This week, we discuss the use cases for Apple Vision Pro and why it will not become the future of video viewing for consumers at scale. We also break down the Diamond Sports Group complex proposed restructuring plan, Amazon's commitment to make a minority investment, and the potential repercussions for Prime Video customers who will be able to purchase DTC access to stream local Diamond channels at a still-to-be-announced price. Finally, we highlight the deal between Qwilt and Cirion Technologies, which will result in Qwilt taking over the former Lumen CDN PoP infrastructure and running their edge cache software and cloud services across what was the Lumen CDN footprint in LATAM.
We also mention some executives with new positions, including Walker Jacobs at DAZN, Michal Tsur leaving Kaltura, Stephanie Mitchko at AMC Networks, and Courtney Sanchez at Tubi.
Podcast produced by Security Halt Media
This week, we discuss the use cases for Apple Vision Pro and why it will not become the future of video viewing for consumers at scale. We also break down the Diamond Sports Group complex proposed restructuring plan, Amazon's commitment to make a minority investment, and the potential repercussions for Prime Video customers who will be able to purchase DTC access to stream local Diamond channels at a still-to-be-announced price. Finally, we highlight the deal between Qwilt and Cirion Technologies, which will result in Qwilt taking over the former Lumen CDN PoP infrastructure and running their edge cache software and cloud services across what was the Lumen CDN footprint in LATAM.
We also mention some executives with new positions, including Walker Jacobs at DAZN, Michal Tsur leaving Kaltura, Stephanie Mitchko at AMC Networks, and Courtney Sanchez at Tubi.
Podcast produced by Security Halt Media
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 3:Welcome to the Dan Rayburn podcast. I am Dan Rayburn, along with co-host Mark Donaghan, back for another busy week of news yes, we are.
Speaker 3:We're going to jump into here, mark. Let's just go into something that's not factual and numbers-based, which is usually we're covering, which is the Apple Edition Pro. So we're recording this Friday, january 19th. It is up and available for pre-order today. I will pre-order one later today so that I can have it hopefully in time which I assume I will be able to for the NAB show in April.
Speaker 3:I thought it would be really good to have it on site so that people during the streaming summit could see it, get hands on with it. I don't know how well it's going to work in terms of people trying it on, since it's really fit for your face and potentially what your eyesight is and different straps amongst your head, but I figure let's give it a try. So as long as there's no problem in terms of me getting it by then. They say it's supposed to ship in February. We'll see, but I'll bring it to the streaming summit. I'm also more going to.
Speaker 3:I think I'm going to do it during lunch on day one, but I think I'm going to do an informal. Bring your lunch for an hour into one of the session rooms. I'll have it there, do an informal demo. People can ask questions, get hands on with it, try it out. I think that's how I'm going to do that. So more information to come, I might be able to get two of them. That way somebody else can start to help me try them on. And no, just for people wondering I am not getting these free from Apple. I actually have to buy them. Apple does not give out anything for free. When they do, it's purely a review unit.
Speaker 1:You have to give it back. Yeah, they're pretty tight yeah.
Speaker 3:And they're not doing review units on this. I mean even in gadget, and the guys got hands on, but they're not selling one.
Speaker 1:Yeah, they have to buy one too. So yeah, you know what might be cool. Dan is if there's anybody and I don't know what there is, but maybe you could find somebody who's built an app or has even just a really basic something to show on it, some live streaming experience or something.
Speaker 3:Yeah, I mean just too hard to manage, although keep in mind that when it rolls out, you're going to be able to download apps from Disney Plus, espn NBA usually PS4, or PGA.
Speaker 1:Yeah, that's right, that's right.
Speaker 3:Yeah, apple put out a list, so includes Macs, discovery Plus, prime Video, paramount Plus.
Speaker 1:There you go.
Speaker 3:Crunchyroll. Red Bull TV. That should be good. Peacock, Pluto, Fubo, so there'll be plenty of apps to try out. Also, it supports streaming video using Safari and other browsers. I thought it was interesting this week Mark and we'll get to Netflix a little later that the news came out that Netflix is not going to have a dedicated app for it, and it just it fascinated me that some analysts are like well, there it goes.
Speaker 2:Division Pro is not going to be successful for.
Speaker 3:Apple. It's dead with consumers. It's like, guys, do you rise with taxes? This is $4,000? Like how many do you think they're going to sell Apple's own? We don't know if this is true, but numbers keep coming out regarding how many Apple plans to build this year, which is different than sell. Certainly, the number was a million. Now we've heard the numbers down to 800,000. So the reason we're talking about this today, mark, is I thought it would be important to highlight that through Apple's own internal thoughts. They sent out a video to employees an Apple executive. I forget his name, but what he said to all the executives is they see the Apple Division Pro use cases being around education and enterprise Makes sense, yeah, training surgery, they called out aircraft repair.
