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   Technology StocksNetflix (NFLX)

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To: Glenn Petersen who wrote (1995)10/20/2020 4:21:14 PM
From: The Ox
   of 2031
At a glance, trailing EPS/Revs make the stock very pricey. With slowing growth, I think the stock is about 20% overvalued at $500/share. $420ish is more in line based on the current projections for 2021. Maybe a slightly higher multiple due to low interest rates but at $500/share - I think if you're a holder of the stock, it's time to consider taking profits...

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To: The Ox who wrote (1996)10/20/2020 4:59:17 PM
From: Glenn Petersen
   of 2031
No argument from me.

I think that NFLX has done a good job of managing expectations. They have not overhyped their pandemic advantage.

Netflix misses on subscriber additions and EPS

Lauren Feiner @LAUREN_FEINER


-- It’s the first report since longtime Chief Content Officer Ted Sarandos was promoted to co-CEO.

-- Netflix told shareholders last quarter that growth was beginning to slow again after an initial uptick when stay-at-home orders proliferated around the world.
Netflix reported earnings for its third quarter of 2020 after the bell on Tuesday. The company fell short of analyst estimates on earnings per share and global paid net subscriber additions, but exceeded expectations on revenue.

Shares fell as much as 6% during after hours trading.

Here are the key numbers:

Earnings per share (EPS): $1.74 vs $2.14 expected, according to Refinitiv consensus estimate

Revenue: $6.44 billion vs $6.38 billion expected, according to Refinitiv

Global paid net subscriber additions: 2.20 million vs. 3.57 million expected, according to FactSet

Netflix said in its letter to shareholders that the slowed subscriber growth was largely expected. In the same quarter last year, Netflix added 6.8 million subscribers, though this time it’s dealing with the fallout of a global pandemic.

The company attributed to slowed growth to its “record first half results.” The stock was considered a good buy early in the pandemic as stay at home orders left consumers looking for ways to fill their time.

For the fourth quarter, Netflix forecast 6.0 million paid net adds, still well below the 8.8 million it added in the fourth quarter of 2019.

“The state of the pandemic and its impact continues to make projections very uncertain, but as the world hopefully recovers in 2021, we would expect that our growth will revert back to levels similar to pre-COVID,” executives wrote in their letter to shareholders.

Subscribers in the Asia-Pacific region were the largest contributor to paid membership growth — a first for the company — accounting for 46% of all global paid net adds.

“We’re pleased with the progress we’re making in this region and, in particular, that we’ve achieved double digit penetration of broadband homes in both South Korea and Japan,” Netflix said in its letter.

It’s the first report since longtime Chief Content Officer Ted Sarandos was promoted to co-CEO alongside long-time CEO Reed Hastings.

Netflix said it still expects the number of Netflix originals it launches next year to still be up year over year each quarter despite delays to production due to global shutdowns. The company said it’s begun to restart production on some of its most popular titles, like “Stranger Things.”

The company’s free cash flow was positive for the third straight quarter, and is at positive $2.2 billion for the first nine months of 2020. It said it expects to be slightly negative on free cash flow in Q4 as production restarts. It expects free cash flow to be about $2 billion for the full year 2020, up from its previous break-even to positive estimate.

For 2021, Netflix said it expects free cash flow to be -$1 billion to break-even.

This story is developing. Check back for updates.

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To: The Ox who wrote (1996)10/21/2020 1:09:27 PM
From: bobby is sleepless in seattle
   of 2031
would you pay 20/month for their services?

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To: bobby is sleepless in seattle who wrote (1998)10/21/2020 1:59:02 PM
From: The Ox
   of 2031
Our family has an account with NFLX. It's a decent product, especially for a family of 4 with different tastes. I don't believe we're paying that much but I don't pay that bill. With the various other streaming services we use, it's not required to keep but it's content is solid.

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To: Glenn Petersen who wrote (1997)10/23/2020 4:54:06 PM
From: Following-Mr.Pink
   of 2031
Agreed; I thought earnings were well-managed. It's unfortunate that the growth story couldn't continue to chug along but this is a LT hold for me.

