Private Equity firm Clearhaven Partners has acquired IP video transport vendor Zixi and will invest in the company, along with Zixi’s executive leadership team, which also invested in the transaction. Terms of the deal were not disclosed. Clearhaven Partners continues to add to their portfolio in the video space, having made a significant investment in Wowza Media Systems in 2021 and investing more than $100 million in SundaySky in 2022.

I got to spend some time with Clearhaven Partners at the NAB Show and like their core focus on the software business, emphasizing data, video and content. At the NAB Streaming Summit in April, Clearhaven’s Founder & Managing Partner, Michelle Noon, spoke about vendor valuations and the M&A outlook for streamers and streaming tech companies. You can watch that discussion here.

Words matter. What is TV? Our industry continues to use words interchangeably as if they all have the same meaning when they don’t. TV is a device; it’s not a type of content. Cable, satellite, and streaming are different means of distribution and video services. Netflix is not in the “streaming” business; they are in the content business and use streaming to distribute their content. “Streaming” is not TV; it’s a technology.

Today, many view the definition of TV as the type of content or viewing, and when used in that context, the word will not have a single definition. When a 30-second video clip on YouTube is being compared to a 90-minute movie on Netflix, as Nielsen does, under their definition of “TV viewing,” the term no longer has a meaning. What is classified as watching TV varies amongst users. Many younger users think of their phone as their TV, and they would be right. For many, the TV is no longer considered a device but the act of viewing a particular type of content or specific user experience, no matter the screen size it is being watched on.

For some, that is content on YouTube; for others, like myself, I only consider it a TV viewing experience if the content is long-form and professionally produced. But it’s not a right or wrong answer; it’s simply a matter of viewer preference. What’s being compared is the act of viewing video content, and what one person defines as content suitable for “TV” viewing will vary. There will never be an agreed-upon definition, and that’s ok. What’s not ok is when companies like Nielsen put out video viewership data and use many of these terms without defining them. They intentionally confuse the market, which is part of their business strategy. The more complicated they make it, the more content owners and advertisers need to use Nielsen to attempt to figure it all out.

Nielsen’s methodology for the Guage report comes from what they say are “TV households” and “linear TV sources,” the latter defined as “broadcast and cable.” A household is a location, not a type of viewing. Cable is a method of distribution. Broadcast is a type of distribution, and today, one can rightfully argue that broadcast would be a channel like ABC and a live stream on YouTube from Red Bull TV — two different types of distribution and business models.

When Nielsen measures viewership on Netflix, we know users watch long-form, professionally produced content. Thanks to Netflix’s data, we know what that content is and what’s most popular. Yet, when Nielsen measures viewership on YouTube, we have no idea what type of content is being watched. A short user-generated instructional video on YouTube is being compared to a professionally produced long-form piece of content on Netflix. That’s not comparable unless Nielsen was simply looking at the total hours spent with video services over other means of content consumption. Content owners of every type compete for our time and eyeballs, but that’s not what Nielsen is comparing.

Within the other category, Nielsen doesn’t count “high-bandwidth video streaming,” which has no definition. The bitrate of a video has never been one of the factors Niselen uses in measuring, and they don’t even collect bitrate data across services. Yet they use the bitrate of a video to define why they don’t include vMVPD services in the total viewing time, which makes no sense.

Nielsen doesn’t define viewing TV viewing by the average length of a title or type of content, which would be far more valuable. We have no idea what kind of content is being viewed on YouTube or even what percentage of it is being monetized. Netflix isn’t free. All content on YouTube is. What would be very helpful to know and track is what percentage of content being viewed on YouTube is also being delivered with ads and how that trends over time.

As an industry, no one wants to agree upon even a core set of definitions and methodology when comparing all forms of video. This is a problem and where we need to start. Content type, length, genre, distribution type and business models are all variables of any video service. But we should start with the basics regarding the length of content, type of content (UGC versus professionally produced) and average viewing time. Simply calling everything TV isn’t helpful. Words matter.

