|From: Glenn Petersen||6/27/2020 6:35:02 PM|
|A podcast devoted to Netflix:|
The Netflix Effect
In Land of the Giants: The Netflix Effect, Recode’s Peter Kafka and Rani Molla examine how Netflix got where it is today and whether or not it can maintain its streaming supremacy. Hear from Netflix’s founders and top executives as well as its competitors, critics and more - covering everything from its unusual internal culture to its battle with Blockbuster, its disruption of Hollywood and the upcoming streaming wars.
The series comes out on Tuesdays starting June 23rd.
Subscribe to Land of The Giants on Apple Podcasts, Google Podcasts, Spotify, Stitcher, or wherever you listen to podcasts.
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|From: Glenn Petersen||7/5/2020 11:40:48 PM|
|How Netflix Beat Hollywood to a Generation of Black Content|
The company didn’t set out to build a big library of Black programming, but now it’s the envy of its rivals.
By Ben Smith
New York Times
July 5, 2020
Updated 11:10 p.m. ET
A promotional image for “When They See Us,” Ava DuVernay’s mini-series on the false convictions of the Central Park Five, in the lobby of the Netflix offices in Los Angeles.Credit...Hunter Kerhart for The New York Times
The Black documentarian Stanley Nelson says his phone has been “ringing off the hook” as America is looking again at racism and the Black experience. Justin Simien, the creator of “Dear White People,” says the reactions to his pitches have grown warmer. And the director Ava DuVernay reports a flood of calls to “me and every other Black person that’s ever picked up a camera.”
Hollywood is scrambling, in its traditional way — late, liberal, a bit ham-handed — to catch up with this cultural moment. Some streaming services have made civil rights-themed programming free to all, while studios race to sign new projects by Black directors. And to the immense frustration of mostly white executives all over town, they also find themselves — again! — scrambling to catch up with Netflix, already a threat to their technology and business model, and now winning the race to the center of the conversation as well.
On June 10, Netflix flexed the depth of its Black programming by showcasing a “Black Lives Matter” collection of 56 shows, films and documentaries, including Ms. DuVernay’s mini-series on the false convictions of the Central Park Five, “When They See Us” and her documentary on systemic racism and mass incarceration, “13th.”
“Netflix doesn’t have to trot out the one or two things, but it has a library that’s a wide cross section of taste and content that speaks to the understating of that audience,” said Ms. DuVernay, who is producing a new scripted Netflix series on the former National Football League quarterback Colin Kaepernick. She called the service “the foremost and most robust distributor of Black images in the world.”
Ms. DuVernay at the Vanity Fair Oscar Party in Beverly Hills, Calif., in February. She has called Netflix “the foremost and most robust distributor of Black images in the world.”Credit...Evan Agostini/Invision
Netflix’s chief content officer, Ted Sarandos, and other executives declined to speak on the record to me for this column, perhaps wary of appearing to take credit. They directed me instead to Black creators and their work.
The story of how the company got there isn’t a particularly satisfying morality tale. It didn’t start with a visionary founder’s decision, a Silicon Valley memo or a culture of promoting Black executives. It is, instead, a recognizable story of stops and starts, internal tensions, corporate competition, social media and personal connections, including to a man known as Hollywood’s “Black Godfather” — all eased by the company’s huge budget for content. But this is a moment when Hollywood, perhaps even more than other media industries, is reckoning with homogeneous leadership — strikingly depicted in “ a photo tour through the Leadership/Management pages of the major studios and those of their corporate parents,” published by the iconoclastic newsletter The Ankler. Netflix’s stories offer a glimpse of how the industry is and isn’t changing.
And Netflix isn’t alone in its connection to the moment. HBO’s 2019 series “Watchmen,” a complex treatment of racism in America, has been much discussed in recent months, though the company started its new service HBO Max with more emphasis on mass appeal than cultural relevance. And at Viacom, which has struggled to compete with larger streaming players, I’m told, BET+ has been a bright spot with series including “Ruthless” from the director Tyler Perry.
When Netflix got into original material in 2013, the company didn’t have a particular focus on Black content. But the company also didn’t have to worry about advertisers or weeknight prime-time slots, and its credo was “something for everyone.” The first signal that the service had an opportunity with Black audiences came mostly from the service’s second hit original series, “Orange Is the New Black,” (“House of Cards” was its first) whose breakout characters included the actresses Laverne Cox and Uzo Aduba. The show prompted a wave of discussion at Netflix about how a diverse cast could succeed widely in the United States and globally, and connect, in particular, on social media, where Black voices on Twitter often shape the cultural conversation.
In looking to Black audiences, the young Netflix was following an old pattern in the television business. In the 1990s, Fox and UPN built their networks with shows like “In Living Color” and “Malcolm & Eddie.”
The year after “Orange Is the New Black” became a hit, Netflix began talking to Mr. Simien about turning his film “Dear White People” into a show that would be a pioneer in a now-familiar genre, which Mr. Simien described as “an ensemble of Black articulate millennial activists in a world of white people.” Now, he said, “that’s everywhere,” pointing to “Atlanta,” “Insecure” and “Mixed-ish.” But when he signed with Netflix in 2015, “this show as a whole couldn’t have existed in any other place.”
He attributes the show’s place at Netflix to a Black executive there, Tara Duncan. “It’s the classic thing of — you just have Black people working at your company,” he said. The director Spike Lee voiced a similar sentiment to The Hollywood Reporter in 2017: “At the other places, there were no Black people in the room.”
