Friday Mailing: Paramount+ Bets on User Interface... While Warner Discovery Bros. Talks Up Content
This week's Member Mailing went out on Wednesday morning. Why Q3 2022 Will Be –and Won't Be – A Turning Point for RSNs dove into the moving pieces of the Regional Sports Networks marketplace for 2022 and beyond.
I hosted a Twitter Spaces with Brandon Katz of Morning Brew to discuss it last night. At the end of the conversation, I realized two things:
RSNs are a bit of a niche issue in streaming, despite the enormous financial and growth implications for the future major sports leagues in the U.S.; but,
as a framework for anticipating the future of sports broadcasts in 2022 and beyond, the moving pieces of the RSN marketplace are an important business case study (or set of case studies).
The future for RSNs is not bleak: even if Sinclair Broadcasting Group fails to launch a DTC service in Q3 2022 (I argued it's at least 50% odds), RSNs will still have more scale than any immediate or short-term streaming alternative, and more importantly more revenue than any immediate or short-term streaming alternative.
Also, as I noted in a correction to the piece, the threat of bankruptcy to Sinclair's Diamond Group division – which owns the RSNs – is not necessarily imminent in Q3 2022.
Instead, the problem may lie more in value proposition design (something I argued in a Twitter thread last night). Meaning, Sinclair has two customers it needs to make happy with a streaming service:
Sports fans, and
Advertisers (something I wrote about in A Short Essay on The Connected Future of Make-Goods & RSNs)
If we consider Peacock's messy 2021 Olympics past as precedent, there is a good chance Sinclair's streaming service may leave both buckets of customers unhappy.
So, if I were to rewrite Wednesday's Member Mailing, I would focus more on that dynamic. I think a more customer-centric lens on how Q3 2022 may capture more of the growing tensions between Sinclair and the leagues than an uncertain threat of bankruptcy.
Because, even if Q3 2022 offers the certainty of when to anticipate the outcomes, it is less clear what those outcomes will be and how stakeholders will react to each of them.
Paramount+ Bets on User Interface...
Yesterday, Paramount+ launched an ad-free Pluto TV-like interface within the app of 18 “live” channels programmed with movies and TV shows from its existing on-demand library.
I think it's a big deal, if not the smartest thing ViacomCBS has done in streaming, to date.
That said, even if this move is a first step towards incorporating more Pluto TV-like interfaces into Paramount+, I don't think it fully incorporates what makes Pluto TV so special.
Pluto TV is a frictionless User Experience (UX).
I've seen and heard this description twice recently: the first in this excellent podcast interview between Variety's Andrew Wallenstein and ViacomCBS Streaming Chief (and Pluto TV Co-Founder) Tom Ryan, and the second in an essay from Vulture's Rebecca Alter, "Pluto Is the Weirdest, Freest Streaming Service You Aren’t Using."
The catch with Paramount+'s new lie is that it does not solve for "frictionless" on Paramount+. Rather, like Peacock at launch and also Tubi TV, it is offering a live TV UX/user interface (UI) as an additional option within the current Paramount+ interface.
Ryan gave a must-read interview to Vulture's Joe Adalian, which played up "live" and user engagement but did not mention "frictionless". Adalian asked him towards the end about "how satisfied you are with the overall state of your user interface and experience".
Ryan's answer is telling:
I think that we’ve got a very solid offering today. Winning the Google Play Users’ Choice award, I think, is a sign that people are really gravitating toward the service that we’ve built. But we are just nine months into this, and we are really just getting started. So one of the main focus areas that we have on Paramount+ right now as a team, is how do we make our content better curated, more discoverable, to drive greater engagement and viewership in order to really allow people to fully understand the breadth and depth of the great content that we have on the service.
So people are discovering it, and we’re seeing lots of records being broken in terms of how people are engaging with Paramount+ with each passing month. But we are working really hard to take the product to the next level. And the key focus there is how do we make content more discoverable, make recommendations better, and really sort of deliver the most entertaining service possible.
The answer implies that discoverability and improved recommendations will reduce friction.
But, Pluto TV offers a different type of frictionless, as Ryan told Wallenstein:
Pluto is a free streaming TV service. It is instant, there is no friction… when we actually launched Pluto we didn’t as for a sign up because we wanted you to be able to sort of experience that magic of turning on the TV through your web browser.
"Magic" isn't a term Ryan uses to describe Paramount+, either.
In a nutshell, I think that's the key question for ViacomCBS's streaming going forward: Pluto TV offers "frictionless" and "magic", but Paramount+ product still needs to get "to the next level".
If one subscribes to the premise that "frictionless" and "magic" is "the next level", the logical conclusion is that Pluto TV is the next level for Paramount+.
While Warner Discovery Bros. Talks Up Content
I wrote about whether user experience (UX) and user interface (UI) matter more than content library in a recent Member Mailing, "Is Growth in Streaming Driven More By Content or Software?"
I concluded:
"there is evidence that software is becoming increasingly important to growth, primarily from Hulu's and Netflix's recent moves, but also from Peacock's and Paramount+'s shortcomings."
So, it is notable that a Variety profile of Discovery CEO David Zaslav from this past week talked up content spend, only:
Warner Bros. Discovery’s goal is to harness the benefits of a projected $8 billion in free cash flow that will come over the next few years mostly from its linear businesses and Discovery’s cable channels as well as WarnerMedia’s CNN, TNT, TBS and others. A portion of the cash will be earmarked for paying down more than $52 billion in debt, while the lion’s share, says Zaslav, will be invested in new content — the lifeblood of a pure-play entertainment concern like Warner Bros. Discovery.
There is no mention of software or UX/UI in the piece.
I think it is especially worth highlighting a quote where the logic of UX/UI and algorithmic recommendations is used to describe content strategy (H/T reader Salil Dalvi):
Kathleen Finch, the top content executive at Discovery in her role as chief lifestyle brands officer, is already excited about the prospect of blending Warner Bros. and HBO content into the menu for Food Network, HGTV and other unscripted channels. She notes that a Warner Bros. crime drama movie could lend itself to a companion documentary or series on Discovery true crime cabler ID. A studio drive to reboot older animation characters could be greased by a Food Network baking special or a Discovery Plus marathon of some sort.
“Our minds are spinning about what we can do together to really grow the audience base as big as we possibly can,” says Finch. On most nights, the largest brands in Discovery’s linear portfolio alone (Discovery, TLC, Food Network, HGTV, ID, OWN) reach some 25% of the women watching TV.
This description describes in content terms what Netflix's recommendation algorithm does for 214MM+ subscribers worldwide, but without describing or discussing the software.
Notably, streaming laggard ViacomCBS is now finding progress in focusing on the software after talking up content spend for the past two years. The implication, when framed against Discovery's PR push, is that software matters to growth.
WarnerMedia's focus on improving HBO Max's software and owning the direct-to-consumer relationship under both CEO Jason Kilar and HBO Max head Andy Forssell has been integral to its 4.25x growth of DTC customers since HBO Max launched in Q2 2020.
However, UI/UX has played a minimal role in Warner Bros. Discovery's PR push, except for this August interview with Discovery's Global Head of Streaming JB Perrette.
With Kilar expected to be headed out the door once Zaslav assumes the reins of Warner Bros. Discovery, one open question is whether a focus on improving HBO Max's software will leave with him. The other open question is whether it will matter.
If you're Tom Ryan, the answer is improving software will matter very much. If you're David Zaslav, the answer appears to be that it will matter less than content spend.
The best answer may be that both matter, but my bias is streaming apps are software products, and the better the software is for the user, the better the growth story.