TV ad spending is likely better insulated against an overall slowing ad environment than social media apps, Pivotal Research Group analyst Jeffrey Wlodarczak wrote investors Friday, upgrading Roku from a “sell” to “hold” rating. Wlodarczak noted Snap’s recent “disappointing outlook (see 2205240006)," comparing the current macroeconomic environment to the late 1990s “when ad-based Internet companies massively benefited from large digital ad spend by profitless Internet companies, that disappeared quickly when investors suddenly pushed those companies to generate a profit.” Also, he said, a recession could accelerate the exodus from traditional pay TV to streaming. PRG’s previous sell rating was based on mixed Roku's Q4 subscriber results and guidance, its saturation in the U.S. streaming market, “too aggressive” revenue growth expectations and Charter and Comcast’s joint move into streaming aggregation (see 2204270057). “Nothing has really changed around our concerns here, offset partially by some signs of chip shortages alleviating,” he said -- adding Roku could benefit from Netflix’ upcoming ad-based plan -- but its $9 billion valuation at $80 a share is “reasonable,” said the analyst. Roku’s strategy to invest aggressively “is unloved by the market but is frankly prudent to try to raise the barriers to entry for existing/new players and attack a sizeable revenue opportunity,” he said: “It also exacerbates the risk that basically no one generates outsized returns if it forces everyone to follow suit.” The lower stock price creates “the potential for an outside player to make a bid for the company,” he said, citing Comcast-Charter or large internet players looking to reach critical mass in streaming quickly.

The NFL didn’t respond to questions on reports it's launching a premium streaming service in July. Sports Business Journal reported Wednesday that the league will have a $5 monthly service for live games on mobile phones and tablets. Games will be limited to what fans can see in their local TV markets, the story said. Before this year, those games were distributed to tablets and laptops via Yahoo and on mobile phones via major carriers in deals that have expired, it said.

Nielsen’s Gracenote launched a data service to help content discovery platforms connect consumers to programming on free ad-supported TV (FAST) channels, along with linear channels, on virtual MVPD services, it said Tuesday. Gracenote Streaming Channels will let content aggregators serve as “one-stop shops” for viewers who are increasingly turning to new free services to augment premium service content, the company said. The offering includes access to Gracenote’s database of schedules for linear streaming channels, including a Gracenote ID, and normalized channel and program metadata with imagery, descriptions and celebrity information, it said. The dataset improves content discoverability and enables personalized program recommendations across different services, the company said. FAST channels are often themed and remain available for a finite time period, Gracenote said, giving the example of a dedicated channel for TV programming resonating with Asian viewers during Asian American and Pacific Islander Heritage month. “Based on the temporal nature of the offering, the ability to integrate the FAST channel and make its content discoverable quickly is critical,” it said. As more consumers adopt FAST channels, “easy integration and discovery options become more important than ever for aggregator platforms,” said Gracenote Chief Product Officer Simon Adams.

Streaming accounted for 30.4% of total TV viewing time in April, a new high, reported Nielsen Thursday. While streaming volume was flat sequentially, broadcast and cable saw a 3% and 2.5% dip, Nielsen said: Broadcast had a 14.7% decline in drama viewing and sports fell 38.25%; cable had a 16.9% drop in news viewing and a 17% bump in sports watching due to the NCAA basketball finals and NBA games, it said. For the month, cable had 36.8% viewing, broadcast had 24.7% and other was 8.2%. Among OTT services, Netflix accounted for 6.6% of viewership, YouTube was 6.1%, Hulu 3.3%, Amazon Prime Video 2.5%, Disney+ 1.7% and HBO Max 1%.

Streaming grew 5% year on year in North America in Q1 and 9% in Europe, with big-screen TVs getting 77% of streamed minutes globally in the quarter, Conviva reported Thursday. Smart TV viewing time grew by 34% year on year in Q1, while desktop PCs and gaming consoles had a 15% decline, it said. Connected TV device viewing slipped 1%, with Roku having 31% of viewing time vs. Amazon Fire at 16%, said the report. Android TV had 78% more minutes streamed in Q1 vs. the prior-year quarter; LG, Samsung and Vizio were all up about 20%, it said. Globally, bitrate improved by 17.3% year on year, buffering was down 1% and video start failures dropped 17.6%, but video start rates grew, with the wait time consumers experienced for a video to start up in every region. Africa was at 8 seconds; Europe had the fastest start time at an average 4 seconds, it said. Ad impressions were up 18%, driven by high-profile sporting events: the Super Bowl, Winter Olympics and NCAA March Madness. Streaming on social media platforms is growing as a way for leagues to engage fans, Conviva said. TikTok grew its streaming audience share for every sports league measured, it said. The NFL had 4% viewership growth on TikTok year on year, and the Los Angeles Rams and Cincinnati Bengals gained over 100,000 TikTok followers during the Super Bowl weekend, it said.