In reality, Netflix didn’t necessarily have a higher proportion of Black people buying content than other studios. But it had a lot of people buying content, and an unusual approach of distributing the power to make decisions. There were five Black executives who could buy content in 2015, and some of them built relationships with Black directors and producers. One former employee said Black executives were sometimes pulled into meetings with Black directors or actors for show.
In the summer of 2015, Black employees at Netflix produced a memo and PowerPoint presentation to make the case that the company was missing an opportunity with Black audiences. They argued in the documents, which I obtained, that Netflix risked missing a boom defined by “Empire” at Fox and “Black-ish” and “How to Get Away With Murder” on ABC. At the time, the memo estimated, only about two million Black households were subscribing to Netflix — 5 percent of its total subscribers. It said that Black households were a $1.4 billion revenue opportunity and that few of Netflix’s top 100 shows, popular across other groups, were resonating with Black audiences. The memo cited “the (lack of) depth in our Black content catalog,” and said Netflix was spending more money on programming for British people and anime fans than for Black Americans.
They made their arguments to Mr. Sarandos and his team in a conference room full of executives in the second half of 2015, two people who were there said. Crucially, they showed statistics suggesting that licensed Black content was, in the company’s terminology, “efficient,” meaning that it was driving above-average viewership for every dollar spent. (“Scandal” and “The Boondocks” were particularly efficient, while “The Bernie Mac Show” didn’t clear the bar, according to the analysis.) And they raised the question of whether Netflix’s algorithms, in organizing content by race rather than genre, were failing consumers. Mr. Sarandos welcomed the presentation, people present at the time said, though he didn’t take any direct action. One current senior executive said it was taken seriously and influenced buyers across the company.
The Black executives who were buying content during Netflix’s first wave of original programming are all gone now. Some didn’t get promotions. Some were hired away by competitors, and some were burned out by an internal culture officially focused on encouraging freedom and responsibility but whose unsentimental firings and blunt feedback carried their own forms of bias and subjectivity. (The company added the principle of “inclusion” to its legendary culture manifesto in 2017.) Among the departures: Ms. Duncan was recently named president of Disney’s Freeform, Devin Griffin is running Viacom’s BET+ and Layne Eskridge is a creative executive at Apple.
Still, the service continued to carve out a lane: The 2015 documentary “What Happened, Miss Simone?” was nominated for an Oscar, and a Black superhero show, “Luke Cage,” ran for two seasons and developed a cult following. Dee Rees’s 2017 film, “Mudbound,” was nominated for four Oscars. Some of its biggest deals went to Black comics, including Kevin Hart and Chris Rock, as well as Dave Chappelle, who became a pillar of the platform. The company began emphasizing the idea that everyone should be able to see themselves on the screen.
By 2018, with Black showrunners and directors occupying an expanding slice of the cultural conversation and Netflix bracing for streaming wars, the company knew it had an opportunity. It started a dedicated marketing channel called Strong Black Lead to connect with Black audiences.
But — in a preview of many of today’s media conflicts — the moves also fed a sense that its marketing as a natural home for Black content was out of sync with its internal culture. The crisis came to a head in June 2018, when two Black executives announced their departures. Days later, simmering complaints led to the ouster of an executive who had offended colleagues by using the N-word in the context of talking about offensive content. The firing, three insiders say, was less a routine human resources decision than an emphatic move by the company’s chief executive, Reed Hastings, to make the company’s internal culture match its content.
Since 2018, Mr. Sarandos has hired a more diverse group of executives at high levels, including the former ABC Entertainment president Channing Dungey and the former Disney production leader Tendo Nagenda. The company also has giant deals with Shonda Rhimes and Kenya Barris, the best known Black showrunners in the country, and a production deal with the Obamas. One of this summer’s biggest releases, with a budget around $40 million, was Spike Lee’s tale of Black veterans returning to Vietnam, “Da 5 Bloods.” Directors who come for meetings have been impressed by the diversity through the ranks.
“When I walked into that meeting for the first time, and I saw that team sitting around the table — I have never seen that much diversity,” said Mr. Perry, the director, writer and comic who created the “Madea” franchise. His film “Fall From Grace” was watched 39 million times in its first month, the company said. “I sat at the table being more impressed than I have ever been in any meeting in Hollywood.”
The number of Black subscribers, a person at Netflix said, has caught up with American demographics since that 2015 analysis.
In the absence of a single clear explanation for the streaming giant’s accumulation of Black content, some Netflix creators pointed me to a 2019 documentary called “ The Black Godfather.” It’s a portrait of the Black entertainment industry deal maker Clarence Avant, who played a central role in things as diverse as shaping Janet Jackson’s career to spiriting Sean Combs out of Los Angeles after the murder of the Notorious B.I.G.
But the movie, a Netflix original, includes a Netflix connection: Mr. Avant’s daughter, Nicole, is married to Mr. Sarandos. It’s a link that Mr. Sarandos has occasionally brought to bear internally. In 2018, two people familiar with the meeting said, he hosted a screening of the movie for Black employees, and told them, to a mix of cringes and sympathy, that he had some sense of what it is to be the only person of your race in a room — because that is his experience every Thanksgiving. He added that it was not the same as being the only Black person in a room of white people.
