Episode 79: Peacock's NFL Gamble; Why Sports Streaming Doesn't Work Financially; A WBD and Paramount Merger Isn't Practical

Speaker 2: 0:02

Welcome to this week's edition of the Dan Rayburn podcast, the show that curates the streaming media industry news that matters most, unvarnished, unscripted and providing you with the factual data you need to know, without any of the hype, the pulse of the streaming media industry.

Speaker 1: 0:21

Welcome to the Dan Rayburn podcast. I'm Dan Rayburn coming to you for the last episode of the year, recording December 29th 2023. Mark Donaghan is a little under the weather today, so shout out to Mark Hope he feels better. So it'll be myself today talking about some of the latest numbers in the space. We did get some interesting numbers from Peacock and others around streaming their exclusive NFL game. I'm going to go through some Paramount Warner Bros Discovery numbers as well. Before I get to that, a quick thank you to quite a few people, and it starts with you all, listeners.

Speaker 1: 0:58

This marks two years this December that I started my podcast, and the only reason I started the podcast was people kept asking me Dan, why don't you have a podcast? And frankly, I didn't think anybody wanted to listen to what I had to say, because I already do so much writing. I already do so much TV work. Frankly, I think people get a little tired of me at times. I don't blame them, hence why I didn't do a podcast, but so many people were asking. People wanted to consume content I was giving out in a different medium, which truly, totally makes sense. So appreciate all the listeners. We're at a little over 35,000 downloads now over two years. This is a 79th episode, so Mark and I will continue to do weekly podcasts going into the new year and the goal is really to highlight facts, trying to separate out what's really taking place in the market versus what people think is taking place. I think opinions are fine in the market, but we're going to have conversations about financials and balance sheets and size of markets and whatnot. We really need to start with the numbers. So Mark and I will be doing more of that in the new year. And, of course, thank you to Mark, even though he's not here this episode. He puts up with my constant change in recording schedule, with all my travels. And also a quick thanks to Denny as well. For those that don't know, denny Kebler is my podcast producer, has been now for two years. Denny's also looking for more work, so if you're looking to start a podcast or you're looking for a new producer, hit me up. Be happy to introduce you to Denny. For those that don't know and they wouldn't Denny recently retired out of the Army, from Special Forces, which referred to as an Army Green Beret, so if we can give him some additional work, that'd be great. So just hit me up on LinkedIn or danitdanerabercom, be happy to link you up with Denny.

Speaker 1: 2:50

So what I want to cover in this last episode of the year, it's not going to be a prediction piece. For those that know me, I don't do prediction pieces. I'm seeing a lot of silly prediction pieces that other analysts are putting out on the web. Frankly, I don't get it. I think it's just a waste of time. I think it's a waste of paper. I mean the predictions I'm seeing, or next year we'll see more consolidation. That's it. That's all they're saying. Streaming will only grow, with users wanting more access to content. Streaming services will raise pricing.

Speaker 1: 3:21

Listen, these aren't predictions. This is called the industry. This is what takes place every single year. So if you've seen a good prediction piece that somebody's written, that is thoughtful, that has numbers behind it, that's analytical, send it to me. I'd love to read it, but so far, I've not seen much tied to the streaming space, other than people making high level grand predictions that AI is going to be important yeah, thanks. In what capacity? They don't say. So I'm not going to go through prediction pieces. What I'm going to talk to is some of the numbers we have to wrap up the end of the year, and the first one is Peacock, I should say NBC Sports. So Peacock had its exclusive NFL game, and by exclusive that means it was on Peacock NFL Plus. But it was also available on pay TV in the two local markets for the teams that were playing. So technically, is it exclusive? I don't know. I guess that's splitting hairs, but the point is they did put out numbers, nbc Sports, and we'll get into the numbers.

