Speaker 1 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 2 0:22

Welcome to the Dan Rayburn Podcast . I am Dan Rayburn , co-host Mark Donegan . We are recording Friday , october 4th . Mark , it's been about 10 days , yes , so we had a little bit of a break there between the last episode . And what do we have this week ?

Speaker 2 0:37

This week we're going to have some things to discuss around Echo Star selling plans to sell Dish to DirecTV us around echo star selling the plans to sell dish to direct tv . We've got some talk about netflix ad tier again , which we're gonna have to debunk . Some skydance news with nfl . Uh , diamond sports group doing some stuff with the chapter 11 . There . We've got some numbers from amazon around the thursday night football game with Cowboys and Giants Interesting I don't know if fight is the right word a business dispute let's keep it a little friendly between Paramount Global who dropped Nielsen , so we'll talk about that . We've also got some information here about Amazon and their ad business . They actually gave out some numbers , mark , at a recent event , so that was interesting , high level , but there's still some numbers we're going to go through that as well .

Speaker 3 1:29

Yeah , that'll be good .

Speaker 2 1:30

That's important . Disney's crack down on password sharing , which , okay , that was a week ago , so that seems like months ago at this point . Yeah , some NBC News , some CNN launching a paywall . Amazon was found to be infringing on two patents pertaining P2P delivery Dating back to the early 2000s some old ones there . And then also Quilt and Comcast interesting deal there . So we've got a lot to cover . Let's get into thanking our two podcast sponsors this week .

Speaker 2 2:03

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Speaker 2 2:52

So , mark , let's jump into the first piece of news here . I don't think there's too much to break down because there's a lot of unknowns . But Echo Star plans to sell Dish to DirecTV . If anybody wants to know how that deal is going to work , I suggest you just look up the press release , instead of Mark and I explaining it . It's being bought for a dollar , but then AT&T shares being bought out , but then it's money's being raised and there's bondholders , and these deals are always very complex . So just best thing is go read all the information that's been put out directly from the companies .

Speaker 2 3:29

I'd say the two key takeaways here . Mark , for us , if these two companies combine , you're going to have two different streaming services Sling TV and Direct TV Stream . Sling TV has about 2 million subscribers by last count that we know end of Q2 of this year . Mtv has about 2 million subscribers by last count that we know end of Q2 of this year . Directv Stream we don't know exactly how many subs they have . Directv has never said . I will put the estimate at 600,000 subscribers . I won't say where that number comes from , but let's just say I feel comfortable enough to put it out there . So in other words , less than a million , definitely less than a million . Also , if you look at three other sources out there moffitt , if you look at some of the others that put out estimates , they put it between 600 to 700 000 subs for direct tv stream . There you go , so we're in the ballpark here .

Speaker 2 4:15

Yeah , uh , stream . Direct tv streams content lineup is more extensive than slim tv from a linear standpoint , but it's also way more expensive . Direct stream , direct TV stream is the most expensive live linear package in the market Most expensive . Also , stream has an optional hardware component tied to it with the Gemini product line . Sling TV doesn't again optional .

Speaker 2 4:43

So what's going to happen ? It's just too early to know . Regular , the companies involved , think regulators in terms of looking at this . They're hoping for approval in q4 of 2025 , potentially also saying that it could could bleed into 2026 . So we're talking another 18 months . And what are going to be any caveats from the doj or others in terms of what they might have to do with the business or it's just it's so unknown . Yeah , combined they would have about 18 million subscribers as of today though , as of today , sorry , not subscribers 18 million users . Users , yeah , right , is internet users , which would make them the large , largest isp in the us . Obviously satellite there as well . That's , you know , a little bit different , but they would be larger than any other provider in the nation . Yeah , so that's interesting .

Speaker 2 5:44

A A couple of things here that DirecTV CEO called out . So first , interesting Mark , how multiple titles I read here said things like satellite service . Directv buys rival dish . Well , it hasn't bought them . It's made an offer to them but the deal hasn't gone through yet . Yeah , and won't for a long time now . Direct tv ceo . You know he's been very vocal about here's the reason why this makes sense . What he's saying is that by putting these two companies together , they're going to be able to cut better deals with distributors and offer more for lack of a better term a la carte options , skinnier bundles , than other programmers will be able to do . Now I don't know why they think that . I don't know why they think that just because they get larger that they are going to be able to dictate to content owners what they pay .

Speaker 3 6:57

That's never worked like that in the past days of building Voodoo and , and you know , our basic concept was that we were going to get to such scale that we could go . We would have the power to go to the studios and say we're not paying you 70% , you're going to be happy to take 50 . Well , did it ever work out that way ?

Speaker 2 7:20

And the easy answer is no no , and it's funny you bring that up because the quote I'm going to read here is the CEO said quote . First and foremost , with all the competition that's out there today , with the directed consumer apps available across the United States , they can't do what we actually have been trained to do over the last 25 years . Really , You're referencing your business over the last 25 years . Really , You're referencing your business over the last 25 years , and he says they can aggregate a whole slew of content where we are content agnostic , where we actually provide a service that is independent of other businesses within our portfolio .

Speaker 1 7:59

And then he says we believe Right . I know it's irrelevant and here's the thing about the content .

Speaker 2 8:04

He says it'll give us the influence we need to quote kind of change the programmers and these carriage agreements . That's the first thing . And two quote to be able to invest in products and services that are aggregated in a way that the consumers are telling us that they need . I don't know what that means .

