StreamWars


By Keith Teare • Issue #307 • View online

Netflix is a buy, along with HBO and Disney. This is a week we should mourn broadcast and cable (or celebrate 🙂 ), not Netflix.

Content

Editorial

The King is dead, or are they? Indeed, the Google Finance chart seems to imply that Netflix is in horrible shape. From a 52-week high of almost $700, its stock sits at $218.22 as Thursday, 21st April.

At the same time, Apple TV+ seems to be growing into a powerful service. Friday Baseball has recently been added to the service that won the Oscar for best picture. Rumors abound that Sunday Ticket football will come soon. And HBO Max is also prospering. Meanwhile, CNN+ is closing down.

This can all give a confusing picture of what the trends are. So let’s start with the real facts (or opinions as they are sometimes now called).

  1. Streaming is pretty much replacing Broadcast, Cable, and Satellite TV delivered by Verizon, Comcast, AT&T, DirecTV, Dish, and the rest. There is zero growth in broadcast, cable and satellite.
  2. Streaming is at the nascent stage. Fiefdoms are being formed. Sports and News are being pulled in. But the end game is not yet straightforward.
  3. Netflix is the 800 Ib Gorilla. From The Guardian: “Around the world, Netflix has 222 million subscribers. In its biggest markets, however, it has an appreciable portion of all households: in the US and Canada, 75m out of a total 142m households have a subscription to Netflix.”
  4. Disney is a close second: From TechCrunch: Disney+ added 11.8 million new subscribers last quarter to reach 129.8 million subscribers. Disney announced as part of its Q1 2022 earnings release and said it’s still on track to reach 230 to 260 million subscribers by 2024. The company’s quarter beat projections after only adding 2 million subscribers in the previous quarter. Disney+ has 42.9 million subscribers in the U.S. and Canada and has 41.1 million internationally. It also has 45.9 million Disney+ Hotstar subscribers, which is a collaborative service offering between Disney and Star India’s existing streaming service.
  5. HBO is growing but far smaller. From The Verge: “The numbers showed HBO added nearly 13 million subscribers last year across both traditional HBO and HBO Max, including growth of three million in the last quarter. Now both services combine for 76.8 million subscribers worldwide, which is still dwarfed by Netflix’s 221.64 million subscribers and even the most recent Disney Plus count of 129.8 million. As we noted in January, HBO Max is doing great… according to HBO Max.”
  6. Paramount plus (Viacom) is a lot smaller: From Variety: “Paramount Plus and Showtime gained 9.4 million streaming subscribers, topping a combined 56 million subscribers by the end of last year, as their parent company ViacomCBS — soon to be renamed Paramount — indicated that it was relying more heavily on revenue from streaming-media operations. 80% of those new subs — or 7.3 million — were strictly Paramount Plus additions. By the close of Q4, Paramount Plus’s total subscribers reached 32.8 million.”
  7. Peacock is next. From The Wrap: “Peacock has “over 9 million paid subscribers,” Comcast chairman and CEO Brian L. Roberts revealed on Thursday. The streaming service is making a little less than $10 monthly per paid subscriber, including advertising, he added. We’ll save you the math: that’s $90 million per month in Peacock subscription and advertising revenue. Most Peacock users have opted for the $4.99 ad-supported option (Peacock Premium) over the $9.99 ad-free option (Peacock Plus), Roberts said.”
  8. Apple’s TV+, which like HBO, has great content, is also a player. From Statista: “The number of Apple TV+ paid subscribers amounted to an estimated 25 million as of March 2022. Additionally, there were around 50 million users worldwide that access the SVOD platform via promotions as the service is available for free for one year with the purchase of new Apple devices.” Those numbers will explode if Apple really does become the home for NFL Sunday Ticket. Let’s hope that Football (Soccer) comes next.

The collapse of CNN+ with reportedly only 10k viewers, is symptomatic of how hard it will be for news to gather subscribers. CNN is a very good news channel, especially in times of big news, like now. But its contracts with distributors prevent it from running a meaningful streaming alternative. Even if it could, it would really have to close down the free service or run it ad-supported. People like me would pay a sub, free of ads, and others would take the ad-supported version. Walking away from its distribution agreements is a $2-3 billion annual loss. But I do believe it could make that up as a global steaming service leveraging free/subscriber as a model. It is not going to do that. This leaves the way open for Twitter, Substack, and others to evolve what online news is.

So is Netflix in trouble? Only if Wall Street is the referee. Wall Street scores according to growth. And the mantra is that Netflix growth has stalled. That has dinged the stock. But has it really stalled? With global reach and household penetration still low in most markets the company has enormous growth potential. Of course, it needs a strategy – like CNN. But unlike CNN, it has no limits on what it can do. Introducing games and ad-supported lower tiers is easier for them. I think Netflix does not stop growing until it is in over one billion homes globally. I doubt Reed Hastings disagrees.

