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‘The consumer is really the winner here’: Mark Boidman on streaming

Mark Boidman, P.J. Solomon Head of Marketing & Media/Tech Services, joins Yahoo Finance’s Zack Guzman and Akiko Fujita to take a look back on the major streaming companies in 2020, and see what 2021 has in store for them as well.

Video Transcript

- Shares of Disney hitting a new high in the session. That stock up about 2%. Disney, of course, one of many companies out there that have seen huge growth in their streaming platforms this year. Take a look at these numbers here.

Netflix up 62% year to date. Amazon up 80%. Roku up 153%. And Disney up about 25% year to date. So, let's look ahead to the outlook for 2021.

We've got Mark Boidman. He's the head of marketing and media tech services at PJ Solomon. And Mark, it's good to talk to you today.

I know it's a cliche, but in many ways 2020 was really the perfect storm for these streaming platforms, with so many of us streaming stuck at home. How much of a leveling off do you anticipate going into 2021, especially just given the huge growth that we saw this year?

MARK BOIDMAN: Thanks, thanks. Look, I think what's interesting here is you're seeing tremendous growth that you would have seen but for the pandemic, and now with the pandemic, it's accelerated that growth. So, what you're seeing is traditional pay TV subscribers who are migrating to over-the-top programming.

And the pandemic has accelerated that. Because consumers want the ability to stream content from anywhere, and without any contracts, or hidden fees, or a cable box.

- Yeah, Mark, when we talk about the trends here, not only are people streaming more, but it's becoming quite obvious that a lot of these companies are going to be shelling out a ridiculous amount of money on the content itself. You think about what we saw from Disney saying that they're going to be spending $16 billion potentially by 2024 on content here.

So, talking about maybe how the costs are going to be rising as all these competitors vie for a lot of the same content in many instances.

MARK BOIDMAN: Right, and look, that's the power of streaming, is the content. The consumer is winning. Because we're seeing more content choices and having the ability to stream what you want when you want it. And the content spend is a key distinguishing factor between each of these streaming services, that original content.

So, Disney has to spend. Netflix has been spending close to $20 billion. You're seeing Apple spending. They have to spend. It's the content that drives consumers to streaming. And if you think about the, again, the ability to stream when you want, where you want it, and having no contract., So, if the content isn't there, you could easily decide to stream elsewhere.

So, I think content is really the distinguishing factor. And you're going to continue to see companies spend rather than just rely on their historical libraries, which Disney has definitely done. But the original content that Disney and others will roll out will continue to drive new subscribers.

- Mark, the ongoing question in the space, though, is just to what extent consumers are going to continue to pay for some of these subscriptions. And you've talked about the ad supported system here, the streaming site sort of being able to be offered for free to a certain extent. How much growth do you anticipate on that front? And which one of the players are we talking about who may make that pivot increasingly as they see their subscriber numbers start to level off?

MARK BOIDMAN: Right, and that is the exciting thing about streaming, is that initially it was pay-- you had to pay in order to subscribe to one of these streaming services. Now, they have an ad-supported streaming services that are gaining traction, with real content.

And so, if you're open to watching some ads or all ads, you're able to reduce, or in many cases see free streaming, which is pretty powerful. And we're seeing real growth there. One, you're seeing ad spend migrating to these streaming services. And two, you're seeing better content on ad-supported streaming services. And you're also seeing, three, new companies, new entrants into free streaming or ad-supported streaming.

So, really, again, the consumer is really the winner here. Because you have a lot more choices. It's really a separation between what we view as old media, watching pay TV, and having to subscribe to numerous channels because they were bundled together, the ability to decide to stream what you want.

And if it's ad supported, even better, because as a consumer, you can make the choice to watch streaming with ads or watch streaming without ads and pay for it. And we're seeing a hybrid, where you have the ability to spend $5 or $6 a month and watch some ads or ad light models, but still stream, and see less advertising than you would see with traditional pay television

- Yeah, you keep saying the consumer is the winner here. Let me push back on that too. Because we think about stuff maybe being behind the paywall, we're going to see that with Peacock and "The Office." you're going to be able to watch some seasons, not all of them, unless you want to pay. We saw prices go up, not only Disney, but Netflix. We talked about that before too.

Maybe-- explain to me maybe at what point the break point comes, when some of these streaming services say, look, we can charge-- either we can charge more or we can maybe start to restrict some of the accounts on these shared accounts, when we talk about families maybe splitting Disney Plus, Netflix. At some point, it seems like that's the direction we're headed. So, how much runway should consumers expect on that front?

- Right, Zack, it's a great point. But there are different ways to look at this. There's one, versus pay television, where the consumer wins because the consumer used to have to pay for a lot of TV programming that they weren't really interested in. So, if you can separate, and say, OK, I'm no longer going to spend $50 to $100 a month on pay television, but I'm going to subscribe to a couple of streaming services and spend $20 a month, that's a real savings for the consumer.

But if you're also going to look at it and say, OK, I want to have a variety of content and I'm going to stream a large number of services, these do start to add up. And there are studies out there that say that most consumers don't want to spend more than $20 to even $30 a month on streaming.

And so, the consumer starts to tap out here in terms of the number of streaming services they will subscribe to. And it starts to look very much like that traditional pay TV subscription cost. And when you think about today, the ability to use, whether it's Sling, or Hulu, or others to watch what feels more like traditional television, that can get more costly than just $20 to $30 a month.

So, you're starting to see a variety of options, though. And that's why the consumer wins. It's really the options. The ability to say, I want to spend less than that $50, to $75, to $100 on traditional pay television. I want to spend $20 to $30 a month, that flexibility. And again, no contracts.

So, if you're going on vacation, or you've decided that there's not the right content on that streaming service, you can cut it at any time. And that's the power of streaming.

- That's a very important point. As a never-quitter myself, maybe it's something I don't appreciate as younger people shift over into the streaming space, with Mark Boidman, PJ Solomon head of marketing media tech services. Appreciate you taking the time to chat.

MARK BOIDMAN: Great, thanks. Happy New Year to all.