Is ViacomCBS A/B testing audience demand for its content? Or is a messy strategy simply a mess?


Let’s start here: I am no longer sure what to make of ViacomCBS’s streaming strategy “CBS ALL-ACCESS” after CEO Bob Bakish’s appearance at the Credit Suisse Annual Virtual Communications Conference.

My two cents is AVOD service PlutoTV is one of the smartest investments Viacom ever made, perhaps THE smartest digital media investment it has ever made (NOTE: I say this as someone who worked on operationally integrating major digital acquisitions like AtomFilms and Shockwave, and gaming freeware instant messaging service Xfire, at Viacom 15 years ago). I also think CBS Interactive CEO Marc Debevoise is one of the smartest executives in the streaming space, and both CBS All-Access and Pluto TV are therefore in unusually capable hands.

But, ViacomCBS’s strategy in OTT streaming, to date, has been to refuse to choose a single strategy: CBS All-Access and a promised “House of Brands” is a strategy that pursues revenues from consumer subscriptions (an app for BET Networks called BET+ is also part of this strategy), Pluto TV pursues revenues from digital video, connected TV advertising, and an arms dealer model pursues revenues from content licensing.

It is also refusing to choose a strategy in an OTT streaming marketplace that is reeling from the impact of Coronavirus. As I wrote back in March:

…[the] impact of the Coronavirus in the marketplace is forcing both ViacomCBS management and its majority shareholders to address questions completely unrelated to streaming, and more important to the day to day operations of the business than streaming. Will a “House of Brands” ever launch? Probably. But will it be enough of a priority for ViacomCBS management in this marketplace to attract audiences and survive after launch? It is not looking promising. (NOTE: When I was at Viacom executive musical chairs was the key challenge in digital – no one stayed long enough to build a credible vision and execution of what Viacom should be doing in digital).

ViacomCBS has since recovered from its moment of “reeling”: its stock is up 200% after dropping to a market cap of $10B, which had erased the value of CBS plus 15% of Viacom‘s value of $11.8B at the time of the ViacomCBS merger, and resulted in S&P Global Ratings putting National Amusements Inc. (NAI), the holding company controlled by the Redstone family, on credit watch.

The CBS ALL-ACCESS “House of Brands” will launch, so now what?

But, two headlines emerged over the past 24 hours which tell two different stories.

First, CBSAA will be being transformed into a “super service” this summer, and here is what Bakish had to say about it.

The second part of our strategy is to transform All Access into a super service,” Bakish told the Credit Suisse Annual Virtual Communications Conference during a session that was webcast. As ViacomCBS drives deeper into the streaming space, including with other offerings like Pluto TV and Showtime OTT, planned changes to CBS All Access include new programming from Nickelodeon, MTV, Comedy Central, the Smithsonian Networks and Paramount Network.

Bakish added his Hollywood studio will add another 15,000 hours of on-demand TV and film content to All Access on top of the 15,000 hours of content already on the streaming service. “We have a good position in the older segment with the current All Access product, but this really brings a lot of young audience to the table,” he insisted.

The strategy is, effectively, more is more: more content will bring more younger audiences, and reach their target goal of 25MM total subscribers across CBS All Access and the standalone Showtime streaming app by the end of 2022.

The Pluto TV twist with “Star Trek”

But then, as allyourscreens Rick Ellis reported, “Pluto TV launched a Star Trek-centric channel today that will air selected episodes from all of the “Star Trek” television shows, including several from the CBS All-Access original programs “Star Trek: Discovery” and “Picard”. This may be “the first time episodes of either ‘Star Trek: Discovery’ or ‘Picard’ have been available for streaming in the United States outside of CBSAA”

Star Trek has been a key driver of CBS All-Access’s success, to date. As I wrote in March:

…increasingly executives at CBS, DAZN, and Starz are openly discussing [pause] as a business metric against which they are managing their streaming businesses. CBS has added more Star Trek programming (Picard) because of data they had on pause, and Starz is planning up to five spin off series of its popular Power series.