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From: Glenn Petersen10/26/2020 6:59:41 AM
1 Recommendation   of 2031
Media executives are finally accepting the decline of cable TV as they plot a new path forward

UPDATED SUN, OCT 25 202011:08 AM EDT
Alex Sherman @SHERMAN4949


-- At least three large U.S. media companies expect the number of U.S. households that subscribe to a traditional pay-TV bundle to fall to about 50 million in the next five years.

-- At 50 million subscribers, it’s unclear the current pay-TV model can survive without falling further.

-- The jury is still out on if streaming economics will convince investors to breath new life into traditional media companies.

There’s a quiet consensus emerging in the hallways and boardrooms of American media companies.

They expect about 25 million U.S. households to cancel their pay-TV subscriptions over the next five years. This is on top of the 25 million homes that have already cut the cord since 2012. At least three major media companies now expect pay-TV subscriptions to stabilize around 50 million, according to people familiar with the matter, who declined to speak on the record because their company plans are private.

The projected decline in subscribers will mean a drop of about $25 billion in cable subscription revenue plus associated advertising losses for the largest U.S. media companies, including Disney, Comcast’s NBCUniversal, AT&T’s WarnerMedia, ViacomCBS, Fox, Discovery, Sinclair and AMC Networks.

This assumption has created a tectonic shift in the media industry. In the last three months, Disney, NBCUniversal, WarnerMedia and ViacomCBS have all announced major reorganizations. They’ve replaced old leaders, consolidated divisions, laid off tens of thousands of employees, and pivoted to streaming video.

American viewers can now choose among streaming services from most of the major players, including Disney+, WarnerMedia’s HBO Max, NBCUniversal’s Peacock, ViacomCBS’s Paramount+, Discovery+ and AMC+, at prices ranging from free to $15 month. All have launched in the last year or are coming in early 2021.

The plan is simple enough: Hope enough people sign up for subscription streaming services to make up for cable TV subscriber losses.

Why streaming might not save U.S. media

In 2015, Time Warner CEO Jeff Bewkes sat down with his executive team to talk about the future of TNT and TBS, the two flagship Turner entertainment cable networks.

For more than a decade, TNT and TBS ratings had lived off re-runs of hit broadcast shows -- “Seinfeld,” “Friends,” “Family Guy,” “The Office” and so on. Now there was a problem. Netflix, Hulu and Amazon Prime Video had acquired digital rights to the same catalog of re-runs. Instead of having to tune into a cable network at a certain time, viewers could consume entire seasons of shows on demand without suffering through commercial interruptions.

“The streamers simply had superior capabilities,” said Bewkes in an interview. “The basic cable networks didn’t have full video-on-demand. We were reliant on advertising. It’s not that the streamers had superior programming, they had superior technology.”

A year later, Bewkes agreed to sell Time Warner to AT&T for more than $100 billion including debt. The following year, Rupert Murdoch pulled the rip cord, selling the majority of Fox’s assets for more than $70 billion to Comcast and Disney. Both men seemingly came to the same conclusion: The cable bundle had peaked. The longer they waited, the less their assets would be worth.

The cable bundle means that consumers can’t select and pay for cable TV channels a la carte. Instead, they have to buy dozens at a time. Media executives have long referred to it as the golden goose.

Media companies who sell channels into the bundle get paid whether or not anyone is watching. Don’t watch sports? You’re still paying $20 or $30 a month (depending where you live) for sports in a standard cable bundle. Don’t watch reality TV? You’re still paying for Bravo, E!, TLC, HGTV, and so on.

Better yet, every popular cable network has been nearly guaranteed distribution -- and payment -- because if an operator like Comcast decided it didn’t want to pay for ESPN, competitors such as Dish and AT&T’s DirecTV could steal its sports-hungry customers.

“Media companies have had a fabulous distribution system for decades,” said Tom Rutledge, CEO of Charter Communications, the second-largest U.S. cable company. “Every distributor had to carry their product, because if they didn’t carry networks, the competition would. In a direct-to-consumer world, the whole ecosystem is smaller. It doesn’t mean you can’t win, but there will be a lot of losers.”