Speaker 3:So for those that are writing, this is the future video consumption for consumers. It isn't. I just chill out, Even if you get. I know people are going to reply if I put something in LinkedIn. I didn't, but they're just going to say, well, that's what TVs cost when they first came out OLED Now they're under $1,000. I'm going to say, guys, this is not the same thing.
Speaker 1:Yeah, no, this thing you have to strap on your head. You don't strap a TV on your face. You know to watch it.
Speaker 3:Yeah, and if you do, you've got a problem.
Speaker 1:Exactly, you better go to the eye doctor.
Speaker 3:It's also interesting some people who have tried this out right, it's just like some other VR things in the sense that some people don't respond well to it or make you nauseous or bothers their eyes. Also, for this one, depending on what your eyesight is, you have to basically insert and pay additional money. I think it was $100.
Speaker 1:It's corrective lenses, right yeah, all right.
Speaker 3:So this is a complicated piece of hardware that is custom fit to your face. You actually have to scan your face for Apple to understand basically what the right setup is, and then you have to figure out in terms of the seal to keep the light out. That's another thing in terms of how the seals are. So even five, six, seven years from now, apple refines this which I'm sure they will, and they get this down to even $1,500. This is still not the way consumers, from a mass market standpoint, are going to watch content. It just it isn't. But it'll be super interesting to see, for sure.
Speaker 1:Absolutely.
Speaker 3:So, if it works out, I'll have one or two to show. Mark, I saw a little brief here from a week ago which I didn't mention in the last podcast. I forgot to, but Twitter is getting into original video programming. Twitter, wow, okay. So they announced a number of content deals, exclusive shows. I thought it was really interesting, though, who the shows are being hosted by.
Speaker 3:So former CNN anchor Don Lemon, former Congresswoman Tulsi Gabbard don't know her Former Fox Sports host, jim Rome, obviously a well-known person, but it just what the hell is Twitter doing? Like, twitter is not the place that you go to get original content. That is not what consumers are looking for on the platform. The platform is still just broken every single day. Stuff doesn't work. Now, I did think it was interesting, mark, that a large portion and we don't know what percent, but a large portion of the content on Twitter is all politics and it's mostly garbage, and it's a lot of stuff that just people have, even, you know, doctored photos, images spreading false information. No doubt there's a ton of that on there. So the fact that you have a former news anchor, congresswoman, I see how it plays into the political side, but Twitter is not going to become a place for original content, video programming on Twitter. It's not a place you go.
Speaker 1:Did you see, though, that Mr Beast has struck a deal with X?
Speaker 3:Yes, I don't know. He struck a deal.
Speaker 3:What he did was he uploaded one video to test how well their yeah actually works and it was interesting he did come out and say that the cost to produce some of his videos are so high in some cases yeah, it's a dollars that previously he couldn't make money back on on Twitter's platform. Now he's done it because he's saying Musk has come on and said hey, you know, we've really changed how we monetize videos. You can make more money. So he put up one videos. A test will be interesting to see what the results are. The thing with that mark is I Don't think it's relevant to anybody. Yeah.
Speaker 1:Because who's the well? Well, that that's a very good point. It's like he is normally. Yeah, yeah, literally nobody there's. You know, that's like Apple, that's like the iPod, and you remember Microsoft's Zune, you know their music player and, and they were number two right there, number two market share and I think at the peak I don't even know if they got to 10 or 11, 12% of the market, I don't even think they did. You know, but they were number two. And Apple was like 85, 90% of the mark, 85%, whatever it was. It was insane, so yeah.
Speaker 3:Yeah, if I remember correctly, the zoom sold About 1 million players in the 2006 2007 timeframe. At one point in two died. You remember in 2008 it's ridiculous I remember this that zoom. Microsoft announced that zoom had passed a milestone.
Speaker 2:Yeah.
Speaker 3:Two million devices.
Speaker 1:Apple, apple. At that point, you know, I don't know what were they doing? A hundred, more than a hundred million a year, or something, or Well, at that point Apple was selling we could go look about that Apple.
Speaker 3:No, I know the number Apple was selling. I mean, you actually should make sure Apple was selling more than 10 million iPods in that quarter. Okay, okay, so they were selling.
Speaker 1:call it 40 million plus a year and Zoom announced they sold two million history.
Speaker 3:Not even that year.
Speaker 2:That's amazing so anyway, that's, that's like mr Beast and all the other creators.
Speaker 3:That's my point, yeah it is yeah, so we'll see. It's interesting, though, to see what the results will be.
Speaker 1:Yeah, it is yeah, by the way. By the way, 2009 Apple sold 54.13 million. 2008 was almost identical 54.83. So just slightly more 2007 51.6. So I. Correct iPods. Ipods, so I mean from 2007 to 2009 they sold oh, call it a hundred and sixty million In just those three years. Yeah, so 40 to 50 million. Yeah, 2006 was was just shy of 40 million, so your memory is correct.
Speaker 2:There you go 39.4.
