Too Much TV: Your TV Talking Points For Monday, February 7th, 2022

Finally, a day with no Jeff Zucker updates...

Here's everything you need to know about the world of television for Monday, February 7th, 2022. 

YOU SHOULD KNOW ABOUT FRNDLY TV
Frndly TV is a two-year-old vMVPD that offers 30+ channels for a base price of $6.99 a month. I just spoke with co-founder and CEO Bassil El-Khatib and he is rightfully proud of the fact that the service is both growing and profitable:

Does you average subscriber have another live TV service? How much of a demographic breakdown do you have about the people who are subscribing to Frndly TV?

We actually have quite a bit of information about our customers, we do a lot of surveys. Some of our customers have other virtual live options, but most don't. We tend to get a lot of cord-cutters.

One of the premises, when we came into this, was that we didn't have to persuade people they wanted this programming. They were already missing this content. We just needed to deliver a service that would be attractive to people looking for some live television at a price that seemed fair to them. 

We did some surveys where we dived deep into how our customers used not just our service but all streaming services. And we found that about 50% of our customers used our service above any other streaming service - Netflix, Disney, etc. So we know that our customers are extremely engaged in the content we have. We think we've tapped into an underserved market and we think we've nailed that with our product.

ANALYSTS CAN BE JUST AS DUMB AS THE AVERAGE INVESTOR
One of the biggest takeaways I learned from my days as a financial reporter is that market analysts can have the same blind spots as the average investor. In many cases, they are even more misguided than the average investor, because their blind spots are combined with that certain mix of skepticism and arrogance you get when you job centers around giving your opinion.

Needham's Laura Martin is arguing today that Netflix needs to roll out a lower-priced advertising-supported tier in order to create more revenue in the U.S. Now Martin has been making the same argument for at least two years, so this isn't based on the recent price slump that hit Netflix following their latest earnings report. She's also arguing that if Netflix doesn't roll out an AVOD tier, it should just sell itself off:

Since NFLX’s balance sheet cannot withstand lower revenue, we recommend a 5-6 minute/hour ad load to supplement a $5-$7/month consumer fee as a second pricing tier option for consumers. Nearly all of its streaming competitors have now introduced this 2-tier pricing strategy. We believe this pricing would generate higher revenue for ‘ad-light’ subs compared with NFLX’s current no-ads tier. Without a lower cost tier, we believe churn will rise in NFLX’s highest ARPU markets owing to the ‘digital attention recession’ as the economy continues to reopen over the next 12 months.

The thing that drives me nuts about calls like this is that it will get lots of attention on social media and in the trades. But anyone who follows Netflix and/or has even a rudimentary knowledge of the streaming business likely realizes this idea is just nuts.

First of all, Netflix is getting more per subscriber than any of its rivals and the first thing that would happen if Netflix rolled out an AVOD is that some percentage of those people would shift to a cheaper plan. Okay, critics will argue, what if Netflix only puts older, less prestigious content on the AVOD? Well, my snarky answer is to ask how well that approach is working out for Peacock? The reality is, most consumers wouldn't understand the content differentiation and short of calling the new AVOD "Netflix, But Slightly Crappier," the net result will be less subscription revenue and a lessening of the Netflix brand.

If Netflix wanted to create an ad-supported AVOD channel to distribute to services such as Pluto, Tubi, etc., they could roll that out tomorrow. And in that case, Netflix doesn't have to worry about brand dilution because that type of channel is by definition reruns of older content.

Another reason why Netflix isn't eager to roll out its is that running an AVOD service is hard. Either you have to build the ad-tech internally or pay heavily for a third-party solution. And then you have to worry about targeting the ads properly, and putting safeguards in place that keep the majority of your inventory being bought up by rival streaming services and celebrities hawking crypto currencies.

And while it's a smaller concern, it's worth noting that some of the content that has been acquired by Netflix has been licensed based on it running on an advertising-free service. For instance, my understanding is that a show such as Criminal Minds is licensed to Netflix strictly as an ad-free market. But it's also separately licensed to Hulu and other places on an AVOD basis.

So yes, while Netflix COULD create a lower-priced AVOD option, it's not nearly as much of a slam dunk as a lot of people (or analysts) might think.

WHY IS THIS BLAND ROM-COM A HIT FOR NETFLIX?
This piece in The Guardian tries to answer the question of why the made-for-Netflix rom-com The Royal Treatment is so popular with Netflix subscribers. And the answer is kind of predictable:

It’s the sort of film that can only exist because of Netflix’s ability to capture audience data. Somewhere deep in Netflix’s basement, an algorithm figured out that millions of people like aggressively inoffensive films about girls who fall in love with princes, and now this exists. Nobody wanted it, nobody expressed an interest in it, but the algorithm decided that there’d be an audience for it, and now here it is.