Speaker 3 8:25

Pipe dreams Dan . Yeah , it sounds great , I mean , it sounds really good . Now I think it would have been better for him to just come out and say , hey look , if we have 20 million subs combined roughly , instead of whatever the number is , you know roughly , instead of whatever the number is , uh , you know we can get economies of . You know operational , you know benefits , the usual right that would have been , that would have been at least like okay , um yeah .

Speaker 2 8:55

And they called it out , but they didn't highlight that . They keep highlighting the carriage side . I think the reason for that is because , naturally , the DOJ and others , government wise , might say well , here's the problem we're having , they don't care about your saving operational efficiency . Yeah , yeah , yeah , yeah . But let me read another quote here . Okay , so he says , quote the technology that we've developed , the user interface that we've created , allows customers to be able to pick the genre , services or packs that they want , allows them to integrate a couple of apps that they're interested in I think SVOD apps and we wrap a wonderful user interface to allow navigation to be easier , to allow search and recommendations to be easier , and it equally is important it's one bill where we keep their costs down and it's exactly what the consumers are telling us that they want . End quote . Well , your user interface is not why people are not signing up for your service . Your service is crazy expensive . Yeah , you've got the lowest number of streaming subs across two services of any other live streaming service in the market .

Speaker 2 10:04

So now combining them because you have a user interface ? I just I don't understand the argument at all . It's odd to me . So the other thing you have to look at take all that aside . In order to even do this deal afterwards , they still have to have additional capital to actually invest in the business . That's right . So that is something you also have to look at is you know the fact that they would have somebody owning a hundred percent buying out AT&T ? Yeah , okay , that is , that is good . But then they have to get a loan , absolutely . And if you look at the loan , I think it was somewhere around five and a half percent that they're paying , right , but they're going to have a whole bunch of additional debt .

Speaker 2 10:51

Here I don't see the merger of two companies with two very expensive products , businesses that are declining high capex costs and bad balance sheets , all of a sudden changing the dynamics of the go-to-market strategy . Now , mark , to your point . If they were like well , this completely changes our operational costs and it allows us to survive in the market , okay , sign me up . But now you're talking about your user interface is going to be a game-changing way to get content owners to charge you less per sub . It's not reality . Yes , that is true . Yeah , so I see a lot of arguments online too of like , well , it's not going to be , you know , allowed government will allow it . They tried this 10 years ago . Well , keep in mind too . Um , the DOJ , and , and and others are are FTC . They look at mergers very differently . When you're looking at quote distressed assets , now I don't know if this would consider distressed assets on either side , but they also don't want companies to go under . They don't want Chapter 11 .

Speaker 2 11:55

So they are a lot more favorable in those instances .

Speaker 3 12:00

Yeah , yeah . The other point that I would make is you know , there's only at least in the US , well , really anywhere in the world , you distribute content over the air via some sort of a cable , a wire , or you have satellite . So those are the three mechanisms . So you know , those are the three mechanisms , so it would seem like that , these two coming together to say , hey , you know , to survive and to thrive and to service our subscribers , you know , and have satellite as an option , that delivery mechanism , Because you know , legitimately , there's some places where you don't have cable , yeah Right .

Speaker 3 12:43

You need it . So , yeah , so I'm with you . I mean I , I , I think . I mean it's going to face scrutiny and you know they're going to have to negotiate key points , but uh , I don't , I don't think this will get blocked . But then again , who knows ?

Speaker 2 12:57

Yeah , I'm not going to say either way . Just the point is for people saying , saying well , it didn't work 10 years ago , 12 years ago . It's a different time period , it's a different you can't look at that . So that's what we have there . I mean , we could talk about this all day and debate it .

Speaker 1 13:08

Frankly , it's all opinion over facts , yeah absolutely so .

Speaker 2 13:11

Just just go look at how the deal is structured . Yeah , so we'll see what happens there . Let's move on to a diamond . So diamond sports group notified the court overseeing its bankruptcy proceeding that it plans to remove itself from chapter 11 , you know , really wants to , and one of the ways they're they're saying they're going to do that and hopefully get MLB's approval is they announced that they're going to release all of their major league baseball teams from under contracts , except the Atlanta Braves . Now MLB came out and was like oh wait , we didn't know it was coming and like that's not the way to do it , which I don't understand , cause this is what the MLB wants . Yeah , so 11 teams partner with Bally sports in 2024 . They're going to have to find new broadcasting agreements .

Speaker 2 13:59

If the court approves of this , that they could be out of bankruptcy potentially by the end of the year . Diamond right now is scheduling a confirmation hearing for its reorganization plan in November . If they get MLB's approval for the bankruptcy reorganization plan , it sounds like by the end of the year they could potentially be out . Interesting . Sounds like by the end of the year they could potentially be out interesting . So that would be interesting to see . Okay , there's mlb then create its own direct to consumer streaming service . Yeah , in local markets , because we have seen the ceo of mlb talk about wanting to do that yeah with a certain core set of teams .

Speaker 2 14:36

I think he said he needed 10 to 12 to make it worthwhile , but we also see teams cutting rsn deals all over the place , so it's going to be a mess .

Speaker 3 14:49

Well , it is it is I mean because and and if you're a team and you're sitting here saying , okay , I can't just wait , you know , season after season after season , waiting for all this to get like , I have to kind of pick a path , a path , you know , I either have to build my own service , I have to , you know , cut my own deals , and so , and in , many cases you're going to have to , even if you look at .