Speaker 3:It's kind of scary. I Can still remember numbers from. Like you know, today's are like kid digital oh wow, wow Kid going back to feed Wow, right, the feed room like wow, yeah, I don't know why I can't remember stuff I could actually utilize. Numbers like this. Well, speaking of numbers, let's jump into Netflix here just real quickly. We've got earnings next week. But you know, for many listeners that don't cover institutional money managers and folks on Wall Street. Man, they're a funny bunch.
Speaker 3:That's a nice way to put it frankly, you don't need to cover them, you don't need to follow what they say. It's it's it's hysterical. And keep in mind they make money based off the recommendations they're doing, and then their banks are used many them are used in terms of what they're recommending to customers. So they're making money here, right, they have a complete, almost every time, conflict of interest, depending on what side they're sitting on. But so city group downgraded Netflix Of I don't know about 10 days ago, and then somebody else in city group Basically said well, you know, even though someone in the team downgraded it, netflix has, quote won the streaming wars.
Speaker 3:And so then they put a buy on Netflix and raised the price target from 525 to 585. So what I thought was really funny was the reason that they put a buy on it Was simply based on the fact that they're saying nobody else Will be able to now compete with Netflix and get to their size and scale, and they're saying the reason Netflix is doing well is quote. Netflix is what the old bundle was all in one service, something for everybody, cuts across every demographic. Well, first of all, netflix is not like the old bundle, because Netflix doesn't do live and it doesn't do sports, so that's not like yeah, where's the local?
Speaker 3:TV, local TV news, that's so. That's not the case. You're also. They're quoted as saying these companies have reduced their content spending. You know, last year, yeah, they reduced their content spending because of two strikes To and, by the way, netflix reduced its content spending as well by about a billion dollars, based on the number Netflix has Projected they'll spend this year, which is about 18 billion. They might update that number next week, we will see. So I just think it's funny that you still have some Wall Street folks saying listen, the streaming wars are over. Netflix is one known will get to their size and scale. Well, netflix is also an international service. So in the same CNBC they then went on CNBC mark they were talking about well, hulu just can't reach Netflix. Well, of course I can't. It's not an international service as of today. So just hysterical. How Wall Street some of these Wall Street people come air streaming services. It's apples to like bowling balls.
Speaker 3:It just just doesn't make any sense, but it makes for an answer.
Speaker 1:Yes, it does I.
Speaker 3:Wish some of the people interviewing them would ask them some better questions on TV, but it's entertaining. Let's jump into more sports news. So the news of the week obviously is Diamond Sports Group. So the company has entered into what's called an RSA restructuring support agreement With its largest creditor groups, which would enable diamond to emerge from bankruptcy. Now this is really important because they went into bankruptcy. The court Must approve any proposed deal. So even though this has been announced, it is not yet been approved by the court. The projections are that it would take the court until March to approve it. I don't know if that's the case, but you know there's a process that has to go through here.
Speaker 3:As part of the terms, amazon is committed to making a minority investment. Now I can't find any single place that Amazon has been quoted on the record how much money they're going to make. But I've seen the media report. It's a hundred million, a hundred and fifteen million and a hundred and twenty five million. What I find really odd mark is it's it's interesting how none of these articles including, you know, major publications Do they say where they got that number from. They don't say according to filing, according to Amazon. I've looked all over. I cannot find anything on the record, so I will just say, unless someone can point it to me. I don't have confirmation of what the number is, but the range we're hearing is a hundred million to a hundred and twenty five million. Frankly, doesn't matter either way. With Amazon, no, the number is small to Amazon. So, as part of the terms, diamonds going to enter into a relationship where they're going to use prime video services, where they're going to use prime video services, so prime video is going to become the primary partner, so that prime video customers can purchase DTC access To stream RSN games, local diamond channels.
Speaker 3:I Think the media is getting a little too excited about this because Diamond owns the streaming rights to five of the nine MLB teams that it's still broadcasting. It's super complicated. They actually have rights to broadcast more teams on paper, but now they're only broadcasting nine of them, and Of those nine they have those streaming rights to five in major league baseballs Troy Tigers, kansas City Royals, miami Marlins, milwaukee Brewers, tampa Bay Rays. Now a couple things we don't know. It's completely unclear if viewers in those markets have to pay more. So if you're a prime Member, do you now have to pay an additional fee on top of this to get the games. That's the biggest thing we need to know. Diamond, all they said was publicly. Additional details regarding pricing and availability will be announced later. So I take that to mean there's probably gonna be some additional costs.
Speaker 3:Yeah yeah, because if you knew there was gonna be no additional cost to Amazon Prime members, wouldn't you put that in the press release?
Speaker 1:I would think that's a pretty major feature of the deal. You know, I wonder too, dan, how much of this is going to oh, what's the right word, you know aggregate, et cetera, to Prime Video Channels, so that, at the end of the day and this will be complicated because, though it might be like, hey, I can go to Prime Video Channels, I can watch, you know, my favorite team, some maybe I get it as part of some subscription, others I have to buy a separate, and that's where the complication comes but what this potentially does for the consumer, though, is solve the big issue, the headache of the last you know couple years of where do I watch the dang game. You know where do I go, and you know. So I am looking at this and I think it's a. The move makes a lot of sense from Amazon's perspective.