Speaker 1: 4:20

But first I did a review of the service. I was watching across a couple different platforms and there was definitely some problems with it. We had a lot I mean a lot of users on Twitter reporting of the issues that they were having. It looked like it was HDR issues in a lot of cases. Color washed out. Some of the screenshots that users shared. It almost looked black and white. Definitely some reports of reduction in frame rate, what users describe as choppiness. Some of the audio and video was out of sync. On Wi-Fi I was getting washed out of image as well. Now, on Fire TV and my O-O-L-E-D-L-G TV, which was the one I was testing on, the picture looked good. The stream lag between Fire TV, apple TV, iphone and MacBook varied by about five seconds, but no doubt there were some problems and kind of surprises me that HDR is even a thing. Why not just default HDR to certain devices that you know are capable of getting it, which is maybe what Peacock was trying to do? But if they were trying to do that, it did not work Was definitely the number one complaint we had from people, just in terms of the quality of the video from a color standpoint just completely washed out. So you can see a lot of videos people shared on Twitter of what they were seeing.

Speaker 1: 5:45

The other thing I'm going to highlight here and this isn't Peacock, this is Amazon and every other streaming company out there Support is terrible. Why is support so bad with these companies? That really confuses me, because when you ask consumers what helps keep them on a service or why they leave a service and many times it's customer service you can't solve the problem I'm having. So Peacock provides no phone support others. Do you have to send them a DM in Twitter or Instagram or on Facebook? I did.

Speaker 1: 6:18

Two hours later I got a response back from the person asking me to take screenshots of my iPhone, which I thought was pretty funny, because for most of you listening, you already know you can't take screenshots of the video on your iPhone because of content protection. So what do you want me to send back? Blank, black screens? Okay, it just shows support. Has no idea how their service even works. In the very first message I also told them the type of iPhone I was using and what my iOS version was. Yet the message they sent back to me the first thing they asked me was what iPhone are you on and what's your iOS version? So they're not even reading what you send them.

Speaker 1: 6:58

So support of these services is just really poor and that's something that they need to improve on. Because good customer service I'll tell listeners, as I'm sure many would tell these companies many times what keeps me on a service, no matter what that service may be, is customer service. If you have good customer service, I will stay with you as a company. Many cases I'll pay more, but customer service has been a big problem for these streaming services and interesting to note that every time I've contacted Netflix it's been the exact opposite Somebody who understands the problem, knows how to solve it, asks you the right steps to take. I recently contacted Netflix around some closed captioning issues where it was forcing on every time, but only certain devices. They immediately knew how to solve the problem. I got someone who understood perfect English. So Peacock and others need to do a much better job of support NBCU also for this particular game, and they announced this previously.

Speaker 1: 8:04

They didn't run any ads in the fourth quarter of the game, so it was commercial free. So this was kind of hokey, to be honest. What they said was the ad free quarter resulted in 40% reduction in standard NFL ad load, which gave viewers more than 12 minutes of additional game related content. But it wasn't game related content. It was actually pretty poorly done. I understand the idea in principle. You want to reward a fan who's willing to pay extra, especially because some people had to pay $6 just to sign up for Peacock to get the game. But it just wasn't well done in terms of what they planned to do. And Drew Lerner over at Sports Media Watch he had a really good story on this and just talked about how awkward the breaks were. So this game was actually pretty close, this NFL game they got pretty fortunate Peacock did and that was a pretty close game.

Speaker 1: 9:06

But in the fourth quarter they cut back to the studio who, instead of talking about the actual game and what was going on and what the latest field goal might impact or how it might impact playoffs. They started talking about the Monday night 49ers Ravens game, which was a completely different game, which made no sense. You're talking about a game that's gonna take place two days later. That didn't make sense. So the whole point of a commercial free broadcast is really to immerse viewers in the game and it make them feel like they're there, make them feel like they're seeing something that's unique behind the scenes. They're talking to players cut back to the studio at the right times. But to cut back it's such a critical point in the game with content that didn't make sense Really.

Speaker 1: 9:59

Just, I would rather seen commercials, to be honest, and it's interesting how many people on Twitter were saying the same thing. They're like if this is what we have to listen to, just show us commercials. So for those that watch golf, I don't, but I see reports here that many of the four majors of the tour champions will air the final nine holes commercial free, with a presenting sponsor, and what that does is allows them to build analysis, to inform the audience between action, but between the shots build suspense while fans are waiting the next shot. That's what NBC could have done here, but instead they chose these pre-packaged, pre-planned segments, some of which were not related to the game at all. So I think it was an absolute failure in their part. From a content standpoint, folks online who follow sports closer than I do and that's all they track, had quite a few articles up there saying the exact same thing. So I just don't think it was a great fan experience, especially here too. Remember that when you're paying $6 for this, like some people had to do, they expect more.

