AMCX
#On the subject of defined niche OTT services, we are, by our own hand and investors in a total of four.
We operate two ourselves, and we have invested in RLJ, which operates two.
So that's four.
So we think that ---+ I'm sorry, forgive me.
I left out BritBox, which hasn't yet launched.
Forgive me So that is five.
So we think that it is early days.
And by the way, those are all subscription.
None of them have ads, people buy them all.
And BritBox has not yet launched, but the pricing is generally between, on the lowest end, a little below $5 and on the highest end a little above $6.
So they all have somewhat similar pricing.
I would first say that it's early days still for niche SVOD.
It's certainly less early days for general entertainment SVOD.
We have Netflix, Amazon Prime, Hulu as dedicated, and they have established what their patterns are.
And then, of course, there are conversions of the ad-supported premium services that have been faring, I'm sure you know better than I, HBO, Showtime, Starz, et cetera.
I think it's early days for these very defined niche SVOD services.
What's curious about them is that they are very defined.
They have an immediate constituency, and they are available with ubiquity on day one.
We don't enter any of them randomly or casually.
We believe that each has a serious and fundamental premise and core audience and relationship to our own content.
So forgive the length of my answer, but it's going to join to your second question in a bit.
And they are each at different stages of maturity in what is the early days.
So, as we mentioned, one is called Sundance Now, probably its identity speaks for itself.
The other is in the horror area, the genre area that we think we have some proximity to, obviously, through Walking Dead and lots of other material that we produce.
And then the British streaming service, Acorn, is something that we're pretty familiar with through our relationship with BBC and the co-productions we have done with BBC and other UK entities.
And Urban Movie Channel, which is in the RLJ portfolio, we also have some editorial proximity to by virtue of the fact that We TV is a significant purveyor of African American or urban-oriented programming.
And then the to-be-launched BritBox, a partnership with our partner BBC and ITV is also in the British area.
So I just wanted to clarify that it is not random or casual, and we are not on the hunt wildly for editorial areas that we don't understand well.
We think we understand these very well.
We understand who the people are, we understand the material that they like, and I will segue to the last ---+ and so to your question, no, I don't think we're overextended.
I don't think we're wide or long.
I actually think we are appropriately and at the right level of risk and investment, each being different, involved.
And we actually feel that it's a progressive, interesting, highly appropriate, strategic network and that will yield and very good return over time.
So that is the answer to your first question.
To your second question, we do think that the Company is becoming and has become more of a studio, as much as ---+ or as opposed to only a channel operator.
And that already has put us in a position of making TV shows that play on our own channels, that go into a subsequent window in the US generally on Hulu or Netflix, that are on our own AMC Global channel, often in a worldwide simultaneous premiere which allows us efficiencies in marketing, and that we sell in subsequent windows overseas where we have channels.
And if we don't have channels, that we sell to SVOD services where we are not present.
That is essentially standard studio functionality.
To your question about whether we would produce where we don't have an initial home for ourselves, we have not yet to date.
And we would certainly ---+ if it was a good business, we would entertain it.
We want to be careful about our financial performance and ROI, and we want to be careful and disciplined about dealing with material that we think we have an understanding of, proximity, authority, and we can really understand.
So I wouldn't rule that out, but I would say that our ---+ for the immediate term, our point of view is to stay, if you can call it that, somewhat close to home, and to expand significantly while we are somewhat close to home because the economics are clearer and more determinable.
I actually think ---+ first of all, I think it's unknown.
I think consumer behavior in this arena, there's not enough data yet to ---+ or I haven't been exposed to enough data to say with authority, it will be that or that.
It may be actually a little bit of both.
Because price-sensitive consumers, I think, and perhaps younger demos, have a greater likelihood, price-sensitive and younger, to ultimately result in either something equal or mildly net down.
I think that consumers who have greater means and are not as young have a greater propensity and higher likelihood, frankly, to buy both.
And there are instances now we're seeing in reasonable numbers when we look at the data, where there are actually people purchasing both, or households purchasing both which is adding net incremental to the MVPD universe.
So a lot will be told, I think, as prices evolve and offerings evolve and the manner of marketing evolves.
Sorry to give you an answer that doesn't say it's one thing or the other.
I really do think it's going to be a bit of both.
In the end, I would be more encouraged than discouraged about the vitality that it provides for the overall ecosystem and the number of subscribers that will ultimately be paying people who do what we do for a living, because I think that the offerings will increasingly be guided by consumer considerations and will adapt to what people want.
And they will find points of interests in sympathy with ---+ at overcoming irritation.
When somebody's like, I've got too many channels and the price is too high, or that show pockets of great interest when they actually, perhaps even alter the nature, the manner in which they offer programming as they compete over time.
So I would be, in aggregate, very encouraged and say that there's going to be an evolution of what was one-size-fits-all-ish approach to greater variability in price, greater variability in content, and greater variability in offerings.
And that energized, I think I will have an energizing effect on the market.
We'll see a little bit of deletion, and we'll see some addition, and I think it's likely to be net ahead.
I don't have enough data to give you a really clear portrait of it.
A lot of the data that I have is admittedly anecdotal and it's preliminary.
But there is ---+ we've certainly seen some of that, just what you said, which is, second member of the household, sometimes younger, subscribing to, whether paid for by parents or not, a virtual MVPD offering, while the household maintains a hard-line carried MVPD offering, video offering.
And then, <UNK>, as it relates to affiliate fees, I think we've said it consistently, and I think you've seen it publicly, we have gone through a majority of our major distributors and renewals.
Again, a modest acceleration in 2017 versus 16.
I won't define it by more than that.
As you know, that's a rate of growth in terms of dollars, so that factors in all elements of consolidations, subcounts, et cetera.
I think we'll leave it at that.
<UNK>, thanks for the question.
Again, we don't disaggregate.
We disclose affiliate revenue.
We're giving you the rate of growth.
That includes not only our traditional distributors, but any of the new virtual MVPDs that are there.
It's all captured.
As <UNK> said, we're on Sony, we're on Sling, and we're on DirecTV Now.
I think it's well known in the marketplace in terms of the disposition of each of those players and their view on pricing and rate, but we have provided a blended number for all distribution on the affiliate side.
Operator, we'd like to take one last question, please.
Yes, <UNK>, it's <UNK>.
I will answer the first one, maybe <UNK> on the second.
In the fourth quarter, we had a mix, whether it's ---+ like I said, whether it's a domestic SVOD, whether it's international distribution or otherwise, we have a mix of shows across a number of the channels on AMC from the studio: Dirk Gently, Fear the Walking Dead, Hell on Wheels, Into the Badlands, The Walking Dead, Turn.
So we have other shows on IFC, et cetera.
So it's really a mix across the channels that really drove, and just the increased number of episodes and content across all the channels that really drove that non-affiliate revenue in the fourth quarter.
On the second part, I would say the overall trend we see, video consumption, demand for video, high-quality video is high.
Continues to be high in what we call ancillary, meaning after a show has been on our platform about a year, those rights are continued to be sought after on SVOD and international overseas, whether it's on our channels, whether it's on channels we don't control, or in markets where we're not distributed on SVOD, the major platforms.
The appetite for high-quality content remains very strong.
Thank you, everyone, for joining us on today's call and for your interest in AMC Networks.
Operator, you can now conclude the call.
