Too Much TV: Your TV Talking Points For Tuesday, April 18th, 2023
Why aren't SVOD's more social?
Here's everything you need to know about the world of television for Tuesday, April 18th, 2023.
NETFLIX EARNINGS HIGHLIGHTS
* Netflix is shutting down its DVD rental business on September 29th, 2023 after 25 years. It was a sliver of the company's overall business and revenue had dropped more than half since 2020. Still, I can't help thinking that there would have been a business there for someone willing to embrace the idea. Renting DVDs via the mail has no doubt gotten tougher in recent years due to increased postage costs and a progressively more erratic postal service. But to be honest, it would be a fun business to be in right now. Combine a mail order business with a small number of experiential analog media stores in major cities...you wouldn't make billions. But I have no doubt it would be successful. And then hopefully cut a deal with one or more of the studios to print DVDs on demand of their out-of-print titles and make them available only via the email service or in your branded stores. Please someone launch this.
* Netflix added 1.75M subs in the first quarter of 2023, which is 700,000 less than many analysts had been predicting (2.3 million). After some of the other companies in the streaming space report their Q1 numbers, we'll have a better sense if this stagnant growth is Netflix-specific or an industry-wide problem. Most of the growth came from APAC (1.46 million), with very modest increases in EMEA (640,000) and UCAN (100,000). Latin America actually shrank a bit, losing 450,000. OTOH, average ARPU grew in Latin America $8.30 in Q4 2022 to $8.60 this quarter. Netflix reduced prices in 116 countries in Q1 and that certainly had some impact on the overall ARPU
* The company also attributed the drop in Latin America subscribers to the recent rollout of efforts to stop password sharing: "As with Latin America, we see a cancel reaction in each market when we announce the news, which impacts near term member growth,” the streamer said. “But as borrowers start to activate their own accounts and existing members add ‘extra member’ accounts, we see increased acquisition and revenue. For example, in Canada, which we believe is a reliable predictor for the US, our paid membership base is now larger than prior to the launch of paid sharing and revenue growth has accelerated and is now growing faster than in the US."
* While Netflix's move into advertising is still in its early stages (it launched in the U.S. in November), the average revenue per user (ARPU) for the ad-supported tier appears to be higher in the U.S. than the company receives from the standard ad-free tier. The ARPU for the ad-supported tier is over $8.50 per month plus the $6.99 subscriber fee. Which is larger than the standard ad-free plan revenue of $15.49.
* Speaking of the low-cost Basic with Ads subscription tier, Netflix announced that it would be increasing the features. “This month we’ll upgrade the feature set of our ads plan to include 1080p versus 720p video quality and two concurrent streams in all 12 ads markets,” the streamer said in the shareholder letter. “We believe these enhancements will make our offering even more attractive to a broader set of consumers and further strengthen engagement for existing and new subscribers to the ads plan.”
* Buried a bit in the advertising section of the earnings report is the news that Netflix is launching a programmatic private marketplace for advertisers.
* In the post-earnings release interview, Ted Sarandos said that he hopes there won't be a WGA strike, but of course the company is prepared for one. "If there is one, we have a large base of upcoming shows and films from around the world, so we can probably serve our members better than most." Because of Netflix's extended production timeline, they can weather a prolonged strike without much of a noticeable drop in output. But similar to the post-pandemic production gap, it will become noticeable six or nine months down the road.
* In the same interview, Netflix co-CEO Greg Peters talked about the Love Is Blind livestream failure: "We just had a bug that we introduced when we implemented some changes to try and improve live streaming performance after Chris Rock.. And we just didn’t see this bug in internal testing because it only became apparent once we put multiple systems interacting with each other under the load of millions of people trying to watch Love is Blind. We hate when these things happen. But we do have the fundamental infrastructure we need. The good news is 6.5 million viewers watched." And according to Vulture's Joe Adalian, that 6.5 million number reflects the live viewers who were able to access the special and those who have watched the special since then.
* Read the complete earnings letter PDF from Netflix at this link.
WHY AREN'T SVODS MORE SOCIAL?
A new digital media trends study from Deloitte has a lot of interesting takeaways. But one big stunner is that the average subscription video churn rate for Gen Z and Millennials is insanely high: 62% and 57%, respectively. That's more than twice the churn rate for gaming services and the primary explanation is that gaming provides a more friendly environment for social interaction.
Given those stats (and Netflix easing into gaming), the big question might be why aren't any of the streaming video services looking into creating more opportunities for social interaction on their platforms?
Maybe five years ago an engineer at the entertainment-centric vMVPD Philo gave me a rundown of an integrated social sharing tool they were experimenting with in-house. You could share programming suggestions with friends, connect with people who shared your love of a show and create viewing lists you could share publicly or privately. The plan was eventually to offer networks the opportunity to send direct messages about shows to viewers who opted in. According to the engineer, the features had been very popular internally. But it hadn't been rolled out to the public at the time, because it required a large subscriber base in order to scale correctly.
I was reminded of this presentation a few months ago and reached out to the vMVPD, which confirmed that the project had been shelved for now as the company pursued "other priorities." And while I don't know the exact reason, my hunch is that it is an idea that is much more technically complicated and expensive than Philo can afford to tackle right now.
When I previously wrote about the Philo project, I heard from a project manager at Netflix who told me that streamer had been experimenting with various social aspects it might be able to rollout at some point. And to be honest, it sounded pretty useful:
As it turns out, this streamer has been working on a somewhat similar approach and it's now far enough along they wanted to begin getting feedback from outsiders. "We think we are far enough ahead of everyone else that we're not as concerned about general info being out there," the exec told me during the presentation. "And to be honest, we need people to start thinking about this and getting comfortable with the idea before we roll it out."