Speaker 1: 11:12

Now, as far as numbers goes, nbc Sports said that the game averaged 7.2 million viewers. Now this is across. This is very important because some of the media have gotten this wrong. That's across Peacock NBC stations in Los Angeles and Buffalo, so in other words, paytv and NFL Plus, and that number's from Nielsen. When you add out of home viewership, the game peaked at 8.3 million viewers. So not surprising. This is what the audience would be on a Saturday night. I really wasn't too surprised.

Speaker 1: 11:50

Now, what we didn't get from Peacock NBC Sports. What we get every week from them was what is the digital only audience in an AMA average minute audience number? They didn't give it out. So, while NBC Sports has previously broken out their NFL game viewership with that digital only number. The reason they said they didn't provide it this time is because the game wasn't broadcast nationally and it wasn't on any other NBC Sports digital platforms like NBCSportscom. So NBC Sports declined to provide any Peacock only viewership number or Peacock Plus NFL Sports. If we look at local PayTV sorry, yeah, local PayTV viewership, which somebody did publish, it looked to be just over a million viewers. So if you take that averaging 7.2 million, you see it peaked at 8.3,. Take out a million for PayTV, take out some for NFL Plus. Now we don't know how many, but my guess is here that Peacock by itself peaked at between 6 million to 6.5 million AMA average minute audience. That looks to be what it peaked at, based on the numbers we know.

Speaker 1: 13:09

Now one of the other things to think about here in terms of what Peacock did you know? What's the key takeaway here? What should you know besides the numbers? Well, what you should know here is Sports has become a very expensive form of content in Peacock subscriber acquisition strategy. It's a high cost with Sports as the focus and we get that's their focus and that's what they're doing here is have a lot of Sports get people on the Peacock platform, but the problem I have with this is that's not a proven model. We don't yet have any data in the market to show that it is driving subscriptions and keeping them. The other issue with Sports is there's no ability to scale globally, because you're getting those rights in a certain region that's very expensive. We would obviously love to know, as an industry, how many people signed up for the Peacock platform just to get this game and cancel within the first 30 days. They won't tell us that, but it'll be interesting to see the Q4 numbers when Comcast puts them out and breaks out Peacock sub to see what it is above the 30 million paying subscribers that they recently told us they had. So that's something we have to keep an eye on, and I'll go one step further here.

Speaker 1: 14:28

I know this is gonna be a little bit different than what a lot of other people are saying in the industry, but right now, today, we have no evidence that streaming Sports online works. Let's just be honest here, and by works I mean is profitable, can drive a profitable balance sheet or drive other services you may offer for instance, amazon with Prime and that you can make money off it, because so far, all we're seeing is we're seeing fairly low viewership numbers tied to sports streaming online, and that's all the data we have. We don't know what percentage of Peacock viewers watch the game. We don't know how many subscribers you have for Apple Friday Night Baseball. We don't know how many subscribers are out there for NFL Sunday Ticket on YouTube TV. As an industry, we have almost no data to know how sports streaming is doing. We have no advertising numbers. We don't know engagement times. We don't know what the average viewing time is on any of these sports either. So when we've seen companies Google, amazon, amazon and others do seven year and 10 year deals for these sports services licensing, we know they're playing the long game here. I get that, but at some point as an industry, we have to start looking at the hard numbers of.

