YouTube is the UK’s most popular video streaming app

New data from App Annie reveals that YouTube still tops the SVoD platforms when it comes to time spent streaming in the UK via apps.

Precise metrics aren’t offered, but we wouldn’t be surprised to learn that YouTube was miles ahead of the rest. Not only is it free, but many people, especially children and teenagers, actively prefer the kind of user-generated content they find there to high production-value proper telly and movies.

Netflix is next, which also comes as no surprise, followed by the BBC’s catch up service – iPlayer – and then Amazon video, which is free to anyone who already has an Amazon Prime subscription. In at number 5 is MX Player which, we have to confess, we had to look up. It’s an Indian SVoD platform, so clearly there’s a lot of demand for content from that part of the world in the UK.

Rounding off the list we have a bunch of other catch-up apps and Twitch, which is mainly used to stream computer games. Another data point that would have been interesting to see is total time spent on streaming apps compared to previous quarters. There must surely have been a significant increase.

Latest Quibi damage limitation exercise does anything but

The CEO of new video streaming service Quibi has turned to the press once more to address its faltering launch, but he continues to score own-goals.

Jeffrey Katzenberg has impeccable credentials as a video content exec, having founded DreamWorks and headed up Walt Disney Studio. He is the joint CEO of smartphone-focused streaming service Quibi alongside experienced tech CEO Meg Whitman and thus ultimately responsible for the success or failure of the venture, which has received billions in venture funding.

It would be fair to say that, right now, the numbers for Quibi are not what was hoped. Three weeks ago Katzenberg said the following in an interview: “Under the circumstances, launching a new business into the tsunami of a pandemic, we actually have had a very, very good launch.” Either that assessment was misleading, or Quibi’s fortunes took a dramatic turn for the worse since then, because he’s singing a very different tune now.

Speaking to the NYT, Katzenberg said: “I attribute everything that has gone wrong to coronavirus, everything. But we own it.” He seems to be trying to completely exonerate himself from any underperformance while at the same time claiming to do the opposite. Not a great start, regardless of how plausible the excuse is.

That wasn’t the last of the doublespeak. “If we knew on March 1, which is when we had to make the call, what we know today, you would say that is not a good idea,” said Katzenberg in response to a question about the timing of the launch. “The answer is, it’s regrettable. But we are making enough gold out of hay here that I don’t regret it.” It’s regrettable, but he doesn’t regret it, OK?

In response to the disappointing launch Katzenberg and co have been desperately trying to tweak the offering to broaden its appeal. They initially left out the ability to cast the content from your phone to your TV, apparently out of a desire to avoid diluting its smartphone specialness, but soon reversed that decision. Now the penny seems to have dropped that allowing some sharing of content online might help spread the word.

“There are a whole bunch of things we have now seen in the product that we thought we got mostly right,” said Katzenberg, “but now that there are hundreds of people on there using it, you go, ‘Uh-oh, we didn’t see that.’” Again, a perfectly normal part of refining a new product, but it’s hard to see how the previous ‘walled off’ approach was ever considered a great idea.

Part of the problem, on top of the pandemic, could be that Katzenberg is used to heading up operations that already have massive brand recognition and value. Disney can afford to limit the distribution of its content and over-charge for it because its unique and highly sought-after. The same it not true of Quibi, so acting all haughty and distant from the start would probably have been a bad idea no matter when it was launched.

Streaming venture leads Disney to 29% revenue surge

The Walt Disney company has reported a 29% increase for year-on-year revenues thanks to its streaming bet, but COVID-19 has forced the team to withhold dividend payments.

The impact of the coronavirus pandemic is clear over the last three months, as Disney has been forced to close all theme parks and the majority of retail stores, while there have also been supply chain disruptions. The launch of Disney+ has offset much of the negative, while the suspension of dividend payments should save the company somewhere in the region of $1.6 billion in cash. This saving will become very useful as the team continues international launches for the streaming venture.

“While the COVID-19 pandemic has had an appreciable financial impact on a number of our businesses, we are confident in our ability to withstand this disruption and emerge from it in a strong position,” said CEO Bob Chapek.

“Disney has repeatedly shown that it is exceptionally resilient, bolstered by the quality of our storytelling and the strong affinity consumers have for our brands, which is evident in the extraordinary response to Disney+ since its launch last November.”

