The Bulletin Edition 14
From The Desk of
When was the last time you owned (or used) a printer at home? We have all been accustomed to printers sitting quietly in every office building corner, with their own cupboards full of reams of paper and oversized toner cartridges. But owning and regularly operating your own personal printer at home? I had a printer at home some 15 years ago but hadn’t even thought about buying one until recently. Printing at home was always very expensive. Two cartridges and a few printouts, some in colour and that is it, you’ll soon see the dreaded “low ink” streaks on your papers and then it's another $65 to start fresh with two full cartridges.
Printer companies such as Lexmark disrupted the high priced printer market by introducing very low priced and inefficient printers to lure buyers in, then the high cost of the cartridges was an attempt to recoup the hardware costs. Soon an entirely new industry spawned, that of the cartridge refill booths that were on every single high street and in every mall across the country. You could buy a refill kit yourself (word of warning on the disastrous mess they mostly caused) but then the printer companies got wise of this and started building printers that would only activate original cartridges. This defensive walled garden approach plummeted personal and home printer sales. Locking a customer in this way has been proven to be a terrible business model and industries all around the world are crumbling because of this approach. It was almost trying to be a forced subscription model than a customer choice subscription model. Does this sound familiar in so many other industries we see today?
I purchased a printer a few months ago on the recommendation from a friend in London. I do like to print documents, especially contracts or papers that require editing and redlining and perhaps I have a small piece of a schoolteacher in me, red pen poised at the ready. However, I am completely amazed at how even printing has jumped a few decades and now the benefit is clearly on the side of the user rather than the company selling overpriced cartridges.
After some research, I ordered the HP Deskjet printer and for a $6 monthly subscription, I can print up to 300 pages a month (in fact I have 3 months free) The printer is connected to the internet and with an app, I can (and so can HP) monitor my cartridge levels and how many sheets I have printed. As soon as my cartridges are low, HP automatically ships me two brand new cartridges at no extra cost with a recycling bag to return the used cartridges (again with no return shipping fees)
As I have covered in this week's “Discussed” section, these types of subscription models, particularly when a piece of hardware is involved, will be the future. Already we are seeing an array of consumer electronics a rock bottom prices due to the upsell (and requirement) of a subscription and/or ongoing revenue stream from the platform (think Roku TVs) I strongly believe this will continue into all aspects of our daily lives from appliances to transport, fashion to services, travel to accommodation.
For now, I am quite happy with my printer subscription and now, a new coffee bean subscription that I signed up for last week. If online subscriptions can make my offline life less cluttered and chore-like then I’m all for subscription inducing productivity and enjoyment!
Last week I published in the Notes section the first of a 2-part “behind-the-scenes piece” on how I put together and write The Bulletin each week. Part 2 will be published this coming Wednesday.
As ever, thank you all for your support and words of encouragement and I wish you all the success for your coming week [C]
The Weekly Dispatch
Netflix
It is evident that time has flown when Netflix releases its financial results. It seems like only yesterday that their previous quarterlies came out (as covered in issue 2 of The Bulletin) and the media, the financial markets and the industry were chatting all week on the predictions and “what to expect” dialogues. Here I summarize the key points and observations however, a copy of the official shareholder’s letter can be found here.
Netflix now has over 200 million subscribers, up 30% from the same period 2019
Added 8.5 million subs last quarter, higher than the estimate of 6 million
37 million subscribers in total were added in 2020
Price increases in the UK, USA and other territories lifted revenue 24%
Recent quarter revenue hit $6.6 billion, with profit reaching $542 million
Full-year revenue stands at $25 billion, with a profit of almost $2.8 billion
These gains have put Netflix in the bullish position of stating that they expect to stop borrowing to finance operations and content costs and would consider using excess cash to buy back their own stock
Netflix stock rose 9% after the announcement, despite falling short of earnings-per-share estimates
80% of new sign-ups came from outside the U.S and Canada
ARPU has grown from $9.88 to $11.02 since 2018
Europe saw the most growth in new subscriptions with 41% of overall subscription additions
In Q4, Netflix had 57.2M global app downloads versus 53.5M for Disney+
Netflix still only represents less than 10% of TV viewing in the U.S., it’s most penetrated market
Netflix has over 500 titles in the post-production phase, with plans to roll them out, one title a week, for the whole of 2021
Again, Netflix reiterated that ads will not appear on the service, with the CEO stating that it will never happen. Something to note on how they will further increase revenues in already penetrated markets, especially with bustling competition from Disney, HBO etc.
Netflix will release a “shuffle” feature later in 2021 that will play a random episode versus the user having to jump around trying to find something to watch
The initial launch of a Netflix linear offering in France is expected to roll out to more territories in the future.
Also noted this week:
Netflix has purchased the animated title The Mitchells vs. The Machines, from Sony Pictures, a movie that was initially planned for a theatrical release. Netflix will have worldwide rights to the titles, excluding China
According to Nielsen, Netflix users watched 57.1 billion minutes of the sitcom The Office last year and with the franchise now on Comcast’s Peacock platform, that's a large chunk of nostalgic viewing hours missing from Netflix’s platform.
