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Since HBO Max launched last May, the tech team has been busy adding a lot of improvements and has rolled out enhancements around personalization, higher-quality video, navigation/design and video playback. Personalization has been a big focus and HBO Max is now using a mix of human-powered discovery and underlying data, along with bespoke tools including an enhanced video player, to also provide parental controls and a unique kids experience. As a user I can verify firsthand that the service has gotten some awesome improvements. It’s great that HBO Max is willing to share so many details on how they are improving the overall viewer experience, something other OTT services don’t talk about, but should. The following is a list of improvements made to the HBO Max service since launch.

Updates rolled out this week include:

• New in-line video for tvOS users, providing content previews throughout the page and communicating emotional context of content
• Re-introducing the restart button to connected TV, delivering an elegant restart experience
• Homepage personalization with component selection and rerank allows each user to see the most relevant trays and titles within each tray, tailored to them through a combination of human curation and data intelligence
• Chrome redesign that allows users to see cleaner, more modern video player controls on mobile and tablet
• Technical enhancements and bug fixes including 50% faster page transitions and browse menu, allowing users to get to the content they want, faster

Updates added since launch include:

Personalization

• “For You” Tray | Each user sees a different selection of content in a tray personalized to them
• Age-Targeted Kids Profiles | Kids profiles launch directly into a homepage curated for their age
• Kids Character Navigation | Browsing via character row directs kids to curated character pages, featuring favorite franchises unique to HBO Max including Sesame Street and Looney Tunes
• Multi-language Playback | Users can watch their favorite shows and movies with more audio and subtitle language options on select devices, with more coming soon

Enhanced Viewing Experience 

• 4K Ultra HD, HDR 10, Dolby Vision and Dolby Atmos capabilities were introduced to the platform with select titles, beginning with Wonder Woman 1984, and will continue to expand across additional programming and devices; we plan to support these formats for all of the films released from the Warner Bros. 2021 film slate

Design and Experience

• Skip Intro, Promos, and Recaps | Viewers now have the power to skip intros, promos, and recaps, getting them right into the content itself and enabling a seamless binge experience
• Improved Content Details Pages | Captivating imagery to draw users in and a more intuitive layout for trailers, clips, extras, and more
• New Hero Unit with In-Line Video | Larger artwork that amplifies our content on the homepage with full bleed imagery and engaging in-line video

Navigation

• Connected TV Navigation Redesign | A left-hand, always visible menu with movies, series, and hubs exposed at the top level of navigation
• “More Like This” Tray | On all Movies & Series detail pages, viewers can see related titles while browsing through the content library
• “Just Added” Tray | Highlights content recently made available on the platform
• Search Suggestions | Search suggestions are now available to viewers on CTV and tvOS, enabling the elevation of popular searches for series/movies, brands and genres, easing the search experience for viewers

Video cloud platform provider Kaltura has filed their S-1 and will be going public under the symbol of KLTR. It’s expected they will IPO sometime in Q2. I’ve read through the entire document and here’s some of the key takeaways:

• $120M in 2020 revenue, with year-over-year revenue growth of 17%, 21%, 27% and 30%, for each quarter last year. 2019 total revenue was $97.3M. Year-over-year revenue growth was 12% in 2018, 18% in 2019 and 24% in 2020.
• Net losses of $15.6M in 2019 and $38.7M in 2020 and adjusted EBITDA of $4.0M in 2019 and $4.3M in 2020.
• At the end of 2020 Kaltura had “approximately” 1,000 customers, who combined, have over 100 million media assets on Kaltura’s platform.
• For the years ended December 31, 2019 and 2020, Vodafone accounted for approximately 12% of Kaltura’s revenue in each such year, and their top ten customers in the aggregate accounted for approximately 27% and 29% of their revenue in 2019 and 2020.
• Revenue from “Enterprise, Education & Technology” was $80.4M (67%), with “Media & Telecom” accounting for $39.9M (33%) in 2020 revenue.
• The company grew revenue by 24% in 2020, while only increasing sales and marketing costs by $3.9M in 2020, compared to sales and marketing costs in 2019.
• At the end of 2020, “approximately” 61% of their revenue was generated from customers in the Americas, 31% from customers in EMEA and 8% from customers in APAC. 81% of revenue came from customers who were with Kaltura as of December 31, 2018.
• For the years ended December 31, 2018, 2019 and 2020, the lifetime value of Kaltura’s customers exceeded five, seven and eleven times the cost of acquiring them.
• Customers include 25 of the US Fortune 100, more than 50% of U.S. R1 educational institutions, including seven of the eight Ivy League schools and some of the largest global media companies and telecom operators.
• As of December 31, 2020, Kaltura had 378 full-time employees in Israel and 584 employees in total across 22 countries on five continents.

