Viacom and CBS reunite, The Big Bang Theory’s First Streaming Deal Is Expected To Top $1 Billion, and other top news
Few key things that happened around the Ad Tech & Media Tech world this week.
Viacom and CBS reunite
After more than a decade of operating as independent companies, Viacom and CBS finalized a merger deal this week to reunite and become a global media giant that hopes to compete with the online competition with a mixed model that’s supported by multi-billion dollar content spend. The newly formed single entity, which still has to get regulatory approval, will be called ViacomCBS and will be headed up by current Viacom CEO Bob Bakish. CBS CEO Joe Ianniello will serve as chairman and CEO of the CBS unit. The merger is pertinent as it comes at a time when traditional media players are competing with not only online streaming giants such as Netflix and Amazon, but also new entrants to the market that are working on their own value proposition, such as Apple and Disney. Scale, content, and cash for investment are necessary to catch up with both changing viewer trends and a quickly moving market. Other traditional media organizations are also looking to either cooperation or M&A as a mechanism to compete. For example, in the US AT&T bought Time Warner, whilst in the UK the BBC and ITV have worked together to create a newly formed ‘BritBox’ streaming service. ll eyes are obviously on Netflix, given that it led the online subscription market for content and is now facing unprecedented competition. Whilst Netflix has the first-mover advantage, which has enabled it to reach a global scale and build an impressive subscriber base, that doesn’t necessarily mean it can relax.
The Big Bang Theory's First Streaming Deal Is Expected To Top $1 Billion
The Big Bang Theory was one of the biggest shows on television when it aired its series finale in the spring, although it didn’t get the “respect” the CBS boss feels it deserved from the Emmys. In fact, it was still so big in Season 12 that the entertainment head honcho at the Eye Network wasn’t happy it was ending. Still, The Big Bang Theory isn’t finished generating huge numbers, even if those numbers aren’t ratings. The show is poised to drive a streaming deal upward of $1 billion. Yes, that’s $1 billion with a b. What streaming platform is willing to shell out that much money for The Big Bang Theory, along with another big sitcom? Well, not Netflix, even though that streamer may be in the need of some classic sitcoms due to recent events. No, upcoming streaming service HBO Max (from Warner Bros.) is in talks to secure The Big Bang Theory and Two and a Half Men that, according to Deadline, could result in a deal of as much as $1.5 billion. Up until an official deal has been struck, The Big Bang Theory was only available streaming on CBS All Access. HBO Max already has the rights to stream Friends once the deal with Netflix expires, and a reboot of Gossip Girl is heading to the new platform as well, although it should be quite different than the original CW series. Throw in the fact that Doctor Who is coming to HBO Max, and fans will soon have to find their time travel TV streaming elsewhere than Amazon Prime.
Amazon Beats Netflix in Over-the-Top Ad Spending
Netflix as dominated the video streaming business for years. However, its dominance of the lucrative business is at risk. Amazon has reportedly overtaken the streaming giant when it comes to (OTT) over-the-top ad spending, upping the competition for customers and streaming revenue. Netflix recently reduced its advertising budget. Netflix’s reduced spending should be a point of concern. For starters, it comes just as its new user additions are slowing down. The company only added 2.7 million new subscribers in its recent quarter, whereas it had expected to add 5 million. Amazon’s increased OTT ad spending underscores the great lengths it is willing to go to make its shows popular and compete with Netflix. While Amazon has resorted to heavily promoting its original content, Netflix has adopted a new tactic. To cut back on advertising expenditure, Netflix has turned to partnerships and licenses to popularize its shows. The streaming giant is also relying on brand partnerships with the likes of Coca-Cola and Baskin-Robbins to reach a broader target market. Brand partnerships and licensing are cheaper tactics and should save Netflix money. The company looking for ways to cut back on OTT ad spending does not come as a surprise, given the emergence of new competition. Netflix will have to battle for streaming revenue with Disney, Comcast, and AT&T’s WarnerMedia. All three are set to launch streaming services soon. By cutting its spending, Netflix could direct the much-needed capital toward coming up with new original content. The streaming giant is in dire need of new content after losing big titles such as Friends and The Office to Disney. Focusing on original content could help it keep its subscription base.
Facebook testing resale of subscription VOD
Facebook is pushing into subscription video on demand, testing whether it can become a reseller of video services. The company is doing a “small-scale” test in selling subscriptions to four services: BritBox (from BBC and ITV), CollegeHumor’s Dropout, MotorTrend OnDemand and Tastemade Plus. But last year Facebook had reached out to bigger players including HBO and Showtime about reselling those services on its platform. In that sense Facebook’s effort looks somewhat like Amazon Channels, an approach copied recently by Apple and Roku. The subscription prices for the services through Facebook are the same as through other platforms, and Facebook isn’t saying whether it’s taking a cut of the revenue in its payment processing as it tests the offering. The current four partners’ services range in price from $2.99-$6.99 per month.
UK consumers switch to online streaming en masse
Sales of DVDs, CDs and video games plunged by almost a fifth in the three months to the end of June, as consumers ditch physical products for online streaming. Specialist retailers including HMV and Game, as well as major supermarket chains Tesco, Asda and Sainsbury’s – big sellers of physical entertainment products – bore the brunt of the £50m year-on-year fall in quarterly sales as Amazon increased its market dominance. Total sales of physical entertainment products fell by 19% year-on-year from £263.9m to £214m in the second quarter, according to market research firm Kantar. Struggling HMV, which has shut 27 stores this year, suffered the biggest fall in market share from 17.7% to 14.4%. The game fell from 8.1% to 7.6%. The market share at Tesco, which has just announced 4,500 job cuts, fell from 10.3% to 8.3% year on year. Asda and Sainsbury’s both recorded a fall in their market share fall from 7.3% to 6.3%. Morrison’s was the only major supermarket chain to post a share rise, albeit just 0.3% to 3.3%. However, while the high street struggles, Amazon’s sales are booming. Amazon now accounts for one in every four pounds spent on physical entertainment products by UK shoppers. In the same quarter last year, the US giant accounted for 22% of spend. Fellow US giant eBay has also significantly increased its market share, from 4% to 5.8% year-on-year. “Amazon and eBay are increasingly popular with shoppers wanting to get the latest release without leaving their homes, particularly if a traditional retailer has disappeared from their local high street,” said Claire McClelland, consumer specialist at Kantar.
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