Walt Disney revenues for Q2 2020 and H1 2020 (USD ($), millions)
Three months to March 28 Year-on-year Six months to March 28 Year-on-year
Revenues 18,009 21% 38,867 29%
Net income 475 (91%) 2,608 (68%)
Free cash 1,910 (30%) 2,202 (39%)

Source: Walt Disney Company Investor Relations

Looking across the business, Disney has been impacted quite severely by the coronavirus outbreak:

  • Cinemas are closed impacting theatrical release and delay to home entertainment revenue
  • Production for new content has been halted
  • Advertising for broadcast TV has been dampened, impacting ESPN and Hulu
  • Parks, hotels, experiences and retail footprint are closed
  • Construction and maintenance is on-hold
  • Benefits and synergies of $71 billion Twenty-First Century Fox acquisition delayed

There does seem to be light at the end of the tunnel for the parks and retail business unit with business returning to normal in China. The Disneytown shopping and entertainment complex has been reopened, while Shanghai Disneyland is scheduled to reopen next week. The team will hope these timelines are replicated around the rest of the world.

There will of course be negative consequences for every business during this unique period, however, Disney does of course have positives to point to. Most notably, the launch and expansion of its streaming platform, Disney+, and new content which has been released on other content platforms.

ESPN has seen viewing figures increase by 11% year-on-year, thanks to the release of Michael Jordan and the Chicago Bulls docuseries, The Last Dance, and the NFL draft, which took place virtually. But it is Disney+ which steals the headlines here.

Over the first five months, Disney+ has bagged 54.5 million subscriptions, vastly exceeding expectations, while there are still lucrative launches in Japan, the Nordics and Benelux over the next few months. The team is not providing much insight on when it plans to break into profitability, but adoption trends around the world are very encouraging to date.

Performance of Walt Disney media assets to March 28
Subscribers (million) Year-on-year Monthly ARPU ($) Year-on-year
Disney+ 33.5* 5.63
ESPN+ 7.9 359% 4.24 (17%)
Hulu (SVOD) 28.8 24% 12.06 (5%)
Hulu (Live and SVOD) 3.3 65% 67.75 29%

*Does not include April subscriber acquisition

This is a major growth asset for the business, especially under the current circumstances. Interestingly enough, there might be an opportunity to offset losses, by releasing certain titles directly on the streaming platform, cutting out theatrical release.

“As you know, we had seven $1 billion films in calendar year ’19,” said CEO Chapek. “But we also realize that either because of changing and evolving consumer dynamics or because of certain situations like COVID, we may have to make some changes to that overall strategy just because theatres aren’t open or aren’t open to the extent that anybody needs to be financially viable.

“So we’re going to evaluate each one of our movies on a case-by-case situation as we are doing right now during this coronavirus situation.”

Releasing in theatres is a big financial draw for Disney, but it also comes with a significant financial outlay. Marketing dollars will still have to be attributed to launches on the streaming platforms, but with content consumption trends shifting more to on-demand, in the living room and the real world, it might make more sense to skip the cinema for some titles.

NBCUniversal has already started releasing some titles on streaming platforms for an additional premium. It has been stated this is due to COVID-19, but it might not be a temporary trend for all titles. Not only is it likely to be cheaper, it satisfies consumer demand and makes the streaming platforms more attractive to subscribe to.

The content business unit is holding the Disney empire up as all the other pillars crumble in the background. Disney is not a company which will ditch its physical business, but success attracts dollars. Chapek has said he remains ‘bullish’ on international expansion of Hulu, while Disney+ is looking like a rip-roaring success. The Walt Disney Company could look like a very different organisation in a few years.

As yet another exec leaves, Quibi may struggle to stay afloat in a perfect storm

Disruptive mobile video streaming platform Quibi seemed to have everything in place to succeed until the coronavirus pandemic came along.

The thinking behind the new SVoD service seemed sound enough: a lot of people watch video while they’re commuting or standing in a queue, so they need short clips optimised for consumption on small smartphone screens. When it launched ten days ago CEO Meg Whitman insisted that launching in the middle of a pandemic of biblical proportions wasn’t a problem, but the signs since then suggest otherwise.

Maybe Whitman thought the disappearance of commuting, especially on public transport, would be offset by the sudden need to queue to get into shops. But reports increasingly paint a different picture, of a lack of buzz and memes as commentators grow sceptical about mobile-first as a positive differentiator.

Adding fuel to that fire is the fact that Quibi has just lost its Head of Brand and Content Marketing, Megan Imbres, who is the fourth senior exec to leave the ship in the past year. “It feels like an opportune time of transition where I can take some time to identify my next challenge,” Imbres reportedly wrote in a note to staff, just a year after joining from Netflix.

