid the spread of the new coronavirus, what will the impact of the pandemic be on cord-cutting? Bullish Wall Street analysts highlight that news and entertainment provided by pay TV operators are key sources of information and distraction for consumers locked up at home, with Comcast, for example, on March 30 saying that linear TV consumption in its homes has increased by 4 hours to 64 hours per week and video-on-demand usage has hit "record highs." Such increased usage could potentially slow down pay TV subscriber losses, which had in 2019 hit an all-time high of 4.9 million for the largest pay TV providers, according to Leichtman Research Group. But with economists now expecting a recession in the wake of the virus crisis, and unemployment on the rise, consumers may soon review whether their pay TV bills could be a place to make cuts, potentially focusing monthly telecom subscriptions to broadband and mobile services. The fact that sports leagues and TV show production have been put on hold could also make pay TV seem less of a value compared with alternatives. Comcast said on March 30 that video game downloads are up 50 percent overall and streaming and web video consumption has increased 38 percent. "In this COVID-19/macro environment, we view the traditional video story as a 'two-sided coin,' though an overall downside to cord-cutting," Cowen analyst Gregory Williams wrote in an April 3 report. "Prior to the COVID-19 crash, traditional video was already facing further deterioration with accelerating year-over-year losses for five consecutive quarters, especially with telco/satellite TV, as the streaming wars begin. As we endure the quarantine phenomenon and potential softer economy (rising unemployment), cord-cutting trends should continue (sports cancellations/delays could impact the value of traditional video), especially as hourly employees look for ways to shed personal expenses and streaming services provide cheaper video solutions. That said, a partial offset is the need for hyperlocal/live news which is increasingly becoming important for consumers to stay up-to-date in the information flow. ? Some on Wall Street have increased their pay TV subscriber loss forecasts for 2020 amid the virus crisis. "There could initially be some benefit from the fact that people have been stuck at home, and that they are glued to cable news, but that won’t last," MoffettNathanson analyst Craig Moffett tells THR. "The financial pressures of the COVID recession will inevitably push consumers to economize, so cord-cutting will accelerate. That will only be exacerbated by the lack of sports programming. Sports are the glue that holds the bundle together. Without sports, the value proposition for pay TV starts to fall apart. ? Bernstein analyst Peter Supino in an April 1 report reduced his 2020 financial forecasts for pay TV companies based on similar expectations. ? We believe video subscriber losses will accelerate, with the recession and lack of sports focusing consumers' attention on pay TV as a roughly $1,000-per-year savings opportunity," he explained. Supino said his new "base case" scenario assumes "accelerating video subscriber losses in 2020" amid rising job losses due to the expected recession. As a result, his estimate is for 1.5 million incremental subscriber losses in the second quarter due to the virus crisis compared with his previous forecast.
https://www.hollywoodreporter.com/news/pay-tv-fears-bigger-subscriber-losses-virus-crisis-1288159
-Facebook Gaming launches tournaments for esports amateurs: Facebook Gaming is launching tournaments for esports amateurs today in early access across the globe. In the era of social distancing, Facebook believes that games can bring us together. While the tournament feature was in the works for a while, Facebook decided to release it early to help people cope better while in isolation because of the coronavirus, said Mina Abouseif, the head engineer behind Facebook Gaming tournaments, in an interview with GamesBeat. Originally designed as a tool to support live gaming events and tournaments, the company worked these past few weeks to shift Facebook Gaming tournaments to meet a digital need to help people stay connected through friendly competition with their friends, family and communities, he said. “Our mission for Facebook gaming is to build the world’s gaming community and organized gameplay has always been a big part of gaming, regardless of levels of competition,” Abouseif said. “Whether it’s someone getting together with family and friends or whether it’s a creator of a tournament for viewers or supporters, or whether it’s an esports organization, this is a big part of gaming.” Abouseif used to play a lot of Electronic Arts’ FIFA soccer games with his friends. They would go to each other’s houses and play for hours. But now they can’t do that, so Abouseif wants to find a way for the friends to connect digitally.
