TV & Video Week in Review

Report Type: 
Week In Review

Fox CEO eyes target of 5m subs for sports JV in its first five years.

Speaking at a tech conference in San Francisco last week, Fox CEO Lachlan Murdoch cited a target of five million subscribers within five years for their recently announced sports joint venture. Partnering with Disney and Warner Bros. Discovery, the JV is set to launch this fall, in time for college football season. Murdoch further claimed that the addressable market for the sports app is 50-60m homes, or roughly half of US TV households. The revenue model will resemble a vMVPD, similar to YouTube TV or Hulu + Live TV, and that each company would be paid per subscriber. Murdoch said ROI should still be robust even with subscriptions in the low seven figures. While pricing is still unannounced, Murdoch indicated that the higher end of analyst estimates is more likely (so at, or around, $50/month). Murdoch also mentioned that an Australian app called Kayo has been “creative inspiration” for the group. Kayo covers almost all of Australia’s sports and carries no channel brands.

The Circana Take:

  • Sports are a top driver of viewership throughout the television landscape. With an addressable market of 50-60m homes, a five-year target of 10% seems conservative, even for Fox. This feels like the company may be trying to soften projections to chill potential regulatory pressures and/or financial analyst expectations.
  • The idea that this offering is aimed solely at cord cutters/nevers and will not accelerate the migration from cable is likely to be a launch, rather than long-term, position. The high price will certainly keep some customers away, but discounted bundled offerings and growing cable prices will eventually change that strategy.

Max will start password sharing crackdown later this year.

Speaking at the same tech conference mentioned earlier, WBD’s CEO of global streaming and games, J.B. Perrette, said the company would begin cracking down on password sharing later in 2024 and into 2025. The effort is part of a multi-pronged approach to increase profitability. WBD’s other strategies include greater globalization of the Max app, expansion of their ad tiers into new markets, improved content slate, partnerships, and a shift from wholesale to more retail consumers. On password-sharing, Perrette said that the effort poses a “meaningful opportunity” but remembering scale also matters. He pointed out that Netflix has been around 17 years to Max’s four (and also boasts over 2.5x more global subs, and 1.5x more domestic subs).

The Circana Take:

  • This strategy makes complete sense and has been successfully implemented by Netflix. It will be interesting to see the effect of the crackdown relative to their premier content slate (Game of Thrones spinoff House of the Dragonseason 2 bows in June, while The Last of Us season 2, Euphoria season 2, and season three of The White Lotus all release in 2025).