I’ll have a more detailed blog post up shortly that gives an overview on Kaltura’s business and competitors.

AT&T announced that it has sold a minority stake in DIRECTV to the private equity arm of TPG. The two parties will establish a new company named DIRECTV (“New DIRECTV”) that will own and operate AT&T’s U.S. video business unit consisting of the DIRECTV, AT&T TV and U-verse video services. Following the close of the transaction, AT&T will own 70% of the common equity and TPG will own 30%. AT&T will net $7.8 billion from the deal, valuing DIRECTV at at $16.25 billion. AT&T acquired DIRECTV for $48.5 billion in 2015, or $67 billion when you include debt.

TPG will contribute $1.8 billion in cash to New DIRECTV and has secured $6.2 billion in committed financing from its bank group, $5.8 billion of which is expected to be paid to AT&T in cash plus the assumption from AT&T of $200 million of existing DIRECTV debt. The New DIRECTV will be jointly governed by a board that has two representatives from each of AT&T and TPG, as well as a fifth seat for the CEO, which at closing will be Bill Morrow, CEO of AT&T’s U.S. video business.

AT&T and New DIRECTV will have commercial agreements in place that will give New DIRECTV video subscribers continued access to HBO Max and to offer bundled pay-TV service for AT&T’s wireless and internet customers. Once the transaction is completed, existing AT&T video subscribers will become New DIRECTV customers and will be able to keep their video service and any bundled wireless or broadband services, as well as HBO Max, plus any associated discounts. The NFL SUNDAY TICKET content deal on DIRECTV, will be a part of the New DIRECTV company.

ViacomCBS held their big streaming service reveal for the March 4th launch of Paramount+ and the company didn’t disappoint. There was a lot of news to digest from the event, both in the volume of new content they highlighted coming to the service, as well as the back catalog of movies and TV shows that will be available. But the biggest news was the announcement that popular Paramount films will come to the streaming service 30-45 days after their theatrical run. All others will come to the platform at a later time, with the company saying some as early as 90 days. Here’s some other key takeaways:

• Paramount+ will have two packages in the U.S., an ad supported offering at $4.99 a month (coming in June) and a “Premium” offering for $9.99 a month. Premium will get you access to live TV with news, local content and more live sports
• Expect 65-75 million subscribers globally for Paramount+ by 2024. That goes along with their projection of 100-120 million MAUs for Pluto TV and an estimated total streaming revenue of $7 billion by 2024
• Paramount+ will have access to MGM films, due to their deal with EPIX, extended through the end of 2023, giving Paramount+ the new James Bond title No Time to Die, amongst other films
• All Paramount+ original series will be made available in 4K with HDR and Dolby Vision
• Similar to CBS All Access, some content will be available for download to mobile devices
• By summer 2021, Paramount+ should have more than 2,500 movies
• A TV show based on the Halo game, being produced by Showtime, will debut on Paramount+ in Q1 of 2022

At some point, ViacomCBS will have an archive of their launch event available on their website here.

In a previous blog post I detailed how the pay TV market lost at least 5.6M subscribers in 2020. While that would seem like good news for live linear streaming services like Sling TV, Hulu, YouTube TV, Fubo, DAZN etc. to date, no live streaming service has seen much in the way of subscriber growth. As an example, Sling TV, the first service to the market and the lowest priced, grew by only 260,000 subscribers over the past 4 years. That’s an average of only 65,000 net new subs per year, when pay TV lost between 4-7 million subscribers each year, over that same time period.

