In my blog post from March of this year I detailed some of the changes Limelight Networks new management team is taking to set the company back on a path to profitability and accelerated growth. Absent from my post were full-year revenue guidance numbers as Limelight’s management team was too new at the time to be able to share them with Wall Street. Now, with Limelight having reported Q1 2021 earnings on April 29th, we have a better insight into what they expect for the year.

Limelight had revenue of $51.2 million in Q1, down 10%, compared to $57.0 million in the first quarter of 2020. This wasn’t surprising since Limelight’s previous management team didn’t address some network performance issues that resulted in a loss of some traffic. The good news is that Limelight stated during their earnings that they have since “reduced rebuffer rates by approximately 30%”, “increased network throughput by up to 20% through performance tuning” and believe that over the next 90-days they can create additional performance improvements that will “drive increased market share of traffic from our clients.” For the full year, Limelight expects revenue to be in the range of $220M-$230M, while having a $20M-$25M Capex spend. Limelight had total revenue of $230.2M in 2020, so at the high-end of Limelight’s 2021 projection, the growth of the business would be flat year-over-year.

New management has made some measurable progress addressing some of their short-term headwinds and identifying what they need to work on going forward. Based on some of the changes they have already made the company expects to benefit from an annual cash cost savings of approximately $15M. It’s a good start, but turnarounds don’t happen overnight and the new management team has only been inside the organization for 90-days. They need to be given more time, at least two quarters of operating the business, before we can expect to see some measurable results and see what growth could look like in Q4 and going into Q1 of 2022. Limelight also announced during their earrings that they will be holding a strategy update session in early summer to discuss their broader plans to evolve their offerings beyond video with the goal of taking advantage of their network during low peak times.

Here’s a quick recap that highlights the most important numbers you need to know from last week’s Q4 2021 earnings from Brightcove, Google, FB, Verizon, AT&T (HBO Max), Microsoft, Discovery, Comcast (Peacock TV) and Dish (Sling TV). Later this week I’ll cover earnings from Akamai, Fastly, T-Mobile, Fox, Vimeo, Cloudflare, Roku, ViacomCBS and AMC Networks. Disney and fuboTV report the week of May 10th.

• Brightcove Q1 2021 Earnings: Revenue of $54.8M, up 18% y/o/y, but nearly flat from Q4 revenue of $53.7M; Expects revenue to decline in Q2 to $49.5M-$50.5M. Full year guidance of $211M-$217M. More details: https://bit.ly/2RgZLVE
• Alphabet Q1 2021 Earnings: Revenue of $55.31B, up 34% y/o/y ($44.6B in advertising); YouTube ad revenue of $6.01B, up 49% y/o/y; cloud revenue of $4.05B, up 46% y/o/y (lost $974M). No details on YouTube TV subs. Added almost 17,000 employees in the quarter. More details: https://lnkd.in/dNrwSVD
• Facebook Q1 2021 Earnings: Total revenue of $26.1B, up 22% y/o/y; Monthly active users of 2.85B, up 10% y/o/y; Daily active users of 1.88B, up 8% y/o/y; Expects y/o/y total revenue growth rates in Q3/Q4 to significantly decelerate sequentially as they lap periods of increasingly strong growth. More details: https://bit.ly/3tf2o7J
• Verizon Q1 2021 Earnings: Lost 82,000 pay TV subscribers; added 98,000 Fios internet customers. Has 3.77M pay TV subs. More details: https://lnkd.in/dWrZ9iP
• AT&T Q1 2021 Earnings: Added 2.7M domestic HBO Max and HBO subscriber net adds; total domestic subscribers of 44.2M and nearly 64M globally. Domestic HBO Max and HBO ARPU of $11.72. WarnerMedia revenue of $8.5B, up 9.8% y/o/y. More details: https://lnkd.in/eZeFy_8
• Microsoft Q1 2021 Earnings: Total revenue of $41.7B, up 19% y/o/y; Intelligent Cloud revenue of $17.7B, up 33% y/o/y; Productivity and Business Processes revenue of $13.6B, up 15% y/o/y. More details: https://bit.ly/3tdv5BV
• Discovery Q1 2021 Earnings: Has 15M paying D2C subs, but won’t say how many are Discovery+; Ad supported Discovery+ had over $10 in ARPU; Average viewing time of 3 hours per day, per user. More details: https://lnkd.in/dp8DZG4
• Comcast Q1 2021 Earnings: Peacock Has 42M Sign-Ups to Date; Lost 491,000 pay TV subscribers; Peacock TV had $91M in revenue on EBITDA loss of $277M. More details: https://bit.ly/3vGnJZw
• Dish Q1 2021 Earnings: Lost 230,000 pay TV subs; Lost 100,000 Sling TV subs (has 2.37M in total). More details: https://lnkd.in/dD9za-e
• Netflix Q1 2021 Earnings: Added 3.98M subs (estimate was for 6M); finished the quarter with 208M subs; operating income of $2B more than doubled y/o/y; will spend over $17B on content this year; Q2 2021 guidance of only 1M net new subs. More details: https://bit.ly/33bsdei
• Twitter Q1 2021 Earnings: Revenue $1.04B, up 28% y/o/y; Average mDAU was 199M, up 20% y/o/y; mDAU growth to slow in coming quarters, when compared to rates during pandemic. More details: https://lnkd.in/dK9PiJf

This morning it was announced that private equity firm Apollo Global Management has agreed to acquire Verizon’s Media assets for $5 billion, in a deal expected to close in the second half of this year. Apollo will pay Verizon $4.25 billion in cash, along with preferred interests of $750 million, and Verizon will keep 10% of the new company, which will be named Yahoo. I’m getting many inquires as to what this means for the CDN market as a whole since the Verizon Media Platform business (formerly called Verizon Digital Media Service) is part of the sale.

While part of Verizon’s Media Platform business involves content delivery, based in large part to Verizon’s acquisition of CDN EdgeCast in 2003, it’s far too early to speculate what this means for the larger overall CDN market. The Verizon Media Platform business includes a lot of video functionality outside of just video delivery, with ingestion, packaging, data analytics and a deep ad stack for publishers as part of their offering. What pieces of the overall Verizon Media business Apollo will keep, sell, consolidate or double-down on with further investment is unknown. For now, it’s business as usual for Verizon’s Media Platform business.

Anyone suggesting that this is good for other CDNs as maybe there will be less competition in the long-run, or bad for other CDNs as Apollo could double-down on their investment in CDN and make it a more competitive market, is pure speculation. It’s too early to know what impact this deal may or may not have on the CDN market.

Netflix reported their Q1 2021 earnings, adding 3.98M subscribers in the quarter (estimate was for 6M) and finished the quarter with 208M total subscribers. On the positive side, Netflix reported operating income of $2B which more than doubled year-over-year. The company said they will spend over $17B on content this year and anticipates a strong second half with the return of new seasons of some of their biggest hits and film lineup. More details:

• Q2 guidance of only 1M net new subs
• Finished Q1 2021 with 208M paid memberships, up 14% year over year, but below guidance forecast of 210M paid memberships
• Average revenue per membership in Q1 rose by 6% year-over-year
• Q1 operating income of $2B vs. $958M more than doubled vs. Q1’20. The company exceeded their guidance forecast primarily due to the timing of content spend.
• Netflix doesn’t believe competitive intensity materially changed in the quarter or was a material factor in the variance as their over-forecast was across all of their regions
• Netflix believes paid membership growth slowed due to the big Covid-19 pull forward in 2020 and a lighter content slate in the first half of this year, due to Covid-19 production delays

Netflix’s stock is down almost 11% as of 5:12pm ET. Roku is also down 5%, probably seeing an impact from Netflix’s earnings.