Some streaming services already have enough library content to thrive in this smaller ecosystem of streaming services.

Disney+, with decades of kid-friendly movies and TV shows plus the Pixar, Star Wars and Marvel franchises, has already surpassed 60 million subscribers, hitting the low range of its 2024 goal in less than a year.

What about the smaller players? Can they compete for new originals against Netflix, Amazon and Apple -- companies with massive balance sheets -- to have the best content going forward?

“The answer is no,” said Bewkes. “These companies are competing against Netflix and Amazon, who have massively more scale for both subscription and advertising at a global level. They’re all going to be collapsed. Only Disney will have enough subscribers and global scale under a distinctive family brand to make it.”

Even Disney will need to keep growing those numbers to make up for impending cable TV losses. Each lost cable customer costs the company about $17.62 each month -- excluding advertising -- according to Kagan estimates. Most of that has to do with ESPN’s value, which commands about $10 per month per subscriber on its own.

Disney charges $6.99 per month for Disney+ and bundles ESPN+, Hulu and Disney+ together for $12.99 per month. And Disney+ doesn’t include advertisements.

At those prices, a one-for-one swap of a cable customer for a streaming customer will mean less money for Disney. This doesn’t even account for potential revenue loss from password sharing. While stealing cable TV is quite difficult, it’s a lot easier to share a password for a streaming service, and it’s more common among younger viewers. In 2019, research firm Magid estimated 35% of millennials share passwords for streaming services.

“It’s just too easy to get the product without paying for it,” said Rutledge.

Moreover, a vicious cycle is settling in that could accelerate cable bundle defections. Distributors like Comcast and Charter no longer care that much whether or not a customer buys traditional pay-TV. The price of a video bundle has gotten so high, there’s little margin for them -- especially compared to broadband internet service.

“You get to that point of financial indifference, then you’re seeing the EBITDA margins go in the right direction and continue to increase,” Comcast CEO Brian Roberts said last month at the Goldman Sachs Communacopia Conference. “That’s one of the big pivots of Comcast the last decade.”

So instead of threatening blackouts to lower rates, pay-TV operators are accepting rate hikes, passing them along to subscribers, and accepting the fact that price-sensitive customers will cancel TV and go to internet only.

Meanwhile, media companies are shifting their best content to their new streaming services. The result for consumers is higher and higher prices for lower and lower quality.

And certain networks, like ESPN, which keep millions of Americans hooked to cable today, may need to pull back on programming costs if too many people cancel. That will only cause more people to cancel. Stabilizing at 50 million (or 55-60 million, as AT&T CEO John Stankey said this week) may be a pipe dream.

“The only thing left holding the bundle together today is sports,” said former AOL CEO Jonathan Miller, who stepped down from the board of AMC Networks in July. “There is nothing any of the networks can do about it. The only question now is how far does it fall and how fast, and is there a bottom. And I don’t know if there’s a bottom.”

Then again: Why streaming might save U.S. media

The best path forward for media companies is if Americans suddenly decide to stop canceling cable. That cash flow can then be redirected to streaming services as the industry’s new global growth engine. There’s at least a chance a combination of live news and sports, combined with inertia and laziness, can keep a diminished bundle alive.

Charter actually added 102,000 pay-TV subscribers in the second quarter. But that’s almost certainly an anomaly. Comcast reported a net loss of 477,000 video subscribers (427,000 residential) last quarter. AT&T, which owns DirecTV, reported a net loss of 886,000 video subscribers in the same quarter.

Media companies could team up and decide to recreate the bundle model with their new streaming services. Unlike the cable bundle, a streaming bundle wouldn’t eliminate the “make your own” option, as each service can be purchased a la carte. But investors may not mind if companies take revenue discounts if it means growth.

It’s also possible that Wall Street will give a window to legacy media companies to let them spend billions on streaming content, giving them a greater chance of finding the next “must-see” shows. Activist investor Dan Loeb has already called on Disney to eliminate its annual dividend and use the cash on original content spend for streaming services.