Speaker 1:I also wonder how many of these teams and leagues which I have heard you know, from talking to various people throughout the industry, that a lot of these teams have been out looking for service providers. You know to. You know, yeah, because they've been thinking hey, I guess, if this whole thing falls apart, we need to build our own D to see, et cetera. But at the end of the day and we've talked about this a little bit on the podcast you know, none of these teams are. You know they're not engineering orgs. They don't want to be in that business. They it's complicated for them to make a buying decision. There really is not one single platform that can really deliver, and so they're kind of a little almost stuck. You know, and Amazon comes along and all of a sudden they've got the video infrastructure. They're already streaming live sports, they have the audience, they have the channels. I wonder if Prime Video Channels is gonna become kind of the place, you know.
Speaker 3:Yeah, here's the problem we don't know is that we don't know that any of the leagues are gonna continue their deals with Diamond, and so that is the big thing listeners have to take away is the deals that they have with MLB, nba and NHL. There is no guarantee they're gonna continue to work with Bali past this year. Now Diamond did come out, mark publicly and say in the conversations they've had with the NBA and NHL, they're open, the leagues are open to discussing a continuing yes yes, I read that too and you know.
Speaker 1:And then I guess, and this is all you know conjecture, and we won't know until you know, until announcements come out. But you know, I wonder too if then the leagues are going to, you know, abandon. In the case of the NBA, they have a very, very good app. I mean Leake Pass is you know, has done really well from what I understand, and of course they came and talked at streaming summit about you know about that. So I can't imagine they're just gonna walk away from Leake Pass and just throw everything up on Amazon.
Speaker 3:But yeah, I True, and also keep in mind they're the only sports league right now that is also bidding their content yeah yeah, that's right, right after 10 years of being in con or you have that complication with it as well.
Speaker 3:Also some of the numbers. I've seen some analysts say, okay, well, prime Video has we think it has X number of subs, if even this many. I saw someone say 50 or 60 million. People are tying this to data. Amazon's gonna get all this amazing data, which is not accurate, because if you have 50 to 60 million people in the US using Prime Video on a regular basis which is what they're suggesting, they're saying now all these people can go. You know, see their local team. Well, no, in baseball they only have five teams.
Speaker 1:Yeah, they don't have my Mets, so I don't count them with it.
Speaker 3:That's right.
Speaker 2:I mean not that the Mets, you know, you know, watch too often.
Speaker 3:But yeah, we'll see this year, but there's a lot of uncertainty here. So I think the most important thing people have to realize is that you know Diamond ballies, you know, has NBA content, mlb content, NHL games for which they retain rights, that you're gonna see through Prime Video channels, but we have no idea what's gonna happen past this year, that's right. Now, as part of the deal, diamond did announce that they're gonna settle their lawsuit with.
Speaker 3:Sinclair. So the pending lawsuit between the companies. So Sinclair is gonna pay Diamond 495 million in cash and they're gonna provide ongoing management and transition services to support Diamonds reorganization. In other words, they're gonna get paid to do that. So at least they are settling Diamond. As of right now Looks like they are settling pretty much everything illegally that they have outstanding with creditors. With Sinclair Now it's with its largest creditor group. I believe it was 85% of creditors, not 100%, but that's enough. So it's interesting to see what potentially could happen to them did what I think it was. It was not think it was $8 billion market debt. Hence they go into bankruptcy, chapter 11. So the issue here is this is good news, it's a step in the right direction. But if they all of a sudden lose their deals after the end of this year with some of the sports leagues, what is going to fuel their cash flow?
Speaker 2:next year.
Speaker 3:How are they gonna grow this business even though they're out of debt? So there's a lot of unknowns here, complicated, very complicated and also, just if you read some of the filing stuff, it's extremely complicated. The contracts between some of the sports leagues and some of the stuff had to trigger by a certain date and if it didn't trigger, the rights wereverted back to teams individually. I was starting to read this and I was like, okay, this is too much.
Speaker 1:Exactly.
Speaker 3:I need to do something else.
Speaker 1:And that's also why, to your point, you make this a lot that it's easy to put up a pithy little LinkedIn post and I'm speaking of analysts and just industry people who do this and make some proclamation. Well, that proclamation, okay, maybe it turns out to be right, but there are so many caveats and asterisks required to. Yeah, it's fine, everybody can have their opinion and kind of give their insight. All right, I'm not saying don't do that, but either put one asterisk that says, hey, look, there's so many unknowns here or something, but don't pronounce things as fact. This is what's gonna happen, and there's so much of that. It's just, it's ridiculous.
