1. NFL Sunday Ticket Goes To YouTube

Months of speculation apparently came to an end this week as the NFL’s valuable Sunday Ticket property, formerly at DirecTV, is now going to go to Alphabet’s YouTube for a whopping $2 billion.

Or YouTube TV, to be more exact.

That’s the part many people seem to be glossing over.

Yes, it will be possible to sign up via YouTube The App.

But most people are going to be signing up via YouTube TV the vMVPD.

That’s a very important distinction as it gives the NFL a huge advantage it would not have had if it had gone with Apple, Amazon or one of the other streaming contenders.

Why It Matters

YouTube TV has around 5 million subscribers to a service that gives viewers access to a package of over 100 cable and broadcast TV networks, including all of the big ones. It is, like its main rival, Hulu Live TV, a recreation of the traditional pay TV bundle with a better interface that also eliminates the need for a set top box. 

But that, and the fact that they are delivered digitally, are the only real differences between vMVPDs and traditional cable. Meaning it’s about as different from cable as satellite is. Same service, different delivery mechanism.

Now this is key because the NFL’s user base skews older. Not as old as cable news, but close: the average NFL fan is 51 and the average age of viewers for non-Amazon NFL games this year was 53. (Amazon’s average viewer was 46.) 

So a couple of benefits here:

YouTube TV feels like “real” TV, not an internet app. That makes having the Sunday Ticket on there feel more serious and less threatening. There’s not some new interface users need to figure out how to use or a cavalcade of UGC videos to wade through. Given that subscribers are going to be paying several hundred dollars for the service, this is key.

Lots of people still like cable TV.  Ever hear of a show on CBS called Fire Country? Me either, until this week, but it’s got around 8 million viewers per episode, about double the number of people who watched the season 2 finale of White Lotus. Meaning it is foolish to underestimate the appeal of network prime time, and so putting Sunday Ticket onto a service that still lets that older, often non-coastal NFL viewership watch shows like Fire Country, Yellowstone and The Voice as well as their local news, is a very smart move as it will still feel like part of their traditional cable bundle, the same one that lets them watch college football and local NFL games too.

[Side Note: In one of my favorite New York Times Cletus Safaris this year, they actually sat down viewers of “red state favorite” (their words, not mine) Yellowstone to explain why they like it. In this Ohio diner, Yellowstone fans feel... ]

Pitchbotisms aside, the other big winner here is going to be YouTube TV. Not only will Sunday Ticket draw in a whole new group of potential subscribers, it also helps to popularize their new(ish) YouTube Primetime Channels feature, an Amazon Channels like service available via the YouTube app that allows viewers to sign up for a range of streaming services like Paramount Plus, Showtime and Starz.

More than that, however, the interface showcases all of the movies and TV series that are available for rent via YouTube.

Which is a whole other thing worthy of scrutiny, in and of itself.

Remember back in 2014 when the only place you could rent the controversial Seth Rogen-James Franco comedy The Interview was on YouTube. (This was after wide distribution was canceled for political and other reasons.) 

And remember how everyone was all “Wait? You can rent movies on YouTube? Who knew?”

And how nine years after the fact everyone is still “Wait? You can rent movies on YouTube? Who knew?”

But yes, YouTube has a sizable library of movies for rent as well as TV series along with a respectable FAST service.

All of which they keep hidden away for reasons known only to them. 

There is not (I just checked) a link on the YouTube web browser interface to that section. Nor is there one on the iPhone app which is, however, pushing “Shorts” hard. (It is, however, in the main interface on both the Roku and Fire TV YouTube apps, but that’s clearly not helping to spread the word.)

Meaning that having the Sunday Ticket available via Primetime Channels might help to boost the rest of the Primetime Channels business for YouTube. 

Or not, because if you don’t bookmark the actual page, it’s not going to be easy to find it again. 

Think Narnia. Or Brigadoon.

What You Need To Do About It

If you are Alphabet, you need to finally capitalize on all the good things you’ve got going on in YouTube. 

Keeping all the TV content you have on offer hidden in your browser and mobile apps seems like a wasted opportunity. You can at least remind people it exists on occasion. Sort of the way you remind me I can subscribe to YouTube TV every single time I load up a YouTube video. 

