The writers and actors strike comes down to a discussion on how best to measure the impact that content has, on a per title basis, with metrics and methodology that both sides agree on, while offering transparency. That’s not promising.

The writers and actors strike is a complex topic due to, amongst other things, a lack of agreed-upon methodology for defining streaming viewership and data transparency. But when SAG-AFTRA is quoted as saying, “It is not okay anymore for companies to just bring in huge amounts of revenue from people’s work and not share it with them,” I think a clear distinction needs to be made between “revenue” and “profits”. Those are very different metrics.

Many are talking about how much money Disney and others streamers are making, but Disney’s DTC business is not profitable. Their DTC business has $10.84 billion in losses from Q1 fiscal year 2020 through Q2 fiscal year 2023. Disney has said they expect Disney+ to, “achieve profitability in fiscal 2024, assuming we do not see a meaningful shift in the economic climate”, but their business is not profitable today. Why isn’t SAG-AFTRA suggesting profitability as one of the metrics so that the more a streaming platform makes, the more writers and actors could make?

Instead, SAG-AFTRA proposed that performers receive a 2% share of the revenue generated from streaming content and they want to use Parrot Analytics’ content valuation platform to determine what revenue was generated by each piece of streaming content. The problem is that Parrot Analytics is using metrics such as Google searches and social media engagement to define which content is considered most valuable to the streaming platforms – based on their “estimates”.

The AMPTP has correctly pointed out that that Parrot’s data is not available to anyone who doesn’t subscribe to them and it, “lacks any demonstrable link to the actual revenue received by the service in the form of new or retained subscribers.” When the core methodology being proposed is not based on actual viewership, I think that’s a problem. Using “popularity” in Google searches and on social media is too vague of a methodology. Popular doesn’t always equate to profitability.

Studios value content differently on a host of factors including the content costs, type of content, target market etc. and those values change. Streaming platforms are constantly evolving their strategies on what content to invest in and that shifts all the time. It’s an extremely fluid business and will continue to be so going forward. Streaming does not and will not look like what linear used to look like. Applying a linear TV model for royalty payments tied to streaming distribution is not going to work.

Both sides are so far apart on the foundation of what should even be measured, how to measure it and what data to share. It’s not looking good to this strike being resolved any time soon.

I’m excited to announce the Streaming Summit is coming back to NYC, as part of the NAB Show New York, October 24-25. The call for speakers and sponsorships are now open and I am looking for speakers, moderators and presenters. The show will focus on the latest trends around sports streaming, bundling and packaging of content, advertising measurement, content discovery, scaling video workflows and delivering a great user-experience at scale. Both business and technical topics will be covered and a networking reception will take place October 24th at 5pm. Full details are on the website and speaking spots will go fast! If you want to be involved in some capacity, now is the time to reach out to me to discuss your ideas.

Podcast Episode 62 is live! This week we peel back the layers of NFL Sunday Ticket on YouTube TV dissecting the potential implications and benefits for the streaming media industry. We discuss the criticality of promptly addressing technical glitches before mainstream media taints the image of streaming technology. Learn how YouTube TV’s new ‘multiview’ feature could amp up the NFL Sunday Ticket experience, or just add another layer of complexity.

We also scrutinize Netflix’s future advertising plans and their proposed creation of a new ad format similar to a half-hour commercial drawn out over days. Also covered is the rollout of YES Network’s single-screen interactive stats on connected devices in partnership with Ease Live. Tune in as we delve into the fiery debate taking place in Europe with ISPs suggesting that content providers including Netflix, Apple, and Google should pay ISPs to carry their video traffic.

I also call out Sandvine for continuing to publish garbage data on the topic, stating opinions as facts, using high-level marketing terms with no definitions, and using the debate to push the need for companies to pay them to use their platform – a severe conflict of interest.

Microsoft has announced it will shut down Azure Media Services on June 30, 2024 and exit the video workflow business. This comes as no surprise since they let go of Azure’s CTO, Hanno Based, in the first half of last year and started restructuring internally around that time. Various Azure Media Services pages on the Microsoft site had broken links and images as of May of last year and are still broken, having never been fixed or updated.