For the past two years we’ve been hearing a lot about low/ultra-low latency streaming, with most of the excitement coming from encoding and CDN vendors looking to up-sell customers on the functionality. But outside of some niche applications, there is very little adoption or demand from customers and that won’t change anytime soon. This is due to multiple factors including a lack of agreed upon definition of what low and ultra-low latency means, the additional cost it adds to the entire streaming stack, scalability issues, and a lack of business value for many video applications.

All the CDNs I have spoken to said that on average, 3% of less of all the video bits they deliver today are using DASH-LL with chunked transfer and chunked encoding, with a few CDNs saying it was as low as 1% or less. While Apple LL-HLS is also an option, there is no real adoption of it as of yet, even though CDNs are building out for it. The numbers are higher when you go to low-latency, which some CDNs define as 10 seconds or less, using 1 or 2 second segments, with CDNs saying on that on average, it makes up 20% of the total video bits they deliver.

Low latency and ultra-low latency streaming are hard technical problems to solve in the delivery side of the equation. The established protocols (i.e. CMAF and LL-HLS) call for very small segment sizes, which correlate to much higher requests to the cache servers than a non-low latency stream. This could be much more expensive for legacy edge providers to support given the age of their deployed hardware. This is why some CDNs have to run a separate network to support it since low-latency delivery is very I/O intensive and older hardware doesn’t support it. As a result, some CDNs don’t have a lot of capacity for ultra-low latency delivery which means they have to charge customers more to support it. Based on recent pricing I have seen in RFPs many CDNs charge an extra 15-20% on average, per GB delivered.

Adding to the confusion is the fact that many vendors don’t define what exactly they mean by low or ultra-low latency. Some CDNs have said that low-latency is under 10 seconds and ultra-low latency is 2 seconds or less. But many customers don’t define it that way. As an example, FOX recently published a nice blog post of their streaming workflow for the Super Bowl calling their low-latency stream “8–12 secs behind” the master feed. They aren’t right or wrong, it’s simply a matter of how each company defines these terms.

In Q1 of this year I surveyed just over 100 broadcasters, OTT platforms and publishers asking them how they define ultra-low latency and the applications they want to deploy it for. (see notes at bottom for the methodology) The results don’t line up with what some vendors are promoting and that’s part of the problem, no agreed upon expectations. Of those surveyed, 100% said they define ultra-low latency as “2 seconds”, “1 second” or “sub 1 second”. No respondent picked any number higher than 2 seconds. 90% said they were “not willing to pay a third-party CDN more for ultra-low latency live video delivery” and that it “should be part of their standard service”. The biggest downside they noted in ultra-low latency adoption was “cost”, followed by “scalability” and the “impact on ABR implementation.” Of the 10% that were willing to pay more for ultra-low latency delivery, they all responded to the survey saying they would not pay more than 10% per GB delivered.

Part of the cost and scaling problems is why to date, most of the ultra-low latency delivery we see is coming from companies that build their own delivery infrastructure using WebRTC, like I noted in a recent post. Agora has been successful selling their ultra-low latency delivery and I consider them to be the best in the market. They were one of the first to offer an ultra-low latency solution at scale, but note that a large percentage of what they are delivering is audio only, has no video, is mostly in APAC and being used for two-way communications. Agora defines their low-latency solution as “400 – 800 ms” of latency and their ultra-low latency as “1,500 – 2,000 ms” of latency. That’s a lot lower than other solutions I have seen on the market, based on how vendors define these terms.

Aside from the technical issues, more importantly, many customers don’t see a business benefit from deploying ultra-low latency, except for niche applications. It doesn’t allow them to sell more ads, get higher CPMs or extend users viewing times. Of those streaming customers I recently surveyed, the most common video use cases they said ultra-low latency would be best suited for was “betting”, “two-way experience (ie: quiz show, chat)”, “surveillance” and “sports”. These are use cases when ultra-low latency can make the experience better and might provide a business ROI to the customer, but they are very specific video use cases. The idea that every sports event will go to ultra-low latency streaming in the near-term simply isn’t reality. Right now, no live linear streaming service has deployed ultra-low latency but with fuboTV having disclosed how they want to add betting to their service down the line, an ultra-low latency solution will be needed.  That makes sense but it’s not the live streaming that’s driving the need but rather the gambling functionality as the business driver for adopting it.

Live sports streaming is one instance where most consumers would probably say they would like to see ultra-low latency implemented, but it’s not up to the viewer. There is ALWAYS a tradeoff for streaming services between cost, QoE and reliability and customers don’t deploy technology just because they can, it has to provide a tangible ROI. The bottom line is that broadcasters streaming live events to millions at the same time have to make business decisions of what the end-user experience will look like. No one should fault any live streaming service for not implementing ultra-low latency, 4K or any other feature, unless they know what the company’s workflow is, what the limitations are by vendors, what the costs are to enable it, and what KPIs are being used to judge the success of their deployment.

Note on survey data: My survey was conducted in Q1 of 2021 and 104 broadcasters, OTT platforms and publishers responded to the survey, who were primarily based in North America and Europe. They were asked the following questions: how they define ultra-low latency; which applications they would use it for; if they would be willing to pay more for ultra-low latency delivery; the biggest challenges to ultra-low latency video delivery; how much latency is considered too much for sporting events and which delivery vendors they would consider if they were implementing an ultra-low latency solution for live. If you would like more details on the survey, I am happy to provide it, free of charge.

While traditional broadcast networks have been able to rely on live content to draw viewers, we all know that younger audiences are spending more time in apps with social experiences. To better connect with young viewers, companies are testing new social streaming experiences that combine Hollywood production, a highly engaging design and in many cases WebRTC technology. (See a previous post I wrote on this topic here: “The Challenges With Ultra-Low Latency Delivery For Real-Time Applications“)

Within the streaming media industry, there is a lot of discussion right now about different low/ultra-low latency technologies for applications requiring two-way interactivity. Many are looking to the WebRTC specification that allows for real-time communication capabilities that work on top of an open standard and use point-to-point communication to take video from capture to playback. WebRTC was developed as a standard way to deliver two-way video and provides users with the ability to communicate from within their primary web browser without the need for complicated plug-ins or additional hardware.

WebRTC does pose significant scaling challenges as few content delivery networks support it natively today. As a result, many companies utilizing WebRTC in their video stack have built out their own delivery infrastructure for their specific application. An example of a social platform doing this would be Caffeine, which built out their own CDN with a few IaaS partners to facilitate the custom stack necessary for them to deliver ultra-low latency relays. Keeping latency low also involves custom ingest applications that Caffeine built out to keep latency low glass-to-glass.

Another hurdle to WebRTC streaming is that it incurs a higher cost than traditional HTTP streaming. The low latency space is a rapidly evolving field in terms of traditional CDNs support for ultra-low latency WebRTC relays and http based low latency standards (LL-HLS and LL-DASH). So cost, sometimes as high as three-times regular video delivery and the ability to scale are still big hurdles for many. You can see what the CDNs are up with regards to low/ultra-low latency video delivery by reading their posts about it here: Agora, Akamai, Amazon, Limelight, Lumen, Fastly, Verizon, Wowza/Azure.

