Who doesn’t love TV? In this golden era of the small screen, there’s heaps of choice too – Bridgerton, Anatomy of a Scandal, Drive to Survive, Love is Blind, Bodyguard, Tiger King, Queen’s Gambit, Game of Thrones… How do you ever run out of things to watch? While Netflix used to think its only competition for her attention was when she went to sleep, all that has changed. As a company they’ve finally acknowledged the huge rise in competition. Because when we wake up, and look to our screens – there’s endless options available.
The total time we spend on social media and streaming platforms is mind-boggling. Every minute, there are 44 million views on Facebook live. But TikTok smash those numbers with three times that engagement – there’s 167 million views every minute. So recently, when Netflix, the previously unrivalled king of content, announced its first drop in subscribers in a decade recently… Darcy and Sascha sat down to discuss: Who’s winning in the war for our attention?
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Sascha: [00:00:34] From Equity Mates Media. Welcome to The Dive. I'm your host, Sascha Kelly. I've got a confession. I'm addicted to television. Bridgerton Drive to Survive. Bodyguard Love is Blind. Queen's Gambit. Anatomy of a Scandal. I've watched all of them.
Audio clip: [00:00:51] I just love television so much.
Sascha: [00:00:52] And Netflix used to think its only competition was when I was too tired to keep watching and eventually went to sleep. But that's not true anymore. And as a company, they finally acknowledged it. Because when I wake up, it's what Netflix I turn on, it's Instagram, it's Tik Tok, it's Spotify. And don't pretend you're immune to this. The total time we spend on social media and streaming platforms is mind boggling. Every minute there are 44 million views on Facebook Live, but tick tock a smashing that with numbers three times that big 167 million views every minute. So when Netflix, the previously unrivalled King of content, announced its first drop in subscribers in a decade, it got us thinking. It's Friday, the 29th of April. And today I want to know who is winning in the war for our attention. To help me answer that, I'm joined by my colleague at Equity Mates end and a fellow correspondent from the frontline of this war. It's Darcy Cordell. Darcy, welcome.
Darcy: [00:01:55] Thanks, Sascha. It's not to have a break from the trenches to chat with you.
Sascha: [00:01:58] You've got to take yourself away from that screen time and get on the mic sometimes. So Darcy, video, audio and social. The three big categories of entertainment and they're all changing. It's shifting sands at the moment. There's new technology, new challenges, disruptors and new customer habits for all of them. What is the headline here?
Darcy: [00:02:18] Our attention is hot property. and I have never felt so popular.
Sascha: [00:02:22] You and me both.
Darcy: [00:02:23] We talk about Facebook and Google monetising our data, but what they're actually monetising is our attention.
Audio clip: [00:02:29] Hey, how did you find out about this place?
Audio clip: [00:02:31] Somebody sent me a link to their Facebook page.
Audio clip: [00:02:32] Facebook, that's why everybody's here.
Darcy: [00:02:34] Are staring at the screen. It's what allows them to service more ads. The data they collect on us along the way just helps them target those ads. I'm going to get a little bit vulnerable here, and I'm going to ask you to get vulnerable with me, too. Can you pull out your phone, and tell me your daily screen time?
Sascha: [00:02:49] I was really worried where you were going with that, Darcy, because whenever a colleague asks you to do something a little bit unusual, you never know where it's going to go. But I'm pulling out my phone. I'm going to screen time. I'm terrified because I know it's going to be bad.
Darcy: [00:03:03] Okay. Tell me your daily average screen time.
Sascha: [00:03:06] It's currently 3 hours and 35 minutes.
Darcy: [00:03:09] Okay. That's actually not as bad as I was expecting. And I'm now really embarrassed to share mine. I'm not sure I want to be vulnerable anymore.
Sascha: [00:03:16] Come on, Darcy. I told you mine. You have to tell me yours.
Darcy: [00:03:19] Okay. I'm over 5 hours a day, and I sit at my desk half the time to. I'm not sure of where that time is coming in, but I'm pretty embarrassed of those three and a bit hours. what do you spend the most time on?
Sascha: [00:03:33] Okay, so Tick Tock is third with an hour 20 across the week. Real estate talking. Obviously not going to be on one of the lists, but I'm looking I'm looking for a house at the moment, but Instagram dwarfs them all. I've spent 8 hours on it over the last seven days.
Darcy: [00:03:50] Wow. Over an hour a day. Nice.
Sascha: [00:03:53] Yeah.
Darcy: [00:03:53] What about the average that we're talking about later? I'm a little bit skewed to yours. I have more time on Tik Tok, less on Instagram, but the app, I spend the most time on his Twitter with about 58 hours a week.