“I’m not saying the reason Netflix is doing what they’re doing is because he’s married to a Black woman — but I do believe being married to and in love with someone who is of color makes a difference,” Mr. Perry said. “And the fact that her father is the literal Godfather that everyone went to for everything is really powerful.”
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|From: Glenn Petersen||7/10/2020 11:53:59 AM|
|I never viewed Quibi as a real competitor to Netflix. I doubt that it will survive. |
Quibi hoped for 7.5 million subscribers in year one. An analyst says it’s at 72,000.
Sensor Tower says that only 8% of the people who signed up for free trials have stuck around when it comes time to pay.
July 8, 2020
Only 72,000 of Quibi's early subscribers have stuck around past their 90-day trial, according to new estimates from app analytics specialist Sensor Tower. The short-form video service's apps have been downloaded around 4.5 million times since Quibi's launch in early April, Sensor Tower estimated Wednesday. Among the consumers who downloaded the service within three days of its launch, only 8% converted to a paid subscription.
Consumers who signed up for Quibi on day one saw their 90-day trial expire earlier this week. Randy Nelson, Sensor Tower's head of mobile insights, conceded that the company is likely going to see additional customers switch to a paid plan in the coming days and weeks. "We're seeing some indication that the conversion rate may be improving slightly with time," Nelson told Protocol. "But if the upper bound of 8% we've calculated for those who adopted the app in its first 72 hours were to remain consistent, it would produce about 360,000 paid users from the current drop of 4.5 million installs."
A Quibi spokesperson disputed Sensor Tower's numbers, telling Protocol: "To date, over 5.6 million people have downloaded the Quibi app. Our conversion from download to trial is above mobile app benchmarks, and we are seeing excellent conversion to paid subscribers — both among our 90-day free trial sign-ups from April, as well as our 14-day free trial sign-ups from May and June."
An 8% conversion isn't great news for Quibi, but it's not completely out of the ordinary. Disney+ converted around 11% of its trial customers, according to Sensor Tower estimates. However, Disney's streaming service attracted many more consumers than Quibi to begin with, and the entertainment giant also benefited from a massive prelaunch campaign.
Quibi's original goal reportedly was to attract 7.5 million paying subscribers during year one. That goal seemed to slip out of reach early on. After an initial spike, the Quibi app performed poorly in app stores. There was a sense that Quibi missed its moment, launching a service optimized for on-the-go viewing during shelter-in-place.
Quibi President Jeffrey Katzenberg went as far as blaming all of Quibi's troubles on the pandemic. However, the service also seemingly underestimated the demand for key features, including the ability to share content on social media and to watch shows on TV screens. Quibi's product team, which is led by Snapchat and Pandora veteran Tom Conrad, has since addressed some of these issues with app updates that included the ability to cast content to compatible TV devices.
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|From: Glenn Petersen||7/15/2020 10:54:10 PM|
|Netflix reports on Thursday. A preview:|
Netflix Reports Earnings on Thursday: 6 Important Things to Watch
Along with paid subscriber numbers, keep an eye on Netflix's second-half and regional commentary, as well as its free cash flow guidance.
By ERIC JHONSA
Jul 14, 2020 | 06:30 AM EDT
With Netflix's ( NFLX) stock up about 70% on the year heading into Thursday's Q2 report, markets will be looking for the streaming giant to once more share strong subscriber growth numbers.
Among analysts polled by FactSet, the consensus is for Reed Hastings' firm to post Q2 revenue of $6.09 billion (up 24% annually) and GAAP EPS of $1.81. However, the company's subscriber growth numbers -- both what it reports and guides for -- typically have a much bigger impact on how its stock moves post-earnings than its revenue and EPS numbers.
In April, Netflix guided for 7.5 million Q2 paid net streaming subscriber adds -- down from a massive Q1 print of 15.77 million -- while admitting that the outlook was "guesswork" given the unpredictability of the environment it was dealing with. With streaming activity still at elevated levels thanks to COVID-19, Wall Street is probably looking for a higher figure.
The FactSet consensus is for 8.26 million Q2 net adds, and informal expectations might be higher still. For Q3, the consensus is for 5.27 million paid net adds.
I'll be live-blogging Netflix's report, which is expected after Thursday's close, along with an "earnings interview" that's set to go up on YouTube at 6 p.m. Eastern. Here are some things to keep an eye on.
1. Second-Half Growth Expectations
Three months ago, Netflix tried to temper second-half subscriber growth expectations: The company said it believed some of the lockdown-driven subscriber growth it was seeing will ultimately act as a pull-forward of sign-ups it would have seen later, and also pointed out that (unlike in 2019) new seasons of Money Heist and Stranger Things won't be arriving in Q3.
Any new commentary that Netflix shares about second-half expectations will be closely watched. For now, the consensus is for the company to add about 12 million paid streaming subs during the back half of the year, with 5.27 million adds expected for Q3 and 6.69 million for Q4.
2. Regional Subscriber Growth and Viewing Trends
Netflix registered strong Q1 subscriber growth in all four of its geographic reporting segments. With lockdowns having eased in some parts of the world and still very much an issue in other parts, it's worth watching what Netflix reports and says about how sign-ups and viewing activity are trending in areas that have seen major reopenings versus areas that haven't.
For Q2, the consensus is for Netflix to add 996,000 paid streaming subs in North America, 3.47 million in EMEA, 1.63 million in Latin America and 2.18 million in the Asia-Pac region. For Q3, consensus estimates are respectively at 241,000, 2.56 million, 1.17 million and 1.44 million.
