Cautious for SVOD, mixed for AVOD, & puzzling for sports and MVPDs/vMVPDs

parqor quarterly results

Outline of Newsletter #212

Argument: Generally, three themes played out in the earnings calls last week:

  1. Cord-cutting is accelerating, splitting the OTT live streaming marketplace into sports/news and entertainment services;
  2. SVOD uptake is real, but most services are bullish while Netflix, Amazon and Roku are cautious;
  3. Mixed messages on AVODs from their owners

1. Cord-cutting is accelerating, splitting the streaming marketplace into sports/news and entertainment

The lack of live sports is accelerating the rate of cord-cutting. It has been splitting the supply side world into live-streaming (sports/news) and entertainment perhaps permanently on the consumer demand side and, temporarily on the supply side (but with longer-term consequences for linear advertising).

The big X factor to emerge is the return of sports, as it is not clear whether it will lead to a return to MVPD bundles, vMVPD bundles, or no return at all.

2. SVOD uptake is real, but most services are bullish while Netflix, Amazon and Roku are cautious

The outcomes for Amazon, AMC, Apple, Roku, and ViacomCBS end up sharing one common theme: the best opportunity for growth is international. That opportunity is not as extreme as Netflix’s implication of a 63MM market ceiling, but almost everyone except ViacomCBS seems to agree that they do not immediately foresee the scale of adoption Netflix has had in the domestic U.S.

3. Mixed messages on AVODs from their owners

All evidence suggests we are still in the very early days of the AVOD marketplace, and everyone is putting their best foot forward because AVOD requires advertising to succeed, and advertising is going to be in short supply for the next two quarters.

For people wanting to better understand where the AVOD marketplace is as of Q2 2020, Roku ends up being the only quarterly earnings report and earnings call transcript worth reading.

Conclusion Final Thoughts On the OTT Live Streaming Marketplace

The streaming marketplace in Q2 2020 has sent out many valuable signals, most of which are cautious. The only questions are (1) how to imagine sports consumption in a world where cord-cutting has accelerated and OTT live-streaming dominates, (2) how to imagine the growth prospects for SVODs in the U.S. given most cautious growth projections; and, (3) how to imagine an AVOD marketplace won by Roku.

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