The Media Services revenue for Microsoft was never big enough to continue to justify their investment and Microsoft never really had an aggressive go-to-market strategy for the promotion and sales of Azure Media Sales. Microsoft says that going forward they will be “focusing on strategic areas of secular growth and long-term competitiveness for the company,” and the streaming video stack won’t be one of them.

Azure Media Services didn’t compete for business in the market very often and was rarely seen in big RFPs, especially when compared to Amazon’s Media Services platform. Unlike Amazon which bought Elemental and other companies to build and operate an in-house media workflow platform, Microsoft relied on a third-party partner ecosystem approach for encoding, packaging, and delivery. Microsoft is recommending that their current customers move over to Harmonic, MediaKind, Bitmovin, and Ravnur.

Updated July 7th: See this post from Microsoft on LinkedIn where they say, “Over the past few years, our company has undergone significant growth and transformation. As part of this journey, we have reassessed our media strategy. After careful evaluation and consideration, we have determined that Azure Media Services has not been a core component of our media strategy for quite some time.”

For customers doing video delivery through Microsoft Azure, I don’t expect any changes since Microsoft outsourced most of that business for nearly the past 10 years to Verizon via their EdgeCast CDN (now Edgio) and years later, added Akamai as a second CDN partner. Microsoft already announced in March they were shutting down “Azure CDN Standard” on Akamai, so it leaves Edgio as Azure’s stand-alone CDN partner. Microsoft never pushed much in the way of traffic to their CDN partners so the shutdown of Azure’s integration with Akamai has no impact on Akamai’s revenue. Microsoft also has their own CDN, Azure Front Door, so they are also pushing more customers to use their own platform. Side note, it would be nice if Microsoft updated their CDN solutions page to list their partner’s name properly since Verizon hasn’t been the name of the delivery service for many years.

Microsoft exiting this portion of its business won’t have much of an impact on video customers or the streaming media industry at large. I think it’s good any time a vendor cuts products, services, or solutions that are not their core strength. Focus is a good thing.

Podcast Episode 61 is live! What do TikTok’s video lengths and user engagement tell us about the future of content consumption? Join us this week as we uncover the surprising data behind this social media giant and its innovative audience. We’ll also dive into the growing trend of long-form content including movies and TV shows being chopped up into bite-sized pieces for a more interactive and engaging viewing experience.

As the demand to get to profitability with DTC services grows, content owners are slashing millions in infrastructure costs through optimization of their video workflows, especially around encoding, storage and delivery. We discuss how advanced codecs and content adaptive technologies are enabling reduced bit rates without sacrificing quality. You will also learn about Netflix’s multi-year technology and workflow transformation, and the increasing importance of purpose-built silicon in the race for 4K streaming.

Lastly, we tackle the issues of media inaccuracies and AI hype within the industry. From the sensationalized reporting surrounding Disney’s CFO’s leave of absence to Microsoft’s questionable AI claims, we emphasize the importance of accurate information and transparency. Discover the potential impact of AI on the streaming industry and Microsoft’s relationship with Open AI – all in this eye-opening episode.

NFL Sunday Ticket on YouTube TV is the first streaming service making consumers pay $250-$440 upfront, well in advance of the season. Having spent that much money, consumers are going to demand perfection from the service from day one, which won’t be possible. Even if YouTube TV delivers a flawless stream on their end with zero technical issues of any kind, users are still going to have problems with things out of YouTube TV’s control including devices, internet issues within the home, and video delivery within the last-mile. The streaming video stack is extremely complex and that is multiplied even further when you have a live stream that includes content protection, authentication, and getting blackouts accurate based on location. [Updated June 23: YouTube TV had another outage for some users, the second this month, due to a “networking issue impacting YouTube’s connectivity with Verizon.”]