3. Comments About Filming Restarts
Relative to many other media companies, content production halts aren't having a major near-term effect on Netflix's release schedule. In April, the company said that its 2020 slate of original series and films had already largely been shot, and that it was "pretty deep" into work on its 2021 slate.
Nonetheless, Netflix has been working in recent weeks to restart production for some projects, particularly in Europe. The company has said it plans to restart filming The Witcher in the U.K. on Aug. 17, and that Stranger Things is "tentatively" set to restart filming in Georgia on Sept. 17. More details might be shared on Thursday about how much production work Netflix expects to have underway in the coming weeks.
4. ARPU Growth
Netflix's monthly streaming average revenue per user (ARPU) rose 8% annually in Q1. 2019 price hikes carried out in the U.S. and elsewhere provided a lift. However, heavy late-quarter paid subscriber growth was a headwind, since Netflix didn't record a full quarter of revenue from the new subs, as was a strong dollar.
The fact that Netflix has now recorded a full quarter of revenue from its Q1 paid adds (provided they didn't cancel) should provide a boost to Q2 ARPU. On the flip side, the passing of the 1-year anniversary of Netflix's early-2019 U.S. price hike will be a headwind.
5. Free Cash Flow Guidance
With production halts reducing its near-term content spend, Netflix said in April that it expects to burn $1 billion or less in cash this year, after having previously forecast $2.5 billion in 2020 cash burn. The company might revise its free cash flow guidance again in its Q2 report, to account for both current subscriber growth trends and production activity.
6. Viewing Stats for New Content
Over the past few quarters, Netflix has been sharing viewing stats for recently-launched originals within its shareholders. For example, in April, the company said that 64 million "member households" watched Tiger King during its first four weeks of availability, and that 85 million watched action comedy film Spenser Confidential. More stats should be shared in its Q2 shareholder letter.
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|To: Glenn Petersen who wrote (1977)||7/16/2020 5:30:08 PM|
|From: Glenn Petersen|
|NFLX is down about 10% in after hours trading.|
Netflix shares fall after earnings miss, weak subscriber guidance for third quarter
PUBLISHED THU, JUL 16 20203:31 PM EDT
UPDATED 20 MIN AGO
Lauren Feiner @LAUREN_FEINER
-- Netflix missed analyst expectations on earnings per share but beat revenue expectations.
-- The company provided weak subscriber growth guidance for the third quarter, saying, “growth is slowing as consumers get through the initial shock of Covid and social restrictions.”
-- The company announced that Netflix Chief Content Officer Ted Sarandos will become co-CEO alongside current CEO Reed Hastings.
Netflix reported its second quarter 2020 earnings after the bell on Thursday, the first full quarter to reflect the impact of the coronavirus pandemic.
The company announced that Netflix Chief Content Officer Ted Sarandos will become co-CEO alongside current CEO Reed Hastings. He will retain his current role and also join the Board of Directors. Chief Product Officer Greg Peters will also serve as COO.
Netflix missed analyst expectations on earnings per share but beat revenue expectations. Shares fell about 10% after hours as the company provided weak subscriber growth guidance for the third quarter.
Here are the key numbers:
Earnings per share (EPS): $1.59 vs. $1.81 expected, according to Refinitiv survey of analysts
Revenue: $6.15 billion vs. $6.08 billion, according to Refinitiv
Global paid net subscriber additions: 10.09 million vs. 8.26 million expected, according to FactSetNetflix provided third-quarter revenue guidance of $6.33 billion, below analyst estimates of $6.40 billion, according to Refinitiv. It expects Q3 EPS of $2.09 versus analyst estimates of $2.01.
Netflix’s guidance for subscriber net adds fell far below analyst expectations. The company expects 2.5 million net subscriber additions for Q3, while analysts were expecting 5.27 million.
Executives explained the slowdown in their letter to shareholders, saying, “growth is slowing as consumers get through the initial shock of Covid and social restrictions. Our paid net additions for the month of June also included the subscriptions we cancelled for the small percentage of members who had not used the service recently.”
Netflix, which notoriously has named everything from Snapchat to sleep a competitor, now counts TikTok among its rivals.
“TikTok’s growth is astounding, showing the fluidity of internet entertainment,” the company wrote to shareholders. “Instead of worrying about all these competitors, we continue to stick to our strategy of trying to improve our service and content every quarter faster than our peers. Our continued strong growth is a testament to this approach and the size of the entertainment market.”
Netflix said it does not expect its 2020 slate of content to be significantly impacted by production shutdowns created by the pandemic. It expects that current production setbacks will push more of its big titles to the end of 2021, but that the “total number of originals for the full year will still be higher than 2020.” Netflix plans to supplement its original content with other films and shows it’s acquired.
Netflix said it has made the most progress resuming production in Asia Pacific and never fully shut down in Korea. It’s resumed some production in Europe as well as two stop-motion animation projects in Oregon and two films in California. But the company warned that “current infection trends create more uncertainty for our productions in the US. Parts of the world like India and some of Latin America are also more challenging and we are hoping to restart later in the year in these regions.”
The company said its net cash in operating activities was +$1 billion compared to -$544 million in the same period last year. Netflix was free cash flow positive for the second consecutive quarter, coming in at +$899 million versus -$594 million in Q2 last year. The company said its growing operating margin has helped its free cash flow profile continue improving, along with content spending being pushed into the second half of 2020 and into next year. Netflix expects free cash flow for the year to be breakeven or positive, though it expects to dip into the negative again next year.