Speaker 3:Yeah, I think some of it's the excitement because it's not the sports but this deal in particular of all the things we cover, is extremely complex. It's just complex from a chapter 11 bankruptcy standpoint. But then you're talking about teams and sports teams and contracts that are different. Yeah, I wouldn't want to be talking about that? Well, no, you would, because the billing I was gonna say, oh, that's how they get paid yeah exactly You're like, bring it on.
Speaker 3:Yeah, so just wait, this'll shake out. We'll see what's actually gonna happen. But the fact that you know to your point people are declaring, okay, prime Video's now gonna become the place for RSN. Yeah, we don't know that, just chill out.
Speaker 1:Yeah, I think ultimately it's good for them. You know for Prime Video, but I'm not saying it's, you know, the ultimate destination. Who knows?
Speaker 3:Well, it's, certainly smart Amazon because for not a lot of money if they're getting in and it turns into something they took a chance for $500.
Speaker 2:Yeah, why would?
Speaker 3:you.
Speaker 1:Yeah, that's a no brainer?
Speaker 3:Yeah for sure. So let's talk some more sports. The New York Post was the first to start reporting that ESPN and the NFL are in talks where NFL could take an equity stake in ESPN. Yeah, that's great. But you know, then it was reported. Well, you know, the NBA could take an equity stake in ESPN as well. They're talking to them. I don't know how this is news. Every single sports league out there that is large enough is talking to.
Speaker 3:Disney about ESPN. Right, we know that Disney's come out and said we're looking for a partner, so none of this is really surprising. The ESPN and NFL won, I think, is interesting only because ESPN would take control of NFL media, so that includes NFL network and NFL red zone. Be interesting if ESPN then took that over. But what I don't know is does NFL plus fall under NFL media? Because then does ESPN take over NFL plus? That would be interesting Because could you all of a sudden somehow then integrate content from NFL plus into ESPN?
Speaker 2:plus.
Speaker 3:I don't know, I don't know what the contractual content agreements are there, but the NFL plus service is not great. So another one that's going to have to shake out, and I certainly think it's going to be this year. There's going to be a lot that is going to have to settle down more because figure diamond, figure ESPN, also NBA licensing, formula One, that's going to be done this year as well at some point.
Speaker 3:Some really interesting deals are coming up. Let's jump into NFL wild card game. So, mark, I'm not going to go through the peacock stuff too much here.
Speaker 1:You covered it.
Speaker 3:Yeah, you covered it very extensively. I mean just that day set up devices, everything. I spent 10 hours on that Saturday. A lot of blog posts.
Speaker 3:Since then there's also just been a lot of nonsense. People have been posting in terms of what NBC Sports said or didn't say. I just go to the press release. I don't know why they're getting these numbers wrong, but just to recap numbers across NBC, fox, ESPN and Peacock. So Fox came out and said based on the wild card weekend, some of these games are Saturday, sunday and some are on Monday because one game got postponed because of weather, so weekend goes into Monday. Fox had 43.4 million peak viewers. Nbc had 38.7 million peak viewers. Espn had 28.6 million viewers, not peak viewers that don't use that number. Now for Fox, nbc and ESPN, that is, across pay TV, their digital platforms, espn plus, peacock, fox Sports, dot com and NFL plus. So the highest is 43 plus million, the lowest is 28 million, so 28 to 43. Peacock came in at 24.6 million peak viewers across Peacock, nfl plus and pay TV markets and the two local markets that the teams were in.
Speaker 3:So just interesting Peacock 24.6, fox 43.4. What does that show you? It shows you that even when the game is streaming only, the audience is still not as large as pay TV. Now NBC Sports did break out Mark they're great with this what percentage of the total traffic of 38.7 million was digital only, meaning NFL plus Peacock? It was 7%. So for NFL games that are not exclusive only to streaming, less than 10% of the viewing audience is digital. And we don't want to say, peacock right, because it's digital, it includes NFL properties as well. So that's the reality. Those are the numbers. Now, as far as the game review, mark, there were far too many issues being reported from users than I would like to see. In all fairness to NBC Sports and Peacock, I do not know what percentage of users the people complaining made up right. Was it less than 1% of all viewers had problems?
Speaker 3:I don't know, we have no information. I did not like how NBC Sports put out a press release saying this was the largest event in the US in terms of internet traffic. Now I thought it was interesting. Everyone just republished that. I reached out right away and said according to whom Like is this Sandvine?
Speaker 1:Day.
Speaker 3:Somebody separate from the company, from Comcast, emailed me and said no, that 30% number is referencing just Comcast's network. Well, you didn't put that in the press release. So the 30% number where it's saying it's 30% of internet traffic, that's 30% of internet traffic, was the peak on Comcast's ISP. Oh wow.
Speaker 1:Wow.
Speaker 3:Comcast only. Wow, okay, yeah but no one picked up on that Interesting Now, is that a surprising number? No, because Comcast, two quarters ago, told us that for Thursday night football, 25% of their traffic on Thursday nights across their network is coming from.
