Verizon VZ +0.3% announced earlier today in their Q. 2 earnings call with analysts and shareholders, that second-quarter revenue fell 5 percent to $30.4 billion. According to Verizon, this was largely because of “declines in wireless equipment revenue in the consumer and business segments, primarily due to limited in-store engagement and the impact of COVID-19 on customer behavior.” Earnings were up in Q.2 from $3.9 billion last year to $4.7 billion for Q. 2 this year.

Verizon said that they had net cancellations of 81,000 pay TV subscribers in the second quarter, which was an accelerating loss in comparison to the same quarter a year ago. In the first quarter of this year Verizon reported a loss of 84,000 pay TV consumers, almost exactly the same amount as this current quarter. Verizon, like other cable and satellite TV providers, have experienced cord-cutting substantially over the last few years and the cord-cutting behavior is still growing.

I conducted a national online study on cord-cutting in June of this year and the data shows even more households intending to cut their pay TV offerings. Many of the cord-cutters have, or will soon buy, Subscription Video On Demand (SVOD) services, like Netflix NFLX +0.6% and Disney Plus, but the traditional full-package cable and satellite providers are suffering from continuing consumer cancellations. Most recently, I saw 8% of pay TV subscribers indicate that they were “very likely” to cut the cord in the U.S. in the next 12 months. In the coveted demographic of 18 to 34 year old consumers, 17% percent said they were very likely to cut the cord which is twice the rate of the U.S. general population. It is not surprising that the 55 and older population are the least likely to say they will cut the cord.

Verizon, and their competitors in the cable and satellite content delivery service business, have suffered for many quarters with consumer cancellations and reductions in their pay TV service. Much of this has been driven by the attractive offerings from the SVOD services, as well as the Free Advertising-supported VOD services, like Pluto and Tubi.

According to a recent report from Goldman Sachs’ lead media analyst Brett Feldman, Cord-cutting is not new, but it is materially accelerating. At an industry level, pay-TV subscribers have declined on a year over year basis every quarter for the last eight years from a peak of 101 million in 1Q12 to 89 million in 1Q20. This represents an aggregate decline of 11% in household penetration (from 88% to 75%) during this period. While this implies modest annual subscriber declines of only 1-2%, we note that over 50% of these subscriber losses have occurred during the last 12 months, with 1Q20 being the worst-ever quarter of cord-cutting. We believe these pressures on the overall pay-TV market are intensifying.”

Verizon reported that 10,000 new net customers were acquired for their internet access service in Q. 2, which was a smaller growth rate than the 59,000 new internet subscribers signed-up in Q. 1. To a large extent the future success of cable/satellite providers rests with their internet access offerings and related services, as well as “skinny bundles,” which are a smaller selection of channels than the traditional pay TV packages.

Verizon Media, which includes Yahoo and AOL, had revenues of $1.4 billion this quarter, almost 25% below Q. 2 last year. These internet units are largely supported by advertising, and many advertisers have cut back or eliminated advertising expendituresdue to the Covid-19 pandemic.

Even with more consumers at home consuming more TV and internet content, the traditional cable and satellite TV companies have major challenges with their current pay TV subscription offerings.

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In the old days, we talked about all the new things in TV – color, remote controls, cable – the world was our oyster in TV viewing. But there was no Internet then and there were no connected TV sets back then. How did we live without those? Now two-thirds of the US, with access to the Internet, connect their TV to the Internet in one way or another.

One of the predominant ways that people connect their TV to the Internet is thru Smart TVs which are traditional TVs with full Web and Internet connectivity and interactivity. You can watch a “regular” TV show from broadcast or cable outlets, or you can watch YouTube or look at Facebook or watch Netflix NFLX, all on your Smart TV. As Dave Morgan, a long-time advertising expert and the Founder/CEO of Simulmedia, a television advertising technology company based in NYC, said, “Connected TV is a big tablet.”