Sascha: [00:04:06] Holy moly. That's amazing.
Darcy: [00:04:08] I will say a lot of that is the work.
Audio clip: [00:04:10] Do you follow him on Twitter now? You should. He's very good.
Sascha: [00:04:13] That data gives us a pretty good snapshot of the type of people we are in, the types of lives that we're leaving. And there's so many companies that we didn't even name.
Darcy: [00:04:20] It does SASSA, a lot of the companies we've mentioned and some that we haven't. Facebook, Google, Twitter, Netflix, Spotify, they've really become the dominant businesses of our time and they've captured our attention. A lot of these companies have really had a rude awakening to start the year. We're talking about the stock market here, and a lot of them are really saying massive falls. Alphabet or Google is down 20%. Meta or Facebook is down 50%. Netflix is down 70% after losing 200,000 subscribers and 35% of that was in a single day. And Spotify is also down 70%. And there's a reason for this. We've got high inflation at the moment, interest rate uncertainty and just overall market uncertainty, too. But for these companies in particular, they're losing our attention.
Sascha: [00:05:07] That's right, Dorsey. We've named a number of different companies in the headlines. I'm going to get you to walk me through all of them today. But let's start with social media, because that's perhaps the most discussed with tech stocks. Rise.
Darcy: [00:05:18] Let's go back to 2016. Things were looking great for Facebook. They had over 2 billion users. They dominated the landscape. 80% of Americans had a Facebook account and the rest of the market was made up of Snapchat. WhatsApp. Instagram, but none of them are really close to Facebook's dominance.
Audio clip: [00:05:35] If you guys were the inventors of Facebook, you'd have invented Facebook.
Sascha: [00:05:38] I sense there's a bot or something coming here. What happened next?
Darcy: [00:05:43] Tik Tok has changed all of that.
Sascha: [00:05:45] It's one of the most popular social media apps out there.
Darcy: [00:05:48] If you've kept an eye on the most downloaded apps on the App Store over the last three years, Tick Tock is almost always at the top.
Sascha: [00:05:55] I can't say that's something that I keep a close eye on, but what do you mean by most downloaded? Like, what are the numbers behind this?
Darcy: [00:06:01] 3.5 billion downloads, which is almost half the world's population. Obviously, there's probably a few double downloads in there.
Sascha: [00:06:09] I know I've downloaded it, deleted it, downloaded it again. So I account for about five of those.
Darcy: [00:06:14] It's now the sixth most used social network. But what blows my mind is how long people spend on it. You said you spend a little bit of time on it, but the average Tik Tok user spends 52 minutes a day on the app. That's compared to Facebook, 38 minutes and YouTube only 18 minutes. So the only platform that really gets closed is Instagram with 53 minutes a day.
Sascha: [00:06:35] Look, I might be revealing my bias here, but 52 minutes a day isn't that hard to reach. Once you start scrolling the colour and movement, the noise is it's so addictive you just get lost in the rabbit hole vehicle.
Darcy: [00:06:47] Sascha But add that up over a month and it's more than a full day.
Sascha: [00:06:50] That's absolutely terrifying. And I didn't know that.
Darcy: [00:06:54] One day I'm on tik tok serious time. If we extend this war for our attention metaphor, the front lines are definitely the younger users like myself. And this is where Tik Tok is winning. 66% of Tik Tok users are under 30 and 41% are between 16 and 24 years old. And the engagement on Facebook and Instagram in these age groups is declining. Teenagers are using Facebook in the US. Is it predicted to fall 45% in the next two years? And people between 20 and 30 are also expected to drop by about 4% in the same time frame. And this is the most lucrative market for advertisers.
Sascha: [00:07:31] So they're looking at these numbers with great interest.
Darcy: [00:07:33] Darcy Meta actually told their employees that teens spend between two and three times more on Tik Tok than Instagram, and Snapchat is the preferred method for communication with their best friends.
Sascha: [00:07:45] Three words.
Audio clip: [00:07:47] Addictive, fun.
Darcy: [00:07:50] Addictive. And Tik Tok even has an influence on pop culture. If you look at Spotify's charts, there's almost always a tick tock song at the top.
Sascha: [00:07:59] And that's not a surprise, Darcy Because teenage girls always seem to drive the music industry. Isn't that right?
Darcy: [00:08:05] They do like Olivia Rodrigo, Madison Beer. Always at the top of the Spotify chart.
Sascha: [00:08:11] Sometimes I hear songs on the radio or on Spotify that I think I've heard that before. And of course it's been on a Tik Tok story and I just didn't even realise. Let's talk about that because I think we could do a whole episode. On how the music industry's using new technology to influence young listeners. Is this simply just a tick tock, disrupter story, or are there other apps that are challenging them for the crown?
