Specialist
VP at Paramount Streaming
Agenda
- Industry push towards profitability, scaling timelines and capital allocation
- Subscriber growth and positioning for Netflix (NASDAQ: NFLX), Disney (NYSE: DIS), Amazon (NASDAQ: AMZN), Warner Bros (NASDAQ: WBD) and others
- Password sharing initiatives, pricing dynamics and content strategy
- Outlook for H2 2023 and beyond, highlighting M&A activity, Hulu's future and continued sports streaming deals
Questions
1.
Could you give an overview of the streaming industry today and its operating environment?
2.
There has been a reset in terms of how the industry is evaluated, as investors are no longer necessarily looking just towards subscribers, but more of those key business fundamentals around profitability and cash flow. As different streaming platforms make these decisions about how much they’re spending on projects, perhaps prioritising quality over having as much breadth of content as possible, how exactly does that factor into the decision-making on what sorts of projects are being made? Is it really looking at what IPs are successful? What does that translate to when it comes to the types of projects getting the green light vs those that previously might’ve been given the go-ahead but are now being shelved?
3.
If a show is working for that first season, then that’s what will dictate whether or not there’s going to be a season two, which is fairly straightforward. What basic metrics will a player such as Netflix or HBO be prioritising for further renewal? Viewership is one, alongside other metrics.
4.
One of the downsides of building franchises is the fact that the cost from season one to season two and ensuing seasons does go up. Can you quantify what the average bump is? How costly it is to build out these larger franchises?
5.
You mentioned that the industry might be in more of a steady state when it comes to content budgets in 2-3 years. Considering the dynamic of building out franchises and reducing cost at the same time, where exactly do you see budgets being in that 2-3 year period? Do you see them down by a certain level, or is it more of a plateau?
6.
What factors are driving a return to the licensing model? It seems that exclusivity, when it comes to SVOD services, has been one of the major trends, but there is also a resurgence in looking at different ways to monetise content which could be impacting the attractiveness of licensing.
7.
We are now more than a quarter into both Netflix and Disney having ad-supported tiers. What has been your assessment their relative launches?
8.
You mentioned that sports has the highest CPMs, whereas those are lower with kid’s content. What is the magnitude of difference between the two, comparing to content such as TV shows or movies?
9.
You mentioned that you’re fairly optimistic about Netflix’s ad-supported tier considering the hires it made and how quickly it was initially thrown together. At the same time, the company reportedly only just passed one million-or-so subscribers in the US for its ad tier, when previous to its launch, it had been targeting 40 million total ad-tier subscribers by the end of 2023. What challenges or hurdles has it been facing to building momentum, considering that start?
10.
How does the size of Netflix’s ad-supported tier impact the CPM that it’s able to command? If it’s not able to deliver on the full size of that base, will that have a significant negative impact?
11.
There are questions regarding Netflix’s crackdown on password sharing, including what the roll-out will look like and the difference it can make. What are your expectations and reactions to Netflix’s initiative here?
12.
Looking at 10% of the supposed 100 million people or households that are currently sharing accounts, how challenging is it from Netflix’s standpoint to identify when accounts are being shared or to not have any issues when it comes to just having regular people switching devices, etc? What are the technological challenges here? What does the company have to work out so that it’s not impacting the existing subscriber base?
13.
When it comes to the pricing of adding additional users to accounts, it seems there’s been some variation in the international markets where Netflix has been trailing this, and also some speculation about what it will ultimately be within the US. What sort of pricing do you think makes sense that Netflix could charge in the US?
14.
It seems that streamers other than Netflix have been quite hesitant to experiment with password-share crackdown. What do think players such as Disney or Warner Bros Discovery are evaluating when considering if this is something worth pursuing?
15.
Disney has been having a busy year in terms of leadership change and the launch of an ad tier. What are your thoughts about its positioning right now and how it’s approaching its streaming strategy?
16.
You mentioned Disney’s upcoming option in 2024 to purchase Hulu outright. What do you think ultimately makes the most sense for Disney? Should it or should it not buy Hulu outright?
17.
If there’s not necessarily a clear reason for either Disney or Comcast to have Hulu, are there any other players out there that you think would look to buy Hulu or make sense as a partner with Disney?
18.
Warner Bros Discovery has certainly made a lot of news in the last year or so. Recently, it’s has been aiming to combine HBO Max and Discovery+ into one platform as it works out the best approach to distribute content. What are your thoughts on the company’s streaming strategy today?
19.
Where does Warner Bros go from here as it establishes a clean slate and tries to figure out the equation of profitability for certain platforms? You highlighted this idea of working on co-exclusivity, but by and large, what do you think makes sense from a strategic point of view, in terms of how it either maintains different platforms or markets them?
20.
What are your thoughts about the role of theatrical right now? You mentioned that Warner Bros may be trying to lean on it more. There’s also discussion of Amazon making an increased foray into theatrical as well. How exactly is this playing into the new calculus for both monetisation of content and the overall distribution strategy?
21.
You mentioned how there is a reset in how the industry is evaluated with a renewed focused on profitability. What does this mean for smaller streaming offerings? Can players such as AMC+ or Starz survive?
22.
Which players do you see as likely aggregators? As you highlighted, it’s not necessarily the ripest time for acquisition, just looking at interest rates and the cost of capital, alongside the focus on profitability for these businesses.
23.
What smaller streaming players do you think are the most attractive as an acquisition target, either in terms of where they are with their subscriber base or their library?
24.
Apple is building out Apple TV and its offerings there with lauded content, looking at Ted Lasso and the following that’s built there. What are your thoughts on Apple’s strategy? What are the key things it’s trying to do in terms of the streaming offering?
25.
There seems to be an ongoing discussion about where sports streaming will end up. You mentioned Apple picking up the MLS and also having some MLB games, Amazon with Thursday Night Football and YouTube/Google with the NFL Sunday Ticket. However, there are also ongoing questions about whether or not the leagues will try to consolidate the streaming rights themselves. What do you see as the future for where sports will be viewable and how much of a presence the streaming platforms will have?
26.
How do the economics for sports streaming work for a pure play streaming or traditional media company? The streaming rights for these sports deals are quite large. They’re hundreds of millions, if not billions, of dollars. Can that work for even a player as large as Netflix?
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