Media Update: Disney Raises Streaming Prices, Women's Soccer Interest Grows, and Post-Pandemic Consumer Savings Dwindle

The ad-supported video supply increased to start the second half of the year, and it appears to have kept to a steady growth rate over the past year.
Industry Notes (Video)
1. With the accelerating decline of cable subscriptions, one of the biggest questions facing the TV industry is whether the concept of the cable bundle – and live television broadly – is appealing to consumers in the digital age. One of the proposed solutions is virtual Multichannel Video Programming Distributors (vMVPDs), such as Fubo and YouTube TV. These platforms have been thoroughly tested for over half a decade, so we can confidently conclude that cable-cutters are not transitioning to vMVPDs in numbers significant enough to offset the losses in the cable business. That is not to say that these platforms are not popular:
Over the past four years, Sling TV has been the only platform not to grow their base by a significant amount. With these gains, the vMVPD space boasts around 13.5 million subscribers compared with 58+ million that traditional pay-TV (cable, dish, DirecTV, etc.) owns. The adoption of vMVPDs will be an important area to watch as the fragmented streaming space looks to increase bundling in order to keep customers. | Leichtman Research
2. Disney’s recent decision to raise the price for ad-free versions of Hulu and Disney+ is turning heads, especially given its aggressive hike. For perspective, HBO Max, recognized for its rich library of premium content, maintains a $6 gap between its ad-supported and ad-free offerings. The price hikes at Disney increase that gap for Hulu to a whopping $10.
Disney’s price hikes are representative of a larger trend in streaming, where companies are driving subscribers down to their ad-supported tier where ARPU is better. Given that Disney maintained the ad-supported version’s price and combined it with a Disney+ and Hulu bundle at $9.99, it is also very clear that it is trying to reduce churn. This could lead to a greater influx of ads, a potential boon for brands targeting Disney’s viewership.
The only real outlier in this trend is Amazon – as streaming platforms up their prices, Amazon offers streaming as a part of its Prime membership at no additional charge. With its widespread market reach, some consumers, wary of additional subscriptions, may lean towards Amazon, especially if they’re already subscribed. While price hikes are undesirable for consumers, it does mean that we should only see the amount of streaming ad inventory increase. | Bloomberg
3. The NFL made a few waves last year with the introduction of NFL+, but the platform largely lacked the content and usability to compete with other services with NFL games. Notably, you could not use the app to watch games on TV, likely a result of existing TV contracts. While that is still true, NFL+ has taken a huge step forward by adding RedZone to its platform and allowing users to stream the show on their TVs. What’s striking is the pricing model – NFL+ Premium, equipped with the much-coveted RedZone, is tagged at a mere $14.99 monthly or $99.99 annually. This is a significant undercut, especially when compared to the pricier NFL Sunday ticket on YouTube TV (YTTV). It’s a powerful financial incentive for potential subscribers.
Established players in the market, such as YouTube TV, Hulu + Live TV, DirecTV, Xfinity, Charter, and Dish Network, will still broadcast the show, so RedZone on NFL+ is hardly exclusive. However, for a certain subset of viewers, it might be just enough to pull them away from their cable bundle. Regular readers of this newsletter know that streaming has been chipping away at linear TV’s hold over the NFL. Between YTTV’s acquisition of Sunday Ticket, Amazon’s acquisition of Thursday Night Football, and now RedZone being available on NFL+, it is obvious that the NFL does not want to be left behind in the streaming era. Many of the NFL’s broadcast rights deals extend until 2033, but these recent moves have laid the groundwork for the NFL to adapt to evolving viewer preferences in the coming years. | The Verge
4. In the media landscape, few shifts have been as seismic as the decline of linear TV. Since the inception of Nielsen’s The Gauge, we’ve witnessed a marked drop in the share of linear TV consumption, comprising both cable and broadcast – for the first time, linear’s share of TV usage has slipped below the 50% mark. July is typically one of the lowest TV usage months because of the lack of sports content and summer seasonality. Even the much-anticipated Women’s World Cup, kicking off at the end of the month, wasn’t enough to counterbalance the dwindling numbers. There will almost certainly be a rebound come Fall with the onset of the football season, but the trendline is distinctly downward for linear TV; between July 2021 and July 2022, linear TV lost 5.5 share points, and between July 2022 and July 2023 it lost another 6.4 share points.
Outside of streaming, the “other” category is also responsible for some of linear’s decline. While this category is primarily dominated by video game consoles, it also includes audio streaming, streaming via a cable set-top box, and other unquantified sources. Here it’s worth noting that TVs are increasingly being used for activities other than consuming TV content:
As the biggest screen in the house continues to be used for other activities and streaming grows, we can expect linear TV’s share of TV usage to continue to decline. | Nielsen
Sports viewership increased due to the Women’s FIFA World Cup at the end of July, but began coming back down after the USWNT was knocked out of the tournament.
Industry Notes
1. With the United States Women’s National Team (USWNT) tragically knocked out of the FIFA world cup in the round of 16, we now have a rare glance into the popularity of international women’s soccer. For context, the USWNT has not placed lower than 3rd since the tournament began in 1991, and they own half (4) of all championships. While the USWNT was in the tournament, it naturally attracted the greatest domestic viewership of all broadcasts, taking three of the four top spots.
The first U.S. game averaged 6.26 million viewers (a record), but the last one only averaged 2.52 million viewers. The USWNT’s final match was aired at 51:00 AM ET, which likely accounts for a large portion of the dropoff. Notably, the U.S. women’s national team’s game against the Netherlands set a new benchmark by achieving the highest-ever English language viewership for a women’s FIFA World Cup group stage match.