https://venturebeat.com/2020/04/07/facebook-gaming-launches-tournaments-for-esports-amateurs/
-AT&T TV Customers Will Get a Free Year of HBO and HBO Max: AT&T is offering a free year of HBO for new AT&T TV and DIRECTV customers. This offer will give subscribers HBO channels in their lineup, along with giving them access to HBO Max when the service launches in May. This offer comes just after AT&T removed HBO from AT&T TV NOW Plus packages and dropped the price of the package by $10/month. AT&T mentions in a blog post announcing the deal that while people are spending most time watching news, there has also been an overall increase in the number of hours spent watching TV in general. Households are renting movies and searching for more movies available to stream, to keep the whole family entertained. In addition to being available as a free channel for AT&T TV and DIRECTV customers, HBO is making nearly 500 hours of programming free via the HBO NOW and HBO GO apps. Distributors, including The Roku Channel, are also making the content free for all users.
https://www.cordcuttersnews.com/att-tv-customers-will-get-a-free-year-of-hbo-and-hbo-max/
-Netflix’s Enhanced Parental Controls Now Let You Fully Block TV Shows, Movies From Kids’ Profiles: As millions of kids are stuck at home, Netflix has released an update to its parental controls with a range of new features — including the ability to completely block individual TV series or films from showing up in a child’s profile. Parents and guardians can now choose to remove individual series or films by title for any kids’ profile, so that they won’t show up anywhere in that profile. Previously, Netflix has offered account-level restrictions requiring that a kids’ profile enter a PIN to play TV shows or movies above a selected maturity rating. Another new feature: Netflix customers can set a PIN password for any individual profile — to prevent kids from using them. In addition, Netflix now lets parents see a history of what their kids have watched (and when) within their profiles; parents also can now disable autoplay of episodes in kids’ profiles. Finally, Netflix is expanding its feature that lets parents and guardians filter out titles in kids’ profiles “that are not appropriate for their age” based on country-specific ratings systems. “Choice and control have always been important for our members, especially parents,” Michelle Parsons, Netflix’s global product manager for kids programming, said in a statement. “We hope that these additional controls will help parents make the right choices for their families.” Netflix account owners can access profile-management settings by clicking “More” in the app or by selecting “Manage Profiles” from the drop-down menu in a web browser.
-Twitter CEO Jack Dorsey Donating $1 Billion of His Equity in Square to COVID-19 Relief Efforts: Jack Dorsey, CEO of Twitter and payments company Square, said he is moving $1 billion of his equity in Square to fund COVID-19 relief efforts and eventually other causes. Dorsey, who has a net worth of about $3.3 billion according to Forbes, announced the plan Tuesday on Twitter. He said the $1 billion represents about 28% of his wealth. The funds will be distributed through his Start Small LLC charitable fund. “Why now? The needs are increasingly urgent, and I want to see the impact in my lifetime,” Dorsey, 43, wrote on Twitter. “I hope this inspires others to do something similar. Life is too short, so let’s do everything we can today to help people now.” According to a Google Doc that Dorsey set up to disclose his donations, the first funding he contributed was $100,000 on April 2 to America’s Food Fund, an initiative launched by Leonardo DiCaprio, Apple, Laurene Powell Jobs, and the Ford Foundation and backed by Oprah Winfrey to provide food to those in need during the coronavirus crisis.