Speaker 2 15:14

Okay , so here , new york mets fan .

Speaker 2 15:17

I'm recording this october 4th , so obviously anyone who watched the game last night against the brewers and the Mets fans , congrats Insanity . But that aside , sny is not carried on either Fubo or Sling TV . Yeah Right , so if you want to watch it Not surprising , you see ? Oh , and it's not . I don't think it's on YouTube either , but it's in Hulu .

Speaker 2 15:38

So because it's also unknown of when a particular station like sny is going to come off of an ott live linear service , I'm not surprised that teams are now saying , well , if we just build our own and go direct , we can guarantee consumers can always get it in market , yeah , or out of market , hopefully . In market , sure . So we're going to see more coming there . In terms of teams , um , what I would just say securing their future instead of relying on third-party platforms . Yeah , that's right . And come on , this is baseball . We're not getting 10 , 12 , 15 million people watching on any given night . Yeah , at all . I mean , people would be shocked if they knew how low the numbers are for MLBTV . This isn't football , so not that hard to do .

Speaker 1 16:27

And speaking of , football .

Speaker 2 16:28

Let's go into some numbers here from Amazon . So they said the Thursday night game between the Cowboys and Giants averaged 16.22 million viewers , peaked at 18.1 million , so it's the most streamed NFL regular season game in history . Keep in mind again . I hate that I have to put a caveat every time I talk about this because nielsen yeah , the data comes from nielsen's panel only . Measurement , yeah , and the qualification is based on nielsen's live plus sd panel only . So nielsen's not providing additional details on what's measured , what is in auto playing on devices . We don't have any details there . Going into more nielsen information here . So paramount global has dropped nielsen , which was its main viewer measurement currency and they say due to soaring pricing demands . Now what's interesting in mark is they actually gave out more details here publicly . So nielsen says quote . Uh , so this is sorry . This is paramount global saying quote . Nielsen says quote . So this is sorry . This is Paramount Global saying quote .

Speaker 2 17:27

Nielsen has severed our longstanding measurement partnership with its unacceptable demands , including substantial price increases that are inconsistent with the realities of a changing industry . We have spent the last few years preparing for a multi-currency future and creating the operational infrastructure to move beyond Nielsen . We are confident in the quality of our alternate currency offering for clients as we continue efforts to reach a new Nielsen agreement with reasonable economic terms . So they have a deal now with VideoAmp . For the last four months they've been ramping up that effort because they had a feeling , well , nielsen might go away here . Yeah , now they're still trying to work a deal with Nielsen . Nielsen came out and said oh , we're still , you know , we still want to , you know , do a new deal this is like a carriage dispute right .

Speaker 3 18:16

That's exactly what it is .

Speaker 2 18:19

Now CBS . Cbs when this was CBS and maybe it was CBS , viacom went . Basically their contract Nielsen expired . This was the exact same thing they talked about and 11 days later they came up with a new one . Yeah , so I don't think Nielsen is going to be gone forever here . Yeah , right , I think they're going to come up . But here's what also Nielsen said . Nielsen said , quote Nielsen's costs as a percentage of paramount ad revenue has quintupled over significant parts of our business over the last years . In certain instances this is key part here Nielsen's fees already exceed the total advertising revenue of the network . Being measured , this has led us to conclude that the model as proposed is not workable and that the cost structure requires re-engineering . The business has changed .

Speaker 3 19:15

Yeah .

Speaker 2 19:16

And you have to change your . How do you price , package , productize and bring a service to market or recharge a service based on the dynamics ? And Nielsen I hear this all the time when they're dealing with someone like Paramount prices , as if , like , the business has never changed over the last 10 years .

Speaker 3 19:33

just businesses , oh , over the last 50 years and that's insane .

Speaker 3 19:37

I mean , yeah , because as soon as you go to a CPM model which is , by definition , what all the programmatic advertising , you know that's ultimately how it's how it's billed , how you pay for the the underlying economic model , how it's billed , how you pay for it , the underlying economic model that totally blows a huge hole in how the TV ad business works , where you know it's like advertisers are basically paying these very large negotiated sums during the upfronts and other negotiating periods based on you know some data . Oh , there's this , you know certain number of viewers , whatever , but it's . And you know , yeah , nielsen of course contributes to sort of back up . You know that's why Nielsen is called the currency . You know the currency , the ad business , but but the but , the sad reality is CPMs are fractions and when you have to pay for actual viewership , just like what you're talking about with the mlb , like baseball , like who doesn't love baseball and everybody talks about yeah , a lot of well you know how many ads , you know how many spots go unfilled .

Speaker 3 20:43

It's crazy yeah , I mean , but the point is is what she is . The comment you made is that there's a surprisingly small number of viewership for even some of these big teams . And you know , when you're paying CPM , that means the dollars just aren't there . So now that's Nielsen has to figure that out , right , you know ? And and all the advertising platforms and the measurement you know companies have to have to . You know they have to figure out , okay , how do we make money ? That's their business business . But that is a reality though . In other words , I , I'm basically validating that , that statement , you know , I I don't know if it quintupled five decks , but it doesn't surprise me . It doesn't surprise me that their previous business model absolutely does not work in this programmatic world no , it doesn't surprise me .

