Media Update: Disney Raising Streaming Prices, Firefox Android Updates, and 311k Jobs Added to Labor Market

We saw a modest uptick in ad-supported video impressions last week, matching the highest levels we’ve seen over the past twelve months.
Industry Notes (Video)
1. Hold on to your wallets, Disney fans – following a series of price increases across its platforms in the second half of last year, CEO Bob Iger has hinted that Disney may raise its streaming prices yet again. At an investor conference on Thursday, he said, “Obviously we have to attract more subs, but I think one of the key things we have to figure out is a pricing strategy that makes sense … In our zeal to grow global subs, I think we were off in terms of that pricing strategy, and we’re now starting to learn more about it and to adjust accordingly.”
Disney has gone through roughly three phases in its brief life as a streaming powerhouse:
In addition to potential price increases, Iger suggested Disney is likely to license content to other platforms, yet another reversal of course from the early days of the platform and a move consistent with industry trends. “As we look to reduce the content we’re creating for our own platforms, there probably are opportunities to license to third parties. For a while, that was considered verboten, or something we couldn’t possibly do because we were so favoring our own platforms.” Closely tied to this strategy is the fate of Hulu, once considered core to Disney’s streaming strategy but now in question as to whether it will even remain a Disney asset. | WSJ
2. As you may recall, Warner Bros. Discovery announced last month that Discovery+ would remain as a separate service, despite the company’s plan (since its merger) to make HBO Max and Discovery+ one combined offering. Yet, the majority of Discovery+ content will be available on a new platform, Max, which will replace HBO Max. WBD’s new platform is likely to be announced and launched in the next month or so, and we are starting to see details emerge (in the form of rumors). Firstly, Max will reportedly be priced at $10 for the ad-supported tier and $15 or $16 for the ad-free tier, identical to the current pricing for HBO Max. Secondly, WBD will be adding thousands of titles from its catalog of unscripted lifestyle shows (Fixer Upper, 90 Day Fiance, etc.), greatly increasing its content offering without raising the price. As we’ve seen with streamers like Paramount+ and Showtime, consolidation in the industry is an economic imperative to reach profitability. The difficulty for these media companies lies in maintaining (or creating new) brand identity while bringing in a wider variety of content – all the while keeping the price at a palatable level. WBD’s decision to leave the HBO name behind and keep Discovery+ around perfectly exemplifies this challenge. | Bloomberg
3. Total TV usage fell 5.1% MoM in February, reflecting the typical decline in viewership after the conclusion of the NFL season. Overall viewing for streaming fell 0.9% from January (the smallest decline of any category) while streaming grew its share by 1.9%.
Tubi claimed 1% of viewership in February to make its debut on The Gauge. Tubi is just the second FAST platform to reach 1% viewership, following Pluto TV back in September. According to Tubi’s internal metrics, its viewership increased 44% in 2022.
Nielsen implemented a major methodology change this month by excluding vMVPDs from the streaming category. This resulted in an over 5 point decline in streaming’s overall share, which now effectively goes to the ‘Other’ category. Previously, vMVPD viewership was counted in both cable/broadcast and streaming, reflecting the fact that it is linear content delivered via streaming. This change means that The Gauge is more focused on the source of the content rather than the delivery. The other significant result of this change is that YouTube’s share of streaming was diminished by 1.2 points in February, reducing its lead over Netflix. While this does not negate YouTube’s impressive growth, it does help paint a clearer picture of how viewers are consuming media. | Nielsen
4. The battle between TikTok and YouTube is heating up – TikTok is introducing paywalled long-from videos up to 20 minutes as a feature called “Series.” Creators will be able to charge up to $189.99 for access to a Series and take home 100% of the revenue, minus the in-app purchase fee which is typically 30%.
In the era of short -form video, TikTok’s role cannot be overstated. In a few short years it launched into popularity and ignited a revolution in content delivery. The spread of TikTok was not just about the duration of video or the power of its recommendation algorithm, but also about infinite video scroll. To understand how much TikTok has influenced video consumption, consider that two direct competitors – Instagram Reels from Meta and YouTube Shorts from Google – rose from two of the largest tech companies. Furthermore, the infinite video scroll is now ubiquitous. Notable adopters include Twitter, Snapchat, Reddit, and Spotify (see below).
The irony of TikTok doing long-form video aside, it is becoming increasingly clear that platforms believe both short- and long-form video are necessary to capture viewers’ attention. It was just last year that TikTok started allowing videos up to 10 minutes, which came about one year after it extended the limit to 3 minutes. Now, in conjunction with TikTok’s investment in improving its live streaming capabilities, these paywalled videos will help bolster the value of the platform for creators.