Speaker 1: 16:06

Does this make sense to move this content from broadcast to streaming? Because if it doesn't make sense financially, if the company's not benefiting in some way, then you have to think about why companies are doing this. I think that's really, really important, and one of the things I was thinking about that is what we've heard for so long from these companies they've been raising pricing is that valuable content was underrated. That's what they keep saying. We're undervalued. Well, first of all, they're the ones who undervalued it because they came to the market with services like Disney Plus and others where it's hey, you pay $5 a month. What math were they using? Were they thought at $5 a month, they were ever going to make money, even at an introductory offer? It doesn't make any sense. So it was undervalued because they undervalued it to consumers and they told us this content is really cheap. And when you tell content, when you tell consumers content is cheap, what do they equate that to? They equate that to I shouldn't pay a lot of money for this. So all of a sudden, these streaming services realized oh, this doesn't work financially. Now we have to continue to raise pricing once a year, twice a year, and then they want to go out and they want to blame that. Well, you know, consumers need to realize our content is worth more money than they think. You told them it wasn't worth a lot based on what you were charging. So it wasn't undervalued. It was that D to C companies didn't properly run the math to realize they couldn't make money based on what they were charging.

Speaker 1: 17:45

The other thing I'll say here is the lack of focus of the business objective is still the problem today. Some companies are getting better, but think about this Is the agenda of some of these companies to maximize the success of theatrical releases or the success of their D to C service? Well, you can't have both, and that's what many have tried to do. And then, are you using your content to make money from it and monetize it directly, or are you using it to make money from other services or to reduce churn from other services? You have to pick one, and companies are trying to do all of them at once. So the Verizon wireless deal recently, where they're bundling in Netflix and Max together. What are they doing? They're spending money on content from those companies, licensing those services and charging a discount, not because they're trying to make money off of someone else's content, but because they're trying to reduce churn of Verizon wireless customers. Their model is very clear, but for many of the companies going D to C that own this content it's not clear and that's been a big problem.

Speaker 1: 18:58

And then the final piece I'll say here is pricing in many cases makes no sense. Why don't you give me the option and the flexibility, as a consumer, to pay to watch this content the way I want to watch it. Why can't I watch one of these services for a week? Why don't you have a weekly cost? Well, because you're going to say I want everyone to sign up for a month, except those are the same companies who will not give you the option to sign up for 12 months and get a discount. That's another issue. Charge me more if I'm not willing to sign up for three months, but why aren't you giving me more flexibility?

Speaker 1: 19:33

All other industries think about other industries. You buy services from Most. All of them give you an incentive to buy in bulk, especially if you pay up front, because they know they're going to keep you for that period of time. And Disney originally did this before they rolled out Disney Plus. Because if you were one of those Disney people who loved Disney whatever that thing was called Disney Fan Club, I don't know you could sign up for Disney Plus for three years at a discount of price before it launched. But now many of the services don't do that. Some do, peacock does, others don't, so pricing is all over the place as well.

Speaker 1: 20:15

So I think if you're going to charge, especially when it comes to sports, you also have to think about how you're charging per content. Now, nobody in the media is reporting that Peacock charged users $6 to see the exclusive NFL game, but technically that's what they did. Think about it. Anybody who didn't have Peacock signed up just to get that game if that's all they wanted to see Now Peacock is assuming because they signed up for that, they're definitely going to stay here. They're going to find other content they want to watch. It's not always the case and there were plenty of people on Twitter who were like yep, I paid the $6. I canceled this thing. The moment I can't. I just wanted to watch the bills game. So you also have to think about how consumers are thinking about paying for content and what they're willing to pay to access content. I think that's super important.

Speaker 1: 21:06

And going back to what I was saying about sports and just not knowing how successful this can be, streaming based, if you look at the numbers that came out from the NFL, from Fox, from many others over the last week, sports on pay TV is having record viewership. Record viewership Christmas Day average viewership. Now, this is TV and digital. New York Giants filled out. So Eagles Ravens versus San Francisco 49ers was 28.7 million up 29%. Cbs game they put out some numbers here that was up 31%. The Fox game between Giants and Eagles average 29 million viewers, tv and digital, ranked as the third most watched Christmas Day NFL game on record. And then the prime time game, abc and ESPN, plus Ravens and 49ers 27.6 million viewers. All three games ranked among the top five Christmas Day NFL games on record dating back to 1988. The numbers we are seeing for sports on pay TV are incredible. So why are we moving them to streaming? Well, because the tech companies are willing to pay a lot of money. There's no guarantee from a viewership standpoint that is going to work long term. It just it isn't. So that's my rant on that. We'll be watching that over the next couple of years.