Speaker 2 21:32

Also , just full fairness here . They say that the um sprint , that's over significant parts of her business , add revenue , right so ? They're not saying nielsen is charging four times as much . Yeah , just add revenue . But it's an issue um I . I still think it'll be solved there , but yeah , it's fascinating , just to see .

Speaker 2 21:53

Look at Nielsen . Okay , then look at VideoAmp . Nielsen's really dominated the market . Videoamp wanted to come in kind of replace them , but then VideoAmp had all these issues with financing the last round they raised and then they lost their CEO . Well , nielsen's obviously had a lot of issues in terms of financing as well and having to do layoffs . Fascinating , mark , to think that you know , here's one company , nielsen , and if you add in VideoAmp , that truly is the currency of an entire industry that's in , I don't know , tens of billions of dollars , and both of them are having a core problem , having a business with their core problem , almost to the point of where you know . If they didn't fix those financial issues they had , they wouldn't be around .

Speaker 2 22:37

Yeah , so to think that our industry is as big as it is okay , still small compared to broadcast TV . But Nielsen's in the broadcast TV business , yeah , and even those vendors struggle to . I'll say operate efficiently from a balance sheet standpoint . It tells you there's a bigger problem . Yeah , I'll say operate efficiently from a balance sheet standpoint . It tells you there's a bigger problem . Yeah , Just how their business is run . Now you mentioned upfront smart . That's a good lead into , let's talk Amazon here . So we've seen a bunch of news in the last couple of weeks because Amazon has gotten 1.8 billion mitts in the 2020 or 2024 upfront . They're going to bring more ads to prime video in 2025 . Now let's just start , Cause many media didn't get this right . Nobody at Amazon confirmed they got a 1.8 million in the upfronts . This was a number put out by a media site .

Speaker 2 23:25

It came out from the information Okay Right , who says we hear that this is what they ?

Speaker 3 23:29

got .

Speaker 2 23:30

You might be right , you might be , wrong , it's a rumor right is what they got here . You might be right , you might be wrong . It's a rumor , right , but no one says this is a rumor . They're just saying , after snagging 1.8 billion , uh , it should say you know , it's reported that , so again , not getting it right now . What we do know is amazon's ad exec , kelly day was , was just at a conference in the uk talking about how there's going to be an increasing number of ad slots for branders in 2025 . So they were talking at this London upfront event and she basically said that Disney's advertising load would quote ramp up a little bit more in 2025 . Quote ramp up a little bit more in 2025 . Now , what I don't know , and I haven't been able to get confirmation on this , is an event specifically talking to European advertisers .

Speaker 3 24:23

It's in London . Yeah , that's right Right .

Speaker 2 24:26

So , is she saying that they're going to Is she talking about that region , right , right ? Nobody seems to be asking that or confirming it . So I I don't know that this as the way everyone's reporting it is they're going to add more ads to prime video across the globe . At the same time , they also were quoted as saying quote we have not changed our plans to have meaning meaningfully fewer ads than linear tv and other streaming tv providers , and we evaluate advertising volumes to help ensure we're delivering a great customer experience . So the headlines that all of a sudden , some I've seen is like oh my god , this is now going to be like broadcast tv . Well , they just said it's not okay and ramping up a little bit . Okay , we don't know what a little bit means . Yeah , that that's . That's unknown .

Speaker 2 25:15

Now , she did give out some numbers here , which I thought was interesting . Uh , also , it's advertising loads going to ramp up , but we also have to remember that it's also created a lot of additional content and viewership for something like Thursday night football is up . They're also going to get NBA next year , so naturally you're going to also have more ad slots to sell because you have more content . So that's something to take into account here . Uh . So data that they showed at the event showed that Amazon prime video can reach about 19 million monthly British viewers , so it's about a third of the population and overall it's still sticking with the number which was the last one they gave us , that I had a global ad reach of about 200 million . So that's the average monthly potential viewers that are ad supported prime video . More than half of that's in the U S , so we don't have any additional details there . I thought that the 19 million broken out for British viewers . I thought that was kind of interesting . Also , she mentioned that Prime Video purposely , deliberately , launched with a very light ad look , no ad breaks in the middle of programs . So they wanted to gently enter advertising . And also mentioned that they have not seen any backlash in terms of people canceling because ads have been included . So here's what she specifically said on that . When it comes to anticipated churn cancellations , she said quote it's actually gone much better than even much less than we anticipated . We haven't really seen a ground soil of people churning out or canceling . Now she declined to say how many move to pay more for an ad-free tier , but she did say that it was below the figure estimated by some analysts of 20% . So that was interesting . We actually got a number there of 20 , 20% . So you know we'll see what happens here .

Speaker 2 27:38

Um , there's there's definitely a battle for subscriber growth . When it comes to the ad side , yeah , amazon's increasing overall spending on on content for prime certainly more sports . Um , us elections coming up , so we also know that . You know there was Amazon and Netflix and a couple others also increasing just the amount of inventory available because they started offering ads around the same time and in different countries . So what did we just talk about with Nielsen and others ?

Speaker 2 28:11

The business is changing . When you have an Amazon or Netflix come to the market , to the largest providers out there , you're going to see changes . Now jumping to Netflix ad business Um , you know , I think we hit this home all the just nonstop and I don't know why we still need to . Yeah , so just the amount of people who are still talking about Netflix is ad business failing . Yeah , so just the amount of people who are still talking about Netflix's ad business failing yeah , so I'm not going to name the person here , but you know here's someone who really is rallying on LinkedIn saying Netflix's ad business is not generating the income that they need to make it worthwhile .

