Media Companies Are Ready to Sell. Does Anyone Want to Buy?

[michael hagerty]

Unless streamers remove the option of cancelling after one month, which is ridiculously counterproductive, the churn issue will never go away and be just a fact of life.

And given that it's not a big threat (again, none of these articles show the context as to whether churn is resulting in a net loss of subscribers and revenue), it can be a fact of life.

Should it become a problem in need of a solution, minimum subscription terms would probably piss people off.

Streaming churn is a byproduct of the fact that unlike broadcast TV with its 22-episode seasons, streaming series are usually 12, 10, eight or even six episodes per season, with a year in between (longer in the case of the writers' and actors' strikes).

If you're going to do that and reduce churn, you need a stable of hits that begin their seasons just as another hit ends. And consolidation to three or four profitable streamers will make that a lot more achievable.

 

[Rusty Muck]

Streaming churn is a byproduct of the fact that unlike broadcast TV with its 22-episode seasons, streaming series are usually 12, 10, eight or even six episodes per season, with a year in between (longer in the case of the writers' and actors' strikes).

If you're going to do that and reduce churn, you need a stable of hits that begin their seasons just as another hit ends. And consolidation to three or four profitable streamers will make that a lot more achievable.

Combining Discovery+ into HBO Max and creating Max broadened the userbase considerably but did not solve their churn problem in the least. Someone craving TLC content is not going to stick around for an HBO drama. Totally different viewership.

There is a good possibility that a combined Peacock/Paramount+ or Max/Paramount+ will have a much higher churn rate for the exact same reason. People will still wait to seek out a show they want to see, binge watch for a month, then cancel.

 

[michael hagerty]

Combining Discovery+ into HBO Max and creating Max broadened the userbase considerably but did not solve their churn problem in the least.

Again, we don't know that churn is a problem. When churn causes overall subscriber numbers to go flat or decline, it is.

Someone craving TLC content is not going to stick around for an HBO drama. Totally different viewership.

Correct. But just like one restaurant can serve both steak and hot dogs, one platform can cater to different viewer profiles.

There is a good possibility that a combined Peacock/Paramount+ or Max/Paramount+ will have a much higher churn rate for the exact same reason. People will still wait to seek out a show they want to see, binge watch for a month, then cancel.

Right. Churn is a given. There are ways to minimize it.

Unlike the Netflix model of dropping all episodes of original content at once and allowing binging, Warner and Apple tend to do an episode a week. Wanna watch all ten episodes of the latest season of a hit show like "Succession"? That's going to keep you subscribed for ten weeks.

Yeah, you can wait until all the episodes are up there and binge them in a weekend, but for buzzworthy shows, it's effective.

Even Netflix is modifying its release model somewhat---"The Crown"s final season of ten episodes saw the first four released all at once and the final six a month later.

It's also why catalog product is so valuable. It'll take you a while to do all 236 episodes of "Friends", or all 331 of "ER".

 

[fybush]

I will be the first to admit that I don't fully understand the way that so many modern business models seem to expect and even thrive on churn. It seems ridiculous to me that I can get a much better deal on a phone if I dump the carrier I've been with for years and switch my service somewhere else, but if that's how VZ and ATT want to play the game, I'll play.

There's so little friction involved in switching streaming service on and off that 6 percent churn actually seems pretty low. I think the question I'm most curious about - and I am sure they won't tell us - is whether Amazon Prime has lower churn than the others. I don't always have something I'm watching there, but I don't drop the service because there's always someone in the household using the free shipping and other Prime discounts.

 

[tall_guy1]

What the article doesn't tell you is whether it's a net loss of customers or made up for with new subscribers. It's just a cancellation rate minus context.



But not any one service---all of them, at different points over the year, with no accounting as to how many came back.