Netflix revealed some viewership numbers in its earnings report. “Never Have I Ever,” the coming of age series by Mindy Kaling, saw 40 million households choosing to watch the show in its first four weeks on the service, according to Netflix. And Spike Lee’s film “Da 5 Bloods” was viewed by 27 million households, Netflix said. However, Netflix changed the way it counts views last year, and now counts a view as a household watching at least two minutes of a show or movie. In Q3, Netflix expects shows and films with big stars to drive engagement, such as “The Old Guard” with Charlize Theron and “Project Power” with Jamie Foxx.
This story is developing. Check back for updates.
Disclosure: NBCUniversal is the parent company of CNBC.
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|To: Glenn Petersen who wrote (1978)||7/17/2020 10:48:24 AM|
|From: Glenn Petersen|
|NBC's new streaming service - Peacock - has launched.|
Inside Peacock’s Ambitious Plan to Crash a Crowded Streaming Field
By Todd Spangler
Zohar Lazar for Variety
In September 2019, Steve Burke, then NBCUniversal chief executive, called Matt Strauss, with a question: Would he take the wheel of the Peacock project?
Strauss would need to unleash the service across the U.S. on a dauntingly short timeline — in just 10 months, pegged to the Tokyo Olympics (more on that later). Peacock would face massive competitors and come to the starting line with comparatively very low brand recognition. Comcast and NBCU wouldn’t be investing as much in the project as peers Disney or WarnerMedia planned to in their respective streaming vehicles.
Peacock also would involve a more complex and, to consumers, potentially confusing go-to-market strategy, with various free, ad-supported versions and premium no-advertising options. The job required coordinating the work of teams in the U.K., New York, Los Angeles, and Lisbon, Portugal, among other locations — Peacock today has a staff of about 1,000 — and collaborating with most of NBCU’s other business units.
And Strauss, who at the time was executive VP of Comcast’s Xfinity consumer services, based in Philadelphia, would need to relocate to New York City. Peacock had until then been overseen by Bonnie Hammer, a longtime NBCU creative exec, and Burke wanted a more product- and tech-oriented leader to shepherd the OTT initiative. (Hammer moved into a new role as chairman of NBCUniversal Content Studios.)
Strauss mulled over the proposition for a few days, then eagerly accepted. “To me it was like a no-brainer. It was exciting,” he says. Within a week, he had packed a bag, then spent the following several months living out of various hotel rooms in the Big Apple. “My wife still doesn’t know what happened. I said, ‘I have to go and get this product launched!’”
Next week (on July 15), Peacock is set to unfurl its plume for a national audience, after a three-month test run on Comcast systems.
Strauss, chairman of Peacock and NBCU Digital Enterprises, doesn’t have everything he wanted for the streaming service’s big debut. Most of the Peacock originals slate has been delayed by COVID-19. The service will come out with just nine originals, which include a slick series adaptation of “Brave New World” and U.K.-set workplace comedy “Intelligence,” starring David Schwimmer. The Summer Olympics were postponed until 2021, depriving the launch of some valuable promotional real estate. And with two weeks before go time, Peacock had deals for Apple, Google, Xbox and Vizio and LG TVs, but still had not clinched distribution pacts with Roku or Amazon Fire TV, the two biggest over-the-top TV device makers (which also have been holdouts on HBO Max).
But Strauss remains undeterred, convinced that Peacock’s greatest potential lies in the free-to-watch tier with a light advertising load that promises no more than 5 minutes of commercials per hour. NBCU’s theory is that “Free as a bird” will resonate with millions of Americans who are financially strapped or just too maxed out to pay for yet another streaming package.
Even before COVID-19 hit, “there were already signs of subscription fatigue,” he says. “And there was thbelief in the industry that people didn’t want advertising or didn’t like advertising. That just isn’t true. Free, ad-supported content plays to our strength, and that has been where we focused.”
Adds Strauss of the advertising-based plan, “In an unstable economy, it’s taken a different meaning. It’s more relevant now than any other time.” He likens the rush into subscription-only business models to “a swarm of bees.”
In streaming video’s animal kingdom, Peacock is both fish and fowl.
While Hulu sells a cheaper VOD service with ads, the streamer killed off its free-to-watch service in 2016. (Hulu is now controlled by Disney, after Comcast agreed to sell its stake.) For now, Peacock uniquely blends current TV content; a back catalog of movies, sitcoms and dramas; news; late-night segments; and sports and other live programming rolled into one service, available either for free or for a $5-$10 monthly fee, the last without ads.
Zohar Lazar for Variety
But analysts say Comcast and NBCU realistically didn’t have much choice about Peacock’s tack. Of the big media companies, it’s the last to push into direct-to-consumer streaming, and its content catalog doesn’t match the breadth of those of WarnerMedia or Disney.
Peacock’s prioritizing the ad-supported VOD side (or AVOD, in industry lingo) was all but inevitable, says Laura Martin, senior media analyst at Needham & Co. “This is the only strategy that NBCU can really have,” she says. “To launch as the 10th subscription service was not as good an idea as trying something different.”