Pause is a key metric in DTC, it is increasingly a more important metric to streaming services than churn. I wrote about Churn v. Pause last December (free download), and here is how I distinguished the two metrics:

The business logic of “pause” in both instances is that user loyalty to content like Star Trek, or interest in additional content the service has invested in, means that users will “pause” for budget reasons, but not churn out and leave a service for good. This logic explains why at another service, Starz, its president and CEO Jeffrey Hirsch said in an interview with Decider that he’s looking to green-light as many as five spin-off shows of the hit series Power, which is in 11M households per episode”.

Meaning, “Star Trek” has been key to driving growth and retention in CBS All-Access’s business model. Adding “Star Trek” paywalled content to Pluto TV arguably compromises this model by giving target consumers one less reason to sign up for CBS All-Access, or users who have paused their accounts to return. Then again, Pluto TV is a linear experience, and clicking on a channel does not allow the viewer to watch an episode from the beginning.

“Star Trek” content on Pluto TV could lead to “strong” conversions of CBS All-Access subscribers.

[CBS All-Access] managed to gain a record number of new subscribers in the January-to-March quarter. Pluto, a leading ad-supported streaming platform acquired in early 2019, has been a driver of “strong conversions” of free trials to paid subscriptions, the CEO said.

Putting free “Star Trek” content on a devoted Pluto TV channel makes a ton of sense in this light, and reflects a clearer strategy: to build a symbiotic AVOD and SVOD ecosystem, with the “arms dealer” model being phased out: “we will not license critical mass of any of our key programming areas — areas like sci-fi, kids or procedurals — to any single player”.

The Road Ahead for CBS ALL-ACCESS?

I started this post with “I am no longer sure what to make of ViacomCBS’s streaming strategy after CEO Bob Bakish’s appearance at the Credit Suisse Annual Virtual Communications Conference.” Part of it is because in Jeffrey Hirsch’s three tiers for the streaming marketplace, he was not sure if CBS All-Access would make it into Tier One.

I am not sure from the above, either. ViacomCBS sounds like it is laying the groundwork for a strong AVOD+SVOD, symbiotic ecosystem built around ViacomCBS’s enormous library of content and its sports broadcasting deals (golf, NFL, and an upcoming Champions League deal for 2021). At the same time, so much library in a single app just sounds so unwieldy: nothing reflected this more to me than Bakish’s “critical mass of live sports” comment about sports content on CBS All-Access this summer, after mentioning the total titles on CBS All-Access will go from 15,000 to 30,000.

Who is or are the customers for this subscription service? Why will this mix of content necessarily drive new and younger customers?

Last, the NBCU Peacock Precedent (**updated**)

Data from a Comcast free run of Peacock suggests otherwise. Joe Adalian of Vulture exclusively reported viewership data of Peacock from Comcast’s Xfinity TV service, which last month made more than 10,000 TV shows and movies available to its more than 20 million subscriber homes for free a “Watchathon Week”. The top titles were Kevin Costner’s Yellowstone and Kevin James’ The King of Queens. Yellowstone was the most-watched Peacock title on Xfinity TV’s two major platforms — X1 (available in homes with cable) and Flex (which reaches about 1 million cord cutters who watch only via broadband). Yellowstone was also the No. 1 VOD title during Watchathon among Flex users, and the No. 7 title on the much larger X1 service.

That is not a “sexy” story for Peacock.  It is, at best, mixed. Yellowstone is more recent, it is headed into its third season, and its audience demos are strong across the board.

But, I cannot imagine King of Queens (last broadcast in 2007) for older audiences in the top 10 of 10,000 titles is what they envisioned users consuming the most. Which suggests, if we believe past is precedent, CBS All-Access likely is going to have a mixed story like Peacock’s: perhaps one or two recent titles in the top 10, but the rest old content with demand from older audiences.

ViacomCBS is betting on “more is more” and that will attract younger audiences. The lesson in all this is that, without an understanding of the customer, bigger may not be better. More is not more. Peacock’s precedent is more leads to mixed outcomes (or in the case of Netflix and Hulu, more but personalized is more).

NOTE: There is absolutely a Curse of the Mogul element to this story, but I will write it at another time with comparisons to executive strategy at Quibi and Disney+.

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