Roxy Lin | A Blog About the Video Streaming Industry

Netflix is now planning to have tens of thousands of subscribers around the world join its “Netflix Preview Club”, where they will preview upcoming projects ahead of release, according to the Wall Street Journal on Dec 1. The reaction and feedback of club members might end up being used to make last-minute tweaks to Netflix’s films and movies ahead of their broader release. Such plan is expected to roll out in early 2023.

The Netflix Preview Club program began more than a year ago and currently has a relatively small group of about 2,000 invited subscribers. The club members have contributed to a bunch of Netflix’s successful release. Before the release of Netflix’s star-loaded film, Don’t Look Up, a few test members said that they thought the movie was too self-serious, prompting the creative team to make adjustments designed to brighten its tone. Don’t Look Up broke a Netflix record for weekly viewing hours of a film, a record it still holds.

Soliciting responses from invited audience before a wide release isn’t a new practice in Hollywood, but Netflix’s push to expand the Preview Club comes at a time when the platform has moved to cap its annual spending on content at $17 billion. Netflix, along with other streamers, while still raising their spending on content (Figure 1), are scrutinizing content spending more heavily and trying to ensure that every dollar spent on content yields the highest level of member attention and engagement. The Netflix Preview Club might serve as a way to help the company with optimizing its content investment.

Other streamers have sought viewer feedback through similar programs. Amazon has invited some customers to review and give feedback on ideas, films and TV pilots through its “Amazon Preview” program. Disney – controlled Hulu for years – has invited some consumers to offer feedback on content once it has launched or to answer research questions through a program called the “Hulu Brain Trust.”

It was reported on Nov 23, 2022 that Amazon plans to spend more than $1 billion a year to produce movies that it will release in theaters, which is, according to Bloomberg, the largest commitment to cinemas by an internet company. In the coming 2023, Amazon aims to make between 12 and 15 movies that will get a theatrical release. According to The Hollywood Reporter, the planning is only the beginning of Amazon’s theatrical effort and the exact number of titles has yet to be finalized. If such a plan is executed, that number of releases will put Amazon on par with major studios such as Paramount Pictures.

Amazon’s theatrical push can be indicated following its acquisition of MGM Studios for $8.45 billion in March 2022. MGM is home to big-screen franchises, including the James Bond series, which is part of the studio’s 4,000 film title library. The news of Amazon’s theatrical push was followed by a cinema stocks surge. Shares in Cinemark rose 12 percent to $13.74 in late afternoon trading on Nov 23. The world’s largest chain, AMC Theatres, saw its stock price rise by 5 percent to $7.72. Shares in Imax rose 7 percent to $15.48, while stock in Cineplex rose 4.5 percent to $10.38.

On Nov 16, 2022, NBCUniversal announced a new measurement initiative entitled “The Currency Council”, where it partnered with 67 advertisers and 158 brands to transact on new measurement currencies. Brands that joined the Currency Council include General Motors, PepsiCo, T-Mobile, Marriott Bonvoy, and Wayfair. The partnered transaction through new currencies is based on One Platform, NBCU’s ad tech, data, and measurement offering that reaches 230 million adults monthly in the US and 1 billion people worldwide. According to Krishan Bhatia, president and chief business officer for global advertising and partnerships at NBCUniversal, the company is now zeroing in on a set of new currency providers including iSpot, VideoAmp, and ComScore before heading into the next upfront cycle.

NBCUniversal’s push into alternative currencies comes as the industry finds itself in a time of upheaval around measurement of digital video advertising business. The industry has been frustrated by the measurement giant Nielsen, who lost its third-party accreditation in 2021, and on Nov 14 2022 the Media Rating Council’s audit committee voted to maintain the suspension of accreditation for Nielsen’s national ratings. Players in streaming are making efforts to grow their own TV sales business. Warner Bros. Discovery tapped iSpot.tv, Comscore, and VideoAmp, as the three measurement companies for the first tests of its own measurement alternative. Paramount, meanwhile, is partnering with VideoAmp and Dentsu on data trials as it also explores alternate currencies to Nielsen. Now, by positioning itself as one of the leaders in the multicurrency future, NBCU is making efforts to take the lead in the lane, trying to attract incremental ad dollars and establishing itself as a safer haven for advertisers.

It is also noteworthy that NBCUniversal’s efforts to push forward with its digital video advertising are centered around the company’s streaming platform Peacock, which is the main endpoint (where the advertising reaches customers) of NBCUniversal’s One Platform. While the streaming service is smaller than many rivals (15 million subscribers), executives at NBCUniversal have touted efforts to drive more ad value from the platform through a number of initiatives. Among them is a plan to launch a self-serve advertising platform that will provide a lower entry point to smaller brands and advertisers, who are not in the marketplace with multimillion-dollar ad buys. According to Krishan Bhatia, “We [NBCUniversal] wanted to basically lower the barrier of adoption and make it as easy as possible for you [advertisers] to go live with advertising and streaming. We’ll start to roll that [the self-serve advertising platform for Peacock] out as we go into 2023.”

