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EXCLUSIVE: Netflix to Acquire HBO, Dissolve Channels Into Streaming Library for iPad Use Only
VideoNuze has learned that Netflix has struck a deal to acquire HBO from Time Warner and intends to dissolve HBO's linear cable channels, with its programs to be incorporated into Netflix's streaming library, available solely on the iPad. Terms of the deal are not yet known, but it is expected to be for stock only, with Time Warner becoming the biggest shareholder in Netflix. VideoNuze interviewed all the key participants late last night.
The deal is a stunning move for all parties, and reflects the fast-changing nature of the online video and pay-TV industries. First and foremost, the deal appears to be a stark reversal of opinion by Time Warner CEO Jeff Bewkes
who has consistently diminished Netflix's prospects. Bewkes commented, "My informal recent remarks, comparing Netflix's rise to the Albanian army's chances of taking over the world got me thinking afterwards, geez, is it possible that I've underestimated Albania's might, and therefore Netflix's potential? So I decided to study up on my history, and it turns out that back in 1378, Albania actually conquered almost three-quarters of the world's population. That was an eye-opener and really made me second-guess myself."
Categories: Cable Networks, Deals & Financings
Topics: Apple, HBO, iPad, Netflix
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7 Things "Dexter" Taught Me About the Future of TV
Last week, in "Showtime Circles Its Wagons, But to What End," I mentioned that I have recently become a huge fan of the network's hit show "Dexter." I was exposed to "Dexter" a while back when an old friend gave me the first two seasons on DVD. I had put them away and recently found them doing some cleaning and decided to give the show a try.
My wife, who ordinarily shares my taste in TV, was completely grossed out by "Dexter" in the first 5 minutes (which is easy to understand considering blood is practically a supporting character in the show), so watching it together on
our main big-screen TV wasn't going to be in the cards. However, I noticed that the first two seasons were available on Netflix streaming, and so I decided early on to watch most of the first season's 12 episodes on my iPad, the first time I would do so with any TV series. Along the way I became completely hooked on the show, and am now well into season 2.
Having this experience gave me a far more personal perspective of how the experience of watching TV is changing for consumers, and what this all means for the future of TV. Here are 7 of the most important takeaways:
Categories: Cable Networks
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Time Warner Cable iPad App Disrupting the Cable Industry
It's been less than 2 weeks since Time Warner Cable announced its iPad app, but the fur has been flying ever since. In the WSJ's latest coverage today, it details how TWC is continuing to insist that its contracts with cable networks give it the right to stream their linear channels to iPads in subscribers' homes. Conversely, multiple network groups, including Scripps, Viacom and Discovery have disagreed, leading to an increasingly public internecine industry fight.
Categories: Cable Networks, Cable TV Operators, Devices
Topics: Discovery, iPad, Scripps, Time Warner Cable, Viacom
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VideoNuze Report Podcast #93 - Mar. 25, 2011
I'm pleased to present the 93rd edition of the VideoNuze Report podcast, for March 25, 2011.
In this week's podcast, Daisy Whitney and I discuss my post from earlier this week, "Could HBO be the Next BLOCKBUSTER." In it I provide a perspective on the challenges that HBO faces adapting to the new competitive landscape. The post has received wide distribution this week including being featured on the home page of the WSJ's AllThingsD technology web site and elsewhere.
For those further interested in the topic, I fleshed out some of the issues in a follow-on post, "Showtime Circles the Wagons, But to What End?" in which I discussed Showtime's decision to pull streaming rights to certain shows from Netflix. This week Starz also delayed the release windows of some of its shows as well. Quite a busy week for premium cable networks.
Click here to listen to the podcast (15 minutes, 42 seconds)
Click here for previous podcasts
The VideoNuze Report is available in iTunes...subscribe today!Categories: Cable Networks, Podcasts
Topics: HBO, Netflix, Showtime
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Showtime Circles Its Wagons, But to What End?
Showtime's new decision to re-negotiate its deal with Netflix, excluding streaming rights to early seasons of current hit shows "Dexter" and "Californication," is a clear attempt by the company to circle its wagons against Netflix's newfound strength. The move effectively short-circuits Showtime's existing efforts to work with Netflix as a key promotional partner. By giving Netflix streaming rights to older episodes, the goal has been to expose a portion of its subscribers to Showtime programs, which would in turn help drive new Showtime subscriptions. (Note: Coincidentally, I happened to have just watched the entire first season of Dexter on Netflix, though I haven't chosen to subscribe to Showtime. More on that in a subsequent post).