Editor's comment:
As they say “a rising tide lifts all boats” and even though Netflix seems unstoppable at this time in growth it shouldn't be bad news for other streaming services, both the next big players and niche smaller services.
If streaming is going to take off to its maximum global potential, we need a “streaming revolution” not a “streaming war.”
The growth of connected TVs, including Roku, Samsung and LG, along with subsidized streaming sticks and integration of OTT services even into existing cable providers STB lineups, will only serve to increase the appetite of content and the access to a wide choice of channels and services around the globe. In some regions the large screen TV is still king, in other territories, mobile-only subscriptions proliferate with Spotify, Netflix and Amazon subscriptions only costing $1-2$ a month for the user. No one size will fit all but streaming platforms must adapt their content, their access and their price points regionally and locally. No consumer needs 500 channels anymore but what they do want is 4 streaming services that offer them thousands of films and TV shows.
Tubi
The Fox-owned ad-supported streaming service Tubi unveiled their “The Stream: 2021 Actionable Audience Insights for Brands.” report this week giving some interesting insights into the audience metrics, demographics and performance of their platform. The report can be viewed here.
Highlights:
Viewing of the free ad-supported serviced reach 2.5 billion hours in 2020 up 58% from the previous year
Tubi’s viewing audience average age is 20yrs
50% of the 33 million monthly active users are under 35yrs
“Our findings highlight Tubi’s young, diverse and nationally representative streaming audience, including viewers in harder-to-reach markets,” said Natalie Bastian, vice president of marketing at Tubi, in a statement. “This year, streaming should be an always-on touchpoint for advertisers looking to reach incremental audiences outside of their existing linear TV strategy.”
Such results are important observations for marketers, platforms and content owners to acknowledge that there is a large market out there for the younger demographic, even if there is competition from social media and gaming. Building up loyalty early on with younger viewers, with brand awareness and better audience metrics will be key to keeping them as active viewers.
FAST France
It was announced this week that Pluto TV will launch in France with over 40 curated channels. The service owned and operated by ViacomCBS Networks will go live on February 8th. France seems to be one of the European jumping-off points for new OTT linear viewing services. Netflix first launched its linear option in France a few months back citing the nations high percentage of linear viewing vs. on-demand as a good reason to use the country as a testing ground. Pluto TV will be the very first free ad-supported service to launch in France and will be available on all streaming services, including Apple TV, Amazon Fire TV and Android TV. Pluto TV has already launched their service (outside of the U.S.) in the U.K, Germany and Spain as well as LATAM.
The service will be heavily curated to the French audience, with content from the ViacomCBS library, along with third-party content from international and French broadcasters and distributors. Pluto TV France will cover all genres including. Lifestyle, kids, animation, movies, TV series, sports and documentaries.
Pluto TV has nearly 36 million users worldwide, across 24 countries and plans on further European country expansion throughout 2021.
Discussed
As always, Discussed covers a few notable topics that came up this week during my interactions on social media and in communication with colleagues that I think are worthy of sharing. Hopefully, they will get you thinking and additional contribution to the topics are always welcome so please get in touch.
The streaming boom won’t last forever: The pandemic level of streaming viewing and signups won’t last forever. How will services tackle churn during the next 24 months? Consumers will need to make choices on what to keep, especially as they compare entertainment subscriptions to others including music, gaming and other household digital expenditures. Will subscription sign-ups fall back to the levels pre-pandemic with households trimming from an avg of 4.7 services down to 2?
What’s next for the subscription economy?: I had many discussions this week online and over Zoom about how subscription models will evolve, in particular those connected to piece of hardware. Similar to my opening piece in From The Desk Of in today’s edition, a number of physical products are already leaning towards a complete subscription model with no hardware cost. If you sign up for the year, you receive the hardware for free. The higher the subscription price the more advanced the device model. Whoop is already leaning towards this in the health and fitness wearables sector, making a used marketplace somewhat obsolete (which could make things interesting) Four seasons are now launching “subscription fitness pods” where you can work out without having to rub shoulders with anyone else and all the equipment is included. Will other brands follow? Perhaps the Roku TV will be free, screen size depending on your subscription cost. There have been rumours swirling for a while about Apple introducing iPhone subscriptions instead of outright device purchase.
Not everyone hates ads: Post online chats with industry colleagues and the Tubi report noted above, the traditional cable subscriber is moving to SVOD services because they have grown tired with the plethora of ads on traditional TV. However, we now have a whole new younger generation TV viewer who has never had cable and doesn’t mind ads (as ads are such a part of social media and YouTube) This could bring a completely new and relatively untouched demographic to the hands of connected TV advertising.
The rise of franchise TV - Everything seems to be revolving around film and TV franchises now. Marvel, StarWars, even films and shows on Netflix seem to be a safe bet to keep churning out new content from. the same franchise. But is this the right model? Should content creators give viewers more of the same that they already like, or strive to give them something new? Which would be better for subscriber retention?
