Specialist
Former executive at Netflix
Agenda
- Writers’ and actors’ strike impact over next 12 months, highlighting content pipelines, relative positioning and potential for FAST (free ad-supported streaming TV) services to benefit
- Netflix (NASDAQ: NFLX) password crackdown launch and industry implications
- Pricing dynamics, ad tier launches, overall subscriber growth trends and
- Profitability push, content development costs and future M&A scenarios
Questions
1.
Let’s begin by looking at the writers’ and actors’ strikes that are in effect. What differences do you see in terms of their impact on the different streaming players and studios?
2.
For Paramount and Peacock, you mentioned a couple of aspects such as their international content and reliance on traditional linear TV. One thing these two platforms do have is some more sports rights compared to a player such as Netflix. How much of an impact do you think that will have, in terms of being able to perhaps mitigate some churn in months where there isn’t any content coming in from the traditional pipelines?
3.
What do you see the consumer reaction being as traditional content releases slow and studios try to stretch out their content pipelines?
4.
In terms of consumers perhaps shifting over to more FAST [free ad-supported streaming TV] channels, do you think people will ultimately choose fewer streamers to pay for or hold on to those with the largest libraries? How does that shift the mental accounting or the amount of wallet spend that they’re looking to spend on their entertainment?
5.
For those viewers that are churning and switching between platforms, how transitory or seasonal is this behaviour vs a viewer that has decided to no longer pay for one of the platforms and instead chooses another FAST channel or one they’re not familiar with? How permanent is this sort of switch?
6.
We discussed the ways in which different streaming platforms will feel the pressure during the strikes. Are there any studios or streamers that you see getting a bit of a tailwind? We talked about how news, sports and some linear TV businesses might do okay, but do you see any surprise winners or at least relative non-losers?
7.
One of the core issues in the strikes is the overall compensation model, including payments and residuals for actors and writers, as well as streamers planning for their business models. What do you think the changes to the structure will be going forwards?
8.
You highlighted how, traditionally, data has been a black box for some platforms. They’ve been quite protective of their data, but it has been shifting a bit, if we look at the introduction of ad tiers, for example. Nielsen has been working with Netflix. There has to be some sort of sharing there to make the ad economics work. As we look at what data could become available, how open do you think streaming platforms either will be or will be forced to be as the negotiations and strikes continue?
9.
What do you see as a likely outcome for the amount of data the streamers may be forced to share? You mentioned Netflix showing its top 10. There is some data out there for how many hours a certain show has been consumed to understand how different shows are performing. When it comes to factoring that into the conversation for what residuals may look like, how do you think things will play out as this process continues?
10.
How long do you think it will be until both strikes are resolved?
11.
Disney and Netflix launched their ad-supported tiers at the end of 2022. Data suggests that, within the US at least, roughly 2% of these platforms’ subscribers are opting for the ad-supported tiers. What do you think these early numbers say about subscribers’ appetite for ad-supported programming?
12.
When you highlight players such as Netflix or Disney increasingly trying to have more people on ad-supported tiers due to the economics there, how does that impact the conversation around the pricing of non-ad tiers going forwards? As they look to push more people here, will that come with a commensurate price increase for some of the other non-ad offerings?
13.
Looking at the AVOD [advertising video-on-demand] piece, I’d like to break into the two other levers for ad load and CPMs. Ad load is one reason why a lot of people were frustrated with the traditional linear model, considering the number of ads that would be seen over the course of an hour of programming. What time frame will streamers have to play around with this portion of things before they start running into the same concerns around having too many ads for a given amount of programming?
14.
Looking at the comparison with the FAST model vs the experimentation you can have with an AVOD service, longer term, do you see it as a structural advantage to have the higher degree of personalisation vs FAST, or does it all ultimately come out in the wash?
15.
I’d like to look at the other piece of the AVOD equation, which are the CPMs. As these offerings continue to scale, how do you think about the timeline or base required to see a player such as Netflix or Disney start to command a higher CPM, or is this already a lever they can pull?
16.
With the convergence of CPMs, what do you think the level is at? Is it close to the USD 40 average you cited for Hulu and where Netflix is occasionally? Is it perhaps a little bit lower?
17.
Netflix followed the launch of its initiative to crack down on password sharing in the US in Q2 2023 with some strong subscriber numbers. What are your expectations for this initiative, starting with the company?
18.
Do you think the approach of having the paid sharing side and adding users for USD 8, in Netflix’s case, will be the structure other players would take?
19.
As we look at a potential tough run through the end of 2023 as the strikes persist, but then also the duelling dynamic of some players feeling increased pressure to drive profitability, what are your thoughts on the timeline we might see for players such as Disney or Max putting in place an initiative like Netflix’s?
20.
I’d like to look at some other streaming players that have also streamlined some of their properties. Paramount, which is focusing on growth, has had a partial integration of Showtime. Max has ditched the HBO in its label. What are your thoughts on these other players and their abilities to continue reaching a broad audience and make their platforms a bit simpler, but ultimately not lose some of the fan base or devotion to their long-time well-known brands?
21.
Are there any other large-scale M&A scenarios that you’re keeping your eye on or could be on the cards over the next few years?
22.
There’s been a lot of discussion about the future of ESPN and Disney potentially floating a partial sale or stake in the asset. What are your thoughts on how that might play out or the role that ESPN will play for Disney or some other players in the industry?
23.
What do you see as key industry risks or challenges over the next 12 months, outside of what we’ve discussed?
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