-Concert Industry Could Lose Up to $9 Billion in Ticket Sales This Year, Study Shows: In a worst-case scenario, the concert industry could lose almost $9 billion if coronavirus quarantines don’t lift by the end of the year, according to a study just published by the trade publication Pollstar — and that figure does not include associated businesses such as transportation, production, marketing, concessions, security, sponsorships and more. While Pollstar projected a $12.2 billion year for the industry based on its first-quarter chart — which was up 10.9% over 2019’s record-setting year to $840 million for 2020 while ticket sales rose 4.5% to 9.4 million — those projections changed virtually overnight as much of the country went into lockdown over the past few weeks. “Estimating what might have been lost obviously depends on when the business rebounds,” the study says, “but if the rest of the year is dark – which is a worst-case scenario and certainly not expected – the potential $12.2 billion yearly estimate minus the grosses from all the shows completed before cancellations and postponements places potential losses for the remainder of the year right at $8.9 billion.”
https://variety.com/2020/music/news/coronavirus-concert-industry-lose-9-billion-2020-1234570682/
-Apple Music Launches $50 Million Advance Royalty Fund for Independent Labels: Apple Music has launched a $50 million advance royalty fund to help independent labels ensure that their artists are paid amid the economic devastation of the coronavirus pandemic, according to reports in Rolling Stone and Music Business Worldwide; a source close to the situation confirmed the reports to Variety. According to a letter sent to the labels and cited by Rolling Stone, independent labels that earn at least $10,000 in quarterly Apple Music earnings will qualify for the royalty advances. To qualify, the indie labels are required to have a direct Apple Music distribution deal. “These are difficult times for the music industry globally,” the letter says in part. “Apple has a deep, decades-long history with music, and we are proud to be in close partnership with the best labels and artists in the world. We want to help.” Richard James Burgess, president and CEO of the independent-music trade group A2IM, said: “A2IM and the independent sector are extremely grateful to Tim Cook and Apple for taking the initiative to set up a $50m fund for advance payments of royalties to independent labels. Many independents, in part because of their greater reliance on physical goods, have been hit hard by the lockdowns that have shutdown touring and physical retail outlets. Apple has been an essential partner for labels and their artists since they setup the first viable, licensed download site more than a decade and a half ago. No doubt this fund will be a lifesaver for some labels and is a welcome acknowledgment of the interdependence of our recorded music ecosystem.”
https://variety.com/2020/biz/news/apple-music-indie-labels-50-million-advance-royalty-1234573841/
-The Virus Changed the Way We Internet: Stuck at home during the coronavirus pandemic, with movie theaters closed and no restaurants to dine in, Americans have been spending more of their lives online. But a New York Times analysis of internet usage in the United States from SimilarWeb and Apptopia, two online data providers, reveals that our behaviors shifted, sometimes starkly, as the virus spread and pushed us to our devices for work, play and connecting. With nearly all public gatherings called off, Americans are seeking out entertainment on streaming services like Netflix and YouTube, and looking to connect with one another on social media outlets like Facebook. In the past few years, users of these services were increasingly moving to their smartphones, creating an industrywide focus on mobile. Now that we are spending our days at home, with computers close at hand, Americans appear to be remembering how unpleasant it can be to squint at those little phone screens. Facebook, Netflix and YouTube have all seen user numbers on their phone apps stagnate or fall off as their websites have grown, the data from SimilarWeb and Apptopia indicates. SimilarWeb and Apptopia both draw their traffic numbers from several independent sources to create data that can be compared across the internet.
https://www.nytimes.com/interactive/2020/04/07/technology/coronavirus-internet-use.html
-Disney Plus Hits 50 Million Subscribers: Within five months of initial launch, Disney Plus has signed up 50 million paid subscribers worldwide, the media company said. Disney last reported 28.6 million Disney Plus paid subscribers as of Feb. 3, meaning it’s packed on more than 21 million net new subs in roughly two months. The subscription VOD product got a big boost over the past two weeks when it launched in eight Western European countries — the U.K., Ireland, Germany, Italy, Spain, Austria, France (after a government-mandated two week delay) and Switzerland. In addition, Disney Plus officially launched April 3 in India, in conjunction with the existing Hotstar service. In less than a week, according to the company, India already accounted for approximately 8 million of Disney Plus’ 50 million paid subscribers. The 50 million figure is well ahead of the company’s own forecasts — and those of Wall Street. Disney, in unveiling the road map for the streaming service almost exactly a year ago for investors, had pegged a goal of 60 million-90 million global subs by the end of fiscal 2024 (Disney’s fiscal year ends in September). Disney Plus may hit that target four years early. Meanwhile, prior to the initial launch last November in the U.S., Canada and the Netherlands, analysts had ballparked around 18 million Disney Plus customers by the end of the 2020 fiscal year. Later in 2020, Disney plans to continue expanding Disney Plus throughout Western Europe, as well as across Latin America and Japan, according to Kevin Mayer, chairman of Walt Disney Direct-to-Consumer & International.