Speaker 2 28:46

It's a series of bad decisions . Well , first of all , you don't know how much income they're generating . Second , they said this would take years before it was a substantial part of their business . And also they have outlined how many years it would take to where it counted for a certain percentage of their business . And when it reaches that percentage , you're talking billions of dollars , yeah , yeah . Then they're saying things like the ad business is broken . I hear that all the time . It's not in good shape . What does that mean ? What does that mean ? Right , the rest of their business is in decent shape , but for how long ? So , in other words , you don't know either . You're asking a question , but at the same time , you're saying that it's a bad business .

Speaker 2 29:26

Somebody here I saw on LinkedIn they were talking an event and they said I asked people who has Netflix with ads ? And no one raised their hand in the room . It tells you everything you need to know . Well , how many people were in the room ?

Speaker 3 29:40

Not only that , but you're in a room with industry people , right , right , who's your demographic ? Yeah , I mean , I mean that's like back in the day . You know early , early , early um UHD and you know everybody wants to watch 4k . For who here has a 4k TV ? Right ? And you know a lot of hands go up see this is the trend the consumer is kind of you know , kind of like , ah , you know ah you know , don't need it so the other interesting thing is how many people like me have an ad plan now because I downgraded I .

Speaker 2 30:17

I had the plan where you had 4k and you could share with four other people , whatnot when they cracked down the ad stuff and I couldn't share it anymore . Yeah , you're like I don't know .

Speaker 3 30:24

I went down to the ad tier yeah , right .

Speaker 2 30:27

So there's plenty of people also who didn't necessarily sign up for the ad tier but downgradeded . How many , we don't know . The idea that Netflix's ad business is failing , that it's not in good shape it's factually inaccurate .

Speaker 3 30:45

Well , let's just , you know , you and I love to you know , look at market capitalizations in the context . So you know , I don't know . I think a lot of companies would love to fail up 90% over the last year in their market . Yeah , but that's the stock price .

Speaker 2 30:56

I get what you're saying , but the stock price doesn't necessarily indicate how a business inside the company is doing . Of course , of course . But to your point , you can't be using the word failure when Netflix is cash flow positive of over $6 billion this year , estimated by their own number . Come on , yeah , yeah , correct . And and here's the thing , if Netflix , from day one with advertising , had said hey , this is going to be a $10 billion business in a year and they didn't make it .

Speaker 2 31:26

Okay , you could say , hey , these guys haven't made their numbers , they haven't made traction . We see them getting traction . They're bringing their ad tech in house . Right , we know how many , what percentage of new subs are signing for ad tier in regions it's offered ? Yeah , we know about what the business will be in a couple of years . Like so far , they're not missing any of the numbers they've given out . Correct , and that's a fact .

Speaker 3 31:49

Yeah .

Speaker 2 31:50

Now one more thing on netflix here . So , without going into politics , reed hastings endorsed kamala harris and did some sort of uh donation I don't know if it was heard or some fund or whatnot .

Speaker 2 32:02

So as a result , according to antenna , yeah you know they're saying that netflix had its worst day of cancellations that day , or its worst few days . So the media wrote netflix cancellation surge . Netflix saw dramatic spike in cancellations . Streaming service lost millions of subscribers . Based on what antenna data ? That's an estimate . Also , if you looked at antenna's data , you know what they actually put out mark they say netflix churn increased by one percent . Do we know one percent equals millions of subscribers ? No , and dramatic spike , that's not a number . Surge , that's not a number . So it was incredible how many stories I saw written about that and the impact to the company and everybody's canceling . And they're sharing it on Twitter .

Speaker 1 32:51

Okay , just wait till their earnings .

Speaker 2 32:53

Yeah , exactly , yeah , disney , let's go to them cracking down a password sharing . Uh , they did announce . You know this was good . They announced how to work when traveling . So you can add a , uh , one additional user to your plan at six 99 a month . So one extra member slot , as it's $6.99 a month . So one extra member slot , as they call it , is available per account . But you can't add another member if you have a Disney bundle Not today . And also , you can't if you're billed through a third party . So interesting , mark , we're always talking about the video workflow . What's the limitation here ? Well , it's not ingestion or coding or metadata or anything else . It's the payment processing and the bundling on the backend account creation , uh , how you build through that when you're being billed through a third party .

Speaker 3 33:39

It's not the video .

Speaker 2 33:40

Yeah , exactly . Now , if you want to use your account while traveling , you must select away from home when you get a message on screen saying this TV doesn't seem to be part of the household for this account . Now , we don't know if you're going to get that every time . They wouldn't clarify that for me . So , like , if you just do it once , do they leave you alone ? Yeah , we'll find out . Yeah , um , when you do get that code , it's going to require a one-time passcode sent to the email address associated with the account . Okay , what's interesting there is . Well , then , nothing stops me from just giving you what that code is so you can get on . Yeah , exactly , it doesn't stop anything .

Speaker 3 34:19

So , but I text you and say hey , dan watch something watch your text .

