Viacom Bets On Advanced Marketing Solutions Platform

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Viacom reported a drop in its Q3 2018 earnings, with revenues in the quarter decreasing by 4 percent to $3.24 billion. Losses were seen across both the company’s media networks and filmed entertainment divisions despite the buyout of its EPIX investment the previous quarter, gains in domestic box office sales and the continued revitalization of its struggling media networks.

Viacom CEO Bob Bakish highlighted the company’s continued evolution during the earnings call, particularly with the increased performance of Paramount and MTV. He also sought to reassure investors that growth would continue as it expands its services and partnerships with OTT platforms, driven further with the recent acquisition of AwesomenessTV.

Viacom’s broadcast networks, which include MTV, BET, Nickelodeon, The Paramount Network and more, collectively saw revenues decrease by 2 percent in the quarter to $2.50 billion. The company reported a 17 percent increase in worldwide ancillary revenues to $158 million, but this was offset by a 4 percent decrease in worldwide advertising earnings to $1.19 billion and a 3 percent decrease in worldwide affiliate revenues to $1.15 billion. However, Bakish emphasizes the strength of the upfront.

“We drove our strongest upfront in five years, with mid-to-high single-digit growth across all our cable networks,” Bakish said. “Reflecting the improved strength of our brands and greater share of viewership across our portfolio.”

The growth in upfront pricing also demonstrates the strength of its Advanced Marketing Solutions (AMS) portfolio, which includes its branded content, advanced advertising and experiential offerings. The company expects that AMS will grow to deliver about $300 million in revenue by the end of the year, setting up a return to overall ad sales growth in 2019.

Additionally, Bakish announced that Fox has agreed to license the AMS data science platform behind Viacom Vantage ad targeting product. With this deal, Fox will be the first media partner to use the technology to power the linear optimization service across its networks, a deal that also accounts for Fox’s acquisition by Disney.

Viacom will add another 600 hours of content to its digital offerings, which doesn’t take into account the acquisition of AwesomenessTV, a digital network with strong Gen Z appeal. The company is also establishing a stronger presence on digital platforms such as Amazon Prime and Netflix around the world, the launch of a direct-to-consumer platform and a B2B-C strategy that brings targeted B2C products that are distributed through partners. For example, Nickelodeon’s Noggin channel is available on Amazon Prime Video, and the preschool entertainment channel has seen substantial subscriber growth.

The company plans to leverage brands such as MTV, Comedy Central and BET to create original content for third-party partners. MTV in particular will be using its extensive library of youth-focused and music IPs, which has remained largely untapped.

Viacom delivered a strong revitalization message for Paramount, with both its film and television channels. Paramount Television helped drive a 35 percent increase in licensing revenues, which brought in $404 million in the quarter.

“We’ve stabilized and turned around four critical parts of the business that were under serious pressure 18 months ago,” said Bakish in closing, referring to its domestic affiliates business, audience viewership, domestic ad sales growth and Paramount Pictures. “Viacom is a story of a company broadening its participation in the media landscape.”

Chinese Streaming Service iQiyi Quadruples Down On Nickelodeon Content

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Originally published at VideoInk.

Chinese streamer iQiyi will have four times the amount of Nickelodeon content than it did last month. The additional programming comes from an expanded multi-year content deal between the streamer and Viacom-owned Nickelodeon.

Under the agreement, iQiyi will take streaming rights of the Nickelodeon shows “SpongeBob SquarePants,” “Shimmer and Shine,” “Blaze and the Monster Machines,” “Top Wing,” “Rusty Rivets” and “Rise of Teenage Mutant Ninja Turtles.” Those shows will be made available to the company’s 421 million monthly active users in both Mandarin and English versions.

The increased content helps solidify iQiyi’s position as one of the most dominant streaming services in China with over 121 million daily active users at the end of 2017. It also builds on the company’s past content partnerships with companies like Netflix, Lionsgate, Jukin Media and Paramount.

According to a report released by eMarketer, by the end of 2018, 22 percent of digital video viewers in China will subscribe to the Baidu-owned company, making it second only to Tencent Video which will control 24 percent of digital viewers. In 2018, eMarketer estimates that close to 229 million people in China will watch video via a subscription streaming service that bypasses traditional distribution and, by 2022, more than a quarter of the population will use an OTT service.