“By reallocating a dividend of a few dollars per share, Disney could more than double its Disney+ original content budget,” Loeb wrote in an October letter to Disney CEO Bob Chapek. “These incremental dollars would, based on our analysis, generate returns that are multiples of the stock’s current dividend yield.”

Netflix has proved that market validation is more important than business fundamentals in terms of growing valuation. Netflix has burned through billions in cash for years, spending borrowed money on content to grab subscribers, and investors haven’t cared.

Maybe media companies won’t have to worry about how to replace revenue from each cable subscriber with a corresponding streaming subscriber. Perhaps simply showing there’s a new growth engine that looks more like Netflix will push investors toward valuing the entire industry higher.

Right now, the market doesn’t seem to think existing media companies are capable of this. Discovery’s enterprise value/EBITDA multiple is 3.5 (7.5 on a blended class share basis). AMC’s multiple is 2.3. Those are terminal values. The average S&P 500 company typically has a multiple between 11 and 15. Netflix is valued at 33.5.

But even if the market is right and media companies can’t stabilize revenues in the shift to streaming, that’s not a death knell. Profit and cash flow could conceivably rise as cable networks are folded and jobs are eliminated. Sometimes industries need a refresh, but it’s not necessarily a funeral.

There’s also the “Underpants Gnome” argument. In a 1998 episode of Comedy Central’s “South Park,” a group of gnomes steal people’s underpants. Their plan is: Phase 1: Collect Underpants, Phase 2: ? and Phase 3: Profit.

A lot will happen between now and 2025. New technologies emerge. Tastes and habits are fickle. Companies acquire other companies. CEOs change.

It’s hard to predict the future. Sometimes fighting to survive turns into actual survival.

The likely endgame

Cable networks continue to be profitable, and recent distribution deals ensure they’re not going anywhere.

Still, some companies probably won’t make it in a streaming world alone. They may need to merge to survive.

Billionaire media magnate John Malone has mused about the consolidation of networks for years, advocating putting together “free radicals” to merge assets. AMC’s “The Walking Dead” may not be enough to keep a streaming service viable, but if joined with Lionsgate’s “Mad Men,” MGM’s “James Bond,” and Discovery’s “Top Chef” and “Deadliest Catch,” such a service may have enough content to remain relevant for a while. Malone has a stake in Discovery and also owns some of Charter -- either of which could act as the vehicle to buy up cheap networks.

The problem is many of these companies may have missed their ideal window to sell. Disney executives looked at the media landscape after its deal for Fox and decided it had no interest in acquiring any existing traditional media company’s content, according to a person familiar with the matter. If a technology company or large media company such as AT&T or Comcast bought a smaller legacy media company today, the acquirer’s shares would likely plummet.

Instead, what’s likely to happen in the next five years is the systematic consolidation and elimination of cable networks. NBCUniversal and ViacomCBS are both considering shuttering networks, though nothing is imminent or particularly close given current distribution deals, according to two people familiar with the matter.

“Media companies can consider consolidating underperforming networks with core channels, hoping to extract additional carriage revenue from a beefier network,” said Kirby Grines, founder and CEO of 43Twenty, a consultancy and marketing firm that provides streaming video strategy advice. “Consumers have loyalty to content and perhaps the companies they transact with. I’m not sure where networks fit into that equation, but it’s somewhere in a meaningless middle.”

ViacomCBS has already identified CBS, MTV, Nickelodeon, Comedy Central, Smithsonian and BET as its tent-pole brands, which show up in the company’s CBS All Access streaming application (soon be renamed Paramount+). Other ViacomCBS networks -- VH1, Logo, PopTV, CMT -- are absent from the streaming platform. That may be a sign they’re at risk of eventual shutdown or rebrand.

Still, most media companies will try to perform a delicate dance, shifting most premium content to streaming while still giving some A-level shows to networks to buoy the bundle for as long as possible.

The forcing function on change will be Wall Street. If valuations keep declining, media companies will have to act.