Speaker 1: 22:45

Let's go on to Warner Bros, discovery, the rumors of buying Paramount. For this one I'm going to stick to facts, not opinions. So let's just go facts here. No one's focusing, it seems enough on this. That deal doesn't make sense from a financial or regulatory standpoint and here's why Many are suggesting that a deal would be approved by regulators quickly, because they're saying Paramount's financials are in distress. And when a company's financials are in distress, the DOJ does tend to allow mergers to go through and go through faster, because they don't want a company to go under.

Speaker 1: 23:23

But let's stick to the financial facts here. Paramount's financials are not in distress. So the end of Q3 did 1.8 billion in cash. At that same period, end of Q3, they reported a profit of 295 million. They generated 377 million in cash flow. Before the end of the year they'll receive 1.3 billion in net proceeds from the sale of Simon and Schuster. They expect the combination of integrating Showtime into Paramount Plus to exceed the previously forecasted 700 million of future expense savings. In Q4, they expect to see the full ARPU benefit of the recent price increase.

Speaker 1: 24:05

In the quarter and this is important. During the first quarter of this year they amended and extended their $3.5 billion revolving credit facility, which now matures in January 2027. They have the money. They're facing 555 million debt maturity this year. And, yes, there is no doubt Paramount has a lot of debt in the books 15 billion in net debt.

Speaker 1: 24:32

So, as I've already previously stated on LinkedIn, do I think Paramount needs to be sold at some point noch? Maybe not as the way they look now. Maybe it's different pieces to different companies, but no doubt they are going to have to look different in the next couple of years. But if you're a buyer, why would you buy them now? You wouldn't. Their stock has gone up a lot simply because of all this speculation, but there's no reason to buy them now. They're not hurting, but their assets are not distressed.

Speaker 1: 25:02

So let's just think about a regulatory issues here. The current FTC and DOJ, which are the two bodies that would look at this, have been very aggressive in combating industry consolidation. So they would definitely challenge this deal and think about why they would challenge it, which I don't see people talking about. It would involve merging two of the five remaining major movie studios, two major television studios, and it would create a very high concentration of linear network ownership, which still, for these companies, is a very large and EBITDA positive business, even with court cutting. Just look at the numbers. You're also going to be consolidating a significant number of major sports rights and the two firms together would account for up to 40% of total time viewed on pay TV. So some people are arguing the industry oh well, regulatory issues won't be a problem, the deal will just go through. Assets are distressed like why wouldn't the DOJ and FTC want it? Why would they want this? Look at what's consolidating. This is exactly the type of stuff that they're constantly trying to stop, and they've been very aggressive as of late.

Speaker 1: 26:22

Now, I'm not going to use my podcast ever to go into politics, but I do have to mention that if Trump won his president and he were to bring in new regulators, they're hurdles because some people are saying, well, depending on the president, right, they could change out who's going to be at the FTC DOJ? Yeah, absolutely true, no doubt. But Trump's previous head of the DOJ made an unsuccessful effort to block if you remember the 18-teen time warning merger. Now, it was unsuccessful, but made a big effort to block it. And if you think also that Warner Bros, discovery's news network, cnn, has been a huge target of Trump in the past, that would be interesting to just see from a personal standpoint. If there's some sort of grudge that is still held there, let's keep that deal from going through just because of that, right. So the regulatory issues depending on who the next president is also could change here, depending on who's in charge of these agencies.

Speaker 1: 27:26

But putting that aside, how would this deal be paid for? Who's paying for this? There's not a lot of cash from the books, so if a deal happened, it would have to be mostly stock for stock and Sherry Redstone would have to accept a piece of a larger company with huge debt and almost very little to no upside guaranteed money. So why even do this? What's the benefit? I don't see one. Strip out regulatory, strip out financials.

