With another earnings season done and dusted, there was one key theme that ran through the presentations: streaming. Even when companies tried to focus on other things, investor questions returned to the quarter’s hottest topic.
VIP has already covered in detail the results for Disney, ViacomCBS, Comcast, AT&T and Netflix. This analysis will focus upon key media stories that emerged for Fox, Discovery, Roku, AMC, Amazon and Lionsgate.
First, some overall good news for TV. Total Q3 revenues from broadcast, cable and premium cable U.S. operations rose by $2.1 billion (6.9%) versus Q2’s COVID-induced fall, to a total of $32.1 billion. In a strange parallel, the year-over-year difference with Q3 2019 also saw an increase of $2.1 billion (also 6.9% up), with the return of postponed sports leagues like the NBA and MLB adding to revenue.
Fox was one of the media companies seeing a yearly revenue increase, up by $50 million (1.9%). CEO Lachlan Murdoch waxed lyrically for close to seven minutes on the earnings call about the sterling performance of Fox News, which led revenue growth across the Cable TV unit by $40 million (3%) year-over-year. Despite this, all investors wanted to discuss was how Fox AVOD service Tubi was performing.
Tubi is thriving. Since Fox closed its acquisition for the free streamer in April, Tubi has seen a 100% increase in total viewing time and had seen 45 of its top revenue-generating days ever since September 1. Murdoch states that Tubi had 33 million monthly average users in August, representing a 65% increase year-over-year.
When asked to give a more tangible figure, Murdoch acquiesced and said that Tubi saw 220 million hours viewed in September, which is notable as no other AVOD releases a metric beyond MAUs. With Fox’s integration with Tubi continuing — there are 41 Fox titles available now, with live feeds from 18 local Fox markets — both hours viewed and MAUs should continue to grow.
Fox’s streaming strategy differs from most media companies. Fox bought an existing free platform and has enhanced it. Discovery is going in the opposite direction, although it should consider AVOD. Discovery is planning to launch its own SVOD service in 2021, although disappointingly it had no new details for it, instead asking investors to attend its investor day in December to find out more.
Investors did ask whether Discovery should license out content to FASTs like Pluto TV and Tubi, but were told that Discovery’s focus is not on near-term cash gains but long-term strategy. With promises that details will soon be unveiled, Discovery’s migration to streaming will soon begin.
Another legacy TV company making the journey to SVOD is AMC Networks. Similar to Tubi, AMC’s collection of SVODs, led by Shudder, saw a 100% year-over-year increase in revenue, up to $200 million. The company also smashed growth records and now expects to have 4 million subscribers across Shudder, Acorn TV, UMC, SundanceNow and IFC Films Unlimited by year’s end, which was initially targeted for EOY 2022.
AMC’s strategy is to be the leader for targeted audiences, and to develop services that consumers will purchase alongside general entertainment services like Netflix and Prime Video. To that note, AMC+ was recently launched, which rolls up content from several existing AMC SVODs but also allows early access to AMC TV shows. With this launch, the company set a bullish subscriber-growth target, between 10 million and 20 million, and with it a growing importance as a revenue stream away from traditional TV.
Roku reported another quarter of growth in revenues and users. There will surely come a time when growth slows, but Q3 saw record revenues for the streaming platform and service. Total revenues increased by 73% vs. Q3 2019, up to $452 million, and were driven by increases both for units (up 57%) and active users (46 million in the U.S., up by 43%).
These users are watching more content on the Roku Channel, both on Roku’s own AVOD service and on other ad-supported streamers, as evidenced by continuing growth in monetized ad impressions, which grew by 90% versus last year. This is impressive, showing that advertisers are beginning to place more trust in a format viewers are watching more and more.
Things haven’t been rosy at Lionsgate recently. The company said that it was slashing 15% of its Global Motion Picture Group workforce on the same day it announced its latest quarterly results. Like many of its media peers, Lionsgate’s business has been rocked by the COVID pandemic. However, a major bright spot has been its over-the-top service.
Lionsgate reported that its Starz OTT service in the U.S. had 9.2 million subscribers in the second quarter, up from 7.4 million. It also added 2.3 million global subscribers, for a total of 13.7 million. The strong sub growth for Lionsgate’s OTT service helped to boost Media Networks segment revenue nearly 4% from the prior quarter to $388 million.
Meanwhile, Amazon Prime Video has also been crushing it. The tech giant noted that internationally the number of Prime members using the service grew 80% in Q3 from the same period last year. Management spoke about the company’s OTT video advertising ambitions on the earnings conference call at the end of October.
“I think video is one we’re working hard on with some of the OTT video advertising opportunities there. We’re seeing some good momentum with that,” Amazon CFO Brian Olsavsky said. Revenue in Amazon’s “other” category, which houses its advertising business, rose 51% to $5.4 billion during Q3. With overall advertising trends seeing a rebound, Amazon’s interest in capitalizing on the growing AVOD opportunity IMDb TV provides would be well timed.
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