When NFL Sunday Ticket launches on September 10th, it’s going to be very interesting to see what challenges users have in signing up and managing their accounts. Watching comments on Reddit, Twitter, Facebook, and other websites, consumers are still asking a lot of questions about account management and billing. YouTube TV has made it very clear there are no refunds, so anyone who might experience technical issues isn’t going to be happy they can’t cancel. Also, there will be no free trials of the service so consumers won’t be able to try before they buy. Never before in the streaming industry have users paid so much in advance of a service without being able to try it out and not having a way to cancel.

The options for signing up and billing will confuse some consumers since NFL Sunday Ticket is not (yet) available for purchase for YouTube TV viewers billed by Google Play, Verizon, or Frontier. Also, if a consumer cancels or pauses their YouTube TV Base Plan, they will lose access to NFL Sunday Ticket. Right now, one of the most popular questions being asked on Google on this topic is, “can i buy sunday nfl ticket without youtube tv.” Users can get a standalone NFL Sunday Ticket subscription through YouTube Primetime Channels but no matter how much education YouTube TV does, there is going to be a lot of confusion around sign-up and usage of the service.

Even though it is very clear that the NFL Sunday Ticket is for out-of-market Sunday games, with YouTube TV also pointing out that, “locally broadcast Fox and CBS games, Sunday Night Football on NBC, select digital-only games and international games excluded,” consumers expect it all when it comes to streaming. No playoff games are included with NFL Sunday Ticket and I’m sure that’s going to catch some users by surprise.

It also doesn’t help that there is a lot of misinformation on news sites about the service. I’ve read multiple “reviews” of the service where the post makes false statements including, “viewers will be able to purchase a certain number of games for a cheaper price,” and “watch every regular season Sunday afternoon game.” YouTube TV has made the terms for NFL Sunday Ticket very clear, but they are going to have their work cut out for them educating consumers on how it all works. YouTube TV’s support is going to be very busy communicating which games they can and can’t watch and what exactly they are allowed to do with their subscription, on top of all the technical questions that are going to come in. Outside of any technical issues, I believe the success or failure of the launch is going to come down to the quality of support YouTube TV provides and how well they communicate. If they farm support out to another country where they don’t speak English natively like we see a lot of streaming services doing with their support, it will be a disaster for YouTube TV.

In May, YouTube TV offered a free 10-day trial, for new members only, during a limited promotion. As we get closer to the NFL Sunday Ticket launch, I’m curious to see if they will run the trial again to get more users familiar with their platform. Doing so would also help them test out their multiview option at scale since to date, the rollout has been, “limited to users who have specific equipment,” with many complaints of it not working right coming in during March Madness. In fairness to YouTube TV, they did say they limited the “early access” to the feature so they could collect feedback and “improve the experience.” This month, multiview functionality was removed from the platform with YouTube TV tweeting on June 18th, “we’re working on some improvements to multiview, so it isn’t available atm. but we’ll be sure to let everyone know once we have an update.”

With less than 90-days before NFL Sunday Ticket kicks off on YouTube TV the amount of work going on at the company, across the entire YouTube video stack, is enormous. People within YouTube tell me the level of planning for NFL Sunday Ticket is like nothing they have ever seen before, which is exactly what we would expect. Google knows what’s at stake with the NFL and I can’t imagine the pressure Google is under from the NFL to deliver a great user experience from day-one. I’m rooting for the Google and YouTube TV teams to have a flawless execution not just week one, but every week throughout the year. If they can keep any technical issues to a minimum, and short-lived, plus provide accurate and timely support, it helps the entire streaming industry. If YouTube TV has any widespread problems with streaming the NFL Sunday Ticket, the backlash from many will be that streaming is not ready for prime time and can’t be used as a replacement to broadcast TV distribution.

Note: Many in the media keep writing that YouTube TV, “has over 5 million subscribers”, which is not accurate. As stated on the YouTube TV blog and in the press release with the NFL, YouTube TV, “has over 5 million subscribers and trialers in the US,” based on their July 2022 announcement.