Every streamer allows users to set up a profile, but those profiles are very general by design. They're primarily used as a way to track an individual user's viewing preferences and data. Maybe you can add one of the pre-selected images as your profile icon, but that is generally the extent of the personalization.
But what if your profile was more like one you'd have on a social media platform? You could add custom icons, and create "playlists" that could be shared publicly and that other users could subscribe to. You could follow favorite actors or directors, so you'd be informed when anything new by them was added to the service. And because you would be providing additional data points about your viewing habits, the service would be able to weed out some of the noise in its recommendation engine.
I was walked through a very early Alpha test of the idea and at least on the face of it, the experience is as jarring as it was the first time I logged onto a streaming service. The UX is extremely unfamiliar at first, but it quickly becomes clear that this could be a massive sea change in how users interact with the service. Users can temporarily hide content that doesn't interest them, and there are content verticals that surprisingly haven't existed before, such as "every new item added in the last week." Users can follow other users, which means they can see which content the other person has been watching (it's very similar to the feature available on Spotify). Users have the ability to decide which data they want to share with others, ranging from profile names and viewing choices to playlists. But they can also decide to not share anything, and there isn't a way to message other subscribers.
That lack of messaging is by design, said the engineer, who told me they had real concerns about potential abuse, ranging from spam to more personal attacks. "We don't this to become Twitter with videos. The primary function of this is discovering new things to watch and tapping into the expertise of people you trust."
So when will this idea be rolled out to the general public? When I asked the question to the group, it provoked a lot of somewhat nervous laughter. "The technology challenges of this are just staggering," said the project manager. "Especially when you are talking about rolling it out to tens or eventually hundreds of millions of subscribers. There are a massive amount of data points that need to be managed and we also have to figure out how to do it seamlessly across multiple platforms."
And then there is ironically the marketing aspect of this idea. "We know that even if we get everything perfect, there will be a lot of negative pushback from stakeholders," said the PR VP. "From users confused by a new approach and from content owners who have concerns about whether their content will be properly handled." One of the current contentious issues internally is whether the idea should be rolled out incrementally to subscribers who opt-in or just roll it out whether subscribers want it or not. "Supporting two vastly incompatible versions simultaneously is a nightmare from a technology standpoint. The flip side is that some unknown percentage of the subscribers won't like the change and you run the risk of losing a substantial number of subscribers in the short term," I was told.
At the time, it didn't sound as if the idea had progressed much past the rough idea stage. And it's not clear that Netflix would be interested in wrangling the massive challenges that would be required to build out such a social-centric approach. If for no other reason than it would require a massive revamp of the current Netflix tech stack. Which has to be a bit scary, given the overall rock solid reliability of the current UX.
But offering a more social-friendly approach to streaming video holds the promise of reducing subscriber churn and increasing retention in the Gen Z demo.
WHIP WATCH WEEKLY STREAMING ORIGINALS REPORT
ICYMI ON ALLYOURSCREENS
* I took a look at the new-ish series Radford Reborn, which just premiered on Speedvision.
* In another indication that Warner Bros. Discovery intends to license its older content any place it can, nearly 50 old seasons that originally aired on various Discovery channels are coming to Hulu in May.
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ODDS AND SODS
* It's hard to imagine a new show description that is less appealing to me then the combination of "game show starring David Spade." But thanks to Fox (and Will Arnett's Electric Avenue Productions), Snake Oil will be debuting on Fox during the 2023/2024 primetime season. According to the network, "contestants are pitched unique products by convincing entrepreneurs – some of whom are showcasing real business ventures, while the others are “Snake Oil Salesmen” whose products are fake. With the help of guest celebrity advisors, contestants must determine which products are real and which are a sham, for a chance to win life-changing money." OTOH, "snake oil salesman" is right on brand for Spade.
* Season two of the multi-generational rom-com series With Love will premiere Friday, June 2nd on Prime Video.
* Perfect Match will return for a second season Netflix. Nick Lachey will return as host.
* The CW -- the broadcast network that bought Nexstar Media Group last year -- has bowed out of this year's upfronts. Instead, it will preview its fall programming lineup during a May 18th press conference at the Park Lane Hotel in New York City.
* Fox News has abruptly settled the defamation case brought by Dominion, after a trial jury was selected and lawyers waited in the courtroom to give their openings. Fox News agreed to pay Dominion $787.5 million, according to an attorney for Dominion. Other details of the settlement were not disclosed.
* ABC has renewed Will Trent for a second season.
* Amazon’s Prime Video has debuted a new feature called Dialogue Boost, which lets viewers increase the volume of dialogue relative to background music and effects, available on a limited selection of originals.
TWEET OF THE DAY
WHAT'S NEW FOR TUESDAY:
Chopped: Military Salute Series Premiere (Food)
Family Legacy Series Premiere (Paramount+)
Halfway To Halloween (Shudder/AMC+)
Inspector Rex Season Four Premiere (MHz Choice)
John Mulaney: Baby J (Netflix)
Murderous Memories Series Premiere (MHz Choice)
Supermarket Stakeout Season Premiere (Food)
Click Here to see the list of all of the upcoming premiere dates for the next few months.
SEE YOU WEDNESDAY!
If you have any feedback, send it along to Rick@AllYourScreens.com and follow me on Twitter @aysrick.