Roku: Data-Driven Selling, Programmatic Are The Future Of TV

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Roku reported healthy growth during its Q2 earnings on Wednesday, touting the importance of OTT and its newfound place in the advertising market. While the brand is primarily known for its smart TVs and apps, Roku is driven by the rising importance of OTT and the evolution of how TV ads are bought and sold.

“Data-driven selling [and] programmatic-based techniques are, in our opinion, a central component of the future of the way TV advertising is going to be traded,” Roku CFO Steve Louden said during the earnings call with investors.

In June, Roku launched its Audience Marketplace that attracted media giants like Fox, Turner and Viacom. The programmatic solution includes the Roku Ad Insights Measurement suite that was created in partnership with Nielsen.

“From the very beginning, our goal with advertising at Roku has been to elevate [and] evolve the state of advertising—to make TV advertising natively targetable, interactive [and] much more highly measured like any digital media that a modern marketer expects,” said Louden.

A majority of ad revenue on Roku is still being generated by publishers on the platform, the company explained, and Audience Marketplace was a way to help publishers remain competitive. Roku participated in TV Upfront season for the first time in 2018—an experience that left a lasting impression on Roku founder and CEO Anthony Wood.

“I think the big takeaway for us [is] that this is really the first year that advertisers are are proactively planning for OTT as part of their annual TV spending plan,” Wood recalled, adding that they have a team to handle traditional TV ad sales as well.

“This is an exciting time to be in the streaming business,” said Wood. “The massive TV ecosystem is moving to modern platforms with streaming at the center of a more dynamic and innovative approach to content distribution.”

Roku climbed to 22 million active users in the second quarter of 2018 who streamed 5.5 billion hours of content. Revenue grew 57 percent to $156.8 million.

Snap Q2 Earnings Tout Ad Revenue Growth And Programmatic Prowess

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Snap, Inc. reported healthy ad revenue growth for the second quarter, placing a strong emphasis on programmatic ad marketplace while continuing to underplay backlash over its app redesign.

Despite an overall loss of $353 million, Snapchat parent company Snap, Inc. earned $262 million in Q2 2018—an increase of 44 percent compared to the same quarter last year. Three-quarters of that revenue was attributed to programmatic ad buying, the company boasted.

Once again, the subject of Snapchat’s unpopular redesign was broached, but the company doesn’t appear concerned. In fact, despite GDPR and user backlash, the app increased global DAU by eight percent YoY and only lost one percent each in North America and Europe compared to Q1.

CEO and co-founder Evan Spiegel reminded investors that they are building a new Android app from the ground up, which has recently entered a testing phase. Reconnecting with Android users will be a “higher focus” for the company, Spiegel explained, admitting that they will continue to change the design based on user feedback.

The company has been rather busy this past quarter bulking up its advertising marketplace which appears to have paid off. Despite a lower user base, Snap managed to increase its average revenue per user (ARPU) to $1.40 in Q2.

Programmatic advertising revenue is up 485 percent YoY, the company told investors. Q2 marked the debut of Snap Kit, a suite of tools that allows brands to integrate Snapchat logins, Bitmoji integration and Lens Explorer. Story Ads, Lenses and Filters are now available programmatically, as well.

The app faces mounting competition from the likes of Instagram, Facebook and—more recently, YouTube—as Snapchat’s own Stories feature is copied time and again. Instead of panicking, Snap, Inc. has focused on long-term growth.

In addition to beefing up its advertising marketplace, Snap, Inc. is fostering influencer talent. The brand recently announced its Yellow incubator program and just last week began testing “Storyteller” ads that promote popular creators across Discovery and Stories sections.

Disney’s TV Ad Revenues Offset Viewer Declines During Q3 Earnings

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Disney reported a total revenue growth of seven percent to $15.23 billion in its third-quarter earnings. A major chunk of its earnings came from the international blockbuster movies, particularly Avengers: Infinity War and Incredibles 2, both of which are breaking box office sales records, even after adjusting for pre-release marketing costs.