Speaker 1:TNF yeah, that's right.
Speaker 3:Yeah, I remember that, and Peacock was a larger number than Thursday night football, so it would make sense that it went from 25% to 30%. Totally makes sense. Now let's go monetization. I covered Mark and I posted on my blog how many total ad breaks Peacock had through every quarter 15, 30 seconds. There's a few one minutes. If you add all those up and you even pick, okay, let's say they got paid $300,000 for a 30 second spot. Their ad revenue is somewhere in the $15 to $20 million for the game. That's excluding sponsorship revenue, because fourth quarter they had no ads but it was quote sponsored by. I don't know what those sponsorships cost. Add another $5 million to it. You're still talking. They made less than $25 million in advertising.
Speaker 3:Unless somehow they had a ridiculous CPM rate that was more than $300,000. Another way, if you do, to run the numbers here. I don't see any way they made their money back. It's reported they spent anywhere between $100 to $125 million on the game. The $115 million is what seems to be reported the most. The cost to produce this event on site and then think about CDN costs, all the back end stuff. The production cost combined is around $10 million.
Speaker 3:I'm not going to break down how I know that number so let's say they paid $115, add a $10 million production cost. You're at $125 million for this game. Let's say you made $25 million in advertising All right, you're still at $100 million loss. Now at $6 to sign up, even though they're saying this isn't a pay-per-view game, for many people it felt like pay-per-view, because they only wanted to see the game. How many subs do you have to get to make that?
Speaker 2:up, that's a huge number, huge number.
Speaker 3:So now you have to figure out how many subscribers you have to get at that price point, just to make, just to break even. So you have to sign up about 16 and a half million, 17 million people at $6. And if you get that many, well then you made your money back, even if they all turn off.
Speaker 1:But we knew Peacock had 30 million subscribers, paid subscribers the last time, so the odds that they're going to do 50% just for a single event of their total existing subscriber base. It's pretty low.
Speaker 3:And they did give out a number of just over 16 million concurrent devices. We're using Peacock streaming, so we see the numbers here. Now you have to project further though. Okay, let's say they sign up five or six million subscribers, but let's say they keep a percentage of those subscribers for the whole rest of the year If they do, each subscribers now worth $72 for the year. So could you make that money back? You potentially could. So we're going to know more from Q1 numbers which, keep in mind, we're not going to get from Comcast until Q2. So we're not going to know until about May, because the numbers we get from Comcast in the next couple of weeks are going to be for Q4. This game was Q1.
Speaker 3:Interesting A lot of variables here, A lot of variables, but from what the NFL said, there was an interesting media only call just before the game with NBC Sports and NFL and what NFL said is you know, we're going to look at a lot of different ways to measure success from this. Viewership will be one of it, but we do want this to continue. We're not going to hear from NBC Sports or Peacock, but it will be very interesting to see just what they go back to the NFL for if they want another one of these games and what they want to bid, Because I'm guessing they're going to go back and say listen, this was a great trial. We had a better understanding of what consumers want to do, but at $110 million we can't make money.
Speaker 3:So does that price come down? And if it doesn't come down substantially, to where they can make money? If they do, then we're going to see more games that happen like this. So to wrap this up, mark, I think this is terrible for fans. Personally, I think it's horrible. We basically are paying for the same piece of content multiple times because if I'm a pay TV subscriber, I am already paying for NBC. I Expect to get all the games because I'm paying for that channel. All of a sudden, now one of the games gets pulled off NBC. Well, it was technically never on NBC. That's something else we found out. Peacock came out and said well, this wasn't part of our Package with the NFL. This came up as a separate item and it was bid on by Peacock only Thought that was interesting just for Peacock. But you know how many consumers know how any of this works? None of them. Yeah, all right, so they expect to get the game because already paying for pay TV and then one game is not on the channel.
Speaker 1:Exactly exactly so confusing and frustrating.
Speaker 3:Yeah, yes, and I saw a lot of comments online from people who are saying Whether Peacock thinks this is a pay-per-view game or not. I Already have four or five subscriptions in my family, I'm not looking at another exactly, which we know is an issue, it is pay-per-view.
Speaker 1:Yeah, it's pay-per-view.
Speaker 3:Yeah, exactly now Peacock keeps coming out saying listen, this is not pay-per-view, it's not. Don't think of it that way, because this is all the other content you get for six dollars a month now.
Speaker 3:Yeah, sure sure, but the issue is, this is not how you think of it. This is how your consumers think of it, so I think they're just out of touch in in that regard. Let's move on to a couple other pieces of news here and then we'll wrap up. Mark so interesting one on the content delivery side of the house. So the deal has been announced that the quilt has pushed out. Now I am probably gonna get this pronunciation wrong, especially considering this is the company from Latam, so I'm gonna pronounce it as Siran C-i-r-i-o-n. I looked up online, mark, how to pronounce this before the podcast. I couldn't find a video. Yeah.
Speaker 1:I don't, I don't know them, and so I can't help.