Post USWNT exit, U.S. viewership took a discernible dip. The Spain-Netherlands quarterfinal match, which averaged 1.78 million viewers, was the biggest outlier, setting a record for non-USWNT quarterfinal games. This game occupied the prime Thursday night slot originally intended for the USWNT. The takeaway from the FIFA tournament is that women’s soccer viewership is most certainly on the rise, and we can reasonably expect further interest in women’s soccer year round (such as the NWSL) in line with this trend. | SMW
Unsurprisingly, the Emmy awards have been rescheduled to January 2024 as a result of the ongoing writers and actors’ strikes. The awards were initially slated for September. Awards shows are particularly sensitive to the strikes, but content across the board has been pushed back and much of fall programming will be unscripted. As far as viewership goes, we will now have to wait until 2024 to see if the Emmys will follow the trend of the Grammys and Academy Awards in rebounding, or continue on its downward trajectory. Given that the Emmys will be further out from the airing of the shows it is awarding and on a date that viewers are not accustomed to, it seems likely that we will not see a sizable increase in viewership in January. | NPR
1. At the recent upfronts streaming was once again a major topic of discussion. Disney’s strides in this domain are particularly impressive – a staggering 40% of their upfront advertising dollars went to their premium streaming and digital video services. Drawing a comparison from the previous year’s data, this suggests revenue close to $3.6 billion, earmarked exclusively streaming platforms. This leap by Disney is a clear testimony to the rising prominence of streaming in the contemporary advertising ecosystem.
On the other end, in some cases advertisers are committing less to Netflix this year around. Although Netflix initially sought a $40 million commitment from advertisers, it reportedly has shown a readiness to negotiate. This flexibility possibly stems from advertisers’ reservations about the streaming giant’s delivery issues from last year, coupled with uncertainties about the number of ad-supported viewers. Despite these initial hesitations, there’s an undercurrent of optimism among buyers that the streamer will continue to improve its ad offering, and that with less committed, more will clear. Presently, Netflix boasts a subscriber tally ranging between 1.5 to 2 million, and a broader user footprint touching nearly 5 million.
Looking at the advertising industry at large, Media Dynamics reported a dip of 5% in linear upfront spend while CTV investment surged 31%. This change is attributable to advertisers seeking more agility in an unpredictable market. As the curtains come down on this year’s upfronts, one takeaway is unmistakable: streaming advertising is on the rise. | Ad Age, MediaPost
2. It’s not hard to build a social media site – Meta proved that when it produced Threads seemingly out of thin air. What is hard is getting people to use it (see this wiki page of “defunct social networking services” for a trip down memory lane). A few weeks ago we laid out why Meta and Threads is theoretically well positioned for success:
Instagram already has those 2b MAUs, and Threads is built right on top of the IG user graph (in other words, Threads doesn’t need to go acquire all those users from scratch – it already has them).
Indeed, Threads attracted over 100 million users mere days after its release. However, a little more than a month after launch, it is being reported that Threads’ DAUs has declined 80%. User retention on social media sites is an enigma that the likes of Google+ and MySpace are probably still pondering, so we won’t waste ink on that topic right now. However it is worth discussing the potential for Threads to be valuable for advertisers. Brands are in the same position as they were a month ago, with Threads lacking advertising. Adweek is reporting that many brands have significantly pulled back their posting on the site because of the lack of engagement from users. Of course, brands are going to advertise where there is an audience – but especially without the capacity to advertise through Meta’s ad platform, there is not a huge incentive to be present on Threads right now. Despite the decline in usage, all of Meta’s advantages (ad platform, tech, brand safety) are still intact, so if the company can find a way to draw users back, it still stands to benefit greatly. | Adweek
1. According to a recent report from the National Retail Federation (NRF), back-to-school spending is anticipated to hit an unprecedented $41.5 billion, marking a significant increase from last year’s $36.9 billion. The previous record stood at $37.1 billion in 2021. The spending spike is even more pronounced among college students, especially on relatively high-value items like electronics and furniture. This surge isn’t solely a reflection of consumers’ willingness to spend. Inflation over the past year has been a contributing factor, and the pandemic shifted forward the adoption of technology in education at all levels. It is reasonable to expect a similar level of spending in future years as these trends continue. | Axios, NRF
2. Consumer credit card debt in the U.S. surpassed the $1 trillion mark in Q2 2023. This represents a 4.6% increase from the previous quarter, now accounting for a larger slice of the nation’s GDP. Alongside, Q2 saw a hike in credit card delinquencies, although the rate for overall loan delinquencies remains stable.
Analysts are now casting a wary eye toward the upcoming resumption of student loan payments, which could amplify the debt issue further. According to estimates by Moody’s Analytics, this resumption of student loan payments could pull $70 billion out of the economy. With the backdrop of high interest rates, there’s growing apprehension that despite a robust economy and labor market, the number of delinquencies might increase
Adding to these concerns, a recent study from the San Francisco Federal Reserve has unveiled that Americans have nearly exhausted their pandemic-induced savings. Conventional wisdom held that the continued consumer spending witnessed over the past year, even amidst soaring inflation, was buoyed by the surplus savings accrued during the pandemic. However, if these reserves are truly running low, the consequences for consumer spending growth in the coming 6 months to a year could be significant.
Earlier in the year, researchers estimated that households still had a cushion of $500 billion in excess savings as of March 2023. This was down from a high of $2.1 trillion in August 2021. But subsequent revisions to government data have painted a more austere picture. As of June, updated figures indicate that the collective excess savings had dwindled to less than $190 billion. While the economy remains robust, these converging factors warrant close monitoring to navigate potential economic headwinds. | NY Fed, SF Fed