Weekly Digest from the West
Jean-Baptiste Piron
Cultural Attaché I Attaché culturel I Québec Office Los Angeles
-Streaming TV services hope that better ad targeting will lead to profits: Streaming TV services such as YouTube TV are looking to reach cord-cutters with cheaper channel packages delivered over the internet.
*The pitch: Better targeting and unique platforms : The virtual MVPDs are positioning themselves as providers of true addressable advertising — or the ability to target individual households and potentially even individual TV viewers. Similar to cable and satellite distributors, virtual MVPDs have two minutes of ad inventory for every hour of programming on the channels in their services. Sling TV, DirecTV Now and FuboTV are already selling into these ad slots. Hulu has gradually started to sell into its live TV service over the past month, and YouTube plans to do the same by the start of the next broadcast TV season this fall. “They don’t have the scale as of yet, but the ability to target is one of their main selling points right now,” said Matt Denerstein, managing director of cross-platform investment at Mindshare North America.
*Another selling point is the uniqueness of the services themselves. Hulu, for instance, does not plan to sell its live TV inventory on a standalone basis in the near future. It’s selling packages across its ad-supported subscription video and live TV services, the idea being that advertisers are buying TV the way people are used to watching it: sometimes live and sometimes on-demand. The value of audience-based buying versus specific networks and shows: By offering better targeting, virtual MVPD providers believe they can charge a premium for their inventory. The question is whether advertisers will pay. In AT&T’s most recent earnings call, CEO Randall Stephenson said the company can get three to five times more money per ad sold on DirecTV when using its data to target the ads to specific audiences. Sling TV’s head of ad sales, Adam Lowy, said the service is seeing more demand for its addressable TV products. More than 80 percent of buys on Sling TV are targeted (not including targeting shows or networks) in some fashion, he said. Sling TV’s programmatic offering (which includes the ability to buy addressable ads) accounted for 50 percent of Sling TV’s ad business last month, versus roughly just 15 percent five months ago.
*Can ad revenue offset losses tied to programming (and marketing) costs? Programming costs are also expected to increase several percentage points every year — which is common in the pay-TV business. “We make a tremendous amount of investments in programming, and those investments will continue to go up whether we’re talking about originals, licensed shows, or live sports,” said a TV network distribution exec. “We have to recoup those costs as they go up. … But at the end of the day, it’s a negotiation.” According to The Information, YouTube expects to make $15 to $16 per subscriber once it starts to sell its own ads into YouTube TV. That might seem like a long shot when YouTube TV and other virtual MVPDs only have two minutes of ad inventory to play with per hour per TV channel.But there’s evidence that distributors can hit those numbers. In the second quarter, Comcast’s cable business made roughly $30.14 per TV subscriber from advertising alone; Charter Communications, meanwhile, made $20.94 per TV subscriber from advertising alone. Granted, these are the two of the biggest traditional pay-TV distributors in the U.S., but YouTube is only aiming for a little more than half.
“The reality is, there is a lot of room to grow here,” said Gandler. “[Traditional] distributors have been selling ads for decades, and it’s been working out well for them — just do the math. “Addressable advertising on virtual MVPDs is going to be significantly more valuable.”
*The question mark is scale: For all of this to work, the virtual MVPDs are going to need a lot more than 6 million subscribers. A separate SNL Kagan report from June estimates that these services will grow to 15.3 million subscribers by the end of 2022. “Everybody already knows that all of these virtual MVPDs are losing money — because logic says you can’t sell that many networks for that little money,” said Alan Wolk, lead analyst for consulting firm TVRev. “They’re doing it because their goal is to grow an audience.” Industry sources were mixed on what constitutes as enough scale for virtual MVPDs to be in the same ballpark as traditional distributors. And will these services need to add more channels — making their bundles increasingly less skinny than they already are — to attract more customers? “The idea is that eventually traditional [distribution] folds in on itself,” said the longtime TV and digital exec. “It becomes less about scale by then and more about waiting it out and staying alive long enough that when [traditional] fails, you’re there to pick up the pieces. The question is: How long until we get to that point and can you gather enough capital to make it?”