But it wasn’t all good news. Consumer products and interactive media revenues dropped by eight percent to $1.0 billion and the segment operating income fell by 10 percent to $324 million due to lower income from licenses and retail store sales. However, decreased licensing revenues from the Spider-Man and Cars franchises were partially offset by gains from Avengers-based products.

TV Viewership Declines, But Higher Ad Sales Compensate

Media networks that fall under the Disney umbrella include ESPN, Freeform and ABC, all three of which reported decreased ad revenues due to declining subscribers and viewership numbers. ESPN, which was impacted by having one less NBA Finals game, was able to compensate with higher affiliate revenue growth and other factors.

Even so, revenues from Disney’s cable networks grew by two percent to $4.2 billion, but its operating income decreased 5 percent to $1.4 billion due to losses at Freeform and BAMTech, the latter of which are related to higher content and marketing costs and technology investments.

The company also assured investors that the subscriber decline seems to be slowing. Even though there are fewer traditional TV subscribers compared to last year, there is a marked growth in digital subscriptions.

Changing Channels

Disney saw losses with its investments in channels such as A&E and Hulu. Even though Hulu saw higher subscription and advertising revenue, these gains were partially offset by higher programming and labor costs. With this information, Iger announced that the company remains enthusiastic about launching a direct-to-consumer (DTC) media platform to compete with Netflix, Amazon and others by emphasizing its iconic brands over providing a huge volume of content.

“In this year of unprecedented consumer choice, brands matter more than ever,” said Iger. “Our incredible portfolio of high-quality, in-demand branded content uniquely positions us to strategically and successfully navigate this increasingly dynamic marketplace. We’ve always believed we have the brands and content to be extremely competitive and to thrive alongside Netflix, Amazon and anyone else in the market.”

Adding Fox Networks Group

Iger went into detail about its upcoming acquisition of the Fox Networks Group and how the addition of its channels, IPs and brands will impact the company’s upcoming SVOD service plans. He explained that Disney’s growth strategy will be served by adding the international properties Fox currently holds, which include 350 channels that reach 190 countries and licenses such as Avatar, X-Men, Deadpool, Kingsman and many more. That’s not taking into account Fox’s substantial investment in European pay-TV company Sky, which it is seeking to acquire.

E.W. Scripps Q2 Revenues Driven By Political Ads, OTT Subscribers And Podcast Advertising

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US broadcasting company E.W. Scripps reported $283 million in total revenues during the second quarter of 2018, up 31 percent year-over-year. Its earnings come as the company executes its comprehensive plan to improve its short-term operating performance, which includes mergers and acquisitions and organizational restructuring as it sells its radio assets. However, a major driver came in form of boosts in political ad revenues and retransmission on its over-the-top (OTT) subscription platforms.

“In local media, we blew away the expectations for our political advertising revenue as we saw competitive elections emerge in markets across our footprint,” announced E.W. Scripps CEO Adam Symson on the earnings call.

Scripps reported that its local media division’s revenue was up nearly 6 percent year-over-year, which includes 3.4 percent growth in broadcast time sales driven by higher political advertising dollars. To put things into perspective, political advertising revenue in Q2 was $14.9 million, more than double the revenue brought in during the second quarter of 2014, the last midterm election year.

Specifically, the company saw strong political spending in its three Florida markets due to the US Senate race there. Other areas include San Diego, with two highly competitive Congressional races, and Nashville’s trio: a local special mayoral election, the US Senate race and a governor’s race.

Based on its second-quarter results, Scripps may have the opportunity to exceed its 2014 political ad revenue dollars of $21 million by over 20 percent in the third quarter.

Growth was also generated through the Katz Networks, which Scripps acquired for $302 million in 2017. It brought in $47 million in revenue, an increase of 21 percent year-over-year. Symson said that each of its multicast channels is serving more than 90 percent of households at a time when more consumers turning to over-the-air broadcasting than ever. In fact, he stated that Katz is “attracting network sized audiences for its cadre of brand and direct response advertisers.”