Darcy: [00:08:35] Tiktok's the main reason. But girls, Snapchat has also had a resurgence. It's one of the fastest growing platforms in the world with over 530 million monthly active users.
Sascha: [00:08:45] That is such a surprise to me. Snapchat, I thought was dead and gone.
Darcy: [00:08:50] a couple of stats, 2.1 million snapchat that created every minute, 3 billion photos and videos created a day and the average user opens the app 30 times a day. Do you want any more stats?
Sascha: [00:09:03] Nah, I'm relaxed. That's enough body stats for me for one episode.
Darcy: [00:09:07] And looking at other social apps are relatively new on the iPhone though. Have you heard of BeReal?
Sascha: [00:09:12] I've not heard of that. It sounds kind of like a dating app.
Darcy: [00:09:16] Not quite. Basically, you post one photo a day.
Audio clip: [00:09:20] Users get a notification that simply says Time to be real.
Darcy: [00:09:24] It's kind of cool. I'm kind of enjoying it.
Sascha: [00:09:27] Oh, all right. I'll have to check that one out. But, you know, I've already got an addiction problem. I don't really need anything else on the list.
Darcy: [00:09:33] We can't forget about truth social Donald Trump's social media platform. And that was the number one downloaded app on the App Store this past week.
Sascha: [00:09:41] It might be the number one downloaded app, but I don't think it's going to take off. Last I heard, it's a bit like Waiting for Godot. You just stay on the waitlist forever. And apparently Trump himself hasn't posted on the platform for over a month. So this isn't a political statement. I'm just going to say the platform's a dud.
Audio clip: [00:09:58] It'll end a little in bed.
Sascha: [00:09:59] So that's a wrap on social media. It's a messy, crazy world out there. It sounds like it's really the front lines. But let's move to audio. My true love and my favourite place to hang out. I can't believe that Spotify is down 70%. I love Spotify and for me there's not really another alternative out there. So tell me what I'm missing is Tidal this amazing secret that I've just been sleeping on?
Darcy: [00:10:24] Not quite. Tidal, although the Jay-Z founded streaming service has made waves after introducing direct artist. So artists are being paid a lot more on the platform, but they've only got about 2% of market share.
Sascha: [00:10:37] And market share means 2% of people using audio streaming services.
Darcy: [00:10:41] Exactly right. So Spotify is the dominant platform. They've got 30% of that market share and the challenges are Apple Music, they've got 15%, Amazon music 13% and Chinese gaming giant Tencent, they've got about 13% too with a big Asian following. And Google's platform, YouTube music, that was actually the only Western streamer to increase their market share in the last year. It's got about 8% actually.
Sascha: [00:11:07] Now you mentioned that. I do know a lot of people who use YouTube music and swear by it. Yeah, there you go. So from what you said, that does sound like there's a lot of platforms around the same level of users, but most people are like main risk. People are using Spotify. They have the biggest platform still. So riddle me this why is it down so much.
Darcy: [00:11:25] If you've been following the markets? A lot of tech companies are down in the past year, especially those that are unprofitable. Spotify actually reported a profit last week, $131 million, but it fell another 12%. Sometimes markets are a little bit irrational.
Sascha: [00:11:42] That's those moments when I go, what is going on? I do not understand people.
Darcy: [00:11:46] Yeah, the consensus from the media is this is about the streaming business model. Netflix has the whole market spooked and Spotify fell on the back of Netflix this fall.
Sascha: [00:11:56] Well, Darcy, you've mentioned Netflix, so it feels like a good place to turn next in the war for attention. They've always been a stalwart. Everyone has a Netflix account. So let's take a quick break. And then when we come back, I want to dig into the video streaming wars. Welcome back to The Dive. Today we're talking about the war for our attention. Before the break, we talked about Tiktok's rise and Spotify's continued strength. But let's turn to the juicy stuff now. Let's go to video streaming, Darcy. Where do we even begin?
Darcy: [00:13:06] We've got to begin with Netflix here. Do you remember the good old days? Every show used to be on Netflix.
Sascha: [00:13:11] I mean, I remember getting it because House of Cards was all anyone could talk about, and I needed to see it.
Audio clip: [00:13:17] Did you think I'd forgotten you?
Darcy: [00:13:19] Netflix had it all. But times have changed. They used to say their primary competition was slate. But now they're acknowledging that competition is stalling their growth. And for the first time ever this quarter, they lost subscribers, 200,000 of them. But more alarmingly, they're saying they'll lose another 2 million subscribers in the next quarter.
Sascha: [00:13:39] Well, what's the big number, Darcy? How many people are still watching them?