For the 2024 NFL season, games will be broadcast and streamed across ten different networks and platforms. That’s great for the NFL’s revenue, but the fragmented distribution is bad for fans. The NFL can get away with this since, in 2023, NFL programming accounted for 93 of the 100 highest-rated shows on TV. Adding two games on Netflix this year allows the NFL to grow its audience, with the Netflix deal being the first that allows for global distribution with no blackout restrictions. Here’s a breakdown of how many games are on each platform:

• Amazon Prime Video: 16 games (all streaming exclusive)
• Peacock: 1 game (streaming exclusive)
• ESPN+: 1 game (streaming exclusive)
• Netflix: 2 games (streaming exclusive)
• NFL Network: 4 games (all games also on NFL+)
• NBC: 17 games (all games are also on Peacock)
• FOX: At least 100 games (week 18 schedule still TBD, all games streaming via FOX Sports)
• CBS: At least 100 games (week 18 schedule still TBD, all games streaming via Paramount+)
• ESPN/ABC: 21 games (all games streaming via ESPN+ or ABC)
• * One could suggest that YouTube TV could also be added to the list since that deal is direct with the NFL, whereas games on Fubo and Hulu+ Live TV are deals that vMVPDs do with the broadcast networks.
• * On the B2B side, Everpass has a deal with the NFL for viewing in bars and restaurants
• * Also on the B2B side, Reach TV has a deal with the NFL for viewing in airports

In a CNBC interview, Brian Rolapp, NFL’s chief media and business officer, was asked how he addresses concerns that the market is too fragmented and that it’s too hard to find games. As expected, he said he “doesn’t think it’s fragmenting too much” for the NFL since “every game we have is on broadcast television in the local markets.” While this is technically accurate, it requires an antenna to get an Over-The-Air (OTA) signal, and you can’t pause or rewind an OTA signal without paying for a DVR. Suggesting there is no fragmentation due to OTA availability is a poor argument. Fans have to go out and buy additional equipment to get the broadcast, and watching an NFL game via OTA is not the same experience as viewing the game via a cable or satellite network.

Unless viewership declines or stays flat over the next year or two, the NFL can continue to put revenue over the fan experience. As frustrated as fans are with today’s sports viewing experience, the NFL has no incentive to change its fragmented distribution strategy as long as fans continue to watch games, no matter how complex the NFL makes it.

A new patent lawsuit has been filed against Google regarding caching and content delivery methods dating back to Sandpiper Networks. The lawsuit relates to how Google delivers content across its network for YouTube content and third-party content across Google’s Cloud CDN platform.

The patents in question were owned by Level 3 and were sold off by Lumen in March of this year to Sandpiper CDN, LLC. I don’t know who is behind the newly formed entity, which appears to have been incorporated solely to acquire the patents. Andrew Swart and David Farber are mentioned in the suit regarding the history of the patents, but I don’t have confirmation of their involvement in Sandpiper CDN, LLC. and the suit. I contacted them asking for clarification and will update this post if I get a response.

For those who don’t know the name Sandpiper Networks, the company is considered by most to have built the first public content delivery network. [See my vendor list at cdnlist.com]

They first offered their “Footprint” CDN services in September 1998, and their ‘598 patent was issued in February 2001. Sandpiper was acquired in a stock deal by Digital Island in October 1999, valuing the company at the time of the news at $630 million. After the news, Digital Island’s shares soared, and by the close of trade, Sandpiper was worth a billion dollars on paper. I don’t recall the final deal price and terms.

In the suit, Sandpiper CDN, LLC. claims that in 2023, Level 3 “decided to exit the CDN market and began selling off its CDN assets” due to the “rampant infringement of its patents, which depressed its revenue and profit.” That assertion is not accurate. Level 3 exited the market as some of its largest customers, including Apple and Disney, moved to other solutions, with Apple building its own CDN and Disney consolidating its traffic to just two third-party CDNs.