LightShed’s Greenfield recommends a ripping-off-the-band-aid approach: Divest the networks now.

“Disney should divest its broadcast and cable networks, Comcast should divest the NBCUniversal cable networks, and there’s no reason why AT&T needs to own the Turner networks,” Greenfield said. “Cable networks are structurally broken.”

Divested and merged media companies will lead to more robust streaming services. This is why Disney agreed to buy Fox’s entertainment assets, including “The Simpsons” and movies such as “The Shape of Water” and “Avatar.”

But it may also accelerate the death of cable TV.

“The total bundle is going to shrink,” said Bewkes. “Whether it disappears, I don’t know.”

Disclosure: Comcast’s NBCUniversal is the parent company of CNBC.

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From: Glenn Petersen10/29/2020 6:05:02 PM
1 Recommendation   of 2031
Netflix raises prices on standard and premium plans

Todd Haselton @ROBOTODD


-- Shares of Netflix were up nearly 4% on the price change before settling later in the evening.

-- Netflix on Thursday raised the prices of its standard and premium plans to $13.99 and $17.99 per month, respectively.

-- The entry-level basic plan remains at $8.99 per month, the same price that was introduced last year.

Netflix on Thursday raised the prices of its standard and premium plans to $13.99 and $17.99 per month, respectively. Prior to Thursday, those plans were priced at $12.99 and $15.99, respectively.

Current Netflix customers will see the updated prices on their bill over the next two months, Netflix told CNBC. Customers will get a warning 30 days prior to the change.

The entry-level basic plan remains at $8.99 per month, the same price that was introduced last year. It’s the first increase since Netflix boosted the cost of its service in January 2019. Prior to then, the basic, standard and premium plans were available for $8, $11 and $14, respectively.

On the company’s latest earnings call, chief operating officer Greg Peters hinted that a price increase might be coming. He said if Netflix continues to do a great job investing in original content to deliver more value for users, then Netflix feels like “there is that opportunity to occasionally go back and then ask for members, where we’ve delivered that extra value in those countries, to pay a little bit more.”

Netflix’s standard plan offers up to 1080p quality and allows people to watch on two screens at the same time. Its premium plan includes support for sharper 4K resolutions and HDR and up to 4 screens at the same time. The basic plan supports 480p, about the quality of a DVD.

Shares of Netflix were up more than 4% on the price change before settling later in the evening. Disney shares were also up more than 3% in late trading, building on gains earlier in the day.

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From: Glenn Petersen11/6/2020 1:41:03 PM
   of 2031
Netflix Picks France to Test First Linear Offering

By Elsa Keslassy
November 6, 2020

Netflix has chosen France to test its first channel offering.

Named Direct, the linear channel — which is only available to subscribers — will air French, international and U.S. feature films and TV series that are available on the streaming service. However, the channel will only be accessible via the service’s web browser, unlike its streaming service, which is found on set-top boxes thanks to distribution deals with French telco groups such as Orange, Canal Plus and SFR.

The initiative marks Netflix’s first foray into real-time, scheduled programming. The service previously tested the option Shuffle Play, which wasn’t in real time but featured recommended programming to a sample of international users, explained a source at Netflix. The difference this time around is that the test is being localized in one country, rather than a sample of users.

On its website, Netflix said it chose France to test its first linear channel due to the “consumption of traditional TV [in France].” It added that “many viewers like the idea of programming that doesn’t require them to choose what they are going to watch.”

“Whether you are lacking inspiration or whether you are discovering Netflix for the first time, you could let yourself be guided for the first time without having to choose a particular title and let yourself be surprised by the diversity of Netflix’s library,” said the streaming giant.

During lockdown, Netflix subscriptions skyrocketed around the world. The service may be testing the channel to see if it allows it to retain subscribers who may feel fatigued after having binge-watched the titles that were recommended to them through the algorithm. This new linear feature may also appeal to older demographics that make up a significant portion of households in France.

The test channel had a soft launch on Nov. 5 and will be more broadly available in France early December, said Netflix. A key European market for the streaming giant, the SVOD is believed to have around 9 million subscribers in France.