Hulu, which saw some big growth in 2019, with Hulu + Live TV subscribers going from 800,000 in May of 2018 to 4.1 million subscribers at the end of 2019, lost 100,000 subscribers in 2020, to end the year with 4 million subscribers in total. YouTube TV ended 2019 with 2 million subscribers and grew to 3 million subscribers as of October 2020, which is the last time Google provided updated numbers. It’s possible YouTube TV could have added a lot more subscribers in Q4 of 2020, but not to the tune of how many pay TV subscribers were lost in the same quarter. Fubo TV did see some small growth last year, closing out 2020 with a total of 545,000 subscribers, adding 229,211 subscribers over 2019.

It’s been reported, but not confirmed, that live streaming service DAZN had 8 million subscribers at the end of 2019, but then lost subscribers in 2020 and have not gotten back to the 8 million number as of yet. To date, the company hasn’t published any official numbers so we don’t know how accurate the estimated numbers are. Then there is Sony Interactive Entertainment, which shut down their PlayStation Vue service in January of 2020. It was estimated they had well less than 1 million subscribers, but to date we’ve never seen any confirmed numbers on that either.

Between one-off big events and platforms with targeted content, live streaming saw a huge amount of growth in 2020. Content from the likes of Twitch as well as Amazon Prime Video, with all the major sporting events they bought the rights too, saw the total number of hours viewed online grow by huge percentages years-over-year. But we have not seen the same growth with regards to live linear services because the services have not evolved into what consumers were told they would become. From day one, the main value proposition vMVPD services pitched to consumers was the cheap cost, when compared to cable TV.

While many services started out that way, they all quickly raised pricing multiple times. The average live streaming package that looks most similar to cable TV now costs $65 a month or more. In January of 2019, Hulu + Live TV cost $40 a month and less than two years later, the price is $65 a month, which is a 38% rate increase. When YouTube TV raised pricing from $50 a month to $65 a month in June of 2020, their rational for doing so was that they were adding eight ViacomCBS’s channels to the lineup. However, there was no option to keep the $50 package and not take the new channels. You had to accept the new pricing and new channels even if you weren’t interested in them. Sounds exactly like pay TV.

Sling TV in particular has called their service “A La Carte”, but you have to buy packages of many channels all together. Adding a premium service like HBO to your lineup for an additional fee per month is not “A La Carte”. The reality is, live streaming services are simply the new pay TV bundles. They are priced like pay TV, bundled like pay TV, and have more restrictions than pay TV, most with a limit on the number of concurrent streams. Companies have used terms like “personalized” and “custom”, to describe how they differ from pay TV services, but there is nothing custom or personalized about having to buy bundles of channels and not being able to opt out of higher pricing with channels you don’t want to watch.

One could easily point the finger at the live linear services themselves and say it’s their own fault for not growing when they keep raising rates. But the real problem is that in most cases, these services don’t own the content and the rates they are being charged by the content owners keeps going up. So the live linear services are in a tough spot as they need the content, but are handcuffed by the pricing and how they package the channels together. Their success, or failure, is really being dictated by the content owners.

If Dish and AT&T weren’t the owners of Sling TV and what is now AT&T TV, I’d argue those two streaming services would have already left the market, just like PlayStation Vue did. The business economics of them standing on their own, as profitable and growing streaming services, without backing from a cable TV operator simply wouldn’t be possible. Content licensing costs are simply too high, along with all the other costs of video ingestion, transcoding, protection, packaging, delivery and playback. They could try the route that Fubo TV is doing right now as a stand-alone company, but you’d need a lot of money to try and become profitable. Fubo TV has recorded a net loss of $402.5 million through the first nine months of 2020 and has negative gross-profit margin. In other words, trying to be a vMVPD on your own isn’t easy and scale doesn’t change your P&L in a positive way.

