Small Screen: Ad Market Softening

Key Takeaways:

• Softening trends within the broader ad market weighed on 4Q22 ad revenues at Warner Bros Discovery, though DTC subscribers increased 11% YoY while ST user estimates for the HBO Max and Discovery+ mobile apps combined increased 22% YoY

• Warner Bros Discovery’s CFO noted that streaming costs were easing due to positive subscriber engagement trends examined in the quarter. This was largely corroborated by ST data: the weekly average time spent per user on HBO Max was up 10% YoY in 4Q22 vs +19% on Disney+, flat on Paramount+, -3% on Peacock, -6% each on Hulu and Prime Video, and -14% on Netflix

  • Sensor Tower’s Churn Analysis data indicates that churn is lowest during the initial run of hit shows, with spikes occurring after a show has concluded. HBO Max monthly churn was ~26% during the run of House of The Dragon, but increased 5pps to 31% in the month following the season finale

  • Churn on HBO Max has been decreasing recently, likely driven by tailwinds from the popular second season of The White Lotus and the success of The Last of Us. As of Jan’23, user churn has fallen 5pps from Nov’22

  • HBO has benefited from strong momentum in The Last of Us in 1Q23, driving a 10% MoM (15% YoY) jump in MAUs in Jan’23, per ST estimates

• Per ST estimates, average DAUs on Peacock were down 22% YoY (for the weeks beginning Feb 6 and Feb 13) as the service lapped the ‘22 Beijing Olympics and Super Bowl LVI (also available via streaming)

  • Super Bowl LVII was available via streaming on a few different apps this year, all of which saw a surge in DAUs during the game: DAUs on the Fox Sports Live mobile app surged 243% DoD, compared to 110% on the NFL app, 101% on YouTube TV, 50% on fuboTV, and 17% on Sling TV

For more information, request the full report from reports@sensortower.com.