HBO, Apple, and Disney are the next three big winners. The losers list includes Comcast, Viacom, AT&T, Verizon, DirecTV, Dish and the other legacy players. Fox, NBC, ABC, CBS are all going to become brands with cobwebs on them.

More in this week’s video

Video


StreamWars

Netflix Is Now Just Another TV Firm in Wall Street’s Eyes

What goes around, comes around. Netflix’s stunning 35% collapse on the stock market today should be a lesson to investors in all high-flying companies (I’m thinking of you, Tesla shareholders). The same investors who rush in helter-skelter while a business is expanding, happily paying any price, rush right back out again as soon as growth comes to a halt. And they won’t care how much a stock has already fallen or how cheap it may have become.

Before Tuesday evening, Netflix shares had dropped 50% since November, when it traded as high as $691. And yet at today’s close of $226, the stock is down nearly 70% from that November high and is back to where it traded at the start of 2018, when Netflix had just over half its current number of subscribers. In a further sign of how things have changed, Netflix is now trading at almost exactly the same multiple of this year’s expected revenue as Disney, the leader of the supposedly slow-growing old-school TV folks, according to data from S&P Global Market Intelligence. What a comedown! Back in January, Netflix’s multiple was twice that of Disney, Koyfin data shows.

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Netflix Loses Paid Users For the First Time in a Decade

And with things getting tighter and stock price lowering, Netflix has started to crack down on password sharing, testing out a feature that would prompt subscribers to pay extra if they were sharing the service with people outside their own household. So, when the company announced that it had lost 200,000 subscribers — the first decline in paid users since late 2011 — and warned of further problems ahead, the feeling in the room must have been less ‘Netflix and Chill,’ and more ‘ Netflix and OMFG it’s over.’

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Netflix Struggles to Hold Its Place in the Streaming Wars

WHEN THE DIRECT-TO-VIDEO docuseries of the streaming wars is filmed, it’s easy to imagine this week’s disappointing Netflix earnings as a big episode-ending cliffhanger: Hemorrhaging customers for the first time in a decade, the company said Tuesday it plans to lose even more throughout 2022 — and the future of the company is at stake.

Netflix lost 200,000 more paying customers than it gained in the first three months of the year, and it predicts it’ll lose another 2 million customers in the second quarter. “Our relatively high household penetration — when including the large number of households sharing accounts — combined with competition, is creating revenue growth headwinds,” the company wrote in a shareholder letter. The loss of 700,000 customers in the last three months in Russia, the result of sanctions, was compounded by an unforecast 600,000-customer loss in the United States and Canada, and another 300,000-customer hit across Europe, the Middle East, and Africa. Gains in the Asia-Pacific region helped cushion the blow, but still resulted in a net loss in users.

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Why Netflix is suddenly losing subscribers

Here’s one way you can tell how big a deal this: In an earnings call after announcing his company’s results, Co-CEO Reed Hastings said the company was going to eventually add an advertising-supported version of the service, which would be cheaper than its current ad-free version. That’s the most obvious takeaway from Netflix’s stunning admission on Tuesday afternoon: Instead of adding more than 2 million subscribers in the first quarter of the year, as it predicted three months ago, it ended up losing 200,000.

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Apple May Have Already Inked Deal for NFL Sunday Ticket — MacRumors

Back in July, rumors suggested that Apple was pursuing streaming rights for the National Football League’s “Sunday Ticket” package, and as of this week, there is a report suggesting that the deal could already be done.

NFL Sunday Ticket has been described as “Apple’s to lose” by Matthew Belloni of Puck News in a report that’s been making the rounds today. In fact, he says that the deal is “actually done” according to one of his sources, and is being kept quiet at the behest of Apple.

My sources say it’s Apple’s to lose, at this point. (One source told me this weekend that the deal is actually done and is being kept quiet at Apple’s request, which I haven’t confirmed and don’t know for a fact; Apple isn’t commenting.) That would make sense: Even after winning top Emmys and the best picture Oscar, C.E.O. Tim Cook has said Apple is merely in its early days of premium video, and nothing is more premium than NFL football. Plus, it would explain Apple’s recent foray into live events and advertising with MLB games.

Given that the information comes from unspecified sources and has yet to be confirmed, it should be viewed with some skepticism at this point. Apple was in talks with NFL executives last year, but there was competition from other TV networks and tech firms like Amazon.