The streaming company opened an office in France in January and vowed to increase its investment in French content. Some of its highest-rated French originals include “Family Business” and “Plan Coeur” (The Hook Up Plan). The company’s original film roster also includes Jean-Pierre Jeunet’s next movie, “Big Bug,” which started shooting last month.

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From: Glenn Petersen11/12/2020 5:10:08 PM
   of 2031
Disney Plus blows past expectations for its first year with 73.7 million subscribers

Jessica Bursztynsky @JBURSZ


-- It’s been exactly a year since Disney+ launched, and the streaming service has far outperformed expectations.

-- Disney announced Thursday that its platform surpassed 73 million subscribers.

-- It’s remarkable growth considering Disney’s goal, at its launch, was to reach 60 million to 90 million subscriptions by 2024.

It’s been exactly a year since Disney+ launched, and the streaming service has far outperformed expectations.

Disney announced Thursday that its platform surpassed 73.7 million subscribers. It’s remarkable growth considering Disney’s goal, at its launch, was to reach 60 million to 90 million subscriptions by 2024.

Just a year in, and Disney+ is quickly creeping up on Netflix, which reported more than 195 million subscribers in its most recent quarter. Disney also joined the streaming wars at roughly the same time as Apple and a few months before Comcast’s NBCUniversal. Apple has yet to release subscription numbers for Apple TV+. NBCUniversal’s Peacock reported nearly 22 million sign-ups as of October, up 12 million from its July report.

It’s worth noting that some of those subscribers arrived at the service through bundles or one-time promotions, but Disney doesn’t break out those numbers. Still, subscribers flocked to Disney right off the bat: 10 million people signed up within the first day. In its first operating quarter, the service secured 26.5 million subscribers.

And it only shot up from there, as the Covid-19 pandemic kept viewers indoors — Disney+ jumped from 33.5 million subscribers in its second quarter to 57.5 million by its third quarter.

The company had its doubters: Some analysts predicted prelaunch that the service wouldn’t reach even 20 million subscribers by the end of 2020. But analysts widely and quickly changed their tune since the service’s launch.

Morgan Stanley on Thursday morning raised its streaming subscription estimates to 230 million by the end of 2025, and MoffettNathanson analysts in October upped their forecast to nearly 160 million subs worldwide by 2024.

“We expect Disney to further lean into streaming, implying higher spend and more original content that moves more quickly to its DTC platforms,” Morgan Stanley analyst Benjamin Swinburne said in a note to investors Thursday.

The strong subscriber numbers come as Disney pushes heavily into its streaming service. The company in October announced that it was restructuring its media and entertainment divisions, centralizing its media businesses into a single organization that will be responsible for content distribution, ad sales and Disney+.

“We are tilting the scale pretty dramatically [toward streaming],” Disney CEO Bob Chapek told CNBC at the time.

Disney’s next step? Proving to investors that it can retain subscribers as well as it can bring them in.

Disclosure: NBCUniversal is the parent company of Universal Studios and CNBC.

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From: Glenn Petersen11/16/2020 5:16:48 PM
   of 2031
Pluto TV CPO Shampa Banerjee explains why free video is booming

Video services have to get over their U.S.-centric thinking to succeed internationally, Banerjee says.

Janko Roettgers
November 16, 2020

ViacomCBS is on track to make $2.5 billion with digital video this year, and a growing part of that revenue stream is Pluto TV, the ad-supported video service the company acquired in early 2019. Pluto ended Q3 with close to 36 million monthly users and video ad dollars more than doubling year-over-year. "It's an amazing asset, and it's growing even faster than we had hoped," said ViacomCBS CEO Bob Bakish during the company's Q3 earnings call earlier this month.

A key part of Pluto's success has been its product design, which mimics the look and feel of cable TV, complete with linear channels and a traditional programming guide. To learn more about what makes Pluto tick, and what the service has in store for 2021, we recently caught up with Pluto TV CPO Shampa Banerjee.