-California Film Commission Chief Colleen Bell Talks Tax Credits, “Force Majeure” And The Resumption – One Day – Of Film And TV Production In The State: One day, cameras will roll again and film and TV production will resume in California, and when it does, Colleen Bell, executive director of the California Film Commission, says that the Commission stands ready to assist those who qualify for the state’s $330 million-a-year film tax credit program. In the meantime, the Commission has told qualified projects that “the impact of the coronavirus on your productions is considered a force majeure situation and will not affect your status as an approved applicant in the tax credit program.” The program is set to start its third phase – Program 3.0 – on July 1, the start of the state’s next fiscal year. Those incentivized projects that were shut down during Program 2.0 are also eligible for force majeure consideration.One day, cameras will roll again and film and TV production will resume in California, and when it does, Colleen Bell, executive director of the California Film Commission, says that the Commission stands ready to assist those who qualify for the state’s $330 million-a-year film tax credit program. In the meantime, the Commission has told qualified projects that “the impact of the coronavirus on your productions is considered a force majeure situation and will not affect your status as an approved applicant in the tax credit program.” The program is set to start its third phase – Program 3.0 – on July 1, the start of the state’s next fiscal year. Those incentivized projects that were shut down during Program 2.0 are also eligible for force majeure consideration. “The California Film Commission is fully functioning and providing all of our services during this coronavirus crisis,” Bell told Deadline. “I have all of my staff tele-working and we are in frequent communication to meet the needs of all the people who rely on our services. In terms of our tax credit program, the coronavirus situation qualifies for a force majeure situation for members of our tax credit program. According to the tax credit program statute, ‘force majeure’ means an event or series of events that are not under the control of the qualified tax-payer. These include, but are not limited to, natural disasters, death, disability and government sanctions. So the COVID virus qualifies under government sanction at this point. Many of the productions that are under our tax credit program have filed for the force majeure exception to the regulatory scheduling requirement, given that they are shut down at this moment.”
https://deadline.com/2020/04/california-film-commission-colleen-bell-tax-credits-1202903217/
-VENN, New Gaming-Centered Media Network, Moves Launch Up to July Amid Virus Crisis: Billed as the ? MTV of gaming," the new cross-platform offering hopes to fill a void as majority of Hollywood production shutters. ? This is an opportunity that’s born from chaos." So says Ben Kusin, co-founder and co-CEO of VENN, a new network focused on the video game and streaming industries and cultures, of his newly-formed company's decision to move up its launch from this fall to July amid the coronavirus pandemic. ? VENN is the nexus of gaming and media and, while most industries have stagnated, these two have taken off," he tells The Hollywood Reporter. With "shelter-at-home" orders in place across the nation, video game and streaming usage has skyrocketed in the U.S. With VENN, Kusin and co-founder, co-CEO Ariel Horn are hoping to fill a ? void" left by so many Hollywood projects shuttering to "make entertainment, make people happy and offer an escape from the problems of the world." Originally set to launch in the latter half of this year, VENN, billed as the "MTV of gaming," will now debut in July across various platforms, from AVOD broadcast offerings to streaming hubs such as Twitch and YouTube. "It’s going to be everywhere," Kusin says. ? We’re calling it a universal network — that means that anywhere that consumers are consuming content." Alongside Kusin and Horn, VENN boasts a team of gaming and media vets that includes former Twitch senior program manager Arya Azar, T-Mobile exec Chris Kindt, producers from major esports events such as Riot Games' League of Legends World Championship and Epic Games' Fortnite World Cup and former G4 CEO Neal Tiles as an advisor. Seed investors in the network include Kroenke Sports, Riot Games co-founder Marc Merrill, co-founder of Twitch Kevin Lin, co-founder of Blizzard Entertainment Mike Morhaime, former head of global esports at Blizzard Amy Morhaime and others.