One problem we have as an industry is that very few companies have put out any real data on how well they have been able to scale their WebRTC based real-time interaction consumer experiences. One example I know of is that Caffeine disclosed that in 2020, they had 350,000 people tuned in to the biggest event they have done to date, a collaboration with Drake and the Ultimate Rap League (URL). While getting to scale with WebRTC based video applications is good to see, we can’t really talk about scale unless we also talk about measuring QoE. Most companies are an ABR implementation within WebRTC, doing content bitrate adaption based on the user’s network connection leveraging the WebRTC standard similar to http multi-variant http streaming but adapting faster relative to what’s afforded by the WebRTC protocol. This is the approach Caffeine has taken, telling me they measure QoE via several dimensions around startup, buffering, dropped frames, network level issues and video bitrate.

Some want to suggest that low-latency based streaming is needed for all streaming events or video applications but that’s not the case. There are business models where it makes sense but many others where the stream experience is passive and doesn’t require two-way interactivity. For platforms that do need it, like Caffeine, people are reacting to one another because of exchanges happening in real time. Chat brings out immediacy amongst participants, whether being called out by a creator or sending digital items to them, fans can change the course of a broadcast in real-time, driven by extremely low latency at scale. In these cases, culture, community, tech and production come together to elevate the entertainment to a whole new level. For Caffeine, it works so well that average watch times were over 100 minutes per user in 2020 for their largest live events.

Streaming media technology has transformed traditional forms of media consumption from packaging to distribution. Now with lots of social media streaming taking place, we are seeing interactive experiences continue to evolve, shaping opportunities in content creation, entertainment, monetization and advertising, with live streaming events being the latest. WebRTC is now the go-to technology being used in the video stack for the applications and experiences that need it, but the future of WebRTC won’t be as mainstream as some suggest or for all video services. WebRTC will be a valuable point-solution providing the functionality needed in specific use cases going forward and should see more improvements with regards to scale and distribution in the coming years.

For many of the largest streaming media related companies, picking best-in-breed video components in different areas of the streaming stack and integrating them into a customized OTT streaming service has become the new norm. API based streaming services combine everything available to customers allowing them to pick the best components between vendors, open source, or completely building it from scratch in-house. A good example is Crunchyroll, which shares a lot on their blog about how they combine their own video development with the best commercial and open source components for their service. Many OTT platforms, broadcasters and publishers take their streaming infrastructure stack very seriously and have invested in engineering expertise, which is a key component in successfully offering a great quality of experience.

Vendors that offer flexible API based video solutions are seeing a lot of growth in the market, which is attracting the attention of investors. Bitmovin, which has been in the industry since 2013 and has raised $43M to date, is currently raising another round of funding, rumored to be in the $15M-$20M range. [Updated April 20: Bitmovin announced is has raised $25M in a C round]  (Mux is raising another round as well) Bitmovin has seen some good growth over the last few years, choosing not to focus on a complete end-to-end video stack, but rather specializing in API based encoding, packaging, player and analytics. By my estimate the company will do $35M-$45M in 2021 revenue.

Bitmovin has benefited from large media companies getting more mature in their streaming stack and expertise, and switching away from less flexible end-to-end platforms, to more highly configurable and modular best-in-breed components. While encoding, packaging and playback are not everything you need to build a video streaming service, Bitmovin and others are trying to be the best in what they do, with a focused core set of offerings. Engineers then choose these components, together with others that are best in their respective category of CMS, CDN, Storage, DRM, Ad-Insertion, etc., to put together a streaming system where they are in full control of every component and gain a large degree of control and flexibility.

When it comes to encoding, Bitmovin takes an interesting approach by not only providing hosted encoding solutions in the cloud, but also a software-only option where customers can deploy their encoding software within the customer’s cloud account. All cloud providers are being extremely aggressive right now to get media companies as clients and gain market share by offering interesting deals on compute and storage, with Oracle being the latest. Leveraging these cloud options together with a software-only approach like Bitmovin offers for encoding, is a great way for some customers to benefit when it comes to costs and choosing the best cloud vendor as part of their best-in-breed strategy. It also gives companies flexibility by not being locked into one cloud provider, as many hosted encoding providers only run on AWS.

For vendors offering API based video solutions, focus is important. You can’t be everything to everybody, trying to solve every problem within every vertical. The approach that Bitmovin and some other vendors take, creates focus by providing specialized and differentiated point solutions, for encoding, player and analytics. Bitmovin can go a mile deep in these services, rather than build an end-to-end service that needs to be a mile wide because of the diversity of customer use cases and needs. This is especially important as the complexity of online video gets higher, with new codecs coming to the market, competing HDR formats, more devices to support, more complex DRM and ad use cases, and low latency requirements. Vendors that try to do everything in the video stack have a good chance of doing nothing really well. Of course, a vendor like AWS does a good job across the entire video stack due to their size and some of the acquisitions they have made, but they are the exception.

Customers who revamped their encoding stack and bitrate ladder with Bitmovin have told me they saw great improvements in viewer experience, a decrease in customer support tickets around buffering and bad quality, and also reduced their CDN and storage costs significantly. Two customers in particular that I spoke to saw a reduction of 60% in terms of their CDN bits delivered, when compared to what they used before. While Bitmovin can’t disclose all of their customers by name, looking at video offerings across the web or via apps, it’s not too hard to see some of the brands that are relying on the company. I see organizations including Discovery, DAZN, Sling TV, fuboTV, BBC, Red Bull and The New York Times that all rely on Bitmovin for core pieces of their streaming video workflow.

In addition to encoding, another video component that’s getting more and more attention are video players. Streaming services need to be available on every platform, with the best user experience, which brings a lot of challenges. While it’s fairly easy to make video play in a web browser, playback on mobile devices, multiple generations and brands of Smart TVs, game consoles and casting devices adds a lot more complexity. Despite the availability of a range of open source players, i.e. dash.js, Shaka player, video.js, hls.js, Exoplayer etc., it starts to become one of the main pain points of media companies, making sure their video works properly across every platform.

Every time I do an industry survey on QoE, problems with the video player or app is the number one complaint that OTT providers say they hear about from users. Dealing with DRM and video advertising on a 2016 Samsung Tizen or 2016 LG WebOS are among the common challenges, same as playback on PlayStation and Xbox, platforms that companies like Brightcove, JW Player or THEOplayer do not support for playback. Thus, going deep on players became important over the past years for Bitmovin and something the company has focused heavily on. From what I hear, they have aggregated hundreds of large customers in the player space and I noticed during March Madness that WarnerMedia was using Bitmovin’s player as well.

With the additional funding Bitmovin is securing, they will be an interesting company to watch as they have a deep understanding of the video stack and the way engineering teams build streaming services. They aren’t the only vendor offering some of these services in the market, but many of the other names people know have less than $10M in total revenue and are much, much smaller. Scale matters in the market and I expect we will see more video developers and engineering teams deploying Bitmovin’s APIs across their video offerings.