The current pandemic is giving people a lot of time for a wide variety of activities (if they aren’t busy working or schooling their kids) such as watching TV, including their Connected or Smart TVs. Alphonso, a TV measurement and data company based in Silicon Valley, issued a study recently looking at Web traffic attributed to viewing of Over-the-Top (OTT) content, which is traditional TV content delivered over the Internet not through broadcast or cable. Much of the OTT content is distributed through Connected and Smart TVs.

Below is a chart that shows visits to Websites promoted by advertisers on OTT content climbing dramatically as the country began to “stay at home.” This was analyzed across eight different industry sectors.

This sort of data will certainly encourage more brands and agencies to purchase advertising inventory on OTT and Connected TV. This data is evidence that OTT content is a viable vehicle for building brands.

Allen Bush, the CMO of Alphonso, commented on the future of advertising on Connected TV programming, “Connected TV advertising is still a small fraction of overall TV spend today. Advances in measurement will help double that spend over the next few years as more brands find the right balance between performance marketing and brand marketing.”

Bush explained the increase in Website traffic due to OTT advertising, saying, “In addition to more streaming content being consumed by more households, there’s the simple fact that people are more likely now to do things online (since they can’t go) to at a brick and mortar location.” Alphonso data below shows the huge growth of OTT viewership since the lock-down.

An early proponent of Connected TV and OTT content is Christy Tanner, Executive Vice President and General Manager of CBS News Digital. CBSN, the 24-hour streaming service of CBS News, has allowed CBS “to deliver critical and timely information during this crisis,” Tanner said. She went on to say that she expects the growth of streaming audiences, consuming OTT on Connected TVs, will continue “at a rapid pace.”

It use to be that people said, “I want my MTV.” Now the data suggests that people are just as strongly demanding their OTT content and their Connected TVs.

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Give me a penny for your thoughts, but trillions of pennies for your video. Once again big money is being paid for a free TV service, Tubi TV, this time. A few months ago Pluto sold for big money to Viacom. Now Tubi has sold to Fox (Fox is now made up of TV stations, cable assets, newspapers, and some digital properties after the rest of Fox was sold to Disney). Reportedly, Fox paid over $400 million for Tubi.

Unlike Netflix or Disney+, Tubi, Pluto and others are free services (or advertising supported as we like to say) or AVOD (Advertising Supported Video on Demand). Through these companies you can watch a plethora of tv shows, movies and other content. All free. All the time.

According to my research, conducted in the summer of last year, Pluto and Tubi was being used by about the same numbers of Americans (approx 6% of the majority of Americans that watch online video at least once a week or more). Another AVOD service, Xumo TV, was purchased by Comcast recently. My research shows that about half the number of people that watch Tubi, watch Xumo.

When you look at this data, you must ask the question, when (or if) will Crackle be bought? This service was started as Grouper many years ago and bought by Sony Pictures Entertainment in 2006. Sony recently sold a majority of Crackle to CSS Entertainment and they are working together on video offerings. Time will tell if Sony and CSS will sell Crackle to another major media conglomerate. What other companies among the AVOD services will also be sold?

1.   Unity will be a very big, and successful tech IPO in 2020.

2.   Home voice platforms will move toward ubiquity in the U.S. and many more services, content, gaming and other features will be offered through voice platforms.

3.   The “no code movement” will prosper in 2020. New tools enable the average consumer to make an app, game, or other software using creator tools from companies like AppOnboard, Roblox, Tongal, etc.

4.   The App Stores will encounter more competition from other companies as we have seen with Steam, Epic, etc. This year will be the beginning of the Post-App Store competition for Apple and Google.

5.   Everybody coming out of high school and college wants to be a start-up CEO.

6.   The best days are beyond for Netflix. They will see big challenges in 2020 from a wide variety of TV and film like content, including Disney+ who will be the SVOD winner in 2020.

7.   Snap will continue to dominate the social media usage of teens and young adults in the U.S. and other high-value countries.