I contributed to that statistic. Hell, I probably skewed it high. Last year, I cancelled:

• Disney+ (grandkids moved 2,500 miles away---I got it when they premiered "Hamilton" and kept it because I figured the kids would be at our house a lot.)
• Hulu (finished Season 5 of "What We Do In The Shadows". We'll be back when Season 6 drops.)
• Peacock (finished Season 1 of "Poker Face". We'll be back when Season 2 drops.)
• Paramount+ (finished Season 2 of "Yellowjackets". We'll be back when Season 3 drops.)
• AMC+ (finished Season 1 of "Cooper's Bar", which is moving to another platform. "Better Call Saul" ended. Will renew for "Dark Winds", but after we finish some stuff on other platforms.)
• Starz (finished Season 2 of "Shining Vale" and they've cancelled it and removed it from the platform. That would land them on my FTG list, but "Party Down" Season 4 will probably drop this fall and I'll be back.)

That's six platforms. Disney+ is the only one I wouldn't be likely to renew, except it and Hulu are going to be one platform this year, and I'll go back to Hulu.

We're actively watching shows on Netflix, Amazon and Max. As long as we are, I'll keep those subscriptions. Even if we weren't actively watching anything on Amazon, it comes with our Prime membership).

We're not actively watching anything on Apple+ at the moment, but my Apple One bundle (Music, TV and storage) makes it make sense to keep while waiting for new seasons of "The Morning Show", "Severance" and "Schmigadoon!". There's also a rumored new season of "Big Little Lies".



Streaming services aren't "beginning" to struggle with profitability. Amazon, Netflix and Hulu are all profitable and have been. Every other major has been in the red since day one and only Max has fixed that and become profitable via some very aggressive cuts.

Do you watch any service's back catalog? On Max, I watch "Home Movies" which is from 1999!

 

[Mikey Radio]

I will be the first to admit that I don't fully understand the way that so many modern business models seem to expect and even thrive on churn. It seems ridiculous to me that I can get a much better deal on a phone if I dump the carrier I've been with for years and switch my service somewhere else, but if that's how VZ and ATT want to play the game, I'll play.

..And yours is just one example of many, Scott. Take car insurance as another. Each time my carrier raises my rates, I do a price comparison to ensure I'm being treated fairly. A few years back I had Progressive. They raised my rates, so I jumped to State Farm as they offered a better deal for the same coverage. A year later, State Farm had a significant jump so I looked at rates again and guess who was cheapest? Progressive - so I jumped back. Last year, Progressive raised me so I did some price comparisons on the internet, and when doing that, Progressive had a lower cost than what I had been paying them, for the same exact coverage levels...So I bought that particular Progressive policy rather than renewing my existing one...It worked! To boot, they still allowed me to keep my diamond status as a long-time customer even though I more or less let my old policy number lapse and got a new one during that transaction. Jumping around and doing price comparisons like that doesn't hurt ones' credit - and as long as you're fully covered and your insurance never lapses it doesn't really matter who you have coverage with. Doing a bit of checking on occasion can result in significant savings.

 

[michael hagerty]

There's so little friction involved in switching streaming service on and off that 6 percent churn actually seems pretty low. I think the question I'm most curious about - and I am sure they won't tell us - is whether Amazon Prime has lower churn than the others. I don't always have something I'm watching there, but I don't drop the service because there's always someone in the household using the free shipping and other Prime discounts.

From Statista:

...in the first quarter of 2023, Amazon Prime had a 30-day trial after which 72 percent of users subscribed to the service. The conversion rate has increased, as it was 67 percent in the same period of 2022.

Moreover, 97 percent of Amazon Prime members renewed their membership for a year, and 99 percent renewed it for a second year over the first three months of 2023.


Come for the shipping, stay for "The Marvelous Mrs. Maisel" and "Jack Ryan".

 

[michael hagerty]

Do you watch any service's back catalog? On Max, I watch "Home Movies" which is from 1999!

I do.

My years as an evening disc jockey and as a reporter doing stories on the late TV news meant that I didn't see most prime-time TV from 1972 on.

After I got a VCR (1981), I'd tape the stuff that mattered to me like "M*A*S*H", "Hill Street Blues", "St. Elsewhere", "Moonlighting" and "L.A. Law" and a bunch I'm forgetting. But when kids entered the picture in 1991, grownup TV kind of fell by the wayside.