It’s also worth noting that there is somewhat of a parallel between TikTok and a traditional TV network. TIkTok is essentially paying for content, amassing an audience, and could sell ads against that audience. There is an obvious difference in that there is much more content available on TikTok, but the business model is very similar. As advertisers look to meet audiences where they are, we will likely see more advertising opportunities on video platforms. | Variety
Industry Notes (Audio)
1. Relatedly, Spotify will be implementing a TikTok-like video scroll in an effort to be a bigger player of “foreground discovery” and drive music, podcast, and audiobook discovery on its platform. If you’ll recall, TikTok has been making moves into the audio space, in an attempt to build off its core features, which include viral audio clips: in October TikTok began exploring music streaming, and in January it began testing podcasting. As we noted when news of these features broke, with its large user base TikTok would be a significant competitor to Spotify in the audio space. Moreover, where Spotify is more concerned about profitability, TikTok appears to be still in the “spend to grow” phase of its life. Therefore, Spotify’s new feature should help increase engagement and make the app more resilient to TikTok’s advances. | WSJ
Sports is continuing its strong performance relative to this time last year, with both men’s and women’s college basketball getting close to tournament time. News viewership remains depressed on a YoY basis, with last year’s invasion of Ukraine setting an extremely high comp.
Industry Notes
1. The Academy Awards attracted 18.7 million viewers on Sunday, a 12% increase over last year and a three-year high. The decline of awards show audiences was particularly acute during the pandemic, with some viewership falling >50%. Last year’s Oscars was the only show to see a notable rise in viewership, possibly due to the “slap heard around the world.” This year was generally without the same level of controversy (excluding a red carpet that was not red), but performed better, bucking the downward trajectory of the past half-decade. Taken together with the Grammys’ surprising 30% gain in viewership last month, it is possible that we are seeing a slight rebound from the pandemic drop.
There are a few factors to consider when assessing if award shows are making a comeback:
This is all to say that one could make an argument for either the relative rise or decline of the Academy Awards, depending on how you weigh these various factors. However, at a fundamental level (and from an advertiser’s perspective), award show viewership is up, ad pricing is slightly down, and these events are still the largest in television outside of sports. | Variety
2. The bracket is locked and the stage is set for March Madness. Unlike the broader advertising scatter market, which has been weak, the sports marketplace has held up extremely well, according to the EVP of CBS Sports Sales at Paramount Advertising. Specifically, advertising revenue for the NCAA men’s tournament exceeded Paramount’s goals, and CPMs have risen high single digits over last year. The multi-week event will pull in between $1.0 and $1.2 billion in advertiser dollars. On the women’s side, Disney/ESPN announced that ad inventory is sold out for the NCAA women’s tournament. The women’s regular season averaged 190,000 viewers on ESPN, making it the most watched in nearly a decade. As we mentioned a few weeks ago, men’s basketball also had a great season, with viewership up 7% over last year. | Media Post, Ad Age
In signal loss news, Firefox announced this week the release of Total Cookie Protection in its Android browser. In brief, TCP is an anti-cross-site-tracking technology that works by maintaining separate “cookie jars” for each website one visits in the Firefox browser. Any cookie is confined to its specific jar, and other sites are prevented from accessing any jar apart from their own; in essence, this turns third-party cookies into first-party cookies via the browser.
This is a small step in a lengthy journey. Way back in 2017, Apple introduced the first version of Intelligent Tracking Prevention in the Safari browser, which blocked 3P cookies after 24 hours. Firefox followed suit in 2019 with Enhanced Tracking Protection, which blocked all 3P cookies by default in the desktop browser. In 2021 it introduced TCP for the desktop, and now it has arrived for the mobile browser.
In the grand scheme of signal loss, this is not a major event – Firefox has less than 1% share of the mobile browser market in the U.S., and this applies only to the Android platform; but it is indicative of the path we are on. The extinction-level event of the cookie-pocalypse is (supposedly) coming in Q3 of next year, when Chrome, with 42% of the market, is slated to block all 3P cookies. | Mozilla Blog
1. Last week we discussed an accumulation of signals pointing to a cooling labor market – Friday brought the official jobs figures for February, and while they were consistent with this picture, the 311k jobs added in February were above economists’ consensus forecasts and provided evidence of a still very healthy labor market.
While the net addition of jobs was robust, the unemployment rate did rise to 3.6% from 3.4% as more people sought work – indeed, February saw the highest labor force participation rate since before the pandemic.
Much of the hiring growth over the past year has come from the leisure & hospitality sector, which has rebounded strongly from the cold storage of the pandemic. Tech, as we know all too well, has been shedding workers in recent months.
Most analysts feel this strong jobs report is likely to push the Fed toward a larger hike in its benchmark interest rate later this month; this kind of move is not without risk, including overshooting risk and, as we’ve seen recently, risks to the financial system borne of rapidly rising interest rates. | WSJ
2. The primary factor in the Fed’s decision to raise rates is of course inflation: the consumer price index remained elevated in February, with YoY inflation at 6%. Although this represents a slight easing from January’s 6.4%, inflation is still sitting well above the Fed’s target as nominal GDP has stubbornly grown. Much in line with the above charts demonstrating payroll growth in leisure and hospitality, core services are experiencing more price inflation than goods:
There was a stronger sign that the economy is cooling in the form of retail sales for February. Spending at stores and online fell a seasonally adjusted 0.4% MoM in February, following an eye-popping rise in spending in January that defied expectations. According to Mastercard’s spending data, retail sales for last month are up 8.7% YoY, excluding autos. It appears that consumer spending still has thrust behind it, even if it is slowing slightly. The takeaway from this slew of economic data is that consumers are still largely resilient to worsening macroeconomic conditions, but cracks are appearing. | WSJ, WSJ