Darcy: [00:13:42] They do still have 220 million subscribers.
Sascha: [00:13:45] That that's still a lot of eyeballs. But it's not surprising. You know, there are so many streaming services out there now.
Darcy: [00:13:52] There are. We did a straw poll in the office. Who do you think had the most streaming services?
Sascha: [00:13:56] Darcy, I did a quick tally. I think I've got five.
Darcy: [00:13:59] Okay. I thought you'd have a few more. Sascha. Alec has six. Alf has four. Bryce has eight. Streaming services.
Sascha: [00:14:06] Don't even eight. Streaming?
Darcy: [00:14:08] I don't know. I didn't even know some of their lives. We're not alone in the office. The amount of people who pay for four or more services has more than doubled in the past three years.
Sascha: [00:14:17] So you're right. Netflix is losing our attention in the face of serious competition. Who are the serious contenders out there?
Darcy: [00:14:23] Disney Plus is the big story here. They launched in 2019 and already have 130 million subscribers.
Sascha: [00:14:31] And that makes sense to me, Darcy, because if you're going to look at any of the platforms, they had such a rich vault to draw from and then they were geniuses and brought out Hamilton around the same time as they were. So I can understand why that had such an impact.
Darcy: [00:14:44] Yeah, everyone loves Disney. They pull the heartstrings, I think. HBO Max is also building. They've got over 75 million subscribers and data from just watch shows that based on viewing time. Netflix is the largest streamer in the U.S. They've got 27% market share, but that's followed by Amazon Prime at 21%, Disney 14, Hulu 13, HBO max at ten, and then a lot of smaller ones after that. Taking all this data, the headline is that there's a lot of competition, but this isn't actually the biggest challenge for Netflix. The biggest challenge is them facing more competition from free streaming services.
Sascha: [00:15:22] Where do I go to get these?
Darcy: [00:15:24] We're talking about Tik Tok and YouTube here.
Audio clip: [00:15:27] Hey, guys, it's Addison Easterling and welcome to my first YouTube video.
Darcy: [00:15:32] The latest Digital Media Trends survey from Deloitte found the majority of Gen Z and millennial consumers are spending more time watching real life content like user generated videos, and they're watching less of these bigger productions, films and shows on streaming services.
Sascha: [00:15:48] But hang on, Darcy, at the start of this episode, you mentioned that Google was down 20%. So if all these younger people are turning to YouTube and user generated content, why is that the case?
Darcy: [00:15:59] It's a hard one to explain, but that's probably along with a lot of these tech companies taking a hit. Google still has a 92% market share of the search engine. I can't say being really taking the crown. They've got 3% in second.
Sascha: [00:16:13] I feel like we've just listed an extraordinary amount of companies in the last 15 minutes. I'm going to say I'm feeling a bit overwhelmed.
Darcy: [00:16:20] That's the thing. A few years ago, it was Facebook, Netflix, Instagram, Spotify. Now the market is super crowded. But fortunately for us as investors, you can pick one of these and you can invest in them. A lot of them are accessible.
Sascha: [00:16:33] That is a good way to put a positive spin on it. Darcy So final thoughts on the never ending war for attention?
Darcy: [00:16:39] I think that's the key point. It's never ending where it Equity Mates need to keep producing podcasts, Netflix needs to keep producing shows, and Tik Tok needs its users to keep creating content. Whenever a consumer anywhere in the world is willing to trade their attention for content, these platforms are ready to make that trade. But something that needs to change is our thinking a little bit. As investors, we're happy to give these companies years, decades, sometimes to grow their users, but that's not really happening anymore. We're losing patience. A lot of these companies, they don't have the ten or 15 years to figure out profitability. There's too much competition, and I wouldn't be surprised to see a little bit of consolidation here. I feel like it's just a matter of time before we start seeing streaming companies merge.
Sascha: [00:17:25] Absolutely right. Darcy. I was listening on a podcast the other day and they said, at what point is Apple going to get their chequebook out and buy some of these smaller competitors? But I've got to say, I'm keeping my Netflix subscription at least until Bridgerton season three comes out.
Darcy: [00:17:39] Good call.
Sascha: [00:17:41] Well, thank you so much for joining us for today's edition of The Dive. If there's a story that you want us to talk about. Make sure you contact us. Our email address is the drive at equitymates.com/contact or you can always shoot us a message on social media. All those details as per usual in the show notes below. If you've been enjoying us, jump into the reviews on your podcast player and give us five stars. It really does make a huge difference in terms of getting our visibility out there. And as you heard today, it is a noisy, noisy content space. Thank you so much for joining me today, Darcy.
Darcy: [00:18:14] Thanks
Sascha: [00:18:15] Until next time