Even if any of these live linear services get to some sort of real scale, there is little to no profitability on the stand-alone streaming service. Using it to reduce churn inside a cable TV operator or trying to sell other bundled services around it, maybe they have more value. But in the next few years I suspect we’ll see some of the current live linear services exit the market completely. In a follow up post, I’ll outline why I think Hulu will exit the live TV market in the next few years.

With the majority of cable and satellite TV operators in the US having reported Q4 and 2020 earnings, combined, they lost at least 5.6M pay TV subscribers last year. That number includes lost streaming subscribers for Sling TV and AT&T. Operators WOW! and Mediacom have yet to report Q4 and full-year 2020 earnings, but as small as they are, they won’t push the numbers either way by much.

These pay TV losses won’t surprise anyone who follows the cord cutting trend, but what might surprise many is that vMVPD streaming services are not gaining the subs lost from traditional pay TV operators. Year-over-year, Sling TV, AT&T and Hulu all lost live subscribers last year. Fubo TV gained 229,211 subscribers and DAZN and YouTube won’t say how many subscribers they gained or lost in 2020. The fact live streaming services haven’t gained many subs isn’t surprising since all live service saw price hikes last year, with the average package comparable to pay TV starting at $65 a month. Make no mistake, live OTT is simply the new pay TV bundle. It can be called something else, but in reality it is priced like pay TV, bundled like pay TV, and has more restrictions than pay TV, with a limit on the number of concurrent streams from one account.

With all these hard numbers one has to ask the question, where are all these cord cutters going and do consumers really care about live TV anymore, outside of sports and some other specific big events? As viewers content habits have shifted to an on-demand world over the past few years, one could argue that without sports content, live streaming would be a thing of the past. The Grammy’s, Olympics, news and some other one-off events would still garner interest, but it’s clear that the live OTT services simply aren’t resonating with consumers in large numbers.

Live content is a different type of viewing experience and Twitch and other platforms like ESPN+, MLB.TV etc. are seeing some growth in consumption, but that content is targeting a very specific demographic, with specific content, and isn’t hitting the largest swath of the market. As an industry, the real question we have to ask is, what does the future of live video consumption look like and who’s going to control the market? In the near term, live TV via cable or streaming won’t be a linear experience as we think of it today.

Last week, I talked to various individuals tied to the current negotiations between the NFL and CBS, NBC, ESPN and FOX as it pertains to broadcast TV and streaming rights for NFL content. Currently, FOX has the NFC conference rights and AFC conference rights are with CBS. NBC has “Sunday Night Football”, ESPN has “Monday Night Football” and FOX and the NFL Network have “Thursday Night Football”. ESPN’s deal with the NFL expires after the 2021 football season and all the other broadcast deals run through the 2022 season.

While there’s a lot of speculation on which broadcasters might get more or fewer games in the new deals for broadcast TV rights, (“rumored” to be valued at $100B across all networks for 8-10 years), I’m more interested in what the NFL will end up doing with the “NFL Sunday Ticket” package. It’s well known that the current NFL deal with DIRECTV (AT&T), which runs through the 2022 season, will not be renewed. This makes sense since AT&T is trying to sell off the DIRECTV business and I’m told the NFL no longer wants the restrictions that come from distributing the package via satellite, which is completely outdated, as is the current streaming experience.

DIRECTV extended their current contract with the NFL in 2014 and as we all know, seven years later, the business models for the packaging and distribution of video content has drastically changed. This leaves a new platform to become the NFL’s partner on selling a streaming package to consumers, without any legacy restrictions. Multiple people I spoke with said that while talks are still in the early stages, Amazon looks to be in the lead for the new digital direct-to-consumer offering of what is currently branded NFL Sunday Ticket.

In 2020, Amazon signed a three-year agreement with the NFL to keep Amazon as the exclusive partner for live streaming Thursday Night Football games, 11 in total, and Amazon streamed an exclusive national regular-season game December 26, on Prime Video and Twitch. Sources tell me the NFL has been very happy with Amazon’s live streaming production of the 2020 NFL season, so it would be a natural fit for the NFL to extend their relationship with Amazon on a NFL-based streaming subscription product.