With streaming, my wife and I are able to catch up on some blind spots. While we're very much interested in new shows, we generally pick one older show and watch it either all the way through or until we don't care anymore. Usually on a night when there's not a new show, or if we're up for watching something after the new show (we tend to max out at about two hours a night in front of the tube).

For us, over the last few years, that's included "Friends", "Frasier", "Seinfeld", "The Good Wife", "The Good Fight", "Studio 60 On The Sunset Strip", "Alias", "The Office", "Parks and Rec", "The Good Place", "Veep", "Designated Survivor", "30 Rock", "Cougar Town", "The West Wing", "Arrested Development", "Mad Men", "Breaking Bad", "The Practice" and some others I'm zoning right now.

We've just started "E.R." in the last week---that will probably take the year.

 

[davideduardo]

My years as an evening disc jockey and as a reporter doing stories on the late TV news meant that I didn't see most prime-time TV from 1972 on.

I lived most of the period from 1963 to 1992 outside the continental U.S. and some of it in Mexico and Ecuador so I missed essentially all the comedy shows and most of the procedural dramas... from Twilight Zone and Newhart onwards. So there is always a batch of shows worth seeing.

NYPD Blue, St. Elsewhere, Hill Street Blues are some of the biggies I totally missed. I just recently did all of "E.R." during COVID. The good ones are timeless. But because my experience and culture is flavored differently, I don't find most of the comedy shows to be relevant... and that makes the humor fall flat.

 

[Rusty Muck]

I will be the first to admit that I don't fully understand the way that so many modern business models seem to expect and even thrive on churn. It seems ridiculous to me that I can get a much better deal on a phone if I dump the carrier I've been with for years and switch my service somewhere else, but if that's how VZ and ATT want to play the game, I'll play.

There's so little friction involved in switching streaming service on and off that 6 percent churn actually seems pretty low. I think the question I'm most curious about - and I am sure they won't tell us - is whether Amazon Prime has lower churn than the others. I don't always have something I'm watching there, but I don't drop the service because there's always someone in the household using the free shipping and other Prime discounts.

High levels of churn like this is, simply put, impractical and unworkable. Merging entire motion picture studios out of existence to merge the streamers under the notion it will stop an obvious cultural shift smacks of both desperation and folly. It will not solve the churn problem and only make it worse.

The whole notion of motion picture studios creating streamers was largely a pile of fool's gold to begin with. Unless you're the size and scope of Disney, it was and is doomed to failure.

 

[michael hagerty]

High levels of churn like this is, simply put, impractical and unworkable.

Pro tip: Blanket statements like this work best (as in at all) when supported by facts. 6.3% churn across all platforms is 93.7% retention.

Subscriber counts at all the majors continue to grow, not decline.

Churn at these levels isn't hurting them and is baked into the model of how the shows on the platforms work.

Merging entire motion picture studios out of existence to merge the streamers under the notion it will stop an obvious cultural shift smacks of both desperation and folly. It will not solve the churn problem and only make it worse.

Paramount's issues go beyond streaming. Shari would be looking to bail even if all she had to worry about were the mothership and CBS.

The whole notion of motion picture studios creating streamers was largely a pile of fool's gold to begin with. Unless you're the size and scope of Disney, it was and is doomed to failure.

They're all stupid. They should have had you on speed dial in 2017. Got it.

 

[Kelly A]

I think the question I'm most curious about - and I am sure they won't tell us - is whether Amazon Prime has lower churn than the others. I don't always have something I'm watching there, but I don't drop the service because there's always someone in the household using the free shipping and other Prime discounts.

They actually talked about that very issue on CNBC this morning. The bottom line was; that consumers LOVE Amazon. 30% of the total holiday shopping in the U.S. this past year was straight through Amazon. Prime memberships come with Amazon streaming. People shop at Amazon and don't bother worrying about the streaming tucked in as part of their membership. It's all just Amazon to them.

 

[michael hagerty]

They actually talked about that very issue on CNBC this morning. The bottom line was; that consumers LOVE Amazon. 30% of the total holiday shopping in the U.S. this past year was straight through Amazon. Prime memberships come with Amazon streaming. People shop at Amazon and don't bother worrying about the streaming tucked in as part of their membership. It's all just Amazon to them.