[Updated April 9: I like seeing this, V-Nova has replied to my post with their thoughts here: https://lnkd.in/d46pQSB]

For companies that supported the Alliance for Open Media (AOM) over the past few years, a lot is at stake to be able to deploy AV1 as soon as possible. There are signs that things are starting to move and the biggest ones are probably the upcoming WebRTC support, AV1 support in Chrome, and Android 10 support. Notably these are all Google projects.

That is great, but while marketing is giving visibility to what has obviously been a breakthrough project, broadcasters and operators alike are still shying away from the AOM technology. More than half of those surveyed in one of my recent industry surveys would like to deploy AV1 in their video services within the next two years but are concerned about hardware support. And, in fairness, reception has been mixed. Broadcom recently announced support for the codec, while Qualcomm support still seems far off.

As of now, it seems as if it will take a while to get the critical mass of device hardware support to make AV1 a success. Many encoding experts who track the topic in greater detail than I do suggest a timeline for adoption of at least another 5 years. In the meantime, AV1 may be confined to niche services and trials delivering low resolution video such as Google Duo in Indonesia. But I’d argue it doesn’t have to be this way, since we live in a world where the processing power in our hands offers up a lot of opportunities for better video experiences. Software decoding is possible and there are solutions out there that can enhance the potential of AV1 to the point of making it viable by serving high-quality premium services this year, not years down the road. AV1 with LCEVC is the solution that has been staring us in the face all along and is starting to get some adoption.

One thought that intrigues me is that there is an MPEG standard, the very organization that AOM tried to disassociate from, that could form an amazing technical combination. MPEG-5 LCEVC is the first enhancement standard that can improve the computational and compression performance of any “base” compression technology. That “any” is the radical part. This new standard could actually accelerate AOM and push AV1 out faster and more efficiently, by making it run on mobile handsets at full HD resolutions.

As both AV1 (from whichever source you choose) is mostly a software encoding and decoding option and LCEVC (from V-Nova) is a software encoding and decoding option, why doesn’t Google and V-Nova combine the two together? In a single software upgrade swoop, we could have full HD WebRTC, web conferencing, and entertainment of all kinds play back on our phones.

We have plenty of new compression technologies in HEVC, VP9, AV1, VVC and one enhancement standard in LCEVC. Yet, most of us are still consuming H.264/AVC video every day, missing out on the better experiences that the new formats could deliver. Let software be king, collaboration prevail, and have “MPEG-5 LCEVC enhanced AV1” deliver better, higher-quality services, sooner.

Last week Kaltura amended their Form S-1 filing, detailing how many shares they were offering to the market and their expected IPO price of $14-$16, in an effort to raise about $275M this month. But like some other tech companies, Kaltura has now postponed their IPO. The market for tech IPOs isn’t great right now and other companies like Intermedia, have also announced they are putting their IPO on hold while they wait for “favorable IPO conditions”. In the last few months, tech stocks have taken a beating on Wall Street and while we don’t know how long it will last, a perfect storm took place preventing some IPOs from going forward.

Some have asked what this all means for Vimeo’s upcoming IPO and if they are at jeopardy of postponing as well. As of the writing of this post I don’t have any other details on Vimeo’s IPO except that they were originally targeting an April time frame, which I’m hearing has now been updated to May. Vimeo has not yet filed an amended Form S-1 for the pricing of their shares, so that’s the next step we would expect to see in the process and keep an eye out for. [Updated April 1: Vimeo has announced their Board of Directors as they prepare to spin-off from IAC and said their IPO is scheduled for the end of Q2.]

Even without some IPOs not taking place right now and the potential for others to be impacted, it’s important to take a look at the differences between all the different video companies in the space, especially around the term of “enterprise video platform”. The goal of this post to lay out some of the numbers and differences between vendors, but it is not a complete product review comparison for all vendors side-by-side, with regards to functionality. As always, customers have to look at the strengths and weakness of vendors based on what they are trying to accomplish for their specific needs. All that aside, there are a lot of differences form a numbers standpoint when it comes to vendors in the market, with some overlap of services.

Kaltura had $120M in 2020 revenue, with year-over-year revenue growth of 17%, 21%, 27% and 30%, for each quarter last year. 2019 total revenue was $97.3M. Year-over-year revenue growth was 12% in 2018, 18% in 2019 and 24% in 2020. The company had net losses of $15.6M in 2019 and $58.8M in 2020. Kaltura’s top ten customers accounted for approximately 29% of their revenue in 2020, with Vodafone accounting for approximately 12% of that. The company grew revenue by 24% in 2020, while only increasing sales and marketing costs by $3.9M, compared to 2019.

While I hear Kaltura get compared to a lot of “enterprise” video platforms in the market, many vendors mentioned are not truly comparable from a revenue, scale or product functionality standpoint. Qumu and MediaPlatform are mentioned most often and do have some crossover into a few of the same vertical markets as Kaltura’s, but they are much smaller companies. MediaPlatform (private) had sub $10M in revenue for 2020 and not a lot of cash. Qumu (public) did $29.1M in total 2020 revenue and projects revenue to grow to about $35M in 2021. Qumu was running low on capital ending 2020 with $11.9M in cash and cash equivalents. The company did a raise of approximately $23.1M in January of this year to get more operating capital. While Qumu grew revenue 15% from 2019 to 2020, it’s off of a very small base and the company disclosed that the increase in revenue was “primarily due to a large customer order received at the end of Q1 2020.” If you strip out that single customer, Qumu’s year-over-year revenue would have been pretty flat. In comparison, Kaltura had $27.7M in cash and cash equivalents at the end of 2020 and had revenue grow 5X larger than Qumu.

Some are comparing Vimeo to Kaltura because Vimeo is using the term “enterprise” very heavily, but don’t believe the hype. Vimeo isn’t really an “enterprise” grade video platform from a product functionality standpoint. Vimeo’s “enterprise” offering is almost entirely Vimeo’s core product, simply with different levels of usage-based pricing and is not tied into other pieces of the enterprise video stack. Vimeo doesn’t have deep integration with vendors that enterprise organizations use for ingestion, LMS, CMS, analytics or a large number of third-party on-prem encoders. Kaltura is the opposite with integrations into just about every aspect of the enterprise video workflow, from ingestion to delivery. Companies like Ramp, SharePoint, Google Analytics, Blackboard, Matrix, dotsub and others are all in the Kaltura video ecosystem.

Vimeo has the largest percentage of their customer base paying an average of $17.83 a month in revenue, which isn’t the business Kaltura is going after. Vimeo said that at the end of 2020, the company had 3,300 hundred “enterprise” customers paying an ARPU of $1,833 a month, but the majority of that revenue is from their OTT related product, not “enterprise”, when defined by use case and application. Vimeo’s definition of an enterprise customer is simply the requirement that the customer purchase their plan through direct contact with their sales force. That’s it. This might be why Vimeo doesn’t break out verticals or use cases in their S-4 filing when it comes to what their “enterprise” revenue really consists of. I also expect a large portion of Vimeo’s revenue specifically tied to their OTT product to not renew throughout 2021. At the end of 2020, less than 1% of Vimeo’s subscribers paid more than $10,000 per year. By comparison, almost all of Kaltura’s customers paid at least $10,000 PER MONTH, over the same time.