On Nov 1, 2022, YouTube launched its new “Primetime Channels”, a feature under YouTube’s Movies & TV hub that allows users to subscribe and watch content from over 30 streaming service providers on YouTube. The streaming services available at launch are Paramount+, Starz, AMC+, and Showtime, with NBA League Pass coming soon. The offering is now only available in the U.S., but YouTube plans to expand to international users in the future.

With the “Primetime Channels” offering, Users who subscribe to other streaming services through YouTube will see content from those services incorporated into YouTube’s apps and platform. When scrolling through YouTube’s search and recommendation pages, users will see suggested streaming content appearing alongside videos from YouTube creators. Users will also get access to behind-the-scenes features and cast interviews, among other bonus content.

By incorporating third-party streaming content into the YouTube interface, YouTube is making itself the aggregated center for video streaming where users no longer need to “jump from app to app to find what you’re looking for” but will be able to “sign up, browse and watch your favorite TV shows, movies and sports from all platforms all directly on YouTube”, according to YouTube’s new release. With this new feature, YouTube could turn off some services like Apple TV+, Disney+, or Netflix, which take pride in their own user experiences.

For those companies who collaborated with YouTube to offer their streaming content, this can be an opportunity to broaden their reach and attract new subscribers. According to Jeff Shultz, Chief Strategy Officer and Business Development Officer of Paramount, the streaming company is “excited to expand our partnership with YouTube to offer customers of Paramount+ another way to stream the content they love,” and that “This new feature gives us the opportunity to expand our presence on YouTube, broadening our reach and giving consumers even more choice when it comes to streaming the best in entertainment.”

On Oct 27, 2022, Walmart and Netflix announced that they will expand their partnership to include a physical storefront – “The Netflix Hub” – at more than 2,400 Walmart locations in the US. Previously, the two companies were collaborating on selling Netflix’s products on Walmart’s website, an effort started in 2021 to “establish Walmart as the Netflix destination for family entertainment experiences”. Now the retail and the streaming giant are furthering their collaboration offline.

“The Netflix Hub” is an in-store Netflix zone in Walmart where shoppers can buy products including music, apparel, collectibles, and games from big Netflix IPs such as Stranger Things, Squid Game, and even the upcoming Knives Out sequel. The two companies will also be selling kits of goodies like popcorn and candy to “make watching Netflix at home feel like you’re at the movies”. Moreover, $19.99 Netflix gift cards will also be sold in the hub, which conveniently translates to a single month of Netflix Premium streaming plan.

The in-store expansion can be seen as Netflix’s latest effort to push its offerings beyond streaming. Facing growth pressure, the streaming giant has quickly wrapped up its cheaper ad tier (coming in November 2022), and worked on crackdown password-sharing (rolling out in early 2023). Besides, the company just announced today its acquisition of Spry Fox, a game development company known for its Cozy Grove and Alphabear. Spry Fox will become Netflix’s sixth in-house gaming studio. To date, Netflix offers 35 games on its platform to subscribers at no additional charge, with 55 more games in development. Now with “The Netflix Hub”, the company is expanding its service bundle to the retail experience.

On Oct 17, 2022, Netflix announced a new feature called Profile Transfer after months of testing in a few countries around the world. According to the company’s press release, the feature allows “people using your [the user’s] account to transfer a profile — keeping the personalized recommendations, viewing history, My List, saved games, and other settings — when they start their own membership”.

The new feature seems to be part of Netflix’s latest effort on cracking down on multi-household usage, i.e. multiple users sharing one account. As the streamer faces the problem of subscribers loss of around 1.2 million in the first two quarters of 2022, Netflix is seeking ways to boost its users growth. Earlier this year, Netflix has been testing a new feature that would restrict password sharing. Now with the Profile Transfer feature, Netflix is trying its very best to make sure a lot of people are soon required to get their own Netflix account. According to the company’s shareholder letter in April, more than 100 million households worldwide are sharing their Netflix accounts. 

The crackdown on account sharing, yet, is not the company’s only solution to boost users growth and revenue. A few days earlier, on Oct 13, Netflix unveiled details for its upcoming ad-supported version. The new tier, called “Basic with Ads,” will be launched globally between Nov 1 and 10 at the price of $6.99 a month, which is a month before the launch of Disney+’s ad-backed streaming tier and for one dollar less. 

When users subscribe to the ad-supported plan, they will be shown four to five minutes of ads an hour and ads will typically be 15 seconds or 30 seconds long, playing before and during content. Not all of Netflix’s vast library will appear on the ad-backed service, according to the company, because of the licensing restrictions that it continues to work on. Users also won’t be able to download content as they can on other tiers of service. The company disclosed that it has nearly sold out its ad inventory at launch.

To date, other streaming giants that offer or plan to offer ad-supported plans include Disney+, Peacock, Hulu, HBO Max, and Paramount+. 