Speaker 1: 27:54

Why combine the two companies? Nobody that I've seen has provided a logical explanation as to why you would do that, like how does that help? Warner Bros Discovery Scale isn't the solution to their problem. Paramount would bring a lot of content, but much less in terms of premium content, long tail franchises, and Warner Bros Discovery with Max, they already have plenty of breadth and depth of content. So I don't see why you do this deal, and the only reason I see people talking about it is oh, paramount's having trouble and they're distressed, but again, they're not. Could their balance sheet be better? Absolutely, but they're not distressed. The other thing is it's likely that further debt would need to be issued to make this deal possible and combined the two companies right now. If you combine them, they have almost $60 billion in debt $60 billion. So I don't see the benefit here.

Speaker 1: 28:57

And then, for the final piece, I'll just say here is, and listeners will know this who have been at companies who are being acquired. But you have to wait a year, 18 months, 24 months before the deal happens. Imagine the impact and the distortion to the businesses both of those over, say, two years of regulators are looking at this. All that means internally for people's uncertainty. Do we still have a job? How many layoffs are going to take place? Because you know they would happen? What's the product going to look like? What's going to merge into what? What's the focus of the content? What's the messaging? What's our go-to-market strategy? All that does is disrupt your business for whatever period of time. Regulators would look at this. Even if a deal was announced in 2024, I guarantee you it would take until 2026 to hear whether or not the deal would go through. So what do you do with your business? For two years? You keep running it business as usual. That's all you could do, because you can't start putting assets in place beforehand or strategies, because you don't know if the deal is going to go through. So the distortion to businesses alone, I think, is a reason not to do the steal. But we'll see what happens.

Speaker 1: 30:12

Let's move on to some news that was announced today. Here's an acquisition that actually was announced. Cheddar News folks might remember Cheddar owned by Altice. They have sold streaming service to a private equity firm. Well, it's a different company, arc type but it's owned by private equity firm Region LP. There were no terms of the deal disclosed. Cnbc is the one who put the story out that I saw. They did call it an earn out deal. Basically, it means that Altice will collect proceeds in the future if Cheddar meets certain performance targets. Cnbc was reporting those payments could amount to about $50 million, based on internal projections. If I remember, altice bought the company for I think it was $200 million when they first acquired Cheddar. I'm actually going to look that up because, since we're talking about getting numbers right, I should be giving them out properly here. So, yeah, it was reported $200 million in April of 2019.

Speaker 1: 31:22

Another piece of information that came out this is not confirmed. This was a rumor that Diamond Sports Group is negotiating with Amazon about Amazon making a strategic investment and a multi-year streaming partnership deal and basically, if that happened, amazon's Prime Video Platform would at some point eventually become the streaming home for Diamond Sports Group's games. So this was reported, I think, a little over a week ago. By the time you're listening, there's probably about 10 days. We haven't heard any additional updates as of yet, but that is something that would be interesting to see if that happened, because it would give Amazon more access to sports and local sports, which we know is important.

Speaker 1: 32:11

One quick note here Intena recently had some additional cord cutting data in terms of sorry, not cord cutting churn data. One thing I'm always going to reinforce with folks is I see many people using Intena's churn data. Well, churn is 7% of the market. They're just saying that as a fact. First of all, that number is according to Intena and, by the way, in the last two weeks I've had three conversations with three companies that you all know by name tied to streaming, who Intena has bundled in with this churn. Those churn numbers are not right. The company's made it very clear to me Churn numbers. Now I can't say what they are right. I'm not going to say who I spoke to at the company, but I've been talking about this for quite some time. The numbers are not accurate that Intena is putting out when it comes to churn. So before you start using those numbers when it comes to churn, talk to some of the companies involved. If you have good relationships, they'll give you a reference point of what the number actually is.

Speaker 1: 33:10

The other thing that nobody is talking about these companies define the word churn differently. Some streaming services are only looking at whether or not you are on the service over a certain period of time throughout the year. So if you started the service in January and you left in April, but you came back in September and you were there at the end of the year, in December, they do not consider you having churned off. Other OTT services count you as a lost subscriber every single time you leave the service throughout a 12-month calendar period. So the term churn is defined very differently. And just to put it in perspective, there are some companies where, if you read their SEC filings and you look at how they define churn, some companies were actually including in their subscription numbers projected future subscribers even though they hadn't subscribed, and they recently removed that as a number and as a result.