If you look at Vimeo’s ARPU growth, the largest portion of it has come from their top ten customers. ARPU amongst their 1.5M+ paying customers grew only $24 a month, over 5 quarters from Q3 of 2019 to Q4 of 2020. That’s an average increase of only $4.80 per quarter. Vimeo’s “enterprise” customers saw over 100% growth, from their top ten customers that I estimate to be in the $100k-$250k a year contract size. So a small segment of Vimeo’s customers is making up the largest percentage of their highest ARPU growth. On the marketing front, Vimeo calls themselves the “world’s leading all-in-one video solution”, amongst many other high-level and generic marketing terms they use, which means nothing. Kaltura on the other hand is very clear about what they do in the market, with lots of details around product support for solving specific problems based on use case, vertical and size of customer.

Since day one, Kaltura has been in the live streaming space with deep knowledge and experience in what it takes to be successful with live, which requires solving a very different set of problems. As an example, Kaltura was the platform that powered Amazon’s AWS re:Invent conference last year and virtual trade shows are a use case Kaltura has been successfully selling into. In 2016, Vimeo tried to get into the live business by building the functionality in-house and then realized how hard it really was. They had to acquire Livestream in 2017 to get into the live business, but live streaming has never been in the DNA of Vimeo as a company. Now, four years after Vimeo acquired Livestream, customers are telling me Vimeo is shutting down the Livestream platform and trying to transition them over to the Vimeo live platform, at a much higher cost, with less functionality.

Vimeo’s live platform does not support streams longer than 12 hours, which is a problem for many current Livestream enterprise clients who have 24/7 linear channels. With Vimeo live, you also can’t restart a live stream without creating a new event as you could previously do with the Livestream platform. Most importantly, the functionality around APIs is essential when it comes to the enterprise video stack and is one of the major deciding factors on which vendors customers use. The Vimeo live API functionality is much weaker compared to the Livestream API. Many of Vimeo’s biggest Livestream customers were deeply using the Livestream API, so that’s a problem for some customers they want to move off the Livestream platform. Customers I have spoken to haven’t seen the value in paying the additional multiple so it puts into question what percentage of Livestream customers Vimeo will be able to retain with the change. By comparison, Kaltura has no limit on the length of a live stream and their platform is open-source, with one of the deepest set of video API functionality in the industry.

In addition to the vendors already mentioned, Kaltura more closely competes with Panopto, especially when it comes to the education vertical and use cases around corporate communications. While Panopto is private and doesn’t disclose numbers, I put their revenue to be around $50M in annual recurring revenue (ARR) last year, with about 40% year-over-year growth. Panopto is well funded, have a very solid platform with scale, and lots of product flexibility targeting specific use cases and verticals. Panopto doesn’t cross over into all the verticals Kaltura sells into as they don’t sell their platform into telecom companies for any cloud TV services. This is a common theme amongst all the vendors, they don’t all compete in the exact same verticals for 100% of their revenue.

Brightcove is another vendor that has overlap into some of Kaltura’s verticals and competes mostly around media and entertainment customers looking for an end-to-end video stack for publishing, broadcast and ad supported business models. Brightcove had $197.4M $194.7M (thank you Brightcove for noticing my wrong number) in 2020 revenue, growing 7% year-over-over, with a net loss of $5.7M, down from the net loss of $21.9M in 2019. The company has projected 2021 revenue to be in the range of $211M-$217.0M, which at the midpoint would be 8% revenue growth. Over the past four years, Brightcove average year-over-year revenue growth was 7.7%. What these numbers show is that the market for certain types of video services and the rate at which they are growing is not as big or as fast as some want to suggest.

Brightcove ended 2020 with $37.5M in cash and cash equivalents. At the end of Q4 2020, Brightcove had 1,051 customers paying an average of $4,400 a year, ($366 monthly) and 2,279 “premium” customers spending an average of $97,200 a year ($8,100 monthly). Brightcove defines a premium customer based on their revenue spend and refers to the non-premium customers as those who use “our volume offerings”, saying it’s “designed for customers who have lower usage requirements and do not typically require advanced features or functionality”. You can read Brightcove’s recent 10-K from February 24 if you want to see all the detailed language on how they bucket their customers based on various products. Like Kaltura, when it comes to the media and publishing space, Brightcove is very deep with their product functionality and API support for use cases around marketing, events and corporate communications.

There are so many high-level umbrella terms used to describe video platforms that it can be confusing when it comes to what vendors really do and who they are targeting with their services. With terms like “enterprise video platform”, “video as a service”, “online video platform”, “business broadcasting platform”, “video cloud platform” etc. many companies may or may not be competitive to one another, depending on what is being compared and your definition of these terms. Amongst all the generic terms I mentioned, you would also hear vendor names including Microsoft (Stream), Zype, Wowza, ON24, Hive Streaming, Frame.io, Zoom, Cisco (Webex), Hopin and many others in the discussion.

In most instances, the vendors I mentioned specialize in other core aspects of the video stack like building video apps, offering API tools for video developers, or focusing on players, video analytics and content management systems. These vendors wouldn’t truly be competitive with one another in an apples-to-apples product showdown. That said, Microsoft, with their Microsoft Stream product, Wowza and ON24 would have some competitive crossover to Kaltura based on product functionality in similar vertical markets. Hopin would compete when it comes to live trade shows and multi-day conferences and Zoom and Cisco with Vbrick compete in the town hall meetings market. If you add up all the use cases for video, verticals, size of customers, region(s) and product functionality needs, there are close to 50 vendors in the “video platforms” market. Many of the vendors names being thrown into the same bucket when it comes to “enterprise video platforms” would simply not be accurate, based on real methodology.

Note: I am an actual user of a lot of these platforms mentioned. I currently have account access to platforms at Brightcove, Kaltura, Wowza, Vimeo, Panopto and others.

Looking for help getting a job in the streaming media industry? Thursday at 6pm ET I’ll be hosting a live Q&A chat, taking your questions and giving out some best practices on job search and placement. You can join the Zoom meeting as anonymous if you like and I’ll be taking questions via chat only and answering them live on video. Below is the Zoom link and the password is: streaming. This is free and open to everyone, so you are welcome to invite others.

Time: Mar 25, 2021 06:00 PM Eastern Time
https://us04web.zoom.us/j/78435691044?pwd=TXBBVkE3YTMwRXJoRlVQQ1lLQlFKZz09
Meeting ID: 784 3569 1044

This week, Limelight Networks announced it was laying off 16% of their workforce, or approximately 100 people. While it’s never good to see people lose their jobs, Limelight’s new management team needed to make drastic changes to the business to re-focus the company. New management typically takes the blame for layoffs but it’s simply because prior management didn’t take the necessary steps needed to put the company on a path to the proper growth and profitability.

Purely from a numbers standpoint, Limelight didn’t have the revenue to support such a large headcount. The company ended 2021 with $230.2M in revenue and had 618 employees. Two customers, Amazon and Sony, account for 48% of their revenue. The company missed both their Q3 and Q4 guidance and ended the year with 527 customers, down from 599 the year before. Also, when compared to other similar vendors in the market, Limelight’s sales team was nearly two times larger, but didn’t have the revenue growth to support it. Over the past four years, Limelight’s average revenue growth was just $11.5M per year, going from $184M in total revenue in 2017 to $232M in total revenue in 2020. The company’s gross profit percentage fell from 43.7% in 2019 to 30.4% in 2020. Simply put, new management needs to make some drastic changes and it starts with headcount.