Like every other media and entertainment conglomerate, NBCU needed a direct-to-consumer play in order to have access to first-party data and best monetize its intellectual property, says Martin. To feather Peacock’s nest, the company is also reclaiming content it had licensed: “The Office,” hugely popular on Netflix, will come to Peacock in January. NBCU can pull its content from Hulu starting next year on a nonexclusive basis, and by 2022 has the right to cancel most of its content-licensing agreements with the service.
Comcast was hesitant to move quickly into OTT because of the potential for conflict with its cable programming partners, says Tuna Amobi, senior equity analyst with CFRA Research. Only in the past few years has the effect of cord-cutting on cable TV pushed Comcast to fully embrace internet video — an effort, not incidentally, led by Strauss. “The landscape was changing so fast, their hand was forced. Effectively, they were in a position where they had to respond,” Amobi says.
The industry’s read on Peacock is that NBCU started with the same idea as everyone else — to create a subscription service to compete with Netflix. But once the SVOD market grew uncomfortably congested, legacy media companies began to turn their focus on free video services. Last year Viacom bought Pluto TV, and more recently Fox Corp. snapped up Tubi. Comcast has acquired free streamer Xumo, and NBCU’s Fandango is in the process of closing a deal for Walmart’s Vudu.
“In a global business worth billions of dollars, we always anticipated more entrants into free streaming and AVOD,” says Tubi chief revenue officer Mark Rotblat. Tubi’s long-tail approach to content and cost model make it different from Peacock, he says. But, Rotblat acknowledges, “in the ad business, there’s only so many dollars to go around, so in that sense they will be competition.”
NBCU execs insist AVOD was always in the cards. As far back as three years ago, NBCU had planned to have an ad component for what became Peacock, according to Linda Yaccarino, the media company’s chairman of advertising and partnerships. “Marketers need scale, and there’s no surrogate for free, premium content in generating scale,” she says. “AVOD was the right bet. There’s no question about where consumer behavior has gone.”
“I don’t think we’re anywhere near the saturation point with streaming. There’s a huge , insatiable appetite for the next three-to-five years. There’s still a lot o f runway ahead.”
Tuna Amobi, Analyst
Peacock is in several ways a defensive play, designed as a hedge against the market forces pressuring NBCU’s TV networks and Comcast’s pay TV biz. In 2019, Comcast shed 671,000 residential video subscribers (down 3.2%) over the previous year, while NBCU cable networks revenue dropped 2.2%, to $11.5 billion during the same period.
NBCU is using Peacock to reinforce the legacy pay TV business of parent Comcast and other operators. (Cox Communications is a launch partner for Peacock.) Peacock Premium with ads is included for no extra charge to Comcast’s and Cox’s customers; for others, it’s $4.99 per month. To get Peacock without any ads, it’s another $5 per month, but Strauss says that isn’t where the team is focused. He wants to strike additional deals with pay TV partners and platform providers modeled on the deals with Comcast and Cox. Fast forward two years, he says, and the goal is for “the majority of market to be able to get Peacock free.”
In other words, as Strauss outlines it, Peacock looks sort of like a basic cable channel — except, he says, NBCU is not asking for carriage fees from any affiliates. He’s circumspect about whether Peacock is open to revenue-sharing agreements, saying there are “different forms of value exchange.”
As it turns out, launching during a global health emergency may be a stroke of luck for Peacock and its free-to-watch story. During the pandemic, 47% of U.S. consumers said they used at least one free, ad-supported streaming video service, according to a Deloitte survey. The majority said they want access to cheaper, ad-supported streaming-video options, both before the COVID-19 outbreak (62%) and since (65%). And while Americans have signed up for more SVOD services — an average of four now, versus three pre-pandemic — they’re canceling those at a higher rate now, the study found.
“The industry can’t just keep adding new paid subscriptions,” says Kevin Westcott, Deloitte’s U.S. telecom, media and entertainment leader, pointing out that there are more than 300 individual subscription-video platforms in the U.S. alone.
The allure of free streaming will be a major growth opportunity in 2020, Westcott predicts: “This will be the year of ad-supported VOD.”
Along with the COVID-19 disruption, Strauss has had to juggle management changes as Peacock races toward its unveiling. He’s had three bosses in the past six months: Burke announced in December he was retiring, replaced in the CEO post by Jeff Shell, formerly head of NBCUniversal Film and Entertainment. Then in May, Shell put TV programming boss Mark Lazarus in charge of a new group, NBCUniversal Television and Streaming, overseeing Peacock along with the networks, stations and NBC Sports.
Shell’s vision with the reorg is “how are we going to organize the company for the next decade,” says Lazarus. “We both thought the best structure for the company was to put all of the entertainment businesses into one portfolio.” The strategy, according to Lazarus, is that Peacock fits into NBCU’s overall approach to entertainment to “leverage our scale in the creative community to acquire, curate and produce content for Peacock.”
Lazarus concedes that the Olympics was going to be “a very nice launching pad” for Peacock. But he says the silver lining is that NBCU was able to reallocate to Peacock promotional resources that would have gone to the Summer Games. And NBC will have the Olympics next summer, followed by the 2022 Super Bowl and the Beijing Winter Olympics, also in 2022.
Strauss is well suited to adapting to shifting conditions, according to a former colleague, who says he’s an exec who embodies “the Comcast way”: He’s a strategic thinker who doesn’t panic, can maintain enthusiasm without being Pollyannaish and engenders team loyalty.