Speaker 3:The, the executives, online when they were pronouncing it. The problem is they were all yeah, so help me.
Speaker 2:No, help there, yeah and I'm still learning English, so foreign languages.
Speaker 3:No, it's not my thing. So Siran from saying that, right technologies and quilt announced a partnership which is gonna expand quilts ecosystem of service providers to bring content delivery, better content delivery, into Latin America. Now For who? Siran is right there. One of the few and Latin America networks that are present in 20 countries. In Latam they're one of the few subsea network providers. They operate amongst one of the most interconnected data center platforms in Latin America. They own 18 data centers. I looked up sizes of their network so they're a long haul and metro network combined comprises more than 31,000 miles and they've got over 22,000 miles of subsea network. Their total CDN capacity today that they list on their website is 13 terabits. Wow, this would naturally expand with yeah, quilt deal. So some context here. The way this is gonna work is Quilt is gonna take over the former Loomers Lumen CDN pop infrastructure and they're gonna run their edge caching software and cloud services Across what used to be the Lumen CDN footprint. Interesting.
Speaker 1:It. That was sold to sit Siran.
Speaker 3:So it's a great deal for Quilt because they're gonna get full Latin American CDN coverage through Siran's infrastructure and peering, and then Siran's gonna get quilt CDN tech. So this is a win-win deal here for sure. Now, what is the size and scale? Quilt's not talking about that yet, which is something we really want to know. Then roll out how long it's gonna take, right, we're gonna have to wait to hear that Lumen sold all this infrastructure, including its network peering hardware, to Siran in 2022. So so interesting to see how some of that is now being repurposed. Quilt is going to place its software and services on that hardware. So this isn't Quilt now having to deploy hardware inside Saran's infrastructure. It's already there, yeah, and then those. It's already there, and then they'll sell it jointly together to customers.
Speaker 1:Are you able to comment down on what Quilt's footprint is?
Speaker 3:I don't know from a terabits standpoint. It's not a number they've ever released. I have asked them multiple times. It's not a number they're giving out. I have heard numbers from others, but I won't put it out because I don't know if it's accurate. I think you also have to break out when you're talking about numbers. You know network numbers, people, companies are always interesting.
Speaker 2:You know it's our network is our size and it's like, yeah, but that's not completely turned up.
Speaker 1:Yeah, that's right, that's theoretical capacity.
Speaker 3:What's the capacity you have today? I remember that from the dot com, days even at Google. They talked about the size of the network and I was like, well, our network is not that big.
Speaker 3:So I don't honestly know. They haven't put out any information on that today. Another piece of news is Lumen was one of those five or six CDNs I highlighted during the PECOC game they were using. Lumen was continuing to operate its network up until that game. Now being told by multiple ISPs that Lumen has shut down their CDN, so we knew that was coming. Lumen is playing some funny games with their wording and telling me no no no, we're not getting out of the CDN business.
Speaker 3:You sold almost 100 copies. You've told your customers hey, this is our last hurrah.
Speaker 2:Yeah, you're shutting it down.
Speaker 3:But some ISPs connected to them have already reached out another one this morning to me saying, hey, they shut this down with us. So Lumen will soon officially be out of the CDN business completely. But the quilt deal here this is an interesting one, and the reason I highlight this two mark is LATAM is an interesting segment of the market because five, six years ago LATAM was supposed to be the next hotspot and you saw companies do large investment into that. And then you went and you looked at where traffic was coming from and the vast majority of traffic in LATAM was still going through the peering location of Miami. That was the reality of it. A lot of that has changed since then, and while India is the new hotspot, really as a cricket and the way some of the mobile phone planes have changed there.
Speaker 3:There's a lot of opportunity in LATAM.
Speaker 1:Yeah, I see it, and same with India, which you just called out those two markets. It feels like I don't know if it's exactly true, but it feels like they're the only growth markets right now. When you look across what's happening in the industry from a vendor perspective, I'm talking but there's investment, there's expansion. It's very interesting what's being built out.
Speaker 1:It's slow but it's happening.
Speaker 1:And I would also say that there's an increasing sophistication.
Speaker 1:And it's not to suggest that I don't like talking about first tier, second tier, third tier markets or that sort of thing, but there was a reality and there is a reality that some markets lag, whether it's technology adoptions, and a lot of it comes down to their investment capability.
Speaker 1:If you can't spend the money it takes to adopt the latest codecs and all the compute requirements that go with that et cetera, well you're not going to do it. So it's not because they don't want to, they can't afford it. But I'm seeing in those markets a pretty rapid increase in their sophistication and in some of those markets and I'm suddenly jumping to codecs but suddenly AV1 is really viable and people are investing in AV1 in India, in the US, there's major companies that are sort of skipping AV1 at this point. So it's fascinating and again, not to get someone's going to write in well, and there's all these reasons and yes, yes, I know I'm mixing points that's more than just there's money in India and there's not money in the US. That's not my point, but it's a use case, exactly exactly.