Rising costs and economic uncertainty are behind a “reconsideration of streaming’s future,” said eMarketer Wednesday, saying services are under pressure to attract and retain customers while “inching toward profitability.” In 2019, 32% of U.S. video subscribers paid for three or more services; 58% do today, and those feeling a pinch from inflation “are likely to take a hard look at which services they will stick with.” The pressure will affect Netflix “acutely,” and the company’s “recent stumbles” open the door for competing services to win viewers, said analysts Paul Verna and Ross Benes. They cited a March CivicScience survey saying 45% of U.S. Netflix subscribers were “very likely” to cancel their subscription if it began charging a premium for account sharing, which the company said last month that it plans to do (see 2204200002). Netflix’s plan to add an ad-based tier will cause an exodus of some customers, said the analysts. EMarketer had forecast that Netflix will reach 658 million users worldwide this year, but it will scale back that number in Q3 because streamers “pay extra to avoid ads.” EMarketer expects Netflix’s ad tier to be discounted, leading competitors to also charge premiums for ad-free plans. The company predicts Netflix's monthly active viewers will rise to 750.2 million in 2025, with its share of the subscription VOD user base slipping from 35% in 2022 to 34.9% in three years.

U.S. consumers are viewing slightly more subscription VOD services than a year ago, with most households, especially those with kids under 18, “churning through streaming TV services less frequently than they were during the first year” of the COVID-19 pandemic, reported NPD Wednesday. The average number of SVOD services per U.S. user reached 4.6 in April, down from the “mid-pandemic” peak of 5.2 in October 2020 but up from 4.3 in April 2021, it said. SVOD cancellations and declines in viewership are less likely to be driven by switching to other services than they were in early 2021, said NPD. The top driver of churn currently is that consumers “aren’t watching as much as before, with 33% of SVOD viewers making this claim, up from 29% a year ago,” it said. “These results aren’t surprising when you consider the fact that so many of us were stuck at home during the pandemic with plenty of time on our hands to try the direct-to-consumer SVOD services that had recently launched,” said John Buffone, NPD executive director-industry analyst. “We’re still above the levels that we were seeing before the pandemic started. During the first two months of 2022, streaming volumes had settled at levels seen between 2019 and 2021. When this all pans out, we do expect to see a net positive environment for the industry.”

U.S. consumer spending on home entertainment content jumped 10.9% in the first quarter to $8.66 billion, driven mainly by the 16.9% increase in subscription VOD to $6.93 billion, reported the Digital Entertainment Group Friday. Sell-through of packaged media declined 19% to $388.48 million, said DEG: “While still significantly below pre-pandemic levels, box-office spending on the titles released to the home in the first quarter jumped more than 500% from the year earlier period, feeding consumers’ appetite for fresh feature films.”

The major MVPDs lost about 1.96 million subscribers in Q1 -- roughly in line with the losses they had in Q1 2021 and Q1 2020, Leichtman Research Group said Tuesday. Combined they have about 74.1 million subs, LRG said. It said they lost roughly 4.74 million subs over the past year, compared with 4.82 million the previous year. It said the largest cable operators lost about 825,000 in Q1, up from a loss of about 780,000 in Q1 2021. It said the top publicly reporting virtual MVPDs lost about 505,000 subs in Q1, accelerating from a loss of about 265,000 year over year. It said DBS operators lost 528,000 in Q1, while telcos lost 95,000.

Staggered releases of popular TV series could prop up the subscriber count at Netflix, Wedbush Securities analyst Michael Pachter wrote investors Monday, upgrading the stock to "outperform." The analyst believes Netflix will exceed guidance for Q2 due to the staggered release date for Ozark, and it believes the same approach for Stranger Things in Q3 could also reduce churn. “Netflix is positioned to grow,” as the subscription VOD service “gradually” raises prices and rolls out an ad-supported option, Pachter said; he doesn’t believe Netflix’s share price will approach 2021 levels “for many years.” Wedbush sees recent Netflix losses as the result of “deep saturation” in the U.S. and Canada. The company’s plans to crack down on password sharing -- which Netflix estimates at 30 million households in those two markets and 100 million globally -- will bring it a “few million new customers.” But its plan to offer an advertising-supported tier “has great potential to drive significant revenue,” he said. Raising prices in mature markets would allow Netflix to drive up its average revenue per user, and its level of profitability, allowing it to reinvest profits to continue growing in Latin America and Asia-Pacific, he said.