Of all the companies you would think of for such an offering, Amazon would make the most sense for the NFL since Amazon can put their marketing power behind it, already has subscriber’s payment info on file and has the resources to execute what would be a very complex video workflow on the backend. Prime Video and Twitch coverage of the NFL is already available to more than 150 million paid Prime members worldwide, and is in more than 240 countries and territories, so Amazon would give the NFL the widest distribution. I can easily imagine Amazon boxes showing up at my house printed with NFL Sunday Ticket promotions like we’ve seen Amazon do with content partners in the past (Minion boxes everywhere!).

Some have suggested Google, Facebook or even Disney, with their ESPN+ offering might be interested in the deal, but Disney would not take it on, nor are they setup to handle it. Even for broadcast TV rights, Disney is being cautious. On Disney’s Q4 2020 earnings call they were asked about the NFL renewal and said, “first priority will be to look and say does it make sense for shareholder value going forward?” Disney still has a lot of work ahead growing and maintaining their own D2C offerings, so building out an entirely new D2C product with the NFL simply isn’t doable for them from a technical stack standpoint.

With respect to Google, Facebook and Apple, I don’t see the NFL Sunday Ticket fitting into any of Google’s current offerings and it would not make sense to try and bundle it in with any kind of YouTube TV or YouTube Music package. I’ve seen some suggest that bundling an NFL offering with YouTube TV would give Google a way to sign up more subs for their vMVPD service, but many wouldn’t be interested in the vMVPD offering and the additional cost. YouTube TV costs $65 a month now and YouTube just announced more “add on” features coming to YouTube TV for an additional unknown cost.

As far as reach goes, the last number Google has publicly given out on subscribers is that YouTube TV has 3 million paying members, a figure they gave out in October of last year and didn’t update during their earnings call in February 2021. YouTube TV launched 4 years ago this month and in that time hasn’t gotten much traction for the service. They look similar to Hulu, which ended 2020 with 4 million paying subs for their Hulu + Live TV offering, losing 100,000 subs year-over-year. The price of live services have all seen very steady increases and not gotten the number of subscribers many thought they would. We saw estimates from analysts and Wall Street firms suggesting Google would get 10 millions subs or more, for the then priced $35 YouTube TV service, within the first year of launch. One could suggest that YouTube could sell a lot of ads against the NFL’s content and share that revenue with the NFL, but that’s something Amazon could do as well. Amazon’s ‘Ads and other’ business did $21.5B of revenue in 2020.

Facebook and the NFL did a content agreement in 2017 which was renewed in 2019 and expired at the end of 2020. As part of the old deal, Facebook didn’t have any live games and provided game recaps that it placed on its Facebook Watch video-on-demand platform. Facebook had to pay an up-front fee for the content and then also split ad revenue with the NFL. In 2016, Facebook did show interest in acquiring rights for live streaming the Thursday Night Games that Amazon ended up getting, but five years later one has to wonder if live streaming of NFL games fits into Facebook’s content road map anymore. When it comes to Apple you have to throw them into the mix due to their reach, but to date Apple hasn’t done anything on the live side, or at scale with video. I know some will suggest they have a younger demographic the NFL wants and the ability to promote services through all the Apple devices and their ecosystem, but I’m not convinced it fits their content strategy.

Based on everything I hear from those closer to these deals than I am, Amazon is in the driver’s seat for the NFL’s new direct-to-consumer offering, although negotiations are early and still ongoing. I’m told that details around pricing for a new streaming NFL Sunday Ticket package and revenue splits have yet to be discussed and that discussions will move along once the NFL finishes the renewals with TV broadcasters. Whomever gets the NFL Sunday Ticket deal, the new streaming service is going to be an exciting product for consumers and will be a huge improvement on what is currently an outdated user experience. And if working with Amazon enables the NFL to bring the price down on a streaming service, which is what Amazon does with all products, the NFL would get a bigger audience, wider distribution for their brand and more revenue based on volume. My bet is on Amazon.