Speaker 3:We're going to talk about that from a regional standpoint to market, to any exchange summit oh, that's awesome. Yeah, that's really good. Right, I've already started lining up Speaker's, moderators. I announced our first, I think, a dozen sponsors. There's another dozen I'll announce next week. So the show is really ramping up now. I've got some great stuff lined up Many hot stars going to come do a technical presentation of supporting cricket. Right, there's your international, but there's some other international ones that are super interesting as well.
Speaker 3:Some from that time. So I'm really interested just to hear the conversations. This year, also, with the AI track right, we're going to see some AI demos, which will be interesting. And also, if we think about where the industry was a year ago, it just sports was a little bit different than it is today.
Speaker 3:So much has happened in one year from last April till when we get to this show, a lot has happened. Also just how the industry has reset in terms of CapEx and OPEX costs and what some of the companies are doing in their debt. That has changed things. So I'm excited for April. Now that I'm past all the Peacock stuff and I've been recording a lot of other podcasts here and there, I'm really buckling down now and working on the streaming summit program. So if you're interested in speaking and you're listening, you better reach out. Stuff is filling up really quickly, which is good. And then, mark, let's just go in the last piece here, just so we can mention it.
Speaker 3:Net neutrality is back on the agenda here in the US because submissions to the FCC's proposed plan to reclassify broadband is title two closed this week. So by the time you're listening to this, it's closed. So you've got the NCTA, which is the cable operators group, the internet television association, right. They're arguing against all kinds of things around blocking, throttling, prioritizing traffic. The bottom line here is this is a thousand percent political. This is all about politics here, but what's really got confusing is the NCTA in particular is saying that the FCC's plan to reimpose net neutrality and they're right it would undermine Biden's administration's own efforts under the internet for all plan, which has to do with US federal funding.
Speaker 3:But keep in mind too that individual states, remember, have announced their own rules. So now this is confusing because it's some of the folks here also calling on regulators to prevent individual states from going beyond their own rules and not applying that neutrality rules to interconnections between broadband service providers and streamers. So it is absolutely messy what is being talked about here. So I think, mark, far messier than when this topic first came up, you've got the NCT also saying well, you should provide exceptions for network management, zero rating. You know, frankly, I'm getting tired of just reading it. So hence why I haven't done too much on it or done any blog posts and I don't plan to, in case it in less anything really breaks. But I bring it up just because people should keep an eye on it and know that something may happen where we get back into this entire net neutrality mess again, which would be a real shame.
Speaker 3:And then finally, mark couple executives on the move. Duzone has hired Walker Jacobs. He's going to be their new Chief Global Revenue Officer and President of the US business so big hire for them. Amc Networks has hired Stephanie Michko. She is now the company's Executive Vice President for Global Media Operations and Technology. Tubi has also hired Courtney Sanchez as their Chief Strategy Officer, so CSO. And then finally, this one popped up on LinkedIn we were talking about it before. Mcalter is from CalTorra is leaving after 17 years co-founder of the company. Pretty incredible. Just to be in any one industry for 17 years is pretty wild, but to be at one company for 17 years, that's for sure.
Speaker 3:Wow, like that's pretty wild. That's a long time, so wish her good luck in her next endeavor.
Speaker 1:Absolutely.
Speaker 3:And I'll also just say look, forget CalTorra's stock price. I've dealt with CalTorra for 15 years probably, and the one thing that's always impressed me about her and the rest of the team there is the professionalism. Caltorra has never been in the news for anything of not treating employees well, or everyone can argue about business models and go-to-market strategy. Should have done this, could have done that. My point is that it's a professional organization and it has been, and it starts with the people. She's partly responsible for that as part of the management team from day one. So wish her well, wish her good luck in what she's doing. She does have some information on LinkedIn of some things she's tied to on the software side, which is tied to completely different industries. It's actually tied to healthcare. I don't know if that'll be the full-on venture, but you can read more on her LinkedIn post, where she did a long post talking about leaving the company. But yeah, 17 years, yeah, that's a long time.
Speaker 1:That is.
Speaker 3:Yeah for sure. So, mark, that's what we've got this week. We've got Netflix earnings, so we'll be covering that. Who knows if we'll get anything good. We may not, but we've got some earnings next week that we'll go through. In the meantime, anyone has any questions? Reach out to Mark and I. Everything we talked about is already up on my blog Sorry, on LinkedIn so you can go see everything there. If you have any questions anytime, reach out to Mark and I. We're happy to hear whatever you want to hear about. We hope everyone's doing well in the new year. The amount of people still with the cold and flu? Sorry to hear that. There's been a lot of that. It always seems to be in January, but things are ramping up. Industry is back at it, people are busy. There's a lot going on. Our HCES is now over, so hopefully everyone can get back in the routine. But if you have any questions, reach out to Mark and I. We appreciate you all listening and we'll talk to you next week. Have a great week.
Speaker 2: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.