Scripps president of local media Brian Lawlor added, “The strategies for their (Katz) success are straightforward: growing the audiences they’re delivering to advertisers, increasing advertising rates as they attract more general advertising brands, and expanding their national distribution and reach.”

Excluding Katz, revenues from the national media division grew by over 60 percent.

But at the same time, the company’s core advertising saw reduced revenue compared to 2017, mainly due to declines in the automotive sector and because there were fewer NBA Finals games featuring the Cleveland Cavaliers. Scripps has lost millions in core revenue over the past two years because of the NBA Finals reduction, and the loss is expected to continue with the departure of Lebron James from the team. To compensate, the company is betting that the Pistons, Nuggets, Pacers or Suns will rise up fill the space.

The good news for Scripps is that subscriptions for its OTT platforms are making a major impact, showing strong retransmission revenues, which increased by 12 percent. The company reported that its OTT subscriber base grew from zero to almost 500,000 by March, led by brands such as Newsy, which fits well with the OTT platform because of its appeal to younger audiences. Even so, Newsy is expanding to include distribution on cable and satellite networks.

“Just like scale adds value in local television businesses, we’re focused on building scale in these fast-growing national brands,” said Symson, discussing how revenue growth was directly tied to the investments made in Katz and Midroll Media. Stand out OTT subscription platforms include DirecTV Now, YouTube TV, Hulu and Sony’s PlayStation Vue service.

Scripps is also seeing significant growth from podcasting networks Stitcher and Midroll Media, with combined revenues that have grown by 50 percent to date. The company explained that consumer engagement with podcasts is accelerating and advertisers are following that trend. Blue Chip advertisers including Proctor & Gamble and Coca-Cola placed new podcast ad buys during the second quarter, showing strong renewal activity in addition to more brands coming on board.

Freakonomics is one of its leading podcasts, and it gets more than 12 million downloads per month. The show also offers extra content to premium subscribers, driving more users to Stitcher Premium alongside dozens of other programs such as Wolverine: The Long Night.

The company said that it will continue to invest in these networks in the long-term while tracking multiple KPIs including the number of listeners on Stitcher and how general market advertising is growing. According to Scripps, the podcasting industry is expected to grow to somewhere between $1-2 billion, with revenue growth on track for meeting that goal.

“As we move into the back half of the year, we see significant opportunity in the local broadcast industry,” Symson said in closing, “[with] a dynamic political landscape, continued growth in over-the-top households, the promise of automated advertising to drive greater national dollars into our local stations and the potential for [mergers and acquisitions]. Today, because of the foundation we’re building with our transformation plan, Scripps is poised to capitalize on all of these opportunities.”

Jell-O Launches Branded Animated Show On YouTube And Amazon Prime

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Jell-O, a Kraft Heinz brand, has remained an iconic food for both kids and adults alike for decades. Now the gelatinous dessert brand is reaching families in an all-new way, through an animated digital television show called The JELL-O Wobz, created in partnership with DreamWorksTV.

The six-episode series is the latest project produced by Springboard, a Kraft Heinz platform that is “dedicated to nurturing, scaling and accelerating” the growth of disruptive food and beverage brands in the US. Springboard officially launched in March with a focus on natural and organic, specialty and craft, health and performance and experiential food categories.

New JELL-O Wobz episodes will premiere each week on DreamWorksTV’s YouTube Channel and on Amazon Prime Video, the latter of which requires a Prime membership to watch. That kind of dual-platform release is a rarity these days, but it could be that the length of the episodes, only about four minutes each, played into the fact that Prime didn’t require exclusive streaming rights. DreamworksTV also has a dedicated subscription channel on the platform, which made Amazon Prime a natural addition for distribution.

To spread awareness of the show, the company will focus on targeted media channels including cinema, print, social media and online videos, where parents and kids go to discover content.

The Wobz are wobbly Jell-O characters shaped like different household kitchen objects, and they adventure through a fantasy kitchen world. The show tackles relevant parenting and developmental issues such as coping with imperfection, accepting physical appearances and embracing free play, which are themes that resonate strongly with today’s parents.