-Now 18% of Americans Own a Smart Speaker: That’s roughly 43 million people above the age of 18. According to the most recent installment of a recurring study conducted by NPR and Edison, roughly 43 million Americans above the age of 18 -- or 18 percent of the population -- now own smart speakers. This is a 2 percent increase from the previous study, in which only about 39 million Americans above the age of 18 were estimated to own the device. The Spring 2018 Smart Audio Report breaks down users into groups based on when they purchased their smart speakers, focusing on “first adopters” and the “early mainstream.” The first group have owned their smart speakers for over a year (26 percent of owners), while the latter group have owned them for under (74 percent). The majority of users from both groups were women and the majority of first adopters were above the age of 55, whereas the majority of the early mainstream were between the ages of 45 and 54. The study uses data from these two groups to delve into hyper-specific questions about usage, noting trends of increased use over time for both of them. Topics covered in the study range from hours per day spent listening to news programming (typically between one and two hours across both groups) to percentage of children using the device to help with their homework. Overall, one in four smart speaker owners with children reported using the device for homework.Analyzing changing behaviors and attitudes surrounding smart speakers, the study found that 44 percent of early adopters and 58 percent of early mainstream users expected to purchase another smart speaker for their households. It also found the vast majority of current owners have had positive experiences -- 61 percent of early mainstream users and 52 percent of first adopters have encouraged their friends to purchase smart speakers. More than half of the survey respondents also agreed to the claim they “wouldn’t want to go back to life without your smart speaker.”
-Verizon wants to partner with Apple or Google to deliver 5G TV: Verizon has ambitions to deliver either a YouTube or Apple online TV service to households using its fast new 5G network, according to Bloomberg, citing a source familiar with the telco’s ambitions. Such a service would mark the first time Verizon had distributed a TV service beyond the East Coast, where it sells its fiber-based FiOS service. Verizon intends to launch its 5G network service in Sacramento and Los Angeles and two other cities by the end of the year, and wants to bundle TV service with it. The programming would be delivered wirelessly to a 5G receiver in the subscriber’s home, and would help Verizon compete nationally against TV and internet service bundles from AT&T, Comcast, and others. Verizon is under pressure to offer a TV service now that rival AT&T bought Time Warner as a way of amassing content for its own TV offering. The company, which pulled the plug on its long-struggling streaming app Go90 last month, has also tried to develop its own over-the-top TV service. It gave up the effort earlier this year, reportedly over internal disagreements and difficulties acquiring content. That service would have competed with Dish’s Sling TV, DirecTV Now, PlayStation Vue, and Google’s YouTube TV, which offers more than 60 channels of live TV for $40 a month. (Apple doesn’t offer a live TV streaming service.)
https://www.fastcompany.com/90206999/verizon-wants-to-partner-with-apple-or-google-to-deliver-5g-tv
-Google wants to bring blockchain technology to its cloud services: Google announced a partnership with the New York-based startup Digital Asset, which makes tools to build blockchain-based apps. The partnership adds to one Google already has with BlockApps, another startup that helps people make decentralized apps, which announced the collaboration last Wednesday on Twitter. Google wrote in a blog post that its Cloud customers can “now explore ways they might use distributed ledger technology (DLT) frameworks” by using Digital Asset and BlockApps. It’s not clear exactly how that will work for customers and whether they will be getting access to proprietary software, but more details will be unveiled this week during the Google Next ‘18 event. The company added that it would introduce open-source integrations for apps built with the blockchain-based platforms Hyperledger Fabric and Ethereum later this year in the Google Cloud Product marketplace. Digital Asset’s CEO Blythe Masters stated in a blog post that the partnership would “provide developers with a full stack solution so they can unleash the potential for web-paced innovation in blockchain.” In exchange for early access to the software (which is set for a 2019 release), Digital Asset tells The Verge, “Google Cloud is helping Digital Asset reach a wider audience of developers across different industry segments that we couldn’t reach ourselves due to our size.” It confirmed that Google was not paying for early access. The move signals that Google is looking into digital ledger technology to give its cloud services an edge over Microsoft Azure and Amazon Web Services, which currently both hold more market share than Google Cloud. It also confirms a Bloomberg report from March, which said Google had been investing in and acquiring startups with digital ledger experience, although Google hasn’t particularly expressed specific interest in acquiring Digital Asset or BlockApps.