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HBO Max and HBO gained 3 million subscribers in Q1 as Netflix reports subscriber decline

AT&T for the last time reported results for its entertainment business, with its Q1 2022 earnings out this morning. The company, which unloaded its WarnerMedia division earlier this month, still operated the business in the first quarter. The company said HBO Max and HBO ended March with total global subscribers of 76.8 million, up 12.8 […]

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CNN+ Streaming Service to Shut Down at End of Month

The New York Times:

Warner Bros. Discovery has decided to shut down CNN+, the ballyhooed streaming service that had been intended to bring CNN into the digital future, just weeks after its splashy debut, according to two people familiar with its plans.

The service is set to cease operations on April 30, the sources said.

Chris Licht, the incoming president of CNN, called an all-hands meeting among CNN+ staffers for noon on Thursday to share the news.

Ignominious, to say the least. Even Quibi lasted eight months.

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RIP CNN+ 2022–2022

CNN+ will celebrate its one-month anniversary by shutting down.

According to Variety, CNN’s incoming CEO Chris Licht invited staffers to a meeting at noon ET on Thursday, at which the announcement was said to be made official.

The service will officially shutter on April 30, according to an email Licht sent to CNN+ staffers that was obtained by Axios.

“In a complex streaming market, consumers want simplicity and an all-in service, which provides a better experience and more value than stand-alone offerings,” Licht wrote.

Whether CNN+ was successful or not is up to debate — the service had a reported 150,000 subscribers three weeks after its launch, with a goal of signing up 2 million in its first year. However, its launch coincided with the corporate merger of Discovery and WarnerMedia, and it became clear quickly that Discovery’s leadership had no interest in a separate news subscription service. Discovery executives quickly ceased marketing spend to promote the service and laid off CNN’s chief financial officer.

CNN+ staffers will continue to be paid and receive benefits for 90 days while they are given the opportunity to apply for other positions within CNN and Warner Bros. Discovery. Licht also announced that CNN+ head Andrew Morse will leave the company.

“While today’s decision is incredibly difficult, it is the right one for the long-term success of CNN,” Licht concluded in his email to staff. “It allows us to refocus resources on the core products that drive our singular focus: further enhancing CNN’s journalism and its reputation as a global news leader.”

It’s expected that some of the CNN+ catalog, including shows like the late Anthony Bourdain’s “No Reservations,” will find its way to HBO Max. The fate of the service’s new programming, and new interactive formats like the “Interview Club,” is unknown at this time.

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A16z Combinator

Introducing a16z START

Today, we officially launched the a16z START program, which fuels founders at the earliest stages of company-building with 1:1 support, network introductions, and up to $1M in funding.

Powered by the a16z seed fund in collaboration with partners investing …

The post Introducing a16z START appeared first on Andreessen Horowitz.

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Why does a16z need its own Y Combinator?

For over a year, Andreessen Horowitz has quietly piloted its own take on an accelerator for early-stage entrepreneurs, and today, the firm announced the program’s official debut.

In exchange for an unannounced percentage of ownership, “a16z START” will offer early-stage founders up to $1 million in venture capital. The checks are backed by a $400 million seed fund, which closed in August 2021.

The remote-first program will accept founders on a rolling basis and wants to connect folks with partners for advice, potential customers or investors, and of course, other entrepreneurs.

On the relatively brief application form for START, a16z names six categories — American dynamism, consumer, enterprise, fintech, games or other. Investment terms will be discussed with final candidates, the form says.

This program extends Andreessen Horowitz’s stamp of approval to the earliest step of an entrepreneur’s journey: the idea stage, or the pre-quitting-your-day-job part of startup life. The company has invested in solo founders before their companies ever existed, but this program appears to be a more formal effort to bring folks into entrepreneurship. Notably, there is no mention of a diversity mandate or focus.

The list of early participants in this program shows that a16z is certainly interested in international entrepreneurs, similar to how Y Combinator has increasingly grown its global presence over the past few years. Some of START’s first entrepreneurs include executives from Rappi, a Colombian unicorn.

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The Battle for Twitter

Back to the Future of Twitter

Elon Musk wrote in a letter to Twitter’s board:

I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy.

However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company.

As a result, I am offering to buy 100% of Twitter for $54.20 per share in cash, a 54% premium over the day before I began investing in Twitter and a 38% premium over the day before my investment was publicly announced. My offer is my best and final offer and if it is not accepted, I would need to reconsider my position as a shareholder.

Twitter has extraordinary potential. I will unlock it.

The vast majority of commentary about the Musk-Twitter saga has focused on the first three paragraphs: what does Musk mean by making Twitter more free speech oriented? Why doesn’t Musk believe he can work with the current board and management? Does Musk have the cash available to buy Twitter, and would the Twitter board accept his offer (no on the latter, but more on this below)?