8.   Cord cutting will continue to grow driving skinny bundles, SVOD, AVOD, and other digital content.

9.   The Internet and the Web are all about video. People don’t want to write, but they love pictures and video. The Web will be the strongest video platform ever. And the phone becomes both a camera and a TV with more video content being consumed on smartphones.

10. 5G will present amazing mobile opportunities for publishers and consumers. The phone will become increasingly central to the production and consumption of video and other content. 5G will be a game changer, especially in markets where traditional IP connections are slow.

11. AI will be central to most big data problems, prediction solutions, discovery solutions, and management decision. AI will be proven to be big business that delivers value now.

12. Tech and media companies will be challenged by the US, European and other government efforts to control data privacy and protect consumers from fraud and privacy breaches. Efforts will grow to break-up Facebook, Google, etc.

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The SVOD Wars are getting a lot of attention. Netflix continues to grow. Disney+ launches November 12 with content from Disney, Fox, Marvel, Lucasfilms, Pixar and National Geographic. Disney is also offering an option to bundle their new service, along with ESPN and Hulu.  Apple has launched with a low price and lots of original content, plus a promotion tied to certain hardware purchases from Apple. YouTube has a paid service already in place, as does Hulu and Amazon (through Prime). ATT/Warner Media is reported to be launching HBO Max in mid-2020. Google may well offer a service.

One thing is clear. More consumers will buy more SVOD services in the months and year ahead.

My company, Vorhaus Advisors, conducted The Manatt-Vorhaus Digital Strategy Study released this summer which indicates that of consumers who already subscribe to a Video on Demand or Streaming Service (74% of the US online population) indicate that they will buy 1.6 MORE VOD/Streaming services. So there is a real opportunity for a couple of new entrants to do well in the SVOD Wars.


Consumers tell us that the most likely services to be picked for new/additional subscriptions are YouTube and Amazon, which are strong, existing services. Of the new entrants to this competition, Disney/Fox scores strongest with 23% of those likely to buy a new/additional service indicating they will pick Disney/Fox’s service. Note in the chart below that Apple and Warner Bros. both come in at 11%. The Disney and Fox brands clearly drive very strong interest in their new service. This data is based on a question about likelihood to subscribe to these services, and not based on any details about the service or their prices.



Apple has created a lot of attention with the low price at which they are offering their service to the public. Plus they are offering a free subscription for one year to the buyers of some of their hardware products. If Apple succeeds with their new originals then they may well strengthen their position in this race.

The SVOD Wars are costing big money for the companies competing and now we will see, starting November 12, how the Disney service is received by consumers. There is no end in sight for the SVOD Wars and we will continue to monitor consumers’ adoption of these services.

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Manatt, Phelps & Phillips, LLP, a multidisciplinary, integrated professional services firm and digital media consulting company, Vorhaus Advisors, co-sponsored a large national survey of Americans 18 years and older, about their media and digital behaviors. The study had over 2,000 respondents which were matched to the U.S. Census.

Cord-Cutting clearly remains a major threat to the traditional pay TV industry of cable, satellite and teleco providers. For a number of years now most pay TV companies (not the SVOD service) have had on-going, drip-drip loss of subscribers. This year the Manatt-Vorhaus Digital Strategy Study show that 10% of pay TV subscribers intend to cancel their service and not replace it with another pay TV package.


The study also showed that 41% of the total adult population felt TV was their most important method of getting entertainment. A separate choice was Connected TV which 11% of the respondents said was their primary choice for entertainment platform. Nonetheless, the big-screen kingdom of TV does have threats at their gates. In the coveted 18 to 34 year old demo, only 19% reported that TV was their primary method of getting entertainment content. Over 54% of these younger consumers aid that smartphone, tablet or PC/laptop was their primary method for getting entertained.



Furthermore, consumers say that they are mostly driven to buy/obtain other services to deliver long-form entertainment content – 68% of consumers say they are driven by other content they can get digitally and not have to pay for. The number #1 single reason for wanting to cut the cord was the cost of cable – another problem facing the cable/satellite industry.