Hello everyone. There were a few follow-ups to yesterday's discussion regarding paid video streaming. We will look at how paid streaming is performing relative to the elephant in the room: YouTube. We will then turn our attention to the momentum found with ad-supported tiers. A question that is being asked more frequently is if Apple will bring advertising to Apple TV and Apple TV+. The update covers Neil’s thoughts on the topic.

Let's jump right in.

YouTube Gaining TV Momentum

Here's Variety:

“YouTube, already the most popular streamer on big-screen TVs, last month built on its lead as one of the only major services to see viewing time among U.S. TV households increase, according to new Nielsen data.

For the period from March 27-April 30, 2023, TV viewing of YouTube videos (excluding YouTube TV) was up 1.5%. That translated into an increase of 0.3 share points, with YouTube ending the month with 8.1% of total time spent watching television, according to Nielsen measurements.

Time spent viewing on most other streaming platforms, including Netflix, Disney+, HBO Max, Prime Video, Peacock and Hulu, was flat or down compared with March 2023, according to Nielsen’s The Gauge report for April. Along with YouTube, two free, ad-supported TV (FAST) services had month-over-month gains: Fox’s Tubi was up 6% from March, adding 0.1 share point to capture 1.1% of overall TV viewing, and Paramount’s Pluto TV viewing increased 3.9% for the month to hold at 0.8% share.”

Given potential seasonal effects on those numbers as we move from March to April, it makes sense to compare April 2023 figures to April 2022 data (via Nielsen).

April 2022 (share of TV time)

Cable: 36.8%

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Hello everyone. We begin with Neil’s thoughts on Netflix cutting prices in more than 100 territories. It is quite the surprising development. The discussion then turns to YouTube and where the streaming service sits in the broader video streaming industry. Will YouTube’s market positioning shift with the company moving deeper into paid video? Will YouTube run into user resistance as it looks to evolve beyond being a source of free, ad-supported content?

Let’s jump right in.

Netflix Slashes Pricing in Dozens of Countries

A long-term trend in paid video streaming has been higher pricing. We can go so far as to say price increases were the big trend in 2022 as companies prioritized revenue and profitability.

As a sign of how the streaming industry is far from settled, Netflix is trying something new in 2023. Here’s the WSJ:

“Netflix Inc. has reduced the cost of its service in more than three dozen countries in recent weeks, as it tries to appeal to customers around the world who have an ever-growing list of streaming options.

The streaming company’s recent price cuts span Middle Eastern countries including Yemen, Jordan, Libya and Iran; sub-Saharan African markets including Kenya; and European countries such as Croatia, Slovenia and Bulgaria.

In Latin America, nations including Nicaragua, Ecuador, and Venezuela have seen reductions in subscription costs, as have parts of Asia including Malaysia, Indonesia, Thailand and the Philippines.

The cuts apply to certain tiers of Netflix in those markets—in some cases halving the cost of a subscription.”

This is a surprising development. It is the opposite of what Netflix management talked about on its most recent earnings call. While management teams are not obliged to follow product strategy discussed on earnings calls, the breadth and magnitude of these price cuts strongly support the view of a strategy shift being in play.

An Above Avalon membership is required to continue reading this update. Members can read the full update here. An audio version of this update is available to members who have the podcast add-on attached to their membership. More information about the podcast add-on is found here.