Home Latest News The Various Strategies Of Streaming Video – Forbes

The Various Strategies Of Streaming Video – Forbes

As media companies unveiled their latest streaming video strategies, Amazon Primes, The Lord of the … [+] Rings: The Rings of Power, is the most expensive TV show ever produced and the most anticipated program in September. (Jay L. Clendenin / Los Angeles Times via Getty Images)
As Wall Street keeps a close eye on streaming video, media companies recently released their latest quarterly earnings report. These reports provided the financial and advertising community the current status, projections and future strategies for the maturing streaming video industry.
For example, Disney announced plans to increase subscriber rates across the board. Both Disney+ and Netflix NFLX fine-tuned plans to launch an ad supported tier. With concerns about revenue, both Warner Bros Discovery and Netflix had personnel cutbacks. Peacock’s subscriber growth was flat while revenue grew. Disney and Peacock both reported revenue losses. WBD crystalized their plans to merge HBO Max and Discovery+. Paramount PARA PARA + however, had the strongest quarter in sub counts and revenue growth while reaching a strategic partnership with Walmart.
During their most recent earnings report Disney made a number of announcements about its streaming bundle. Included in these announcements was a sizable increase in their subscription costs.
The monthly fee for the standalone Disney+ (without ads) will increase three dollars from $7.99 to $11.99. Disney+ will introduce its anticipated ad tier on December 8 with a monthly cost of $7.99. Effective October 10, the monthly charge for Hulu without ads will increase by $2 to $14.99. Hulu with ads will have a one dollar increase to $7.99. The monthly cost to subscribe to ESPN+ will increase by 43% to $9.99. For the recent quarter, Disney reported a quarterly revenue loss of more than $1 billion for three steamers. Despite lowering their global subscriber forecast, Disney reiterated its goal of becoming profitable in two years.
In addition, Disney announced changes to the Disney bundle. The current bundle which combines Disney+, Hulu and ESPN+ has a monthly cost of $14. It will increase to $15 (still significantly lower than subscribing to the services individually). In addition, Disney will add several new bundling options for subscribers. These include an ad supported Disney+ and Hulu for $10 each month, when an ad supported ESPN+ is included the price increases $13. The new bundles become available on December 8.
The Disney rate increases come at a time of strong subscriber growth. The number of Disney+ subscribers reached 152.1 million surpassing estimates. Hulu had 46.2 million subscribers and ESPN+ stood at 22.8 million. Collectively, the three streamers totaled 221 million subscribers, exceeding Netflix for the first time.
In the first quarter of 2022 Netflix reported their first global subscriber loss in over ten years with a net loss of 200,000. More ominously the company anticipated a loss of two million global subscribers in second quarter 2022. The announcement sent its stock price plummeting. To help boost revenue, Netflix announced a crackdown on password sharing, will introduce an ad supported tier and laid off hundreds of employees.
For the second quarter Netflix announced its global subscribers dipped by nearly one million totaling 220.67 million subscribers. The increasingly competitive North American (U.S. and Canada) dropped by 1.28 million, more than twice the decline from the first quarter. The North American market now has 73.28 million subscribers. Despite the loss in subscribers, second quarter 2022 revenue reached $7.97 billion, a year-over-year increase of 9%.
Earlier this year Netflix had raised U.S. subscriber fees including $15.49 for high-def streaming (compared to $7.99 in 2013) and $20 for 4K streaming. In July with a reported 100 million that access Netflix without a subscription, the streamer announced a monthly cost of $2.99 for password sharing.
Netflix said their ad supported tier will be launched in early 2023. With no ad sales infrastructure Netflix, in July, announced a “global advertising technology and sales partnership” with Microsoft MSFT . Morgan Stanley MS predicts an ad supported tier will cost $10 each month. With Madison Avenue looking forward to an ad supported by Netflix, MoffettNathanson forecasts ad revenue could jump from $150 million next year to $1.8 billion in 2025.
Another company very active was Warner Bros. Discovery WBD . In its first earnings report since Discovery’s $43 billion acquisition of Warner Media, the newly merged company made several strategic announcements designed to reduce the $55 billion debt load incurred when WBD went public in April.
The expected merger of streaming providers HBO Max and Discovery+ will take place in the U.S. during the Summer 2023 and global markets afterwards. Prior to the combined service CNN streaming content will appear on Discovery+ and such content as the Magnolia Network from Chip and Joanna Gaines will become available to HBO Max subscribers. By offering something for everyone it is hoped that churn will be minimalized. Currently, the monthly ad free version of HBO Max is $15 and an ad free version of Discovery+ is $7.