Strauss says Lazarus is helping Peacock get buy-in from other parts of NBCU that may be reluctant to move fast. “Challenging the status quo, it takes time,” Strauss says. “Having Mark in this position accelerates that.”
Analysts agree that while Peacock may be coming out of its shell later than other streaming services, it’s not too late to make a mark. “Arguably, among ad-supported platforms, if there’s a leader, they’re definitely the one to watch,” CFRA’s Amobi says. “I don’t think we’re anywhere near the saturation point with streaming. There’s a huge, insatiable appetite for the next three-to-five years. There’s still a lot of runway ahead.”
Zohar Lazar for Variety
Lazarus disputes that Peacock is meaningfully “late” to the game: “This is early days. I don’t think five years from now we’ll be talking about who was first, who was second.”
During the pandemic, Peacock has been able to “accelerate our deal flow” for content licensing, Strauss says, citing pacts with A+E Networks, Warner Bros., Sony and Paramount. The Peacock Premium tier will have close to 20,000 hours of content at launch (versus the 15,000 hours NBCU projected earlier this year), and Peacock Free will have more than half the titles in the upper tier.
The streamer will feature current-season programming from NBC and Telemundo; access to hundreds of movies, like “Jurassic Park,” “Do the Right Thing” and “Shrek”; and TV comedies such as “Parks and Recreation,” “30 Rock,” “Saturday Night Live,” “King of Queens,” “Everybody Loves Raymond” and “Two and a Half Men.” Peacock also is home to dramas including “Law & Order: SVU,” “Downton Abbey,” “Yellowstone,” “Friday Night Lights” and “House,” as well as kids programming including “Curious George” and DreamWorks Animation’s “Where’s Waldo?”
Peacock will include daily programming highlights from NBC News outlets, NBC Sports, E! News and Access Hollywood, as well as late-night fare from Jimmy Fallon and Seth Meyers. It will have an NFL Wild Card game in January 2021 and sports like Premier League soccer and Ryder Cup coverage. News and sports are “an important part of our content strategy,” says Frances Manfredi, president of content acquisition and strategy for Peacock and NBCUniversal Digital Enterprises.
As Manfredi concedes, Peacock isn’t going to get content from some quarters. “It would be stupid to deny that the vertical integration isn’t happening in the market,” she says. On the other hand, the Peacock acquisitions team has had “a lot of discussions with studios that felt their content potentially gets lost on really large platforms. They felt we would give them more attention in terms of promotion,” according to Manfredi. “Nobody has said, ‘Nah, we don’t want to be on Peacock.’”
Peacock’s originals slate is led by Bill McGoldrick, president of original content for NBCU Entertainment Networks and Direct-to-Consumer. The originals cut across genres and range from the forthcoming “Battlestar Galactica” reboot from exec producer Sam Esmail (“Mr. Robot”) to a revival of “Saved by the Bell.”
What makes a Peacock show versus, say, one for Bravo or USA? “The word we use is ‘premium,’” McGoldrick says. “We need a certain amount of those shows that create bigger swings.” The fact that Peacock isn’t going to churn out hundreds of originals (which it wouldn’t be doing even without COVID) is something McGoldrick spins into a plus in talks with producers. NBCU won a bidding war for “Dr. Death,” based on the Wondery podcast, by highlighting the promotional opportunities Peacock was prepared to provide for the show, which stars Jamie Dornan, Christian Slater and Alec Baldwin. “We can say, ‘You are not going to go into a big conveyor belt that will forget you unless an algorithm brings it up.’”
Comcast has projected it will invest $2 billion into Peacock over 2020 and 2021. The company expects the streamer to generate $2.5 billion in revenue by 2024, with 30 million-35 million users, and to break even that year. But does NBCU need to pump more cash into Peacock to stay in the race?
“Spending more money doesn’t mean you’re going to be more successful,” Strauss says. Once Peacock achieves “meaningful share” in the next few years, “that opens up opportunity to make decisions about more investment and strategic decisions.”
As for the low consumer awareness for Peacock: It stands just a hair higher (26.8%) than Quibi (24.8%), per a recent YouGov survey provided exclusively to Variety Intelligence Platform. Strauss believes the branding exercise will be a function of time for Peacock (which, obviously, nods to NBC’s iconic logo).
“We made this strategic decision to not call ourselves ‘NBC Plus,” Strauss says. “We certainly see the value of the NBC catalog and the history of the content. But at the same time, we called ourselves Peacock, and that gives us permission to create a service that is not exclusive to NBC.”
Using data from the initial Comcast test, reaching 15 million Xfinity X1 and Flex customers, Strauss and the Peacock team have made some adjustments ahead of the broader midsummer launch. Strauss had T-shirts made for the crew with the word “Pivot”— a well-known Shell directive — emblazoned across the back.
Zohar Lazar for Variety
Among the learnings: People were looking for an escape from the news, with viewing of classic movies like “E.T. the Extra-Terrestrial” and Hitchcock films performing well, along with nostalgic comedies like “30 Rock,” “Frazier” and “Everybody Loves Raymond.” Peacock adjusted to account for the viewing behavior.
Also, Peacock users gravitated to the curated channels on the service, around brands like NBC News Now, shows like “SNL” and genres like true crime. For the U.S. launch, Peacock will more than double those channels, to more than 40, with a longer-term target of having around 75. (That will include a channel around “Keeping Up With the Kardashians.”)
