Too Much TV: Your TV Talking Points For Monday, December 4th, 2023

Apparently, I have a brand

Here's everything you need to know about the world of television for Monday, December 4th, 2023. 

APPARENTLY, I HAVE A BRAND
Earlier today, I had a few people messaging me about a piece in The Hollywood Reporter, which discussed a new Verizon deal which would bundle together Netflix and Apple TV+ for a discounted monthly price:

On Monday, the telecom giant Verizon announced a $10 per month deal that includes the ad tiers of both Netflix and Max. That’s a 40 percent discount compared to their standard prices.

And it’s notable because while Max has offered discounted pricing before (Max just offered its ad tier for $3 per month for Black Friday), Netflix has notably not offered any discounts or wholesale prices on its plans for many years.

Netflix's would be notable if the paragraph above was in any way accurate. But it's not. 

Netflix has offered similar deals previously in the U.S., and in fact, you can get a basic Netflix account for free right now with certain T-Mobile cellphone packages.

And outside the U.S., Netflix and every other streamer are cutting all sorts of deals with local telecoms, cable operators and anyone else who might help them grow subscriber numbers and reduce churn while not substantially impacting the bottom line.

But that didn't stop people in the industry today from jumping to the familiar argument that this meant companies were creating a new bundle or that they were "reinventing cable." 

It's an industry conventional wisdom that I have pushed back against whenever I can and apparently it's become my brand. Because I had one person send me the tweet below and predicted it would make me "crazy":

To be fair to Kate - who I think is a very perceptive and talented journalist - she was by no means the only industry veteran making the same snarky argument today:

It astounds me how many people in the industry believe this. It's just a given, in much the same way that most Trump voters believe voting machines in the 2000 Presidential election were controlled by a company in Venezuela. It fits into their narrative of what they think happened. Or it sounds good and they don't have any other data to draw on when forming an opinion.

So here are the facts. Streamers cut packaging deals all of the time. And that is what these soft bundle deals are. Just packaging. They aren't an indication of the streaming sectors’ weakness, but an indication that in general the streamers continue to be nimble when it comes to marketing and costs.

Bundles and various other deals have been popular for years in countries where the average revenue per user (ARPU) is low. They are particularly popular in places such as Africa, MENA and Asia where there is a lot of competition, the ARPU is low and a sizeable number of subscribers are watching the service primarily on mobile devices. Cutting a deal to bundle your service in with local telecoms is a natural fit. And while the price the telecom pays is usually discounted, the streamer doesn't have to worry about the bulk of the marketing and since the streaming subscription is tied to the telecom account, churn tends to be lower. The ARPU remains low, but expenses decline.

Even in more mature markets, bundles can make a lot of financial sense. Not because of the weakness of streaming, but because it offers a chance to cut marketing spend and tie the customers up in a package they are less inclined to change. So Peacock cuts a deal with Instacart, you can get Paramount+ for free with a Walmart+ subscription. It's a trade-off for the streamer because it means a potentially lower ARPU. But if it means spending less money on customer acquisition and marketing, a lower ARPU can sometimes be more profitable.

That is the thing to remember when thinking about these various new bundles. Are the deals being made because the streamer is desperate to find some new subscribers at any costs? Or are the decisions driven by an effort to maximize revenue?

A lot of casual observers seen the newer ad-supported Netflix tier as a sign of weakness. But the data doesn't show that at all. The streamer continues to have a high ARPU in the US and a fairly low churn rate. Rolling out the ad-supported tier was an effort to increase revenue (ad-supported tiers can be very profitable if executed correctly), and cut down on churn. The lower monthly subscription cost also offers the opportunity to lock in some finicky subscribers in a mature market where overall growth has slowed.

But that ad-supported tier also offers a lot more strategic flexibility for Netflix. Its existing subscribers tend to be willing to pay full price for the service and don't show a lot of interest in "trading down" to the cheaper ad-supported tier. So bundling the full-price ad-free Netflix plans into a soft bundle for a discounted price is going to be a net loss.

However, bundling an ad-supported tier offers a lot of upside. Sure, bundling the plan might provide a temporary revenue hit. But growing subscribers means the opportunity to grow ad revenue. So if the plan is executed well, a $2 or $3 decrease in direct subscriber fees can be more than offset by the increased ad revenue.

But this isn't some indication that the streaming business is collapsing or that we are returning to some new bundle. In fact, it's the very opposite. The strength of the traditional cable bundle was its integrated flat costs and wide range of networks. But it also only worked as a bundle. Networks couldn't cut outside deals or offer their programs to new fangled competitors. That lack of flexibility meant the industry wasn't prepared to compete on a playing field in which streaming meant endless options and price points.

These bundles are a sign of vitality and growth. If you've written a book, a sale is a sale. Whether it's via Amazon, a local book store, an airport shop or a library. And in the same way, Netflix is still Netflix. Whether you pay for it directly, or as part of some sort of bundle or promotion.

SPEAKING OF MY POINT OF VIEW
I've recently had a couple of people contact me to do some consulting work and this is something I'm definitely open to doing more of in the future. So whether it's the state of the industry, streaming UX issues or anything related to the streaming video sector, I'd love to talk to you. I'm also available for podcasts and other interviews.

Reach out at rick@allyourscreens.com

ODDS AND SODS
* If you are a fan of short-lived shows from Freeform, ABC Family & The CW, have I got a FAST channel for you.

* Prime Video has officially given a series order for the drama Cruel Intentions, inspired by the iconic '90s film of the same name.

* Barbie begins streaming on Max on Friday, December 15th. Along with the theatrical version of the movie, Max will also premiere Barbie With ASL, the hit film interpreted in American Sign Language (ASL)

* Kasey Moore at Whats-On-Netflix reports that the Nike Training Club videos are exiting Netflix. 

TWEET OF THE DAY

WHAT'S NEW TODAY AND TOMORROW:

MONDAY, DECEMBER 4TH:
* Blake Shelton's Holiday Bartacular Featuring Ice T (NBC)
* Dew Drop Diaries (Netflix)
* Midsomer Murders (Acorn TV)
* Murder In Boston: Roots, Rampage, And Reckoning (HBO)

TUESDAY, DECEMBER 5TH:
Geddy Lee Asks: Are Bass Players Human Too? (Paramount+)
Great Photo, Lovely Life (HBO)
Isabel Preysler, My Christmas (Disney+)
Life Below Zero: First Alaskans Season Premiere (NatGeo)
Partnair: The Forgotten Tragedy (Viaplay)
Real Time Crime (Investigation Discovery)
Stavros Halkias: Fat Rascal (Netflix)
TMZ's Merry Elfin' Christmas (Fox)

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.