Welcome to the latest installment of Dan Rayburn's Streaming Insights & Intelligence, a new weekly insights column on StreamTV Insider where the industry analyst puts facts and figures to the news you need to know about. Join the discussion on LinkedIn and check back each week as he unpacks key industry happenings.
Here’s what Rayburn is tracking for the week of January 29, 2024: Alphabet Q4 2023 earnings; NFL Pay TV viewership dwarfs streaming distribution; Harmonic Q4 2023 earnings; Sky cuts 1,000 UK jobs; Paramount cuts costs.
Alphabet Q4 2023 Earnings
YouTube advertising revenue of $9.2 billion, up 15% y/o/y; Cloud revenue of $9.2 billion, up 20.3% y/o/y, with an operating profit of $864 million. Alphabet ended 2023 with 182,502 employees, down 7,732 from the end of 2022.
Key Takeaway: YouTube ad revenue is still accelerating and shows no signs of slowing. On the earnings call, the company declined to give out any YouTube TV subscriber numbers or mention how many signed up for NFL Sunday Ticket. Google executives said they are “closely looking at” an international expansion of YouTube TV, but that “There’s nothing specific I have to add at this moment in time on this one.”
NFL Pay TV Viewership Numbers from FOX Sports Shows Streaming Can’t Compare for Distribution
FOX Sports had over 58.9 million peak viewers on pay TV for the NFL NFC Championship game. Now compare that to Peacock's 16.3 million concurrent devices number NBC Sports published, and it’s clear the internet is not prepared to replace pay TV as a broadcast distribution platform with the same level of video quality, reliability, and scale.
Key Takeaway: No level of new codecs, 5G, or hyped AI or blockchain-enabled tech will fix it. They are two completely different distribution platforms whose scale and quality are often compared apples to apples when they are very different in terms of what they can support at the level of quality viewers expect. ATSC 3.0 is interesting, but that will have no impact in the next few years.
Harmonic Q4 2023 Earnings
Revenue of $167.1M, up 1.6%; Revenue from their broadband segment was $115.2M, up 20%. Revenue from their video segment was $51.9M, down 24%, all y/o/y. Cash of $84.3 million.
Key Takeaway: While the company had previously "received indications of interest in our Video business from a number of parties. To date, that interest has not yet translated into a definitive agreement with any party,” and the company is "continuing the strategic review process. "
Sky Will Cut About 1,000 Jobs in UK in Shift To Digital Streaming
I hate to say it, but Sky and Paramount won't be the only ones to cut jobs; there will be more this year. Peacock is losing too much money and can't continue to burn billions in cash, and Comcast will need to rein in costs more. If the NFL invests in ESPN, redundancy across both companies will require a reduction in head count. DISH, Comcast and Verizon are losing too many pay-TV subscribers to keep the headcount for those divisions what they are.
Key Takeaway: Any merger of content assets in the industry across Paramount, WBD, AMC Networks, Lionsgate etc., will result in layoffs. For all the talk of consolidation, I don't think merging content assets makes any sense until companies figure out how they will monetize content with profitability. Joining two debt-laden companies to create one with more considerable debt is not a "consolidation" strategy. Strategy aside, 2024 is going to get a lot worse for layoffs across the video industry, streaming, pay TV, vMVPD, broadcasters and content owners. Many thought we were done with the massive layoffs we saw in 2023, but that's not the case. Balance sheets tell the story.
Paramount’s Will Cut Costs with Layoffs and Removal of Content from Library
Following a town hall meeting, Paramount’s CEO announced in a memo that the company will do a round of layoffs globally to cut costs. No details were given on the number of job cuts that will occur or over what time, but I expect more details to come out next month during or near the company's Q4 earnings call on February 28th.
This week, Paramount+ removed some international original content across its markets and will not debut some planned programming sourced outside the U.S. as part of the entertainment giant’s goal of managing costs. Full story here.
Key Takeaway: Paramount has no choice to but to cut more costs as the company races to reach profitability from their D2C services.
Other news highlights:
- Plex has raised a new round of funding, larger than Plex’s $50 million round closed in 2021, but the exact number has not yet been released. Plex previously raised a B round of $10 million in 2014. Plex says they expect to reach profitability by year-end or just after.
- Samsung said TV demand remained weak due to unfavorable economic conditions, with profitability decreasing slightly on a quarter-on-quarter and year-on-year basis due to the stagnant TV market demand and increased costs amid intensified competition. The company commented, “in 2024, replacement demand linked to global sporting events is expected to gradually ease the decline in TV market demand. However, uncertainties surrounding various macro factors are anticipated to continue.”
- BritBox, the SVOD platform launched in the US in 2016 as part of joint venture between BBC Worldwide and ITV, featuring programming from both UK broadcasters, said less than 5% of their customer base are expats. BritBox reported at the end of 2023 it had surpassed 3.4 million subscribers.
- Netflix's management made some interesting comments on their Q4 earnings call about content spending, sports, market consolidation, and competition. A full recap can be seen here.
Dan Rayburn is an analyst in the streaming media industry, with regular TV appearances on CNBC, Bloomberg TV, and Schwab Network amongst others. He is conference Chairman for the NAB Show Streaming Summit in Las Vegas each year, and his streamingmediablog.com website is one of the most widely read sites for broadcasters, content owners, OTT providers, Wall Street money managers, and industry executives. He also has a podcast at danrayburnpodcast.com. He can be reached at [email protected]
Dan Rayburn’s Streaming Analysis & Insights is an opinion column. It does not necessarily represent the opinions of StreamTV Insider.