The most interesting question of all, though, is the last paragraph: what potential does Musk see, and could he unlock it? For my part, not only do I agree the potential is vast, but I do think Musk could unlock it — and that itself has implications for the preceding paragraphs.

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Elon Musk secures $46.5bn to fund possible hostile bid for Twitter

Tesla CEO is putting $21bn of his own money in the package, according to US watchdog filing

Elon Musk has secured $46.5bn (£35.6bn) in financing to fund a possible hostile bid for Twitter and is putting up $21bn of his own money as part of the package.

On top of that equity, Musk is raising a further $12.5bn for the offer via a margin loan secured against his shares in Tesla, the electric carmaker that he runs as CEO. Morgan Stanley, the US investment bank, is leading a group of financial institutions providing $13bn in debt financing.

Continue reading…

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All About Musk

Elon Musk’s The Boring Company Raises $675M To Dig More Tunnels

Tunnel construction startup The Boring Company raised $675 million in a new round of funding that brings its valuation to nearly $6 billion, the company said late Wednesday.

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Tesla has another record quarter in tumultuous period for Elon Musk

Electric car company reports $18.8bn in revenue for the first quarter, up 81% from a year before

Tesla smashed Wall Street estimates for revenue and profit in another record quarter on Wednesday, despite a tumultuous few months for its CEO, Elon Musk, and ongoing supply chain concerns.

The electric car manufacturer reported $18.8bn in revenue for Q1 of 2022, up 81% from a year earlier. The report beat analyst expectations of $17.8bn, sending Tesla shares up 4% in after-hours trading.

Continue reading…

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Crypto Corner

Announcing a16z crypto research

The best industrial research labs throughout history have played a critical role in pioneering much of modern technology. Two modern examples of successful research labs — both founded in the wake of radical advances in the field of artificial intelligence …

The post Announcing a16z crypto research appeared first on Andreessen Horowitz.

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a16z Crypto’s Comment on SEC Exchange Act Proposal

Today we submitted a comment letter objecting to the SEC’s proposed definition of an exchange as overbroad and likely to inhibit web3 innovation.

Specifically, our comment seeks clarification that it does not apply to DeFi protocols, and asserts that it …

The post a16z Crypto’s Comment on SEC Exchange Act Proposal appeared first on Andreessen Horowitz.

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Coinbase unveils its NFT marketplace, challenging OpenSea

Coinbase has unveiled a long-awaited NFT marketplace, amping up the competition in a fast-growing sector that’s been dominated by a single player, OpenSea.

The crypto exchange announced Wednesday the beta launch of Coinbase NFT where users can check out an initial collection for sale on the Ethereum blockchain.

Beta testers will be able to buy and sell NFTs with a Coinbase wallet or a self-custody wallet. The company is waiving transaction fees “for a limited time,” Sanchan Saxena, vice president of product for ecosystem products, said in a blog post.

Fees eventually will be added and will be “in-line with Web3 industry standards, and we’ll provide notice before anything changes,” Saxena said. OpenSea charges a 2.5% fee, and allows NFT creators to set their own fees, including royalties on subsequent sales.

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Essay of the Week

The great streaming service shakeup

Good morning! Netflix is having its face-the-music moment and CNN+ is reportedly against the ropes after executives realized people don’t want to pay for what amounts to just CNN. What’s a streaming service to do? I’m Janko Roettgers, and I’ve been a Netflix subscriber since 2010 (am I … old?).

Also, we want to know what keeps you up at night when it comes to how companies are using AI. Read the bottom for more, then respond to this email and let us know.

It’s tough to be a streaming service

Netflix co-CEO Reed Hastings shocked the streaming world this week by announcing that, after years of saying absolutely not to the idea of an ad-supported tier, Netflix will almost definitely be launching an ad-supported tier. And CNN’s new streaming service, CNN+, appears to be imploding just three weeks after launching — kind of like Quibi but even more wild because CNN is a legacy brand with a stable of reliable content and Quibi was, well, Quibi. All this goes to show: It’s hard out there for streaming services.

Netflix is adjusting its business model after losing subscribers for the first time in a decade. Its stock price plunged 35% after its earnings whiff, the biggest drop since 2004, and investment firm Pershing Square sold its 3 million shares at a loss yesterday, saying, “We have lost confidence in our ability to predict the company’s future prospects.” Yikes. But changes are coming.

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Startup of the Week

Musk says robot, aimed for 2023, will be worth more than Tesla’s car business

Tesla CEO Elon Musk says the company’s robot, named Optimus, will be “worth more than the car business, worth more than FSD.” FSD, or “full self-driving,” is Tesla’s advanced driver assistance system that relies on cameras and computer vision technology to perform some autonomous driving tasks. An FSD subscription costs Tesla owners about $12,000, or […]

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Tweet of the Week


Bonus Tweets


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