Snapchat and Facebook look to boost the social video chops with professional content. Viacom wants to anchor a pay TV skinny bundle, and Amazon is challenging pay TV in Europe.
Chapter 1: Viacom pay TV skinny bundle (1:20)
Viacom is working with pay TV operators to define a new skinny bundle that doesn’t have any sports or news channels in it. The CEO wants it to cost $20 a month, and for Viacom channels to anchor the bundle. Certainly, taking sports out should give operators more room to charge a lot less. Dropping news channels should help somewhat as well.
However, neither Will nor I think that a bundle anchored by Viacom channels will be a particularly strong proposition. Specifically, I don’t believe it will be effective in bringing millennials back to pay TV. They are a key demographic for Viacom.
Chapter 2: Facebook premium video (6:30)
Facebook is tapping longtime partners Vox Media, Group Nine Media, and Buzz Feed to make video shows. Reuters reports that the social giant is doing two types of deals with content creators. It is paying $250K per 20min episode, and $10-$35K for 5-10 minute episodes. It is also offering 55% of ad revenue to partners. This is a switch in strategy for the company. Speaking at the Recode conference earlier this year, Dan Rose, a Facebook executive, said the company only wanted to share advertising revenue.
Facebook is putting a sharp focus on building out its video offerings. It has introduced a dedicated video tab in each user’s profile, and has introduced connected TV apps. Longer videos and a presence on the television make a lot of sense for Facebook. Video ad values on the site have been going up and are now comparable to TV ad values. And the longer engagement offered by television and 20-30 minute episodes should help boost ad revenue even higher.
Chapter 3: Amazon Channels in Europe (10:30)
Amazon launched Channels in the UK, Germany, and Austria this week. It managed a major coup by enticing TV channels previously only available through pay TV to join the service. Discovery Channel and Eurosport Player are both available a la carte for the first time.
This has led to much speculation that pay TV is under attack from Amazon. I agree with this hypothesis. In Europe, free-to-air channels are much stronger than in the US. A consumer can put together a very interesting entertainment bundle by combining free-to-air channels with online offerings. I think this situation could lead to a pay TV contraction in Europe.
Chapter 4: Snapchat recruiting media partners for Discover (15:30)
Snapchat is busy recruiting top TV talent to help boost its Discover video platform. James Corden, Jimmy Fallon, and Conan O’Brian are among some of the celebrities making shows for Snapchat. They have been attracted by the success of Snapchat’s own show Good Luck America, which is just entering its second season.
One thing to keep in mind is the constantly shifting business models offered by the social platforms. Snapchat and Facebook are both changing the balance between licensing and ad revenue sharing. This makes it particularly challenging for content providers to make money.