This is such an arrogant take. First, that process is precisely want executives are paid big money to do. Figure out markets being underserved and greenlight projects to fill that need. To a large extent, executives at every studio use viewing data and other metrics to make these decisions. Attributing the decisions at Netflix to "the algorithm" either shows a lack of knowledge about how the industry works or a strong desire to just be inflammatory. 

It's true that The Royal Treatment is nothing more than a solid, sometimes predictable genre movie. But if it makes viewers happy and they watch it, then aren't Netflix executives doing their job?

NEWS FROM NATGEO, DISNEY BRANDED CHANNELS
Monday's TCA networks de jour were National Geographic and the Disney Branded Channels.

NatGeo announced 13 new originals projects it is producing for Disney+. Which is pretty amazing, given that the NatGeo linear channel is currently filled with 90% episodes of Life Below Zero, Wicked Tuna and various international smuggling TV shows.

Here is the rundown of all the upcoming NatGeo projects.

THE STREAMING WINNERS AND LOSERS FROM 2021
The Entertainment Strategy Guy has his rundown of the shows he considers to be the streaming winners and losers from 2021 and you should just go there to read the piece, since it includes a lot of data.

I had a couple of reactions to reading the piece. First, I think his rundown fits pretty closely with what I would have guessed based on no data. But it's good to see the data there to support my hunches.

Second, I think it's important to remember what the publicly available data can't tell us. When it comes to titles that aren't the most-watched shows, success or failure is more difficult to parse. If two shows receive the same amount of viewing, but Show A costs twice as much to produce as Show B, then A is likely a flop and B maybe be considered a modest success. But since we don't know the budgets for shows, there is no way for us to judge that accurately. I think it's also important to remember subscriber service numbers. Netflix has a much larger subscriber base in the U.S. than say, Apple TV+. As a result, it can sometimes be a bit misleading if you just consider total viewing minutes for a show. A show that is viewed by 20 percent of the Netflix subscriber base in the U.S. is going to generate a lot more viewing minutes than a show getting that same 20 percent of the Apple TV+ subscriber base.

Given that the various major streaming services has different approaches to transparency when it comes to subscriber numbers, I'm not sure what the answer is for this problem. But it's worth keeping in mind as you see press releases touting this or that number popping into your email inbox.

SPEAKING OF QUIBI
People like Jeffrey Katzenberg always land on their feet, no matter how big their failure. Katzenberg was just interviewed by Morning Brew, who spoke with him about his investment company's interest in the digital security firm Aura. But he was also asked about his experience with Quibi, and he says that failure humbled him. Sort of:

When we last spoke, you were about to debut Quibi. What did you learn from its failure?

Katzenberg: I couldn’t be prouder of what we built and delivered. The big idea of a next generation of film narrative, longform stories in quick bites. The content that was made, the talent that contributed to it, the studios that made it. They exceeded my expectations.

But I am humbled by its failure. It clearly did not have a product–market fit. We can argue about, was it the product, was it the market at the time we launched, or was it never to be a fit? But we do get up everyday and take a little TV with us and have in-between moments. Will it never be a product–market fit? I’m not sure.

So I’m humbled. In life I believe the greatest lessons you learn are from your mistakes and misses and not your successes. Trying to follow your exact path on your next success usually doesn’t lead to success. But the learnings from failure are powerful. I am humbled, but not humiliated by it, because I am proud of what we did.

ODDS AND SODS
* Alex Wagner is returning to MSNBC as a fill-in anchor and contributor.

* The Tubi original movie 10 Truths About Love premieres on February 11th.

* NBC has ordered a second season of That's My Jam.

WHAT'S NEW FOR MONDAY
Here's a quick rundown of all the new stuff premiering today on TV and streaming:

American Experience: Riveted-The History Of Jeans (PBS)
Angela Black Series Premiere (Spectrum)
Clotilda: Last American Slave Ship (NatGeo)
Independent Lens: Owned-A Tale Of Two Americas (PBS)
The Chelsea Detective Series Premiere (Acorn TV)
1000-lb. Best Friends Series Premiere (TLC)
One Thousand Years Of Slavery (Smithsonian Channel)

Click Here to see the list of all of the upcoming premiere dates for the next few months.

SEE YOU TUESDAY! 

If you have any feedback, send it along to Rick@AllYourScreens.com and follow me on Twitter @aysrick.