Outside of the numbers, Limelight also had operational issues from a sales, product and technical standpoint that prior management never addressed. Limelight hasn’t had a full-time CTO in more then five years, which is unheard of for a CDN vendor selling a technical service. The company also has no dedicated Chief Product Officer, which is negatively impacting Limelight’s product road map and ultimately what sales could sell into the market. Limelight also needs to improve their cost structure, which is something the new management team is laser focused on and once done, should save them a lot of money. I won’t go into specific details, but the way Limelight deploys capacity in certain regions is simply not efficient from a dollars standpoint when compared to other CDNs.

Based on some of the changes new management has already made, Limelight is expected to benefit from an annual cash cost savings of approximately $15M. Limelight ended 2020 with nearly $47M in cash and cash equivalents, so the company has capital. The focus for new management will be around guaranteeing better performance at scale (with the right cost structure), offering a new products and a clear product road map, diversifying revenue so they aren’t dependent on two customers for half their revenue, and becoming profitable. In 2020, Limelight’s GAAP net loss was $19.3M, so that’s something they need to improve on so they can get to cash flow break-even or better.

Changes are never enjoyable when it involves layoffs, but in this case it was a necessary task Limelight’s new management team had to accomplish, so they can put the company on a path to faster growth and profitability.

Thanks to John Clifton and Tim Meredith for having me on “The Tech That Connects U‪s‬” podcast, where we discuss some of the latest OTT business models; subscriber projections; what the future of the conference business looks like in a post-Covid-19 world; and how I got started in the industry. Great chat talking real-world happenings in the streaming media industry. Listen to it below or on Apple Podcasts and Spotify.

On Monday March 22nd at 1pm ET, I’m moderating a session as part of BitmovinLive on, “Encoding Workflows Best Practices: How to Scale for Quality and Cost.” Come join this unique conversation with no pitches or demos, just real-world information on the best practices you can apply to improve your OTT video offering. With speakers from Blizzard and Sinclair Digital, we’ll discuss how broadcasters and OTT streaming services are prioritizing optimizing their encoding stack to improve their Quality of Service (QoS) while keeping costs in check. Bring those burning questions to our panel and be part of the discussion. You can register for the event here.

Since HBO Max launched last May, the tech team has been busy adding a lot of improvements and has rolled out enhancements around personalization, higher-quality video, navigation/design and video playback. Personalization has been a big focus and HBO Max is now using a mix of human-powered discovery and underlying data, along with bespoke tools including an enhanced video player, to also provide parental controls and a unique kids experience. As a user I can verify firsthand that the service has gotten some awesome improvements. It’s great that HBO Max is willing to share so many details on how they are improving the overall viewer experience, something other OTT services don’t talk about, but should. The following is a list of improvements made to the HBO Max service since launch.

Updates rolled out this week include:

• New in-line video for tvOS users, providing content previews throughout the page and communicating emotional context of content
• Re-introducing the restart button to connected TV, delivering an elegant restart experience
• Homepage personalization with component selection and rerank allows each user to see the most relevant trays and titles within each tray, tailored to them through a combination of human curation and data intelligence
• Chrome redesign that allows users to see cleaner, more modern video player controls on mobile and tablet
• Technical enhancements and bug fixes including 50% faster page transitions and browse menu, allowing users to get to the content they want, faster

Updates added since launch include:

Personalization

• “For You” Tray | Each user sees a different selection of content in a tray personalized to them
• Age-Targeted Kids Profiles | Kids profiles launch directly into a homepage curated for their age
• Kids Character Navigation | Browsing via character row directs kids to curated character pages, featuring favorite franchises unique to HBO Max including Sesame Street and Looney Tunes
• Multi-language Playback | Users can watch their favorite shows and movies with more audio and subtitle language options on select devices, with more coming soon

Enhanced Viewing Experience 

• 4K Ultra HD, HDR 10, Dolby Vision and Dolby Atmos capabilities were introduced to the platform with select titles, beginning with Wonder Woman 1984, and will continue to expand across additional programming and devices; we plan to support these formats for all of the films released from the Warner Bros. 2021 film slate

Design and Experience

• Skip Intro, Promos, and Recaps | Viewers now have the power to skip intros, promos, and recaps, getting them right into the content itself and enabling a seamless binge experience
• Improved Content Details Pages | Captivating imagery to draw users in and a more intuitive layout for trailers, clips, extras, and more
• New Hero Unit with In-Line Video | Larger artwork that amplifies our content on the homepage with full bleed imagery and engaging in-line video

Navigation

• Connected TV Navigation Redesign | A left-hand, always visible menu with movies, series, and hubs exposed at the top level of navigation
• “More Like This” Tray | On all Movies & Series detail pages, viewers can see related titles while browsing through the content library
• “Just Added” Tray | Highlights content recently made available on the platform
• Search Suggestions | Search suggestions are now available to viewers on CTV and tvOS, enabling the elevation of popular searches for series/movies, brands and genres, easing the search experience for viewers

Video cloud platform provider Kaltura has filed their S-1 and will be going public under the symbol of KLTR. It’s expected they will IPO sometime in Q2. I’ve read through the entire document and here’s some of the key takeaways:

• $120M in 2020 revenue, with year-over-year revenue growth of 17%, 21%, 27% and 30%, for each quarter last year. 2019 total revenue was $97.3M. Year-over-year revenue growth was 12% in 2018, 18% in 2019 and 24% in 2020.
• Net losses of $15.6M in 2019 and $38.7M in 2020 and adjusted EBITDA of $4.0M in 2019 and $4.3M in 2020.
• At the end of 2020 Kaltura had “approximately” 1,000 customers, who combined, have over 100 million media assets on Kaltura’s platform.
• For the years ended December 31, 2019 and 2020, Vodafone accounted for approximately 12% of Kaltura’s revenue in each such year, and their top ten customers in the aggregate accounted for approximately 27% and 29% of their revenue in 2019 and 2020.
• Revenue from “Enterprise, Education & Technology” was $80.4M (67%), with “Media & Telecom” accounting for $39.9M (33%) in 2020 revenue.
• The company grew revenue by 24% in 2020, while only increasing sales and marketing costs by $3.9M in 2020, compared to sales and marketing costs in 2019.
• At the end of 2020, “approximately” 61% of their revenue was generated from customers in the Americas, 31% from customers in EMEA and 8% from customers in APAC. 81% of revenue came from customers who were with Kaltura as of December 31, 2018.
• For the years ended December 31, 2018, 2019 and 2020, the lifetime value of Kaltura’s customers exceeded five, seven and eleven times the cost of acquiring them.
• Customers include 25 of the US Fortune 100, more than 50% of U.S. R1 educational institutions, including seven of the eight Ivy League schools and some of the largest global media companies and telecom operators.
• As of December 31, 2020, Kaltura had 378 full-time employees in Israel and 584 employees in total across 22 countries on five continents.

I’ll have a more detailed blog post up shortly that gives an overview on Kaltura’s business and competitors.

AT&T announced that it has sold a minority stake in DIRECTV to the private equity arm of TPG. The two parties will establish a new company named DIRECTV (“New DIRECTV”) that will own and operate AT&T’s U.S. video business unit consisting of the DIRECTV, AT&T TV and U-verse video services. Following the close of the transaction, AT&T will own 70% of the common equity and TPG will own 30%. AT&T will net $7.8 billion from the deal, valuing DIRECTV at at $16.25 billion. AT&T acquired DIRECTV for $48.5 billion in 2015, or $67 billion when you include debt.