Speaker 1: 34:17

Who was it? I'd have to look it up again. I think it was AMC networks. All of a sudden, their total number of subscribers took a huge hit in one quarter because they changed the way they define their definition of churn. It's on LinkedIn. I believe it was AMC, but I'll double check it and my point is you have to think about methodology and definition of words. It's extremely important. What are we going to see in the new year? Well, I did a little post on LinkedIn the other day. Some people felt like, hey, this is kind of doom and gloom for the new year. No, I don't think it is. It's just reality.

Speaker 1: 34:59

Due to high interest rates, lack of access to capital for many, especially streaming vendors, growth is going to be hard to come by in 2024. Very hard Raising money now. The interest rates are so high. I had a conversation with someone today who said vendor X raised 95% of the money they were looking to and around, but they can't raise the last 5%. You're talking hundreds of thousands of dollars, not millions. Can't raise it and sheets will show an improvement year over year due to cost cutting and layoffs and spending less than CAPEX and cutting contracts and getting lower pricing. But that's not growth in the business. So for many vendors in particular, growth is going to be flat year over year. Now, that's not all vendors, especially ones that focus and specialize smaller. But the monitor next year, both on the customer and the vendor side, will still be do more with less and spend money wisely.

Speaker 1: 36:01

So companies, vendors that have a very focused product line, solve specific problems and specific verticals, have a clear go to market message of what they do. Some of them will see some growth, but the fact that a lot of companies can't get money right now is going to be a big issue going into 2024. It's a big issue. So why is it so difficult? Well, part of the reason, too, is a lot of VCs have gone under. Let me give you an example. In view, boston based VC company, they laid off most of those employees and would stop all new investments months after raising $570 million in their seventh fund. It's a 17-year-old firm which managed $2.4 billion.

Speaker 1: 36:52

According to Pitchbook, the number of active investors in the US VCs fell by 38% in the first three quarters of 2023 compared to 2022. So, according to Pitchbook's data, their stuff is good. If you look at the methodology, you're talking about more than 2700 fewer firms making deals in the market. That's a big number. And then you have inactive investors as well that are selling their VC assets in the secondary market. That means companies are not as valuable as they were originally valued when they got their money. Some of these firms, obviously, too, are collecting management fees and they're just waiting for startup valuations to rebound. And then we also know that where investment is going right now is AI. You've got some firms that are of the new money they're investing in new companies. 75% or more is going to something tied to AI, and it's not AI tied to video, it's AI tied to cybersecurity, healthcare, all kinds of other vertical industries.

Speaker 1: 38:08

But this is a big problem and we have to watch this in the new year, because you have vendors in the market that are sitting on Mark and I talked about this on a recent podcast anywhere between 15 million to 30 million in cash and even though they're not burning a lot, losing called a couple million dollars a year they can't transform their business because they have no money to make acquisitions and their stock price is too low, and they don't want to dilute investors and issue more shares. They don't want to acquire more debt and borrow more money at high interest rates. But that is the reality. What's taking place in the market today. So 2024 is going to be? It's going to be tough. So, if you're in this industry, stay focused. Focus on facts over fear. Look on what's actually going on in the market. What I would love to see at the end of the year. I was going to ask Mark what he wants to see from the industry at the end of the year and going into the new year.

Speaker 1: 39:06

You know what I'd love to see in the new year from our industries? A couple of things. First and foremost, I'd like to see more professionalism. The amount of just insults on LinkedIn and cursing amongst one another, which I will not get into is pretty ridiculous to me. Right? It's just like we're adults, not children.

Speaker 1: 39:24

I mean return emails, man. People have gotten bad about that. The amount of people that can't return emails now, or can't return them in a timely manner, like, is getting worse every year. I know that sounds crazy, but it's incredible how many responses I get to emails four months later. Or someone says sorry, I was busy. That's a terrible reply because what you're implying is that they're not busy. We're all busy Now. I get it if someone's trying to sell you something, right. A lot of those emails you never return. But, like, I'm not selling anything, a lot of other people in the industry aren't either. So it shouldn't take that long to return to reply to an email.

