Yahoo Screen’s Demise Follows Familiar Pattern for YHOO Stock Owners

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Talk about a squandered opportunity. After a couple of years of being legitimately in the on-demand online video industry, Yahoo (YHOO) has officially pulled the plug on Yahoo! Screen.

Owners of Yahoo! Stock See a Familiar Pattern in Yahoo! Screen's DemiseYahoo stock modestly advanced on the news, against a slightly bearish headwind on Tuesday. And why not? While conceptually the service was promising, after two years it was still costing the company money more than it was making. If it’s clearly not going to boost the value of YHOO stock, why not just cut bait?

Still, it would have been nice to see Yahoo! make a go of its television programming ambitions, if only to further blur the lines between cable television, over-the-top services and the on-demand market Netflix (NFLX) presently dominates.

Add it to the list of things CEO Marissa Mayer has botched.

Say Goodbye to Yahoo! Screen

The video segment of the popular web portal wasn’t lacking decent content. Clips from Saturday Night Live were prominently featured — and loved — and in the same vein as Netflix, Yahoo stock went as far as to create some of its own programming from scratch. The original stuff was … not bad, all things considered.

Yahoo! Screen even served as the venue for the world’s first exclusively online broadcast of an NFL game played overseas. From a technical perspective it went smoothly, particularly for a “first ever” showing of the ilk. The only real unfortunate aspect of the game’s broadcast was that it was a matchup of the Bill and the Jaguars. Though it ended up being a good game, neither team has been a big fan draw of late.

Still, 15 million online viewers of the game isn’t anything to scoff at.

None of it was ever enough to make Yahoo! Screen fiscally viable, however. The company took a $42 million write-down thanks to Yahoo! Screen in the third quarter of last year, most of which was blamed on the high costs of original programming that never led to the advertising revenue expected in response to the programming effort.

If anything was, that was the writing on the wall for Yahoo! Screen.

What Really Went Wrong

It’s easy to be a Monday morning quarterback, but in this particular case, the miscues aren’t being disputed by YHOO stock owners — CEO Marissa Mayer just never turned Screen into what it could have been and should have been, nor did she tell users about it.

A quick look beyond the headlines and into the thoughts/comments in response to the demise of Yahoo Screen immediately makes one thing painfully clear … too many regular users of Yahoo! had never even heard of Screen. It costs nothing to promote the Yahoo! Screen on the Yahoo! homepage and to Yahoo! e-mail users. Yet, the first many heard of Yahoo! Screen was Monday’s notification it was going away.

It wasn’t just a lack of users that doomed Yahoo! Screen from the beginning, however.

It’s a more philosophical idea (and arguably an extension of the notion that Yahoo! simply didn’t market the product well enough), but the users who did tiptoe into the world of Yahoo Screen never quite understood what it was, what it was supposed to be and why they should come back to it.

Granted, that may not have entirely been Yahoo’s fault. At one end of the on-demand video spectrum is Netflix, with a clean, well-thought-out user interface without any distracting advertising. At the other end of the spectrum is Alphabet‘s (GOOG, GOOGL) YouTube, which is not only a proverbial free-for-all in terms of online video, but users expect it to be laden with obnoxious ads.

Yahoo Screen was something in the middle, which is admirable, but not advisable. Being a pioneer only works when your value proposition is distinct, and the reason for the differentiation is made clear. Even after two years, many users simply never understood what Yahoo Screen was trying to do.

And that one’s ultimately on Marissa Mayer.

Bottom Line for YHOO Stock

In retrospect, it can’t be terribly surprising Yahoo Screen is going away, as Mayer has a long history of ideas that are creative and bold, but ultimately ill-conceived.

Take Tumblr as an example. Yahoo paid $1.1 billion for blogging/image-sharing website Tumblr in 2013, hoping to tap into its wide user base and the user-generated content craze. More than two years later, it’s still not clear what Tumblr is supposed to be for Yahoo.

In retrospect, the same can be said of Yahoo Screen…. and Katie Couric, and Polyvore, and Cooliris, and a couple of dozen other recently made deals.

What exactly is Yahoo trying to do, or be?

There is a bastion of hope for patient owners of Yahoo stock, and it has got nothing to do with the impending split of Yahoo!’s web business and its stake in Alibaba (BABA). That bastion of hope is simply that, even with a long streak of confused products and services, Yahoo! still draws 1 billion unique users to its site at least once per month.

Though Marissa Mayer doesn’t seem able to monetize those users very well, the brand itself is still primed for a CEO that can.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/01/yhoo-stock-yahoo-screen/.

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