Speaker 2 34:27

But I'm also wondering , without saying it , like , if you do that more than a few times , is it kind of like you got to get your own account , like I don't know ? Yeah , yeah , so I couldn't get any of those questions answered . So we're going to find out soon enough , when people start doing that , yeah , but keep an eye on that one also , we're going to have to really watch . I would say , well , we're just hitting October now , right , so really , q4 mark of how might this change ? Disney plus subscribers and the number going up if more people are adding . But keep in mind again , this is only going to be for those that aren't in a bundle , and I don't remember what percentage are not in a bundle . So we'll see , we'll see the numbers from Q4 , but we're not going to see those , of course , until next year . Yeah , that's right .

Speaker 2 35:15

A couple more things here . Nbcu and Charter have added Peacock to the list of free DTC services available for Spectrum TV Select customers , so this follows similar deals Charter's done with Max , espn+ , disney+ , paramount+ , amc+ , bet+ . It's pretty incredible . It's almost now $70 worth of free to direct-to-consumer services . Wow , yeah , that you get . Now , of course , charter's paying for all this . Yeah , and now they're paying a wholesale rate . Sure , but think about that . Even if the wholesale rate is 50% off what we pay , charter's footing the bill of $30 a month for every person just to keep them on pay TV .

Speaker 3 36:05

Wow , yeah , wow , that's a big deal .

Speaker 2 36:10

Well , yes , how's that sustainable ? But also that sustainable . Well , yes , how's that sustainable . But also , why are we not making a bigger issue of this in the market ? Yeah , yeah , I mean , think about that . Pay tv doesn't want you to leave for streaming services and they're going to include it . Okay , that might stop cord cutting , yeah , but that's also going to absolutely ripple your art poop , I mean , sorry , your profitability . Yeah , yeah , so super curious to see how that works . The other thing we don't know here is are these wholesale deals only for those that activate the direct-to-consumer streaming service with Charter ? So I don't think Charter's . If only 5% of their audience uses amc plus , I don't think they're paying for the other 95 that aren't . I don't have guarantee on that , yeah , but I can't imagine they would be . So , yeah , reality , it may not be 30 per user , it might be an average of 15 per x number , but still it's . It's the idea here of what's happening . It's a big deal , yeah yeah , yeah .

Speaker 2 37:19

CNN has launched a digital paywall , so they're going to charge . This is an odd one with CNN , so they're going to charge . Quote some users okay , to read articles for the first time . Then they say an average visitor to CNN's website who may only read a few articles a month will not be prompted to pay . Who may only read a few articles a month will not be prompted to pay . Only after users consume a certain number of free articles will they be prompted to subscribe to $4 a month . So what is a certain number ? I asked , and I was told we don't have a number to provide . Yeah , yeah , so I don't think , frankly , it's going to be set in stone .

Speaker 3 38:00

My guess is they may adjust this number over time based on how well this works . Yeah , yeah , but how ? How is how ? Is this really that much different ? From as long as I log in , I get three free articles a month or something . You know all these sites now , and it's not three , I think it's two or you know as sometimes it one , but it's not like you can't for most of them . Anyway , you can't view a free article , and if you really want to take the time , you just set up a whole bunch of email addresses and just you know you could , you , could , I think what's even easier is and I've seen this over the last couple of years Maybe I'm different just because of the news that I read , and it's mostly tied to business .

Speaker 2 38:35

Whenever I see an article that's behind a paywall , the first thing I do is just Google that article , because another site that's free has already recapped what the site that's paid said . Like I've never had to pay because , like , oh my God , I have to read that article . It's an exclusive . Yeah , so I don't understand that . Now again , maybe that's because I'm an industry person reading about industry news , yeah , sure I'm not the average consumer . Yeah , but that's what cnn is is doing . We'll see if we get any numbers from them down the line .

Speaker 3 39:06

Well , I I mean , look , you know they're also trying to solve this issue of you know , when I can't charge these large networks , um , you know they're also trying to solve this issue of you know , when I can't charge these large networks . You know these big licensing fees , how do I monetize ? You know how do , how do .

Speaker 2 39:21

I , yeah , and frankly I think news is the hardest to monetize because there's so many places we go for news news , exactly , exactly the younger audience , of course , to imagine a younger audience member paying four dollars for news . They'd be like what do you mean ? News costs money . What's wrong ?

Speaker 3 39:34

yeah , that's not exactly yeah what that's not doesn't charge for news .

Speaker 2 39:38

What ?

Speaker 3 39:38

are you talking about what's ?

Speaker 2 39:40

cnn .

Speaker 3 39:40

They probably don't even know what cnn is yeah , yeah , no , no , they know it is that's .

Speaker 2 39:44

That's the channel my dad watches or something you know like , or my mom you know it's like yeah , good , good point . So let's talk infrastructure here two pieces . So there was a ruling by a Delaware jury last week that AWS is infringed on two patents pertaining to delivery and they're awarding the patent holder $30.5 million in damages . Uh , however , uh , the court's final judgment is doing the case soon because , uh , amazon was found to have infringed on the patents willingly , which can result in higher damages , up to three times what was originally given out . So I don't know if this goes up to over $90 million . So the two patents that they say AWS's cloud front violated were originally developed by Boeing , which was interesting now owned by a company called Acceleration Bay , which is just a patent troll .

Speaker 2 40:42

Yeah , what was I thought very interesting was in the court . You know , amazon's argument was they have authorization from Boeing to use the patents and then its technology is different from the patents . Well , okay , if you want to argue the technology is different , hey , I totally get it . Yeah , yeah , but saying you have permission to use it from Boeing , they don't know the patents anymore . Yeah , I didn't understand that approach .