On Sep 29 2022, Roku, America's No. 1 streaming media device company, announced the acquisition of Nielsen’s Advanced Video Advertising (AVA) business, which includes Nielsen’s video automatic content recognition (ACR) and dynamic ad insertion (DAI) technologies. In addition, Nielsen and Roku have entered into a long-term strategic partnership to enable a cross-screen measurement tool allowing advertisers to track viewership data across desktop, mobile, connected TV, and traditional TV. This brand new cross-screen solution is upon release in December.

When it comes to video streaming, the focus was used to be on streaming subscriber numbers, but now companies are looking at monetization. Facing new growth hurdles, some of the biggest players in streaming have been taking steps to launch ad-supported tiers; at the same time, marketers are looking forward to shifting more dollars to streaming as consumers are spending more time on SVOD. Roku sees its chance to become a central hub for video advertising. Up till now, it’s still challenging for companies to measure data across the many devices people use to consume streaming content. By acquiring Nielsen’s four-screen measurement tool Nielsen One, Roku aims to provide companies and marketers with “a consistent, comparable, and deduplicated view into the channels and platforms audiences consume, across screens”. A key element of this tool is eliminating (or deduplicating) redundant audience data so marketers can evaluate campaigns’ unique reach and frequency on multiple devices.

Besides the cross-media measurement solution, Roku’s ambition also includes addressable TV advertising – a new form of TV advertising where advertisers can target video ads to specific households. With an forthcoming end-to-end DAI solution, Roku is hoping to enable addressable TV ads where ad can be reached to assigned audiences while they are watching TV via on-demand, live-streaming, or linear viewing environments. U.S. spending on addressable TV advertising – still just a fraction of the total TV ad market – is expected to reach $4.2 billion by 2024, doubling its 2020 total of $2.14 billion, according to the 2022 report by eMarketer. Through the deal with Nielsen, Roku is angling to get a bigger piece of that pie.

When it comes to the business world of video streaming, Roku might not be the first name that pops up in people's minds. However, being the biggest supplier for streaming and TV-related devices in the U.S., Roku has more than 63 million active accounts using its platform to stream everything from live, linear television to streaming services like Netflix and Disney+. In 2021, Roku has also moved into original programming, launching its debut of 30 titles which Roku acquired from the short-form streaming service Quibi earlier this year.

On Sep 14, Walt Disney’s CEO Bob Chapek said at an investor conference that the company was planning to group all its streaming products under its flagship Disney+ app, and could tie that service more closely to its theme-parks business. Disney-owned streaming platforms involved in this shift include Disney+ (family-focused and franchise content, including Marvel superhero, Pixar, and Star Wars movies and series), Hulu (general entertainment content), and ESPN+ (sports-focused content).

As the Disney executive stated, placing all three platforms under one umbrella in a single app would reduce the friction viewers faced when toggling between different platforms and devices. Mr. Chapek referred to this sort of packaging as a “hard bundle”, as opposed to the softer bundles it already offers in the U.S., where consumers get a price discount for signing up for several services but they remain on separate apps.

The company has already experimented with such a simplified model in Europe, where the Star streaming brand, which includes many shows that also air on Hulu, is already part of Disney+. Other media companies are also joining the trend of merging their streaming offerings. Warner Bros. Discovery Inc. has said it would combine its Discovery+ service with HBO Max. Paramount Global is considering closing its Showtime streaming service and merging its content into Paramount+. The platforms and apps are not the only parts that join the trend – so as IPs. With the new “open for business” strategy, Warner Bros. has put some of its best-known IPs up for grabs, selling The Lord of the Rings to Amazon and peddling around The Batman animated series. Whereas before, WarnerMedia zealously guarded its films for HBO Max.

It is interesting to look at how the “streaming revolution” is undergoing such a makeover. Before the coronavirus pandemic started in the U.S., voices like The New York Times had expressed concerns about the Exclusives feature of SVOD streaming services, where “[…] The subscription model undermines that fantasy of universality. Imagine a video store that allowed you to rent only Warner Brothers movies. Imagine having to enroll in a corporate loyalty program, pledging allegiance to Disney or Sony or Netflix, and being forced to limit your choices accordingly.” But two years after the pandemic started, it seems like “the fantasy of universality” are circling back, where companies across the industry are trying new strategies under the pressure of economic uncertainty -- from bundling to pricing to ad-supported content. Are there too many lineups in the market? Will people pay for a more aggregated experience? Now with some media giants pursuing a more centralized path, the rest of industry will all but certain to watch the new strategy closely.

Hey guys, welcome to my blog! I’m Roxy, an undergrad at New York University majoring in Media, Culture, and Communication. The majority of my content here will cover my thoughts on current events and trends in the entertainment industry - especially video streaming!

For information sources, I will be following Wall Street Journal, New York Times, and The Hollywood Reporter.

Let’s see what happens!