Documentary Business

Peter Hamilton Consultants, Inc

Netflix & the Streamers Put a Blowtorch to the PayTV Model. What Do the Charts Say?

There’s a mixed bag of stories revealed in the charts that caught my eye during this rather slow Summer month.

Bottom line:

  • The shift to streaming is gathering pace: consumers are putting a blowtorch to the “melting icecube” of legacy broadcast and cable media.
  • The data asks a big question:  Do Discovery, Peacock, Paramount, and other latecomers, even including Disney, have the scale and momentum to succeed?

Read on below…

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1. Streamers Grab a Larger Share of Viewing

Graphic retrieved from Nielson

  • According to Nielsen, the U.S. streaming audience grew 22.6% year-to-year.
  • Broadcasters and cable channels lost nearly 10% each.
  • Meanwhile, the largest PayTV services lost about 1.9 million net video subscribers in Q2 2022.
  • That’s almost 700,000 more than the same time a year ago.
  • Key Takeaway: Traditional networks are losing viewers, advertising revenues and subscription fees to the streamers, and the rate of loss is accelerating.

2. Netflix Dominates the Streaming Audience

Graphic retrieved from Nielson

  • Audiences watched an average of 191 billion minutes of streamed content per week.
  • Netflix gained 8% share, boosted by the nearly 18 Bn minutes watched of Stranger Things, complemented by the nearly 11 Bn minutes of combined viewing of Virgin River and The Umbrella Academy.
  • Movies The Gray Man and The Sea Beast contributed over 5 Bn minutes.
  • Note that YouTube viewing consists of consumer uploads versus commissioned and acquired programs offered by Netflix, Disney +, etc.
  • Discovery +, Paramount+ and Peacock are counted in the ‘Other Streaming’ category, and don’t meet the 1% threshold.
  • We are reading calls to shut down or merge these struggling services.  (Is Peacock the “New Quibi?” Wall Streeters say “Stop! Put a bullet in it!”)

3. FAST’s Are Rising

Graphic retrieved from Hub Entertainment Research

4. Market Caps Tell a Story

  • Market cap is a measure of scale, and therefore of the strategic resources that may be available to expand existing services, compete for suppliers, and acquire new services.
  • The content market involves tech giants who exploit the power of video story-telling to add revenues and brand value.
    • Apple has more or less retained its market cap despite the 2022 tech bloodbath.
    • Alphabet (YouTube) and Amazon (Prime) retain dominant scale, though have been hit harder by investors.
  • Netflix is a pure content player, and has lost two thirds of its value since 2021. (Below)

Screenshot of Netflix Market Cap

  • Legacy media players Disney, Comcast and Paramount have also been hit hard by the market. (See table above).
  • I have read speculation that Paramount may be an acquisition prospect for Walmart as the retail giant escalates its commitment to video.
  • Discovery merged with Warner Bros to achieve scale, but Warner Bros Discovery still lags far behind Netflix and is dwarfed by the tech giants. (Below)
  • Watch out for my upcoming analysis of what’s going wrong for WBD.

Screenshot of WBD Market Cap

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