Banerjee joined Pluto in early 2020 from Eros Now, an Indian streaming service that has amassed close to 200 million registered users to date. In our conversation, she talked about the Indian streaming market, her plans to attract new audiences to Pluto, and what it takes to build a global streaming service.

This interview has been edited and condensed for clarity.

Before joining Pluto, you led product for Eros Now, which primarily targets the Indian market. That's also where Disney+ is seeing a lot of growth these days, to the point where one in four Disney+ subscribers is now in India. Why is streaming seeing such a boom in India right now?

Indians love movies. They love entertainment. That's not new. But when I started with Eros in 2014, it was kind of a different world. People would go to work, download their movies, come home and watch offline. We had to give people a download feature. Now, all that has almost gone away. One of the big things that happened: Carrier prices have become very cheap. Jio had a huge role to play in it by making bandwidth so cheap, and they have also upgraded the network. I think that's really part of the reason for the explosive growth.

India is very varied. Every region has its own language. India has 22 official languages. People either watch Hindi, English or they watch their regional languages. Typically, somebody from one state will watch either English or Hindi, and their entertainment in their language, but not something from another region. People watch English entertainment, they watch a lot of Hollywood movies. A lot of the content that you see here in the U.S. is already popular. So the appetite is there.

What lessons did you learn from working for Eros and on a product targeting the Indian market?

One of the things I learned is that in Southeast Asia, people don't want to pay. I grew us from nothing to 150 million subscribers, but they were all freemium. When I left, there were around 23 million paying subscribers around the world in 135 countries. The interesting part was, 80% of our user base came from India, but 80% of our paying user base came from outside of India, primarily from the U.S.

So we were actually looking at a model very similar to Pluto: having linear channels, and we were going to monetize it with advertisements. We were looking at that because [we thought]: These people, they'll never pay us, [but] they want to watch us. Let's monetize it. That's actually what attracted me to Pluto, because it felt like, boom, this is the growth area.

Now that you are in charge of product at Pluto, tell us about its secret sauce.

I think it's partly the familiarity of the interface. The second thing is, someone has done the programming for you. You know, people are lazy. They just want to veg out in front of the TV set. [They] don't know what to watch because there's so much out there to choose. That choice is made for you by Pluto; the linear channels have that choice made for you.

And then our shows, it's familiar content people have seen before. And despite everything, even with Netflix originals, "The Office" and "Friends" were the two most popular shows on Netflix. People want to watch shows that they're familiar with, especially now with COVID. I think it's a safety thing. It's something I know, something I'm in control of. We just got that right.

Does having that familiar, cable-like interface limit what you can do to innovate?

No. We have a certain audience that is attracted to our service. It's a fairly large audience. But there's a lot one can do to get a new audience that did not grow up watching linear TV. At times, I want to watch a linear channel, maybe because I'm lazy. But sometimes, I want to figure out what I want to watch, or [get] recommendations, based on my behavior, versus something that's editorially curated. I think there's a lot one can do, keeping the same format, keeping the same interface, or similar interface.

And then there's advertising. That's a big thing we're working on, the ad experience. You know, we have the data, we have the intelligence. What can we do to keep them watching? Because I watch ads, it can be extremely useful if the right ad is targeted to me.

Other than these product improvements, what else is Pluto focusing on next year?

International is a big focus for us. We'll be going to different countries. That itself has its own nuances, understanding what works. Every region has its own nuance.

We're always very U.S.-centric. We think everyone is like us, with 500 devices. It's not [like that]. [If you are] launching in Latin America, for instance, casting is very important. That's how the family watches. Everyone, mobile is what they have. They have one big screen. That's it. And it may not even be a smart TV. So they buy a casting stick, and that's what they're using. Behaviors outside of the U.S., they're quite different.

Any other trends you're seeing ahead for 2021?

I honestly think AVOD [advertising-based video on demand] is going to become much bigger in 2021. People do like to watch reruns. They do like to watch old shows.

Why do you think people are leaving cable? They're leaving cable because [they ask themselves], "Oh, my God, I'm paying all this money for what? To watch old shows. And if I can watch them for free, why should I be paying for it?"

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