In August of last year, I detailed how some OTT services were starting to optimize their encoding bitrates by reducing some of their top-rungs in their bitrate ladders, utilizing better HEVC compression and other tactics in an effort to save money. Nearly a year later this trend has taken hold across the industry with many streaming services having cut by 25-30% of the total number of bits they were previously delivering. In some cases, the largest streaming services tell me they are saving tens of millions of dollars this year on cloud encoding, storage and delivery costs, compared to their 2022 spend. This trend is only going to continue in 2023 and into 2024 as streaming services focus on profitability and rationalizing spending across their entire video workflow. Disney recently published a blog post on how Disney+Hotstar expedited 4K transcoding by 2-4 times, quadrupling their capacity, and reducing their network storage by 80%, while cutting computing costs by 10–15%.

Compounding the problem for vendors that sell to OTT services is the fact that there is little consumer demand for 4K video. Many inside the industry continue to push the 4K narrative, but consumers are not demanding 4K and in many cases, are not willing to pay more for it. As one executive at a large streaming service recently told me, there are “diminishing returns to offer 4K, even for sports”. YouTube has already confirmed that their broadcast of the NFL Sunday Ticket on YouTube TV later this year will not be in 4K. Amazon’s Thursday Night Football season wasn’t in 4K and Friday Night Baseball games on Apple TV+ are not in 4K either. These are important examples as the companies backing all of these live sporting events, Amazon, Google, and Apple, could all afford to do 4K if they wanted, but even they don’t see the value to their businesses.

Industry executives who still go around saying, “consumers expect 4K video,” or that, “users will churn if you don’t have a 4K option,” are completely disconnected from reality and living in a business world that does not exist. If this blog post sounds familiar to you it’s because I have been talking about the problems with the cost of 4K on the entire video workflow for a long time. In 2014 I did a blog post entitled, “The Dirty Little Secret About 4K Streaming: Content Owners Can’t Afford The Bandwidth Costs,” and that hasn’t changed.

Netflix, Max, YouTube TV and some other OTT services charge a premium for 4K video and in the case of Netflix, they even charge more for 1080p with 720p being the default video quality with their $10 a month plan. Consumers vote with their wallet and decide what level of video quality they want, the streaming industry doesn’t decide that for them. We recently got an interesting data point from Netflix saying, “on average, more than a quarter of Netflix sign ups now choose the ads plan in countries where it’s available.” That’s an important number to keep an eye on over the next few quarters since their AVOD plan maxes out at 1080p.

For vendors that were relying on 4K video quality to grow their revenue, betting that OTT services would need more cloud encoding, storage, video delivery, and computing, they have lost that bet. Companies that bet big on 4K have lost. Last year, many vendors had little to no year-over-year revenue growth, with some even being negative for the year. The lack of 4K adoption in the market is not the only reason for low or negative revenue growth, but it had a big impact. The market for consumer streaming services needing 4K video quality at scale, simply isn’t there and is not coming. At the NAB Show this year, you could even see that realization on the show floor with fewer vendors pitching 4K or 8K proof-of-concept demos. This year was all about doing more with less and the optimization of the current video workflow.

The reality is that today, HD streams, especially with HDR, look so good that many consumers can’t tell the difference between HD/HDR and 4K. And for those that do, many simply don’t see it as a big enough feature to pay for it. Streaming services work very hard to provide a good user experience across so many different apps, devices, platforms, and last-mile ISP issues, that offering a 4K option only increases the chances of a poor consumer experience. All streaming services are trying to deliver the best possible experience across the lowest common denominator.

Going into 2024 will be no different, with content owners large and small telling me how much they will continue to reduce costs from their video pipeline going forward. Many vendors need to make some immediate changes to their business models and cutting headcount alone won’t be enough. Some are doing more than that, but others are still putting out CAGRs (Compound Annual Growth Rate) and TAMs (Total Addressable Market) in the industry that are 100% false and wasting time with press releases that mean nothing with regard to the growth of their business. Doing more vendor-to-vendor partner deals is not what’s needed in the market right now and is not where the revenue growth is going to come from. Vendors need to think about how they repackage and price their services, how customers want to buy them, deploy them and the best approach to selling in the market. You have to know what the customer’s problem is and how you can solve for it. Any other approach is a lost cause.