Perhaps in an attempt to focus public attention away from that news, Quibi founder Jeffrey Katzenberg granted Reuters an exclusive interview in which he insisted “Under the circumstances, launching a new business into the tsunami of a pandemic, we actually have had a very, very good launch.”

Katzenberg conceded, however, that having his entire target audience confined to quarters was pretty far from ideal. A further indication that the launch may be somewhat short of very, very good is the announcement that Quibi is introducing the facility to cast onto TVs, which would appear to defeat the object of the service somewhat, and presumably wouldn’t have been introduced under normal circumstances.

For an expert view on the matter we spoke to Omdia Analyst Ed Barton, who focuses on the entertainment sector. We’re still looking for the big growth indicators,” said Barton. “The download numbers aren’t great and the immediate pivot to make the shows available on the big screen doesn’t reflect confidence in the mobile-first model.

“Their biggest challenge is they have yet to unearth a service defining hit on the scale of Breaking Bad or House of Cards, something that makes their service mandatory to the zeitgeist obsessed mainstream viewer.”

As ever, content is king, but Quibi may have been hoping to avoid the spending arms race being fought by Netflix, HBO, Amazon, etc thanks to its novel format. That hope now looks forlorn and if Quibi wants to stay afloat long enough to survive the perfect storm of its launch, it may have to massively increase its investment in unique programming.

Quibi positions itself as a complement to Netflix

With the streaming world becoming ever more congested, it’s not clear how many more services the industry can tolerate, but Quibi doesn’t think it has to worry about that.

Speaking on Squawk on the Street, Quibi CEO Meg Whitman boasted of an impressive start to the challenger content application, as well as talking up the role of a short-form video niche in the daily lives of mobile-orientated consumers.

“It didn’t hurt us at all,” Whitman said on launching during the coronavirus outbreak. “We had 1.7 million downloads in the first week, which exceeded our plans, our expectations, and the app is very popular. I have to say it is one of the most successful launches of a completely new brand and a completely new app.”

1.7 million downloads is of course impressive, but it will have to scale rapidly if it is to create a proposition to compete for attention with the likes of Netflix and Disney hogging the limelight. It certainly has the star cast to challenge, Steven Spielberg and Guillermo del Toro are two who will be creating content, but then again, the team does not directly compare itself with the status quo of content streaming.

The streaming world is of course becoming incredibly congested, and consumers wallets will only be able to tolerate a certain number of services. Internationally, there is still room for growth, but there are some markets where the segment might be at saturation point and companies are simply trading subscriptions much like telecoms providers are today. But Quibi might be able to avoid this cutthroat battle.

“There are lots and lots of streaming services which are long-form content made for the television set, but we think we are really different from that,” Whitman said. “I suspect the consumer will pick one or two, maybe three long-form OTT services, like the great brands out there. I think they’ll pick a music service for sure, and I think they’ll bit Quibi because they are three usecases, three different kinds of content, three time availabilities.

“If you have an hour and a half, you might want to sit back on your coach, watch TV with one of the great streaming services but it you are moving about your house or ultimately out and about, you’ll want to be on your mobile, so that’s the niche I think we fill. I don’t think people pick a music service and an OTT service, both fill a portion of their life, and I think we will be a third one in that group.”

While it is an interesting concept, and one which is certainly a possibility, it will be an uphill battle for Quibi. Fortunately for Whitman and the team, Netflix also faced an uphill battle in the early years before blossoming. It can be done as long as you have deep pockets, something which Quibi certainly does thanks to $1.75 billion in investments to date.

The issue which Quibi faces is it is trying to change the status quo, it is trying to introduce a new form of content to change viewing habits. This is immensely challenging, though a 90-day freebie introductory offer is one way to get eyeballs on the service. And with cash to burn, promotional offers can be continued through the coming months to get as many people on the service as possible.

This is where the coronavirus outbreak might work out as an advantage for Quibi. Not only are the consumers desperate for new content, but because movie sets are closed, more might be encouraged to try Quibi. And with the movie sets closed, there is less pressure on Quibi to spend on content which means more can be directed towards marketing and promotions.

The issue which Quibi faces will arise in three months’ time; has it validated the concept? Will consumers be convinced that short-form video can replace 30 minute episodes? Is the mobile experience good enough to challenge what Netflix offers?