https://www.theverge.com/2018/7/23/17602762/google-cloud-blockchain-digital-asset-blockapps
-WarnerMedia Chief: HBO Will Boost Volume of Original Programming to Combat Churn: AT&T leaders have been promising for months to increase content spending at HBO to give it a boost in the premium content wars. That money is finally starting to flow into HBO’s coffers in order to greenlight projects that have long been in development, according to WarnerMedia CEO John Stankey. Speaking on AT&T’s second-quarter earnings call Tuesday — AT&T’s first earnings since closing its acquisition of Time Warner last month — Stankey said the goal was to give HBO more programming to drive more subscriber engagement and reduce churn. He noted that data mined from HBO’s digital platforms indicates that some viewers drop in and out of their subscription to HBO depending on the shows are airing fresh episodes at any given time. “We have a tremendous amount of great projects already in the funnel,” Stankey said. “They’ve not been in a position to say yes to because of constraints on certain resources. We’re attempting to open up those constraints on high-quality top projects.” The goal is to “balance out the schedule in way that creates a more engaging consumer experience over the course of the year,” he said. Stankey was asked during the call with Wall Street analysts about a New York Times report earlier this month that AT&T would push HBO to reach for a broader audience and change its programming mix — based on Stankey’s comments from a private town hall session with HBO employees that the Times obtained. Stankey said the report had not “effectively characterized what we are about,” but he did not elaborate. Stankey did not give a round number for the increased content spending at HBO. He assured the analysts that they would pursue “a very responsible investment” in more shows at a time when HBO faces a huge increase in competition from Netflix, Amazon and a host of other new players in the premium content arena.
https://variety.com/2018/tv/news/att-warnermedia-hbo-earnings-originals-1202883128/
-What’s new on Netflix, Amazon Prime Video and Hulu in August 2018: https://www.androidcentral.com/whats-new-august-2018-netflix-amazon-prime-video-hulu
-Viacom Acquires AwesomenessTV; CEO Jordan Levin to Depart: It’s official: Viacom closed a deal to acquire AwesomenessTV, a youth-oriented digital media company, as Viacom looks to expand its reach among digital-first audiences sandwiched in between its Nickelodeon and MTV brands. Terms of the deal were not disclosed. However, a source said Viacom is paying well below $300 million for the digital-media company. The final price tag is considerably less than AwesomenessTV’s $650 million valuation after the company’s latest investment in 2016. [THR reported that Viacom paid $25 million plus the assumption of AwesomenessTV debt; the actual total value of the deal is still unconfirmed.] Word that Viacom was in advanced talks with the company — majority owned by Comcast/NBCUniversal, with stakes held by Verizon and Hearst — emerged earlier this week. Viacom sees AwesomenessTV as boosting its push to produce original premium digital programming with social-video distribution for young, mobile audiences at scale. The ATV Network reaches 158 million unique users with about 300 million monthly views. In addition, AwesomenessTV brings with it a full production studio with an existing library of more than 200 hours of long-form TV series and feature films. “Awesomeness has done an incredible job building their brand into a digital media powerhouse for today’s most sought-after and hard-to-reach youth audiences,” Day said in a statement. “The team brings strong digital expertise, deep connections with top talent and influencers, a world-class television and film studio, and a robust branded content team and creative agency that will accelerate the growth and scale of Viacom Digital Studios.”
https://variety.com/2018/digital/news/viacom-acquires-awesomenesstv-jordan-levin-exit-1202888377/
-Video Interview with Gaumont’s Vanessa Shapiro: Vanessa Shapiro, Gaumont’s president of worldwide TV distribution and co-production, talks to World Screen’s Anna Carugati about the success of Narcos and how the company is looking to expand its activity in the television space. https://worldscreen.com/video-interview-gaumonts-vanessa-shapiro/
-Discovery may launch its own streaming service, too: Following Discovery Communications $14.6 billion acquisition of Scripps Networks Interactive in March, the company is now toying with the idea of launching its own direct-to-consumer service. According to remarks made by Discovery CEO David Zaslav at an industry event, AdWeek reports [paywalled], the company is considering a service with all of Discovery’s networks at a price point of $5 to $8 per month. Whether the service would be U.S.-only has not been determined, nor did the CEO hint at any kind of timeframe for a launch. However, Zaslav did note that he was encouraged by other newcomers in the streaming space, including the low-cost skinny bundle Philo, and AT&T’s just launched WatchTV. Discovery’s channels today are available on a number of the over-the-top live TV services, including WatchTV, which houses 30 of its networks. Following its merger with Scripps, the company operates four of the top five cable networks for women 25-54, the exec also said – ID, HGTV, Food Network and TLC. And it accounts for 22 to 25 percent of the U.S. female audience on any given night, he claimed. That sizable chunk of the viewing audience, plus demand for its popular fare like “Shark Week,” could drive customers to a standalone service.
https://techcrunch.com/2018/07/27/discovery-may-launch-its-own-streaming-service-too/