Lumen’s CDN revenue did not decline due to a lack of companies licensing their patents. Level 3/Lumen’s CDN business declined before 2023 due to less overall traffic growth in the market, lower pricing across the industry, and customers optimizing their video to deliver fewer bits. We’ve seen these trends across other CDNs, which are well documented with public data.

The patents in question are 478,903; 8,595,778; 8,645,517; 8,719,886; 9,021,112; and 10,924,573.

Disclaimer: Over the past twenty years, I have been paid to work on many patent suits tied to CDN patents, including those owned by Progressive Networks, Burst, Move Networks, Microsoft, Viatech and others. As of the publication of this post, I am not working on the Sandpiper CDN, LLC. case.

Note: The Sandpiper logo shown is the company logo from Sandpiper Networks and not of Sandpiper CDN LLC.

In Q1, Verizon, Comcast, Charter, Altice, EcoStar and WOW! lost 1.55 million pay TV subscribers, Hulu+ Live TV lost 100,000 subscribers, Sling TV lost 135,000 and Fubo lost 110,000 subscribers. Combined, that’s 1.89 million live TV losses in Q1. We don’t know how many subscribers YouTube TV gained or lost. But it’s a safe bet that YouTube didn’t make up the nearly 1.9 million difference.

While Peacock and Paramount+ don’t have a live linear channel lineup comparable to pay TV, they do have live content. Peacock gained 3 million subscribers in Q1, and Paramount+ added 3.7 million. Consumers are not tuning out live; they are just moving from a deep linear channel lineup to specific live content. Max gained 700,000 subscribers in the US in Q1, but we don’t know how many added the B/R Sports Add-On for live sports.

We all know sports content drives live TV viewing and keeps consumers from cutting pay TV services faster, but so far, vMVPDs are not benefiting from a steady stream of new sign-ups. Yet, some in the industry continue to want to imply that Hulu and other vMVPDs are doing better than they are. Someone who covers the streaming space recently said in a LinkedIn post, “…Hulu+ Live TV, in particular, is adding customers at a steady clip.” That’s simply not true.

Over the last three years and one quarter, Hulu+ Live TV has gone from a low of 3.7 million subscribers to a high of 4.6 million. In the previous two years, the number of total subscribers hasn’t deviated by more than 10% and in the past five quarters, that number dropped to 6.5%. Six quarters ago, Hulu+ Live TV had 4.5 million subscribers. Disney just reported the same 4.5 million subscribers at the end of Q1. These numbers tell the story; anything else is just hype and poorly worded-posts with vague references. Most often, the person writing the post doesn’t know the numbers.

Looking at pay TV cord cutting figures from last year and Q1 of this year, I estimate the pay TV market will lose about 5 million subs combined in 2024. That would be a loss of about 7% of total pay TV households in the US.

Here’s this week’s bulleted list of key numbers and data points from Q1 earnings across WBD, Disney, FOX, EcoStar, Vizio, Akamai, Brightcove and Vimeo, including P&L, sub additions/losses, ARPU, and 2024 year-over-year projected growth:

• The Disney earnings deck said that a definitive agreement regarding the new JV sports streaming partnership hasn’t been signed yet with FOX and WDB.
• FOX said 90% of all viewing hours on Tubi come from AVOD content, not FAST channels. Tubi’s CEO confirmed in April 2024 that Tubi is not profitable. In Q3 of 2022, FOX said Tubi had $165 million in revenue for the quarter. Based on those numbers, Tubi’s annual run rate for 2023 should have generated over $700 million in revenue. More details here.
• In Q1, Warner Bros. Discovery added 2 million DTC subs (700,000 from the US) to end the quarter with 99.6 million. DTC revenue was $2.46 billion on a profit (Adjusted EBITDA) of $86 million. More details here.
• Sinclair is looking to sell more than 30% of its 185 owned or operated broadcast stations, including the Tennis Channel. Sinclair CEO Chris Ripley said the company is open to offloading parts of its business without giving specifics.
• AMC Networks added 100,000 DTC subscribers in Q1 to end the quarter with 11.5 million subscribers, up 300,000 YoY. Ad-supported versions of some of its DTC services will roll out in 2025.
• Disney’s DTC streaming business, Disney+ and Hulu, had an operating income profit of $47M in Q1, while ESPN+ lost $65 million. More details here.
• Vizio’s SmartCast Active Accounts growth is slowing. It added only 100,000 accounts to end Q1 with 18.6 million. More details here.
• Verizon, Comcast, Charter, Altice, EcoStar and WOW! have lost 1.55 million pay TV subscribers in Q1. Looking at figures from last year, I estimate they will lose about 5 million subs this year combined.
• Akamai expects to see $3 million—$4 million in revenue due to the Olympics. The impact of the Olympics on CDNs is never as significant as some suggest. Akamai also mentioned that their delivery business is “highly profitable” and that they have reduced their delivery capex costs to “low single digits,” a 50% reduction from a few years ago. More details here.
• Vimeo’s revenue in Q1 was $105 million, flat from Q4 revenue of $106 million and up 1% YoY. Net income in the quarter was $6 million. Keeping the 2024 revenue guidance of $385-$400 million would mean revenue would be down -8% to -4% YoY. More details here.
• Brightcove’s revenue was $50.5 million in Q1, flat from Q4 and up 3% YoY. Its net loss was $1.6 million. The 2024 revenue guidance stays the same and is expected to be in the range of $195M-$198M. More details here.
• Launching this August, Sky is bringing more sports to viewers with Sky Sports+ at no extra cost. This will give users over 50% more live sports this year and enable the capability to show “up to 100 live events via concurrent streams.”

On Akamai’s Q1 earnings call, the company gave details regarding their delivery business. Akamai expects to see $3 million – $4 million in revenue due to the Olympics. Due to a social media customer who has optimized their platform to save money, Akamai said it would take a hit of $40 million – $60 million in revenue for the year due to less traffic from this single customer. Akamai did not name the customer, but it is TikTok. They have been pre-fetching less content and optimizing their entire infrastructure stack for the past few quarters.

Outside of TikTok, Akamai said that due to “slowing traffic growth across the industry” (they highlighted gaming in particular), they expect to see $20M-$30M less delivery revenue for the year. The company said that by the end of the quarter, they will have repriced five of their seven largest delivery customers and expect the remaining two to reprice by Q3. Regarding the repricing, Akamai said the pricing they are seeing is in line with what they expected. For those who have suggested that Akamai is dropping their delivery pricing just to win business, they’re not. The company confirmed that there is delivery traffic that Akamai is not taking on as it’s not “profitable” or “strategic.” Akamai also mentioned that their delivery business is “highly profitable” and that they have reduced their delivery capex costs to “low single digits,” a 50% reduction from a few years ago.

Here’s a breakdown of Akamai’s delivery revenue over the past 13 quarters:

• • Q1 2024: $351,758
  • Q4 2023: $389,048
  • Q3 2023: $379,304
  • Q2 2023: $379,698
  • Q1 2023: $394,384
  • Q4 2022: $415,183
  • Q3 2022: $393,248
  • Q2 2022: $416,678
  • Q1 2022: $444,148
  • Q4 2021: $470,767
  • Q3 2021: $462,068
  • Q2 2021: $466,739
  • Q1 2021: $473,669

For those wondering why the overall traffic growth rate is down, just look at the subscriber numbers from OTT platforms. Some, like Sling TV, lost subs in Q1, and so did Hulu+ Live TV. Subscriber growth across the industry wasn’t strong in Q1. Akamai also noted that traffic growth in the gaming industry was lower.