Speaker 2 41:11

So I'm assuming something else went on there in the court proceeding for them to make that argument . Maybe it was hey , even if someone acquires these patents , you still have the rights to it , but I don't think that would work . Yeah , so I thought that was really odd . I don't know all the details around it . Now , interesting , with these two patents and they're from the early 2000s , no-transcript They've either been very successful or not successful at all . And also , on the Amazon side , even though it was called , cloudfront was called out in the damage filing by the jury , I should say the ruling it actually , from looking at the court records , looked like it only pertained to what Amazon is doing with gaming .

Speaker 3 42:10

Oh , interesting .

Speaker 2 42:11

Yeah , okay , because look also who they went through activision blizzard yeah , that's right take to interact .

Speaker 2 42:16

Yeah , it actually was tied to gaming yeah , yeah so we'll see what happens there . I mean , frankly , look , let's just say amazon doesn't dispute it . Now amazon , so far I haven't seen a counter filing of any kind , so I don't know what they plan to do . But if they get out of this having to owe 30 million and it's not raised , that's not bad , considering some of these patent damages are in the hundreds of millions or billions of dollars . That's my take . Of course it's not my 30.5 million .

Speaker 3 42:45

Exactly .

Speaker 2 42:47

And then finally here let's go through another infrastructure Interesting here . So so Quilt has announced a deal with Comcast , which is pretty interesting here . So Comcast is going to deploy Quilt's open caching platform on its own hardware . They gave me some more information , which was nice . I appreciate that . So this is going to be at hundreds of locations in Comcast network over the course of the rollout . The first locations are going live in the next one to two months . So this is coming up .

Speaker 2 43:20

The companies neither are disclosing the capacity Comcast will deploy within their network or the percentage of total video traffic that Quilt's open edge platform will deliver across Comcast network . So we don't know the size and scale . But you're talking hundreds of locations , yeah , so it's not small . What is interesting here is Quilt gave me some numbers that , with the addition of Comcast to Quilt's federated CDN strategy , so other ISPs that have deployed Quilt's open caching platform , quilt says that their total on-net coverage of US broadband households will be at 55% by the end of the year . Wow . So that's real interesting because previously the federated CDM models that we saw tried by Ericsson with UDN Gravity , many , many , many years ago , they never got enough coverage that it mattered Mm-hmm , and we saw previous ones before that ago is they never got enough coverage that it mattered , and we saw previous ones before that . But you have to have enough coverage in a particular region .

Speaker 2 44:25

So maybe you need to maybe you need Dan really quick to give a 30 second primer on federated CDN . Sure , so federated CDN is the idea that you're going to go out and you're going to deploy your software inside ISPs multiple ISPs in a particular region , using the ISPs hardware and infrastructure , and then a content owner can come directly to a quilt and say okay , I want to give you X percentage of my total video traffic . You're going to push that out amongst all the different ISPs that your platform's already installed in . And that's never worked historically . And when I say never worked , I mean in terms of any company getting vendor getting a large percentage of the total bits delivered in a multi-CDN strategy , because most of the federated CDNs never had any actual coverage .

Speaker 3 45:13

They didn't have the coverage Exactly and yeah , and that's why you're pointing out that this 55% number is significant .

Speaker 2 45:21

It is Now . We don't know capacity , and so what ?

Speaker 3 45:24

I say all the time is Understand , yeah , right Details , right If .

Speaker 2 45:28

I put a million servers in my house . I have more servers than Akamai . Well , I don't have the capacity they have or the reach or the distribution , just servers . So it's like talking about capacity without performance . Right , you have to have both .

Speaker 2 45:40

Yeah , so interesting though that Quilt's going to have full regional coverage in the US , so that's very interesting . It definitely distinguishes its operation and business model as a result because it's on that coverage . But the interesting thing really for me here is the handoffs . They're not paying for power . It's a huge hit that the balance sheet is not taking .

Speaker 2 46:21

So interesting because Quilt started as really a point solution selling to ISPs and they've transitioned to becoming its own federated CDN selling delivery across multiple ISPNs directly . So it's starting to compete more with traditional CDN providers like Akamai , fastlane , egeo and it's using its federated model to get a right . Now , from what I see , a small percentage of traffic from customers who are using a multi-CDN approach . But the question is , how much more can they grow that with adding Comcast , because Comcast is the one you really need to have to get the coverage and it bumps their number up above 50% coverage in US broadband households . So interesting . I've also seen Quilt more in the mix for live event traffic from Prime Video and Peacock . Now they don't talk about these customers because they can't but we can see it .

Speaker 2 47:15

So that's interesting . Then the final piece is you know , in a federated CDM model Quilt shares revenue with ISPs , as they will do in the Comcast deal . So since the ISP is providing the hardware , you know , quilt can add capacity to their federated on that model to a fraction of the cost to competitors . It's not spending money on CapEx , on edge infrastructure .

Speaker 3 47:40

Yeah , that's right .

Speaker 2 47:41

So very interesting the way this is going to work Now . At the same time , of course , comcast's press release was ridiculous . You know we're creating the most distributed content delivery network in the US , yeah , well , with what capacity ? Because you're not going to have the capacity of Akamai , yeah , and you're not going to have the capacity of CloudFront . So , again , distributed without capacity or quality . That is only one way to measure it , that's right . So you know that's very important here . Distribution and capacity go hand in hand . Now I do think we're going to get some more details here over time , mark . I think we're going to get some more numbers . Comcast seems to be talking about this publicly a little bit more than they have previous deals that they've announced in partnership . So I'm hoping to get both companies to talk actual numbers at the NAV show next year by then . It's already deployed , it's already out . You got customers running on it , yeah , so , uh , we'll see . That's the goal , though . I'm hoping for that . So that's what we got this week . Uh , thanks again to our sponsors for this week IDS , integrated-digitalcom and Netskirt , netskirtio .