Like literally Every. Single Time.

I’d also bear in mind that a lot of your target audience has zero idea what a vMVPD is. Or even a “cable TV service that’s an app.”

Work with them. Explain where their broadband is going to come from, what exactly your product does, how it’s not all that different from their current cable set up in a lot of ways and much, much better in others.

You will get many more subscribers that way.

If you write about the industry, remember that YouTube TV is going to be how most people access Sunday Ticket. Not the YouTube app on their phone. It’s a distinction worth noting.

If you are Amazon, Apple or one of the also-rans, do not despair. There are plenty of sports properties out there, they are great ways to create stickiness and (for Amazon) sell product as well.

2. Netflix Gives Out Refunds

Buzz can be fickle.

One minute everyone’s talking about how great you are and how brands are fighting each other just to buy thirty seconds of ad space on your platform.

The next, they’re mocking you for having to give some of that money back as subscriber numbers did not meet expectations.

If you’re Netflix, the buzz cycle is particularly hard to please.

A situation that is only compounded by the uncertain nature of streaming and by just how radical an undertaking it is to turn a service that was known for not having ads into one that does. 

But that’s okay. Because ad-supported Netflix will be just fine.

Why It Matters

Here’s what’s important: There were numerous reports that Netflix had sold out all of its inventory even before the service had actually launched. At phenomenally high CPMs. 

Not hard to figure that one out. There were a lot of brands that wanted to be on streaming, but only on something that felt to them more like prime time. Or prime time circa 2004, anyway, when upscale audiences could regularly be found on prime time.

So they paid a premium for Netflix, and even if the big N has to give back a percentage of that premium, I suspect they are still coming out way ahead.

As for building up their ad-supported audience, well, that is going to take time.

As per our friend Evan Shapiro, who gets his stats from Antenna, just 9% of Netflix’s new November subs chose the ad-supported tier. 43% of those ad-supported subs switched over from another tier, while 57% of them were former subscribers who jumped back in. 

At present, Netflix also has fewer ad-supported subs than any of its rivals.

This is to be expected, given, as noted, that Netflix was the OG ad-free app and the lack of ads was a big part of its appeal.

The issue, as Shapiro wisely points out, is that if a big portion of Netflix’s new ad-supported subscribers come from the higher-priced “Standard” and “Premium” tiers, then the math will not add up and the service will lose money. 

And the thing is, I do think that a big part of it will come from people who currently watch the Standard and Premium tiers. 

The caveat being they are not the ones actually paying for it.

Yes, I am talking about password sharers. All those 30 year olds still on their parents plans, all those friends, ex-roommates and grandparents.

Netflix, as per the Wall Street Journal, has a plan to turn them all into subscribers, and I suspect that the ad supported tier is going to prove attractive to many of them, especially the ones who are not hardcore Netflix viewers.

That should provide Netflix with enough ad-supported subscribers in the years ahead to make this quarter’s misses seem like a misty water-colored memory.

Provided (and this is always the great big honking asterisk) they keep on making shows people actually want to pay to see.

What You Need To Do About It

If you’re an advertiser, just be realistic about what you can expect from Netflix over the next few months. Realize that there will be additional buzz for you just from being one of the first Netflix advertisers. That, and have faith in the stellar ad team Netflix has put together to make sure you get value for your ad dollars.

If you’re Netflix, no use woulda-shoulda-coulda-ing the fact that you never got rights to run ads on a lot of your original content. That ship has sailed and you just need to make sure it doesn’t happen again. Keep the ad loads light and resist the temptation to keep adding “just 15 more seconds.”

Where I live we call that “boiling the frog.”

Don’t.

And once you get that piece settled down, it’s time to take your place as an industry leader and get the rest of the ad-supported streaming universe in order, creating standards for things like measurement and privacy, pulling down walled gardens and acting like responsible adults.

As you will see shortly  in our newest TVREV report on Advertising and the FASTs, it won’t be long before streaming is the dominant television ad vehicle, a path that will be infinitely easier if everyone is pulling in the same direction.