The animated show’s debut coincides with the recent launch of JELL-O Play, a gelatin toy brand comprised of differently shaped molds and edible stickers designed to engage families by promoting free play and creativity. The toys also happen to be available for purchase on Amazon.

“Jell-O has a legacy as a family brand,” Springboard marketing and sales lead Katy Marshall told AList. “The JELL-O Wobz and JELL-O Play are opportunities to bond and connect as a family, as parents and kids have become increasingly over-scheduled and free play time has been on the decline.”

Marshall added that parents are searching for easy and convenient solutions for creative play, and Jell-O seemed to fit the mold, so to speak. That led to putting the dessert at the core of its toy products while the show complements it by dealing with relevant topics in a humorous and playful way.

“Today’s parents and kids feel more pressure than ever before, and yet families spend less time talking about important issues like self-acceptance,” Marshall said in a statement. “As a brand whose values center on family bonding and free play, we wanted to create a show to foster this important dialogue.”

Tencent Video Leads The Pack In China With iQiyi, Youku Close Behind

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Originally published at VideoInk.

In China, citizens aren’t streaming content on Netflix, Amazon, or Hulu. Instead, the country’s ‘Big 3’ streaming services are Tencent Video, Youku, and iQiyi. And also unlike the streaming market in the US, the competition emerging out of China’s streaming market is much tighter.

According to a report released by eMarketer, by the end of 2018 24 percent of digital video viewers in China will subscribe to Tencent Video, 22.9 percent to iQiyi, and 22 percent to Youku. Though Tencent leads the pack and is expected to continue to do so, controlling an estimated 29 percent of shares by 2020, the competition is much closer between these streaming giants than those in the United States, where Netflix is the clear winner.

In 2018, eMarketer estimates that close to 229 million people in China will watch video via a subscription streaming service that bypasses traditional distribution. By 2022, more than a quarter of the population will use an OTT service.

Much of the attraction to SVOD services, aside from more affordable price points, is the growing production of original content. Investing in content has been a key theme for all of the platforms owned by the so-called BAT companies (Baidu, Alibaba and Tencent). Alibaba-owned Youku is expected to post the highest increase in content spending in 2018 and has also secured rights to stream this year’s FIFA World Cup. As a result, eMarketer expects Youku’s subscriber base will grow by 55 percent this year and overtake iQiyi for second place in terms of digital viewer share by the end of 2019.

“As the race to gain a larger slice of viewer screen time heats up, all three major streaming players in China have invested billions to develop their own original programs and secure rights to exclusive content,” eMarketer forecasting director Shelleen Shum said. “Competition in China’s growing OTT market, fueled by growing internet connectivity and a broader shift toward internet entertainment, is cutthroat. As subscriber churn rates are high, content remains a critical part to improve user stickiness.”

Zynga Q2 Earnings Tied To Mobile Advertising Revenue Growth

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Zynga delivered second quarter revenues ahead of guidance driven by strength in its mobile live services in addition to network optimizations across the company’s advertising portfolio. The game company’s revenues came to $217.0 million, which is up 4 percent year-over-year while bookings were $233.9 million, up 12 percent year-over-year, with the strongest growth coming from its mobile titles.

On the earnings call, Zynga CEO Frank Gibeau highlighted how growth across user pay and advertising drove mobile revenues up 7 percent to $192.7 million and mobile bookings up 17 percent to $211.6 million. Feature enhancements and bold beats increased player engagement with “forever franchise” games, particularly Words With Friends, CSR 2 and Zynga Poker. These three games delivered higher than expected monetization and collectively brought double-digit year-over-year mobile revenue and bookings growth.

Feature enhancements led to higher player engagement, which in turn led to strong advertising performance in addition to the continued adoption of user monetization within the games. Specifically, Words With Friends delivered a 30 percent increase in mobile revenue and mobile bookings were up 49 percent year-over-year. The company intends to further advance this growth trend by creating more value for players through additional feature enhancements in the coming quarters.

Meanwhile, racing game CSR 2 benefited from a licensing agreement with Universal Brand Development for a Fast & Furious in-game event, which Gibeau said was the strongest performing release from the partnership to date. Although its mobile revenue was down four percent year-over-year because of the timing at which the company recognizes bookings into revenue, the game delivered its best quarterly bookings in its history with a 21 percent year-over-year increase.