It might have convinced 1.7 million people to download the app for a free trial, but the real test will come when Quibi asks the same users to pay for the service.

Vodafone says upstream broadband data flows have doubled in some markets

Operator group Vodafone has shared an update on changes to activity across its European networks coz of Coronavirus.

Apparently a fifth of global internet traffic goes over Vodafone’s networks, so it has a fairly comprehensive view of what’s going on in certain regions. Principal among those is Europe and Vodafone says mobile data usage has increased by 15% on average across the continent. The more advanced the pandemic is, the more mobile data use has increased, so Italy and Spain are the main drivers of that increase.

A similar, but more exaggerated, pattern applies to fixed-line broadband, with Italy and Spain showing a 50% increase in usage. While streaming video will account for a lot of that, the most extreme changes have been caused by video conferencing, which is why upstream (originating from the user) data has increased by 100% in some markets.

“The biggest user of bandwidth on our networks is still the streaming of TV, film and games. Streaming traffic has increased by 40% on mobile and 50% on fixed broadband across European networks as a whole,” blogged Johan Wibergh, Vodafone group CTO. “Gaming traffic alone has increased twofold on mobile and nearly threefold on fixed broadband.

“This has put our mobile and fixed networks under strong pressure with evening peaks for mobile increasing by 20% in countries like Italy and Spain and fixed broadband traffic by around 35% in those countries, putting them near capacity during some parts of the evening. We have therefore brought forward planned upgrades to add four Terabits per second of additional capacity to our networks during March and April.”

Vodafone’s metrics tally with those published recently by Nokia. Operators and networking vendors alike are keen to stress how on top of the unique circumstances they are, but then again would they be blogging about it if they weren’t? Having said that there have been few reports of network problems that we’re aware of and our evening viewing of Tiger King yesterday went without a hitch, so what more could you ask for?

Nokia reveals impact of COVID-19 on network traffic

The Deepfield analytics team of networking vendor Nokia has been having a look at how network traffic evolved over March.

It comes as no surprise to see that video conferencing traffic went through the roof, with some US networks experiencing 700% growth in use of the app Zoom alone. Zoom has come under massively increased scrutiny as a result and is consequently having to raise its game. It’s also interesting to see how much more popular it is, especially at the weekends, than Skype, which had been presumed to be the default off-the-shelf video conferencing choice.

The other main source of network traffic is subscription video on demand. Apparently Disney+ already accounts for 8% of all SVoD traffic in some European networks and is maintaining a higher bitrate than the incumbents thanks to the use of six different content delivery networks. As you can see there is increasingly a spike in SVoD demand in the middle of the day that rivals the traditional evening one.

“Traffic increases continue across all regions, and networks seem to be handling these increases well,” conclude the blog. “However, as mentioned before, we are seeing additional demand placed on specific domains (peering, edge routing). Also, there is a need for the cloud-based infrastructure to scale up to support this increased demand.”

Sky UK and Virgin Media both offer new Universal movies

Self-isolating brits will be able to watch the latest Universal movies without leaving the house via Sky and Virgin Media.

NBCUniversal announced its ground-breaking decision to make new movies available to stream on demand immediately, thus eradicating the cinema commercial window, earlier this week. Sky announced it would offer the facility to its UK customers almost immediately and now Virgin Media has decided to join the big night in party.

As with almost everything else right now, this move is being positioned in the context of the COVID-19 pandemic. Across much of the world schools are being closed, people told to work from home and families increasingly barricading themselves into their homes, emerging only to panic-buy bog roll and pasta. The assumption is that a lot of telly will be watched while this runs its course.

“We’re working hard at Sky to make sure we continue to look after our customers,” said Stephen van Rooyen, EVP & CEO, Sky UK and Europe. “We’re also introducing some things to help make life a little easier for anyone at home trying to work, stay connected to loved ones, or keep the family entertained.”

“In these challenging times, its great news for our customers that they won’t be missing out on the latest cinema releases,” said David Bouchier, Chief Digital Entertainment Officer at Virgin Media. “At a click of a button, friends and families can sit back, relax and enjoy the latest blockbusters from the comfort of their sofa.”

For once we’re not getting ripped off on the exchange rate, with movies like Trolls World Tour costing quarantined Brits £16, compared to $20 in the US. While it’s both understandable and desirable for entertainment providers to be doing their bit to maintain national morale, there may come a time when we don’t have the bandwidth to support this spike in demand. Now that really will be a crisis.