On Point
70 million - number of subscribers who watched “Lupin” on Netflix within the first 28 days of the title being on the platform (Netflix)
$47 - average monthly amount U.S. consumers pay for streaming services (JD Power)
50 billion - number of streams reached by the artist Drake on Spotify, an all-time platform record (Spotify)
9.2% - the percentage of total US streaming share Peacock captured at the beginning of January just with the series The Office (ReelGood)
40 million - number of TV viewers who tuned into to watch Joe Biden’s presidential inauguration
14% - the percentage drop of late-night broadcast TV show viewing YOY (Nielsen)
7 million - number of paying SVOD subscribers in Indonesia as of Jan 2021 (AMPD)
6th - India will become the sixth-largest OTT market by 2024 (PwC)
2 billion - The estimated number of active SVOD subscriptions globally by 2025 (Juniper)
70% - the percentage of U.S. residents that now have access to low-cost broadband (BroadBandNow)
Productivity
I had no qualms about including this great article from the Guardian as this week's Productivity piece and it really has had me thinking over the past few days about the notion of being labelled as a beginner at something, albeit later in life. It is a long read so. I highly recommend you save it to read later when it can be fully absorbed.
We tend to think that our childhood and early years are the only periods where we learn all we need for the rest of our lives and that this groundwork is then stacked up with experience, almost like a knowledge and skill accumulation system. However, as noted in this brilliant piece, it doesn’t have to be that way and being a beginner later in life can bring immense benefits, career changes, comfort zone challenges and how learning new skills later in life can for some, become addictive.
One To Read
This week's recommended read could not have come are a better time and I am always eager to see the latest book releases and how the topics and narrative fit in with that of the shifts and global changes we have seen over the past 12 months. I can’t imagine being a nonfiction author is an easy time right now. Imagine if you have spent the last 5 years writing a book on The Trends of The Next 3 Years” or “Will We Really Experience A Global Pandemic” or “How To Travel The World On The Cheap In 2020.” I am sure many authors put their head in their hands last year when they realized that their manuscripts had become irrelevant almost overnight.
I will admit I am only a chapter or two into this book but already highly recommend that you add it to your reading list. Reset comes across as though the author whipped up this 331-page book just last weekend considering the timely relevance of so much of its contents. With questions rising around the role of the internet, social media in today’s society and my own questions, especially after last weeks political changes, author Ronald J. Deibert digs deep into the sometimes difficult topics of the realities of “The Market for Our Minds,” when we think we are just sharing our lives to our friends and families and yet the reality of what goes on underneath all this is a lot further from the truth. Accountability of social networks and media outlets is inherently weak, considering the role they now play in society, with the author highlighting that the internet and social media is almost a completely unregulated surveillance industry. This is not a book of scaremongering paranoia but one that poses questions on how we use social media and the internet and what we need to do to take a step back to hopefully reclaim the internet to be one that benefits rather than divides.
Diversion
Remember 20 years ago when, with the click of the mouse on your 56k dial computer, you could travel across the globe and see a street corner or a view via a grainy webcam set up to refresh with a new photo every 10 seconds? These windows to the world gave us opportunities to see birds hatching, volcanoes pending eruptions, traffic cams to plan your commute and sometimes just a nice view of somewhere distant and tropical. Now video and especially photography of places is all about perfecting the shot, making sure the subject or view is shown in its best (or distorted) light, free from the rawness and imperfections of everyday life.
Window Swap is this weeks diversion and a welcome one it is. After gazing outside my window at either snow or leafless trees and having two events sent online this month, where I would normally be jetting off somewhere warm and different, Window Swap gives a raw and sometimes surprising peek into places afar (and perhaps even in your own city) A fair distance from the perfections of Instagram and a nice reminder than a world untouched is still out there for us all to explore hopefully soon.
And Finally
The role of the remote
It is fascinating that despite most of us owning a cellphone, every TV, streaming box or stick comes with a separate remote that if you live in a household with teenagers, most of the time the batteries are missing or the remote just doesn’t work because it’s been dropped on the floor so many times. So why do device manufacturers still include the remote and how valuable is it for Netflix or Disney to have their own branded button on these often mislaid objects?
Protocol explores this very topic in this insightful piece that highlights the challenges connected-TV hardware companies are having when they end up promoting a competing streaming service on their own remotes “branded buttons.”
Is Spotify’s Podcast Strategy Failing?
A topic I would certainly like to explore in more detail (plans for The Focus, a new subscription service are in the works) this week news rumbled out over the viability of Spotify’s podcast strategy, with the stock being downgraded by Citi on the basis that competition is heating up, especially from Apple, and that spending hundreds of millions of dollars on celebrity exclusives may not have been worth it with poor return and lacklustre additional downloads. It will certainly interesting to see the financials on how the streaming music service aims to recoup the costs and keep and attract listeners.
This concludes this week’s edition of The Bulletin. If you would like further details on anything mentioned or have questions or suggestions that you would like to discuss on email or to schedule a call, please drop me a note.
Cheers and thank you for your support and I wish you all the success for your coming week.