Gibeau also noted that a key component of CSR 2’s success is its partnerships with carmakers, which gives players a chance to check out high-end vehicles. Recent examples include the in-game launch of the BMW M2 Competition, which gave players a chance to virtually preview the high-performance car before the real-world vehicle officially debuted.

“For the remainder of 2018, CSR 2 has more bold beats planned, including a series of events featuring some of Porsche’s most iconic cars, collectors and drivers in the celebration of Porsche’s 75th anniversary,” he announced.

Lastly, Zynga Poker revenues rose by 19 percent and mobile bookings were up 13 percent year-over-year, with growth in performance was supported by feature updates.

Looking ahead, the company plans to leverage games produced by Turkish game studio Gram Games, which Zynga acquired in May for $250 million. Gibeau said that its most recent title Merge Dragons has the potential to become one of the company’s next forever franchises.

Meanwhile, Zynga’s four-point growth strategy includes:

  • Delivering growth in live services
  • Building new games with the goal of creating forever franchises
  • Investing in mobile technologies
  • Exploring merger and acquisition opportunities that will enhance growth potential

Zynga said that it is taking its time with new game development while it focuses on its forever franchises, which form the core element of its mobile business. The reason for this is because the company wants to give new titles a strong chance of rising to become forever franchises. A “machine gun approach” of releasing a long list of games in a short time would require extra marketing and talent resources.

MoviePass Shows Marketing Potential; Ability To Sway Subscribers

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MoviePass parent company Helios and Matheson Analytics is flipping the script for the struggling movie ticket subscription program. Following an earlier announcement made this week that outlined changes to the service’s pricing plans and limited access to theaters, Helios released a series of performance metrics to help position MoviePass as a kind of marketing platform.

The press release reads, “MoviePass continues to prove that it is a strong partner to movie studios and distributors in their strategy to reach and influence audiences to select their films over others,” making the case that its subscribers see more movies than non-subscribers.

It then cites a study conducted by the National Research Group in March, which shows that not only are subscribers are twice as likely to see a movie on its opening weekend, but they’re more open to taking and making recommendations for what to see next.

Making the case for how valuable MoviePass subscribers are to studios and distributors, the study indicates that almost half of subscribers attend movies that they wouldn’t otherwise see in theaters, and 70 percent said that they were still likely to see a film despite a low score on Rotten Tomatoes.

This outcome is attributed to a “combination of experiential, field, e-mail and social media marketing, and/or its in-app marketing and placements impact the specific films subscribers are more likely to see, which drives meaningful incremental revenue to both distribution and exhibition.”

As evidence, the service credits its marketing activities for driving ticket sales to films such as Blindspotting and Beast. Movies such as Tag were promoted in-app, and the announcement states that MoviePass purchases made up 13 percent of its opening weekend domestic box office ticket sales. Meanwhile, MoviePass engages with its users on social media by posting trailers, quiz questions and highlighting movie release dates. The company stated that the integration of Moviefone.com, which it acquired in April, in the service will lead to more revenue generated from studios and brands.

Although the biggest impact is on independent films and documentaries such as Three Identical Strangers and RGB, with MoviePass comprising about 12 percent of the latter film’s ticket sales, the service claims to have an impact on major films and moviegoing as a whole.

In support of this statement, Helios showed how 30.8 percent of its subscribers went to see Ocean’s 8 compared to 4.9 percent of the general population in the US. Game Night also saw high numbers, with 25.4 percent of subscribers going to theaters to see it compared to 2.7 percent of Americans.

“Through our one short year of incredible growth, we’ve learned a few key points about the film Industry,” said MoviePass CEO Mitch Lowe in a statement. “We are able to create immense value with our film partners by driving traffic to their films and effectively increasing the valuation of their films on the back-end deals they create. Not only do we want to provide an amazing deal for our subscribers but we also want to be a positive force in Hollywood.”

The MoviePass announcement comes on the same day AMC announced its record-breaking earnings, which was supported by the success of its competing movie subscription program AMC Stubs A-List.