1. Churn Is Real
Anyone who has been following this column (or pretty much any other TV industry analyst) knows that predictions of massive churn are not new. It would be hard to imagine any other outcome given the forces at play: a serious glut of new programming, an array of competing services without any sort of clear differentiation, the fact that most households still see streaming as an addition to traditional linear rather than a replacement for it, and most important, the ease of hitting pause on a month to month contract.
All of which has led to this much quoted sentence from the Wall Street Journal’s Ben Mullin and David Marcelis: Roughly half of U.S. viewers who signed up within three days of the release of “Hamilton,” “Wonder Woman 1984” and “Greyhound” were gone within six months…
(That’s Disney+, HBO Max and AppleTV+, in that order, if you’re keeping track, though all of the various Flixes are seeing high churn rates.)
Why It Matters
Churn is a problem regardless of business model.
For ad-supported (AVOD) subscription models, advertisers, who frequently buy ads months in advance, want to have a sense of how many people will be seeing their ads when they actually run, and if the audience size is not stable, that’s a problem.
For subscription (SVOD) models, investors want to better understand how the service is doing, which affects stock prices.
For both, the number of subscribers is important in helping to lure top talent: it’s not enough just to pay them hundreds of millions of dollars. You need to be able to guarantee a set number of users too, as that number, which will impact ratings (such as they are for streaming) which in turn impacts the syndication value of the series.
This is why we are likely to be seeing a lot more of what’s being called “The Great Rebundling.”
Again, this is not a new concept, industry analysts have been talking about it for years, and there are already numerous examples, from Disney’s Hulu/Disney+/ESPN+ bundle to the numerous deals from various Flixes to save by taking on a full year subscription.
We are likely to see more of these bundles coming from MVPDs, who will combine various streaming services with broadband, and, often as not, a stripped down linear package, as a way to retain customers who prefer streaming and to slowly extricate themselves from all those painful carriage negotiations. As noted in our recent report on ACR data, MVPDs are sunsetting their set top boxes and introducing apps, connected devices, and, in the case of Comcast, actual smart TVs, all of which serves to make streaming easier and more accessible, even for their most technophobic customers.
Beyond bundling though, there’s no real fix for churn.
It’s what happens in new markets as consumers test out their various options before settling on a favorite. In the streaming market, that’s complicated by the fact that most of the players haven’t figured out what they want to be about yet, and so, with the exception of Discovery+ which is all about non-fiction, the various Flixes all sort of blend together in a sea of “HBO-like” programming and viewers will flit back and forth to watch whatever is getting the most buzz at the moment.
That will change soon enough, but until it does, churn will most definitely be a factor.
What You Need To Do About It
If you are one of the Flixes, the sooner you can settle in on a unique positioning, the less churn you will face. In the interim, realize that high profile series or movies are likely to attract many subscribers who have no intention of staying around so factor that into your ad sales pitches.
What you can do though, is steal some cable company tricks to retain those new subscribers, like lowering the price substantially when they want to unsubscribe and/or offering a significant discount for the first year.
If you are an advertiser and you are looking at CTV, you are going to have to deal with the ups and downs caused by churn. Best to focus on the quality of the audience and on what the various services can do for you when those audiences don’t match what you were promised.
2. NBCU Writes The Book On Measurement
NBCU released a very comprehensive report on TV measurement providers this week, and if you’ve seen it, you’ll know that “the book” is not really an exaggeration: at well over 100 pages, the report is close to book length. The fact that NBCU has been calling it their “Look Book” only helps to extend the metaphor.
The Measurement Look Book (you can download your own copy) is notable not only for its thoroughness but also for the fact that it is largely written in plain English, rather than the thick soup of incomprehensible jargon so many industry reports revert to.
If you’ve been following along, you’ll know that using plain English is a hallmark of TVREV reports, so it’s particularly gratifying to see that we’re not the only ones who understand the value.
Why It Matters
The report takes a deep dive look at the eight leading measurement companies: 605, Comscore, iSpot, Nielsen, Oracle, Samba, TVSquared and VideoAmp.
Those eight were then ranked according to a number of criteria that NBCU grouped into three big buckets: Completeness of Solution, Ability to Deliver and Cross-Platform Currency Readiness.
As you might imagine, the 116-page report goes into detail on a number of other issues, including how the various providers approach identity, what metrics they are actually measuring and whether they take the quality of the programming into account.
That last point may seem surprising to people not closely tied-in to the advertising portion of the industry, but it is highly relevant.
You see the programming on many streaming services and devices ranges from high production value network TV series (and reruns thereof) to heartfelt videos from Suzy’s Yoga Yurt that Suzy’s partner shot herself with an iPhone and a ring light. If you’re an advertiser, you will likely have a distinct preference for the former over the latter, even though spots bought on each will reach the same audience. So by saying “yes, context matters,” NBCU is making an important point.
I’m going to double down on that point too, because one of the more interesting developments I’ve encountered is that various brands and agencies use different terminology to describe the same things, which is why so much of the data around TV vs digital ad spend is all over the place.
Some brands refer to CTV as “digital” and lump it together with YouTube and other website-based, largely user-generated video. Others put CTV in the “TV” category alongside linear. Some will differentiate between “digital TV” and “social video” while still others will put the streaming version of network TV shows (via their old school for-our-cable-subs-only apps) in the “TV” bucket, but streaming from say, The Roku Channel or Hulu as “digital” because it didn’t start out as network TV.
If you’re thoroughly confused by all that, imagine how the TV buyers must feel and why it’s so important to distinguish professionally produced TV programming from amateur video.
In case you’re still not convinced that there’s actually an issue around measurement, let me lay this seemingly innocuous sentence on you “[N]umbers can change quite dramatically depending on whether a company is using a one-second exposure, a six-second exposure, or even a one-minute exposure.”
(And by “company” they’re talking about the various measurement companies in the report, not the actual streaming services themselves.)
Making sense of all that is quite an undertaking and it’s great that NBCU is taking the lead in helping to both lay out the challenges and quantify the results in a way that is accessible to the sort of people who need to start thinking about this.
What You Need To Do About It
If you’re in the industry, you need to download the report ASAP. More than just a ranking guide, it stands on its own as a very smart and thorough overview of all of the current issues around measurement, why they exist and how we might solve them. Good knowledge to have whatever your job is.
If you’re one of the industry mandarins who looks at this and thinks it’s not really relevant, think again.
I am continually floored by the amount of misinformation I hear coming from people in senior positions who have not really kept abreast of all the changes the industry is going through and have not really looked at most of these vendors in years, and so hopefully this report will serve as a wake-up call.
If you’re Kelly Abcarian and the team at NBCU, take a bow, all of you. You’ve really produced something to be proud of.
On the flip side, I’m thinking this is not not a “one and done” report: the industry is in such a state of flux that this is more a snapshot of where we are now, and if things are not markedly different in February 2023, then lots of people are not doing their job.
If you want to know more about all this, look for an in-depth interview with Kelly Abcarian in TVREV next week as well as a follow-up from CIMM (that we are helping with) in the months to come, that will serve as a complement to this report.