“Sometimes when you turn on the TV, you just want to watch TV,” Strauss says. “There’s this notion that ‘Nobody watches TV’ — but the data suggests something different.”
Working during COVID-19 has, of course, been as much of a challenge for Peacock as it has for any other enterprise. Strauss had been holed up in his Cherry Hill, N.J., home before decamping in early June to the family’s summer house on the Jersey Shore. “I had to get a desk, buy a printer and move my kids’ Xbox and their computers so they could play ‘Fortnite,’” he says.
Strauss holds two all-hands meetings each week (on Mondays and Thursdays) for Peacock. So far, there have been more than 30 such confabs. Before, the team was meeting as a group just once a month. The Peacockers include the British team developing the service’s tech infrastructure, composed of the same folks who built the Now TV streaming service for Sky (the U.K.-based satellite operator Comcast bought in 2018).
“The team hasn’t lost any momentum,” Strauss claims. “We’ve been able to hit all our deadlines. I’m really proud of that fact. We are probably working better than we were before.”
For the Peacock team, Strauss says, he’s tried to establish a culture of more risk-taking and agility — a philosophy that goes against the grain of the make-sure-not-to-break-anything world of traditional cable. “As you are navigating change, you have to be flexible,” he says. “We have a young culture, and I’m excited about our future.”
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|From: Glenn Petersen||7/29/2020 10:02:19 AM|
|Netflix scores record 160 Emmy nominations, and Disney Plus notches its first ever|
Also: Apple TV Plus' big-budget originals earn the service's first nods, but none in the most coveted category: outstanding drama.
Joan E. Solsman
July 28, 2020 10:50 a.m. PT
Netflix spends billons of dollars every year making TV programming, more than any competitor -- and in the Emmy nominations Tuesday, it showed. Netflix earned a record 160 nominations, the most ever for a single network, beating out No. 2 HBO by more than four dozen.
Disney Plus also made its mark. The service, only eight months old, earned its first nominations, including one in the coveted category for outstanding drama series. Disney Plus netted 19 total Emmy nominations, with 15 of them for The Mandalorian, the live-action Star Wars series, nominated for best drama, that was a breakout hit for the new service. No other streaming service has landed a nomination in that all-important best-drama category in its first year.
Meanwhile, Apple TV Plus, which launched just weeks before Disney Plus and also spent top-dollar on its originals, accumulated major acting nominations, but none of its original shows themselves were nominated for best series. The Morning Show, Apple's marquee drama, with a reported $200 million budget for 20 total episodes over two year, earned acting nominations for Jennifer Aniston, Steve Carell, Billy Crudup and Mark Duplass. Apple TV Plus had 18 nominations total.
The nominations mark symbolic victories in the so-called streaming wars, a seven-month window when media giants and tech titans released a raft of new streaming services to take on Netflix. These battles pitted rookies like Apple TV Plus and Disney Plus (and more recently HBO Max and NBCUniversal's Peacock) against heavyweights like Netflix and Amazon Prime Video, spurring these huge corporations to pour billions of dollars into the hope of shaping the future of television.
Among other streaming services, Amazon generated 30 nominations and Hulu got 26 this year.
HBO, which was perennially the leader of Emmy nominations before Netflix began to overtake it, garnered 107 nominations this year. It had the distinction of generating the most nominations for a single title: Its drama Watchmen earned 26.
ABC will broadcast the Emmy award ceremony on Sunday, Sept. 20, from the Microsoft Theater in Los Angeles.
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|From: Glenn Petersen||8/4/2020 6:07:44 PM|
|Disney+ grows to more than 60.5M subscribers|
Anthony Ha @anthonyha /
3:45 pm CDT•August 4, 2020
Disney+ had more than 60.5 million paying subscribers as of yesterday, according to The Walt Disney Company’s CEO Bob Chapek.
Chapek shared the number during a call to discuss the company’s latest earnings report, which covered the company’s most recent quarter ending on June 27. He was essentially offering an update on the 57.5 million paid subscriber figure included in the report, and he said the growth is “far exceeding our initial projections for the service.”
Disney+ launched in November of last year. The company previously announced in April that the service had passed 50 million subscribers. (Those numbers include subscribers acquired through bundling with Hotstar in India, as well as free subscribers through a promotion with TechCrunch’s parent company Verizon.)
The coronavirus pandemic has accelerated growth for some streaming services. Most notably, Netflix added more than 10 million new subscribers in its most recent quarter, bringing its global total to nearly 193 million. As for Disney’s other streaming services, ESPN+ has grown more than 100% year-over-year to 8.5 million subscribers (as of June 26), while Hulu grew 27% to 35.5 million subscribers (3.4 million of them are paying for both video on demand and live TV).
And Disney+ may have gotten an additional bump, thanks to the release of “Hamilton” over the July 4 weekend.
Overall, Disney said revenue for its direct-to-consumer and international division increased 2% year-over-year, to $4.0 billion, while the unit’s operating loss grew from $562 million to $706 million.
Still, streaming likely counts as a relative bright spot compared to many of Disney’s other businesses that have either slowed or paused entirely due to the pandemic. (Parks are gradually reopening, for example.) The company’s total revenue fell 42% YOY to $11.8 billion, and earnings per share for the quarter showed a loss of $2.61.
Update: During the call, Chapek also announced that “Mulan” will be released on Disney+ on September 4, as a “premiere access” title that costs an additional $29.99.
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