Exactly. Even if there were an existential crisis in streaming (there's not---this is the consolidation phase you learn about in Econ 101), Amazon would be fine because 167 million Americans subscribe to Prime and video's included, not an add-on.

 

[TheBigA]

People shop at Amazon and don't bother worrying about the streaming tucked in as part of their membership. It's all just Amazon to them.

At one time ESPN was like that for cable subscribers. Just tucked in there with everything else.

 

[Kelly A]

Exactly. Even if there were an existential crisis in streaming (there's not---this is the consolidation phase you learn about in Econ 101), Amazon would be fine because 167 million Americans subscribe to Prime and video's included, not an add-on.

Which, by the way; only two more episodes left of Season 2 of Reacher. Love that show. Thought season 1 was a little better, but have found 2 entertaining.

 

[Larry]

Streamers might piss off a lot of people with minimum commitments (eg 1 year) but it might make sense for them to offer deeper discounts for annual subscriptions.

 

[Mikey Radio]

They actually talked about that very issue on CNBC this morning. The bottom line was; that consumers LOVE Amazon. 30% of the total holiday shopping in the U.S. this past year was straight through Amazon. Prime memberships come with Amazon streaming. People shop at Amazon and don't bother worrying about the streaming tucked in as part of their membership. It's all just Amazon to them.

Exactly. Even if there were an existential crisis in streaming (there's not---this is the consolidation phase you learn about in Econ 101), Amazon would be fine because 167 million Americans subscribe to Prime and video's included, not an add-on.

Agreed. Probably 80% of my shopping this year was done via Amazon. I had part of my order sent to my place as I was gifting it here, and part sent to a relative's home across the country, as I would be celebrating with them and gifting other stuff to them there. All of it showed up to the right place, on time and as promised. One guy had something that didn't fit right. I logged on to Amazon and had a gift/return receipt sent to his e-mail address. I decided not to gift something I had purchased. I went to Amazon, printed a QR code for it, and as soon as I dropped it off at any UPS Store, Whole Foods or Amazon location here, I immediately got my refund. To boot, since I have Prime, many of the things I bought were delivered to me within 2 hours at most. Others within a day or two max. In short, simpler, faster easier, painless and better than most any brick and mortar store or website, especially when shopping en masse.

Oh yeah, I also have Amazon's streaming service as part of that membership. I personally don't watch a lot of TV, but the remote for my LG smart TV has an "Amazon" button on it, right next to the button for Netflix - so we may check it out on occasion to see if there's a show or movie or series we're interested in. Personally I could take or leave it, but it's there so I use it.

 

[michael hagerty]

Which, by the way; only two more episodes left of Season 2 of Reacher. Love that show. Thought season 1 was a little better, but have found 2 entertaining.

I'll add that to our list!

 

[michael hagerty]

Streamers might piss off a lot of people with minimum commitments (eg 1 year) but it might make sense for them to offer deeper discounts for annual subscriptions.

Until and unless the streamers develop deep stables of proven hit shows and schedule them to begin as others end, even a deep discount is going to result in people paying for a service they're not using for weeks or months at a time.

Again, churn is not a problem. Subscriber counts at all the majors continue to grow (I looked it up).

Consolidation will fix part of the issue---popular shows spread over too many platforms. When there are only three or four places to sell a mass-appeal show, those platforms will be able to build those stables and schedules.

 

[Rusty Muck]

Pro tip: Blanket statements like this work best (as in at all) when supported by facts. 6.3% churn across all platforms is 93.7% retention.

Subscriber counts at all the majors continue to grow, not decline.

Churn at these levels isn't hurting them and is baked into the model of how the shows on the platforms work.

So why is this even being presented as a problem elsewhere on the thread by posters that are not me?

Paramount's issues go beyond streaming. Shari would be looking to bail even if all she had to worry about were the mothership and CBS.

And why would any buyer for the company want the liabilities like the cable networks?

They're all stupid. They should have had you on speed dial in 2017. Got it.

It's not my fault hindsight is 20/20.