-Netflix Has Tripled Its Digital Ad Spend Since COVID-19 Hit The U.S. (Report): In recent weeks, some streaming services and content providers have signifcantly ramped up their digital ad spend, putting out more marketing to catch the attention of folks stuck at home due to the COVID-19 pandemic. According to a report from marketing data company Pathmatics, Netflix went from a digital ad budget of around $150,000 per day (March 13) to spending more than $500,000 per day (March 19). Pay TV channel Starz similarly increased its spend, going from around $300,000 per day (March 13) to more than $700,000 per day (March 19). Hulu had a slightly different response: on March 16 only, it bumped its ad spend up from $300,000 to $402,000, then dropped back down to around $300,000 for every day after. This increased spend is noticeably going toward placing ads on social media sites like Facebook and Twitter, Pathmatics says. As for ad content, Hulu is promoting its live news content, while Starz is offering a swath of Broadway shows–perhaps trying to draw those who purchased tickets to summer theatre productions that have now been cancelled. (If you’re among them, check out Andrew Lloyd Webber’s YouTube channel.) Like pretty much every other business, digital ads have taken a hit from COVID-19. New data from the Interactive Advertising Bureau (IAB) shows overall digital ad spend for March and April is down 38% from what marketers expected to shell out. But the IAB also points out that of all ad industries, digital is actually the least affected: marketers are spending 41% less on TV ads than expected, 43% less on ads in print publications, 45% less on radio, and 51% less on outdoor ads like billboards. Ironically, while spend on digital ads is down, they’re being viewed more than ever. Pathmatics’ report says that news sites and medical outlets have seen major jumps in traffic and the amount of ads they’re serving. CNN’s website, for example, served 90% more digital ads in March than it did in April. The New York Times and Fox News both served 40% more, and health sites WebMD and Healthline each saw 20% spikes.
https://www.tubefilter.com/2020/04/09/netflix-hulu-digital-ad-spend-coronavirus/
-Apple and Google are launching a joint COVID-19 tracing tool for iOS and Android: Apple and Google’s engineering teams have banded together to create a decentralized contact tracing tool that will help individuals determine whether they have been exposed to someone with COVID-19. Contact tracing is a useful tool that helps public health authorities track the spread of the disease and inform the potentially exposed so that they can get tested. It does this by identifying and “following up with” people who have come into contact with a COVID-19-affected person. The first phase of the project is an API that public health agencies can integrate into their own apps. The next phase is a system-level contact tracing system that will work across iOS and Android devices on an opt-in basis. The system uses on-board radios on your device to transmit an anonymous ID over short ranges — using Bluetooth beaconing. Servers relay your last 14 days of rotating IDs to other devices, which search for a match. A match is determined based on a threshold of time spent and distance maintained between two devices. If a match is found with another user that has told the system that they have tested positive, you are notified and can take steps to be tested and to self-quarantine. Contact tracing is a well-known and debated tool, but one that has been adopted by health authorities and universities that are working on multiple projects like this. One such example is MIT’s efforts to use Bluetooth to create a privacy-conscious contact tracing tool that was inspired by Apple’s Find My system. The companies say that those organizations identified technical hurdles that they were unable to overcome and asked for help.
https://techcrunch.com/2020/04/10/apple-and-google-are-launching-a-joint-covid-19-tracing-tool/