Speaker 2 48:54

Mark and I will be back next week . We've got . Let's see , mark , we've got another two weeks before . We'll take a week break while I travel . But we've got Netflix earnings in the next two weeks and then later this month we actually have quite a few earnings . We've got Verizon , we've got Meta . We've got Verizon , we've got Meta , we've got Comcast . We've got about another six to eight companies that have announced earnings dates as of yet Sorry , or so far and we have a bunch who haven't as of yet . But pretty soon we're going to have earnings and I think the Netflix ones will be most interesting . Also , mark , just last week's podcast where we talked about what was happening at IBC the encoding stuff , the stuff with , just you know , nvidia NetIn I got a lot of good feedback from people just saying it was real interesting . You know I wasn't there . I didn't realize that's a lot of what was being focused on was building not just encoding but video pipelines you know , on edge compute amongst cloud and CDM vendors super interesting side of that .

Speaker 2 49:53

So , uh , mark and I are going to be focusing on one of the two topics . Like that , bring some more hopefully , just you know intelligence to the market or what's being worked on . Because , man , if , if I could talk on the podcast , mark of you know all the conversations I have every day with companies and what they're doing , this podcast would be a lot more exciting than it is , because I'd have all these numbers to give out that people don't know Right , but , of course , 99% of everything's always off the record , exactly , yeah .

Speaker 3 50:23

But the stuff at .

Speaker 2 50:24

IBC . They're out there , it's public . Here's what they're doing . Yeah , so there'll be more of that coming up , and then , before you know it , we're going to be at the NAB show already . Oh , it's amazing . Yeah , holiday will be over . We'll be in January and NAB will be four weeks away .

Speaker 3 50:39

And you're going to be saying hey , if anybody wants to speak , get your submission in . I'm going to open it November 1st . Yeah , Amazing .

Speaker 2 50:46

I've got to open it up earlier this year . I already have companies reaching out asking to save spots and they're already lining up customers and , yeah , I'm super excited for next year . I'm also frankly , just it's going to be even more work than last year was um which .

Speaker 2 51:05

I don't mind , look , I'll take work all day . But it's just logistically , there's so much to do and there's so much that's out of your control when you're in a venue . Yeah , yeah , that's . That's always the downside to running the show . Business is your show . You're set up and prepared , but you've got to prepare for you know what's don't , don't , don't forget your door stoppers .

Speaker 3 51:21

Well , Mark , I have new door stoppers .

Speaker 2 51:22

Oh , you do , okay , ready for this . So we'll let listeners in early .

Speaker 3 51:26

Yeah , yeah , listen , yeah . Listeners who don't know what we're talking about are like what the heck ? This is how fanatical .

Speaker 2 51:31

I get with the NAB Show Streaming Summit . If you're paying money , I take that personally . When you're paying money to come to my event , the NAB's event , I'm going to try and execute it as perfectly as I can . One of the things I absolutely despise at any conference you go to is how the door always slams in the middle of a conference . Someone has to get out , make a phone call . I get it , but for some reason people don't know . Most cases it's just like hold the door as you leave . It makes so much noise . And some conference venues have this dumb , still old school , you know high school type school door where you have to pram it like push it , whatever those push doors .

Speaker 3 52:07

Yeah , it makes so much noise .

Speaker 2 52:09

So this year I asked the convention center to give me the actual dimensions of the door and the width , and they were like what , the width of the door ? Right , yeah , give me the width of the door . Come on , this isn't hard , just go measure it . And I actually found these silicone door stoppers that you put like on the door so that even when the door closes , it won't fully close and it'll make no noise . So if I can get rid of the noise of the doors closing this year , I'll be super happy . But there's like 20 things like that this year that I want to improve on to make the experiences as perfect as I possibly can . Yeah , with everything that's in my control , some there is in the venue . So we already have a long list . We're ready to go . We've already had some operational meetings , we've already had some AV meetings , so I'm super excited , yeah .

Speaker 2 52:55

So , November 1st for those listening , sponsorship Kit will come out . Call for Speakers will come out . If you have any ideas , get to me now , because come November , december , a lot of proposals will start coming in . Yeah , that includes you , mark . Yep , I know I .

Speaker 3 53:08

That includes you , mark Yep , I know .

Speaker 2 53:09

I know . You're looking at me going , hey if you want to talk , you better put something in , that's right .

Speaker 3 53:14

I don't get a cut the line . No , I can tell the listeners that , 100% . Dan , does not let me cut the line . No , this is all about the content .

Speaker 2 53:23

It's about people who pay . You got to give them good content . So that's what we got this week . Thanks everyone for listening . Thanks to our two sponsors . If you have any questions , reach out to Mark and I . We'll be back . We'll be back next week , normal time on . Friday . We'll drop this on Monday after Any questions reach out to us . All the numbers I talked about today are up online so you can check it out on my LinkedIn profile . Thanks everyone for listening . Everyone , stay safe we .

Speaker 1 53:48

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 streamingmediablogcom .