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Media Chasing Netflix Struggle Over Streaming

Jeffrey Katzenberg and Meg Whitman of Quibi
Short-form streamer Quibi, introduced at CES by co-founders Jeffrey Katzenberg (l.) and Meg Whitman, will shut down. (Image credit: JohnStaleyPhoto.com)

Even with Netflix’s subscriber growth slowing a bit in the third quarter, trying to catch the streaming leader continues to cause pain for the media companies pivoting into the direct-to-consumer arena.

ViacomCBS is the latest big media provider to reorganize its ranks to emphasize streaming, putting Pluto TV founder Tom Ryan in charge as the effort gets underway to turn CBS All Access into Paramount Plus.

Discovery has renamed its “dplay” video-on-demand business in the United Kingdom as Discovery Plus, which is likely to also be the name of its long-awaited direct-to-consumer offering when the company finally gets its streaming ducks in a row.

And Quibi, the high-profile, short-form mobile streaming service launched by Jeffrey Katzenberg and Meg Whitman with $1.75 billion invested by many of the industry’s big studios, said it was shutting down after a slow start. Quibi put the blame on the COVID-19 pandemic that kept on-the-go mobile users at home, on expensive content that skewed old and on legal problems from a company claiming a patent on the technology Quibi was using to let people shift from watching shows horizontally to vertically and back again.

RELATED: Quibi Lament: How Did Jeffrey Katzenberg Not Succeed with Record High Pandemic Audience Levels and $1.8 Billion?

“The world has changed dramatically since Quibi launched, and our standalone business model is no longer viable,” Katzenberg and Whitman said. “We have reluctantly come to the difficult decision to wind down the business, return cash to our shareholders, and say goodbye to our colleagues with grace. We want you to know we did not give up on this idea without a fight.”

Digital Dilemma

Jealously watching Netflix accumulate subscribers and command viewers’ attention, nearly all of the big media companies in TV are looking to pivot from traditional pay models to streaming, investing billions in new programming and forgoing the revenue from syndicating content at a time when competition seems to trumping cooperation.

Managements are being retooled, often resulting in layoffs. Comcast’s NBCUniversal put Mark Lazarus in charge of TV and streaming and The Walt Disney Co. created a division headed by Kareem Daniel to oversee content distribution and the company’s streaming services. Jason Kilar, who cut his teeth at Hulu, is now heading AT&T’s efforts at organizing AT&T-owned WarnerMedia’s resources to prop up HBO Max.

Pluto TV founder Tom Ryan

Pluto TV founder Tom Ryan will ramp up ViacomCBS’s Paramount Plus.   (Image credit: ViacomCBS)

Viacom and CBS re-merged to compete in the streaming arena, and joined the restructuring parade by placing Ryan in charge of streaming activities. Chief digital officer Marc DeBevoise, who had been heading up the transformation of CBS All Access into a grander Paramount Plus, is stepping down. 

“Tom is a pioneering streaming executive who has demonstrated extraordinary talent in creating a differentiated, consumer-centric service that resonates with global audiences,” ViacomCBS CEO Bob Bakish said in a statement. “He will bring this same digital expertise, entrepreneurial spirit and strategic, collaborative mindset as we deliver the very best of ViacomCBS to Paramount Plus and our portfolio of streaming platforms.” 

RELATED: ViacomCBS Puts Pluto's Ryan in Charge of Streaming

Kelly Day, chief operating officer of ViacomCBS Networks International, will take on an expanded role as president of streaming for VCNI. 

Paramount Plus, which will have NFL football and news in addition to movies and series, is expected to launch in 2021 domestically, followed by a rollout in markets including Australian, Latin America and the Nordics.

Discovery lost its direct-to-home guru when former Amazon executive Peter Faricy resigned in June. CEO David Zaslav is now counting on a team of three executives to deliver a product he’s been talking about for nearly a year and has called “the most important thing we’ll do as a company since I’ve been at Discovery.”

In the U.K., Discovery Plus will have a subscription component, but Sky Q pay TV customers will get it free for a year. Zaslav said Discovery has been talking to distributors to launch a Discovery Plus, or whatever it’s called, in the U.S. That strategy has helped the Disney Plus streaming service get off to a fast start with Verizon Communications customers and made the premium version of NBCU’s Peacock TV free to Cox Communications subscribers.

No Worries Over Netflix

Netflix, meanwhile, reported a tough quarter with slower-than-forecast subscriber growth. But Wall Street analysts predicted it would continue to dominate streaming and have increasing financial success, turning cash flow positive as soon as next year.

Jeff Wlodarczak of Pivotal Research said in a note that “very few players can (or will) be able to keep up with Netflix content spend levels,” meaning Netflix will continue to be the dominant global SVOD player and Disney Plus and Hulu would combine as a complementary second-tier player, “with Amazon on the periphery and there is a reasonable shot that AT&T management will screw up HBO (in similar fashion to DirecTV) as a competitor.”

“The biggest losers in our view are traditional pay TV players that rely on rising per-subscriber fees and high advertising loads, don’t have other businesses to offset likely accelerating weakness in pay TV and don’t have effective DTC strategies,” Wlodarczak said.