TPG will contribute $1.8 billion in cash to New DIRECTV and has secured $6.2 billion in committed financing from its bank group, $5.8 billion of which is expected to be paid to AT&T in cash plus the assumption from AT&T of $200 million of existing DIRECTV debt. The New DIRECTV will be jointly governed by a board that has two representatives from each of AT&T and TPG, as well as a fifth seat for the CEO, which at closing will be Bill Morrow, CEO of AT&T’s U.S. video business.

AT&T and New DIRECTV will have commercial agreements in place that will give New DIRECTV video subscribers continued access to HBO Max and to offer bundled pay-TV service for AT&T’s wireless and internet customers. Once the transaction is completed, existing AT&T video subscribers will become New DIRECTV customers and will be able to keep their video service and any bundled wireless or broadband services, as well as HBO Max, plus any associated discounts. The NFL SUNDAY TICKET content deal on DIRECTV, will be a part of the New DIRECTV company.

ViacomCBS held their big streaming service reveal for the March 4th launch of Paramount+ and the company didn’t disappoint. There was a lot of news to digest from the event, both in the volume of new content they highlighted coming to the service, as well as the back catalog of movies and TV shows that will be available. But the biggest news was the announcement that popular Paramount films will come to the streaming service 30-45 days after their theatrical run. All others will come to the platform at a later time, with the company saying some as early as 90 days. Here’s some other key takeaways:

• Paramount+ will have two packages in the U.S., an ad supported offering at $4.99 a month (coming in June) and a “Premium” offering for $9.99 a month. Premium will get you access to live TV with news, local content and more live sports
• Expect 65-75 million subscribers globally for Paramount+ by 2024. That goes along with their projection of 100-120 million MAUs for Pluto TV and an estimated total streaming revenue of $7 billion by 2024
• Paramount+ will have access to MGM films, due to their deal with EPIX, extended through the end of 2023, giving Paramount+ the new James Bond title No Time to Die, amongst other films
• All Paramount+ original series will be made available in 4K with HDR and Dolby Vision
• Similar to CBS All Access, some content will be available for download to mobile devices
• By summer 2021, Paramount+ should have more than 2,500 movies
• A TV show based on the Halo game, being produced by Showtime, will debut on Paramount+ in Q1 of 2022

At some point, ViacomCBS will have an archive of their launch event available on their website here.

In a previous blog post I detailed how the pay TV market lost at least 5.6M subscribers in 2020. While that would seem like good news for live linear streaming services like Sling TV, Hulu, YouTube TV, Fubo, DAZN etc. to date, no live streaming service has seen much in the way of subscriber growth. As an example, Sling TV, the first service to the market and the lowest priced, grew by only 260,000 subscribers over the past 4 years. That’s an average of only 65,000 net new subs per year, when pay TV lost between 4-7 million subscribers each year, over that same time period.

Hulu, which saw some big growth in 2019, with Hulu + Live TV subscribers going from 800,000 in May of 2018 to 4.1 million subscribers at the end of 2019, lost 100,000 subscribers in 2020, to end the year with 4 million subscribers in total. YouTube TV ended 2019 with 2 million subscribers and grew to 3 million subscribers as of October 2020, which is the last time Google provided updated numbers. It’s possible YouTube TV could have added a lot more subscribers in Q4 of 2020, but not to the tune of how many pay TV subscribers were lost in the same quarter. Fubo TV did see some small growth last year, closing out 2020 with a total of 545,000 subscribers, adding 229,211 subscribers over 2019.

It’s been reported, but not confirmed, that live streaming service DAZN had 8 million subscribers at the end of 2019, but then lost subscribers in 2020 and have not gotten back to the 8 million number as of yet. To date, the company hasn’t published any official numbers so we don’t know how accurate the estimated numbers are. Then there is Sony Interactive Entertainment, which shut down their PlayStation Vue service in January of 2020. It was estimated they had well less than 1 million subscribers, but to date we’ve never seen any confirmed numbers on that either.

Between one-off big events and platforms with targeted content, live streaming saw a huge amount of growth in 2020. Content from the likes of Twitch as well as Amazon Prime Video, with all the major sporting events they bought the rights too, saw the total number of hours viewed online grow by huge percentages years-over-year. But we have not seen the same growth with regards to live linear services because the services have not evolved into what consumers were told they would become. From day one, the main value proposition vMVPD services pitched to consumers was the cheap cost, when compared to cable TV.

While many services started out that way, they all quickly raised pricing multiple times. The average live streaming package that looks most similar to cable TV now costs $65 a month or more. In January of 2019, Hulu + Live TV cost $40 a month and less than two years later, the price is $65 a month, which is a 38% rate increase. When YouTube TV raised pricing from $50 a month to $65 a month in June of 2020, their rational for doing so was that they were adding eight ViacomCBS’s channels to the lineup. However, there was no option to keep the $50 package and not take the new channels. You had to accept the new pricing and new channels even if you weren’t interested in them. Sounds exactly like pay TV.

Sling TV in particular has called their service “A La Carte”, but you have to buy packages of many channels all together. Adding a premium service like HBO to your lineup for an additional fee per month is not “A La Carte”. The reality is, live streaming services are simply the new pay TV bundles. They are priced like pay TV, bundled like pay TV, and have more restrictions than pay TV, most with a limit on the number of concurrent streams. Companies have used terms like “personalized” and “custom”, to describe how they differ from pay TV services, but there is nothing custom or personalized about having to buy bundles of channels and not being able to opt out of higher pricing with channels you don’t want to watch.

One could easily point the finger at the live linear services themselves and say it’s their own fault for not growing when they keep raising rates. But the real problem is that in most cases, these services don’t own the content and the rates they are being charged by the content owners keeps going up. So the live linear services are in a tough spot as they need the content, but are handcuffed by the pricing and how they package the channels together. Their success, or failure, is really being dictated by the content owners.

If Dish and AT&T weren’t the owners of Sling TV and what is now AT&T TV, I’d argue those two streaming services would have already left the market, just like PlayStation Vue did. The business economics of them standing on their own, as profitable and growing streaming services, without backing from a cable TV operator simply wouldn’t be possible. Content licensing costs are simply too high, along with all the other costs of video ingestion, transcoding, protection, packaging, delivery and playback. They could try the route that Fubo TV is doing right now as a stand-alone company, but you’d need a lot of money to try and become profitable. Fubo TV has recorded a net loss of $402.5 million through the first nine months of 2020 and has negative gross-profit margin. In other words, trying to be a vMVPD on your own isn’t easy and scale doesn’t change your P&L in a positive way.

Even if any of these live linear services get to some sort of real scale, there is little to no profitability on the stand-alone streaming service. Using it to reduce churn inside a cable TV operator or trying to sell other bundled services around it, maybe they have more value. But in the next few years I suspect we’ll see some of the current live linear services exit the market completely. In a follow up post, I’ll outline why I think Hulu will exit the live TV market in the next few years.

With the majority of cable and satellite TV operators in the US having reported Q4 and 2020 earnings, combined, they lost at least 5.6M pay TV subscribers last year. That number includes lost streaming subscribers for Sling TV and AT&T. Operators WOW! and Mediacom have yet to report Q4 and full-year 2020 earnings, but as small as they are, they won’t push the numbers either way by much.