Speaker 1: 40:06

So I think I'd like to see in the industry, better communication amongst people. I'd like to see better communications across companies. I'd love to see more transparency in the space. Now I realize I'm asking for something. I'm not going to get Search leagues, amazon, others. We know they hold on to their information, their data. They're pretty secret about it. But think if we were having this conversation or discussion five years ago, we would say the same about Netflix. And look at how much information Netflix over the last couple of years, has started to put out. Yes, some of it, like they've recently announced, is very high level. A number of hours view doesn't tell us much, but they're starting to give some insights into their business. They've been more open. They've answered more questions with Wall Street, so companies can do it. We've started to see it. So I'd love to see better professionalism. I'd like to see more transparency.

Speaker 1: 40:59

And the final thing I'd say is I'd like to see people in the industry better educate themselves on what's taking place, focus on the numbers, have a better understanding, not only what is taking place in the industry, but what is going on at your company. Does your company make money? Does it lose money? How much money does it have on its balance sheet? What does it owe in terms of debt? Now you're working in a private company, it's a little harder to know those numbers, but many times internally, if you ask, you will get something. Have a better understanding of where companies sit from a financial standpoint. Second thing I'd say is in terms of better educating yourself, understand what it takes to move up in the industry into either a different position you want, inside a different department inside the same company, or to a different company. Understand what they want to see. Understand what's important from a certification standpoint.

Speaker 1: 41:52

I see a lot of people still saying well, I'm going to go get some certifications, I'm a project manager, I'm going to go get PMP. Well, take a look. A lot of companies now want Agile. They're looking at Jira. So is PMP the right cert for you to be getting? Don't guess. Go directly to monstercom. Go to the company's website. Look at the job that you want. What are the requirements? Talk to someone who does that job at that company. So, better educate yourself.

Speaker 1: 42:21

Education, I think, is key. We secure the future by looking at the past. You have to look at what companies have done in the past, what mistakes they've made, so we don't make those mistakes as an industry going forward. I truly believe in that and we have so many new people in the industry people who don't know the industry, don't know the history, don't know what's already been tried or why something didn't work or what the consumer response was to it that we need to constantly remind ourselves of what we've tried, what we've done at a certain point in the market that was different from today. So I think education is key. So if you're looking for education, if I can help I don't know everything about the stream media space, but I know a lot of people, if I don't know the information happy to try and connect you with someone. Maybe who does I know I've been talking about doing a jobs webinar. I've been waiting till the new year, but I will do that in January.

Speaker 1: 43:13

Live Zoom webinar for those that want tips and tricks in terms of their profile on LinkedIn and what it should say should not say your resume, what companies should be looking at that are going to be growing in the new year. I will be doing that soon. But if you're looking for help, reach out to myself. Mark's also willing to help, especially more in the marketing side as well, if that's the side of the house you're coming from. And then, finally, just hope everyone had a good new year.

Speaker 1: 43:39

New year you'll be listening to this after the new year, so I hope, getting into the new year, everyone's focused on family health, right? Two things that are more important than business and just being successful mentally, physically, focusing on what you can do at your company so they can operate more efficiently that is key and better understand what's taking place in the market. That's what we're all trying to do. That's why you're listening to this podcast right now. That's why you're reading LinkedIn right, you want to educate yourself. That's a good thing. So appreciate everyone listening. Hope everyone has a good start to the new year.

Speaker 1: 44:12

If you have any questions in any time, reach out to me. Everything I talked about today is on LinkedIn. Mark and I are always available on LinkedIn or just email me directly. Dan at DanRabermancom. Appreciate all everyone's support and all the people who send in comments as well about what they want to see us cover and not cover. We love all comments, even a third, sometimes negative one. That's okay, we'll take it. We got thick skins over here. We'll take it. Please send it in. Thanks very much for your support and we look forward to talking to you in the new year.

Speaker 2: 44:40

If you enjoyed the show, send it to a friend, have questions for Dan or Mark, connect with them on LinkedIn at any time and be sure to check out Dan's blog at streamingmedia blogcom.