At the end of second quarter 2022 WBD had 92.1 million global streaming subscribers, up 1.7 million from the first quarter. With expectations of profitability by 2024, the company projects to have 130 million global subscribers by 2025 (with a profit of $1 billion). In addition, WBD announced the launch of an as yet to be named free ad supported streaming service.
WBD also announced a return to the more traditional movie release schedule. WBD announced its film studio will prioritize releasing films in theaters rather than HBO Max. After a theatrical run, movies then will become available on Premium VO VO D before being streamed. WBD did however raise some eyebrows in Hollywood by cancelling several movies already in production including Batgirl from DC Comics.
As mentioned, a priority of WDB is debt reduction. Earlier this month in a cost cutting decision 70 HBO and HBO Max employees were dismissed. More employee layoffs are anticipated.
For the second quarter Paramount Global reported that Paramount+ had added 3.7 net new subscriber additions. This brings the global number of subscribers to 43.3 million up from 39.6 million in the first quarter. The media company pointed out the net number would’ve been greater if 1.2 million Russian subscribers had not been removed. Year-over-year revenue for Paramount+ increased by 120% as subscription revenue totaled $830 million in the second quarter, an annual growth of 74%. Paramount+ stated a goal of 100 million global subscribers by 2024.
When all of Paramount’s streamers are included, global subscriber counts reached 63.7 million, up from 62.4 million from the previous quarter. (Again, subscriber counts would’ve been higher if 3.9 million Russian subscribers had not been removed.) By comparison, in the second quarter of 2021 Paramount Global had 42 million global streaming subscribers.
The free ad supported Pluto TV also reported growth. In the second quarter Pluto TV had close to 70 million active monthly users, up from about 68 million in the first quarter. Global viewing hours have increased by percent double-digit for the past two quarters. In its earnings report, Paramount also noted a stronger global presence of Pluto TV. Pluto TV is expected to surpass $1 billion in ad revenue this year.
In August Paramount+ announced a partnership with Walmart+. Under the agreement, all Walmart+ members will have the basic Paramount+ subscription (with ads) as part of their membership. The promotion starts in September.
In the second quarter the Comcast CMCSA owned Peacock reported flat subscriber growth numbering 13 million paid subscribers. By comparison, in the first quarter with the Super Bowl and Winter Olympics subscribers counts increased by four million from fourth quarter 2021. Comcast also said in the second quarter there were 27 million monthly active accounts, a slight dip from 28 million in the first quarter. Comcast has set a goal of between 30 to 35 million active monthly users by 2025. Quarterly revenue losses at Peacock continued totaling $467 million, a year-over-year increase from $363 million. Revenue for the quarter however, increased to $444 million. An ad free version of Comcast remains at $10 per month.
Looking at other streaming providers AMC+ reached 10.8 million subscribers in the second quarter of 2022, a quarterly increase of 1.3 million. The Fox owned free ad supported Tubi increased its monthly active users to 51 million compared to 33 million last year. The revenue of Tubi grew year-over-year by 45%.
The changes occurring in streaming video comes at a time when viewers continue to migrate to the platform as tens of billions of dollars continue to be invested in content each year. Recently, data has shown that hours spent viewing streaming content has outstripped that of cable, a trend which is consistent within audience engagement as well. At Diesel Labs, streaming engagement was 10% higher than cable in the second quarter of 2021 and 13% higher in second quarter 2021.
Furthermore, according to Nielsen’s monthly Gauge Report, in July 2022, streaming video accounted for 34.8% audience share compared to 34.4% for cable TV and 21.6% for broadcast TV. (By comparison in July 2021 streaming video accounted for 28.3% share.) This marks the first time more viewers were watching streaming video than either cable or broadcast TV.
The supremacy of streaming is expected to continue. In September, a time when viewers are accustomed to new television programs, Diesel Labs reports the most anticipated show is The Lord of The Rings: The Rings of Power on Amazon AMZN Prime. The production cost for the first season runs just over $58 million per episode or $465 million over the first season. Making it, by a wide margin, the most expensive TV program ever produced. Amazon has a five-year commitment to the project.

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