These pay TV losses won’t surprise anyone who follows the cord cutting trend, but what might surprise many is that vMVPD streaming services are not gaining the subs lost from traditional pay TV operators. Year-over-year, Sling TV, AT&T and Hulu all lost live subscribers last year. Fubo TV gained 229,211 subscribers and DAZN and YouTube won’t say how many subscribers they gained or lost in 2020. The fact live streaming services haven’t gained many subs isn’t surprising since all live service saw price hikes last year, with the average package comparable to pay TV starting at $65 a month. Make no mistake, live OTT is simply the new pay TV bundle. It can be called something else, but in reality it is priced like pay TV, bundled like pay TV, and has more restrictions than pay TV, with a limit on the number of concurrent streams from one account.

With all these hard numbers one has to ask the question, where are all these cord cutters going and do consumers really care about live TV anymore, outside of sports and some other specific big events? As viewers content habits have shifted to an on-demand world over the past few years, one could argue that without sports content, live streaming would be a thing of the past. The Grammy’s, Olympics, news and some other one-off events would still garner interest, but it’s clear that the live OTT services simply aren’t resonating with consumers in large numbers.

Live content is a different type of viewing experience and Twitch and other platforms like ESPN+, MLB.TV etc. are seeing some growth in consumption, but that content is targeting a very specific demographic, with specific content, and isn’t hitting the largest swath of the market. As an industry, the real question we have to ask is, what does the future of live video consumption look like and who’s going to control the market? In the near term, live TV via cable or streaming won’t be a linear experience as we think of it today.

Last week, I talked to various individuals tied to the current negotiations between the NFL and CBS, NBC, ESPN and FOX as it pertains to broadcast TV and streaming rights for NFL content. Currently, FOX has the NFC conference rights and AFC conference rights are with CBS. NBC has “Sunday Night Football”, ESPN has “Monday Night Football” and FOX and the NFL Network have “Thursday Night Football”. ESPN’s deal with the NFL expires after the 2021 football season and all the other broadcast deals run through the 2022 season.

While there’s a lot of speculation on which broadcasters might get more or fewer games in the new deals for broadcast TV rights, (“rumored” to be valued at $100B across all networks for 8-10 years), I’m more interested in what the NFL will end up doing with the “NFL Sunday Ticket” package. It’s well known that the current NFL deal with DIRECTV (AT&T), which runs through the 2022 season, will not be renewed. This makes sense since AT&T is trying to sell off the DIRECTV business and I’m told the NFL no longer wants the restrictions that come from distributing the package via satellite, which is completely outdated, as is the current streaming experience.

DIRECTV extended their current contract with the NFL in 2014 and as we all know, seven years later, the business models for the packaging and distribution of video content has drastically changed. This leaves a new platform to become the NFL’s partner on selling a streaming package to consumers, without any legacy restrictions. Multiple people I spoke with said that while talks are still in the early stages, Amazon looks to be in the lead for the new digital direct-to-consumer offering of what is currently branded NFL Sunday Ticket.

In 2020, Amazon signed a three-year agreement with the NFL to keep Amazon as the exclusive partner for live streaming Thursday Night Football games, 11 in total, and Amazon streamed an exclusive national regular-season game December 26, on Prime Video and Twitch. Sources tell me the NFL has been very happy with Amazon’s live streaming production of the 2020 NFL season, so it would be a natural fit for the NFL to extend their relationship with Amazon on a NFL-based streaming subscription product.

Of all the companies you would think of for such an offering, Amazon would make the most sense for the NFL since Amazon can put their marketing power behind it, already has subscriber’s payment info on file and has the resources to execute what would be a very complex video workflow on the backend. Prime Video and Twitch coverage of the NFL is already available to more than 150 million paid Prime members worldwide, and is in more than 240 countries and territories, so Amazon would give the NFL the widest distribution. I can easily imagine Amazon boxes showing up at my house printed with NFL Sunday Ticket promotions like we’ve seen Amazon do with content partners in the past (Minion boxes everywhere!).

Some have suggested Google, Facebook or even Disney, with their ESPN+ offering might be interested in the deal, but Disney would not take it on, nor are they setup to handle it. Even for broadcast TV rights, Disney is being cautious. On Disney’s Q4 2020 earnings call they were asked about the NFL renewal and said, “first priority will be to look and say does it make sense for shareholder value going forward?” Disney still has a lot of work ahead growing and maintaining their own D2C offerings, so building out an entirely new D2C product with the NFL simply isn’t doable for them from a technical stack standpoint.

With respect to Google, Facebook and Apple, I don’t see the NFL Sunday Ticket fitting into any of Google’s current offerings and it would not make sense to try and bundle it in with any kind of YouTube TV or YouTube Music package. I’ve seen some suggest that bundling an NFL offering with YouTube TV would give Google a way to sign up more subs for their vMVPD service, but many wouldn’t be interested in the vMVPD offering and the additional cost. YouTube TV costs $65 a month now and YouTube just announced more “add on” features coming to YouTube TV for an additional unknown cost.

As far as reach goes, the last number Google has publicly given out on subscribers is that YouTube TV has 3 million paying members, a figure they gave out in October of last year and didn’t update during their earnings call in February 2021. YouTube TV launched 4 years ago this month and in that time hasn’t gotten much traction for the service. They look similar to Hulu, which ended 2020 with 4 million paying subs for their Hulu + Live TV offering, losing 100,000 subs year-over-year. The price of live services have all seen very steady increases and not gotten the number of subscribers many thought they would. We saw estimates from analysts and Wall Street firms suggesting Google would get 10 millions subs or more, for the then priced $35 YouTube TV service, within the first year of launch. One could suggest that YouTube could sell a lot of ads against the NFL’s content and share that revenue with the NFL, but that’s something Amazon could do as well. Amazon’s ‘Ads and other’ business did $21.5B of revenue in 2020.

Facebook and the NFL did a content agreement in 2017 which was renewed in 2019 and expired at the end of 2020. As part of the old deal, Facebook didn’t have any live games and provided game recaps that it placed on its Facebook Watch video-on-demand platform. Facebook had to pay an up-front fee for the content and then also split ad revenue with the NFL. In 2016, Facebook did show interest in acquiring rights for live streaming the Thursday Night Games that Amazon ended up getting, but five years later one has to wonder if live streaming of NFL games fits into Facebook’s content road map anymore. When it comes to Apple you have to throw them into the mix due to their reach, but to date Apple hasn’t done anything on the live side, or at scale with video. I know some will suggest they have a younger demographic the NFL wants and the ability to promote services through all the Apple devices and their ecosystem, but I’m not convinced it fits their content strategy.

Based on everything I hear from those closer to these deals than I am, Amazon is in the driver’s seat for the NFL’s new direct-to-consumer offering, although negotiations are early and still ongoing. I’m told that details around pricing for a new streaming NFL Sunday Ticket package and revenue splits have yet to be discussed and that discussions will move along once the NFL finishes the renewals with TV broadcasters. Whomever gets the NFL Sunday Ticket deal, the new streaming service is going to be an exciting product for consumers and will be a huge improvement on what is currently an outdated user experience. And if working with Amazon enables the NFL to bring the price down on a streaming service, which is what Amazon does with all products, the NFL would get a bigger audience, wider distribution for their brand and more revenue based on volume. My bet is on Amazon.