With its decision, Showtime has doubled down on its relationship with its pay-TV partners. Maybe I'm missing something important, but from my perspective, the new decision seems grossly out of step with current market realities and it will only lead Showtime toward an even more uncertain future.
Categories: Aggregators, Cable Networks
Topics: HBO, Netflix, Showtime
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Adobe Pass Boosts Cable Networks' TV Everywhere Role
Adobe is announcing a new service this morning called Adobe Pass, which is intended to streamline how pay-TV subscribers gain access to authenticated premium content online. While Adobe Pass offers a key benefit to users in the ability to have "single sign-on" across multiple devices and web sites, a more critical upside is that with Adobe Pass, cable networks gain far greater control over their relationships with viewers as TV Everywhere efforts ramp up. In this respect Adobe Pass is a potentially significant building block in helping make TV Everywhere a reality. Todd Greenbaum, senior product manager at Adobe, briefed me earlier this week.
First, from a technical perspective, Adobe Pass looks like a pretty elegant solution that positions it well to be the glue that hold TV Everywhere authentication together. The idea is that when a user visits a content provider's web site they'll still see freely available content, but they'll now also see some that is for paying subscribers only (see TNT example below). If the site has added the Adobe Pass software, then when the user clicks on the authenticated content, a selection of pay-TV operators who have integrated the Adobe Pass API will appear (currently Comcast, Cox, DISH and Verizon are all on board). The user selects their pay-TV provider and is then asked for the user name and password they use with their pay-TV operator.
Categories: Cable Networks, Cable TV Operators, Technology
Topics: Adobe, Time Warner Cable
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Could HBO be the Next BLOCKBUSTER?
Last week, amid rumors that Netflix was planning to bid for the new "House of Cards" TV series, directed by David Fincher (a deal finally confirmed late Friday afternoon), there was no shortage of media coverage asking, "Could
Netflix be the next HBO?" As interesting a question as that one is, here's one that's even more intriguing, and provocative: "Could HBO be the next BLOCKBUSTER?" At first blush, the comparison might seem ridiculous, and admittedly there are numerous differences between the two. But there are some troubling similarities which should be causing the HBO executive team to now be on high alert.
Categories: Aggregators, Cable Networks, Technology
Topics: HBO, Netflix, Time Warner
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NCAA MMOD Runs Home Page Takeover Ad On NYTimes.com
Speaking of sports, here's how big a deal live streaming of March Madness on Demand (MMOD) has become for the NCAA and its TV partners CBS and Turner Sports: yesterday, which was the tournament's big kickoff, the parties ran a pricey full-page, rich media takeover ad on the NYTimes.com home page (see below). MMOD has developed into the highest-profile live online video sporting event of the year. It's hard to believe any real college hoops fan doesn't know about MMOD's availability, but with the NYTimes ad, clearly the parties weren't taking any chances.
Categories: Broadcasters, Cable Networks, Newspapers, Sports
Topics: CBS, MMOD, NCAA, NYTimes, Turner Sports
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Will Cable TV Networks Kill Their Golden Goose?
I've been dismayed, though not entirely surprised, by reactions from cable TV networks over the launch of Time Warner Cable's new iPad app earlier this week. A pair of articles, in Adweek and the WSJ summarize various networks' protestations about the new iPad app, namely that it is an unauthorized use of their content by Time Warner Cable, per their interpretations of their affiliation agreements with TWC.
That may well be the case, and TWC may well be pushing the edge of the envelope in this implementation of its larger TV Everywhere goals. However, in my opinion the bigger question that cable network heads should be asking themselves is whether, by resisting initiatives such as these, they want to risk contributing to killing their golden goose, or whether they want to do their part in helping usher in the future? What they decide to do is at the heart of what role the pay-TV industry will play in the online video era.
Categories: Cable Networks, Cable TV Operators, Devices
Topics: iPad, Time Warner Cable
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With Next New Networks Deal, YouTube Evokes Cable's Early Days
With Monday's announcement that YouTube is acquiring independent video producer Next New Networks, plenty of people have concluded that Google
and YouTube have officially become content providers themselves - something the companies swore they'd never become. While it's tempting to conclude this, my take is that YouTube is actually lifting a page from the cable industry's evolution - seeking to act less as content creator, and more as a "strategic catalyst" for the online video era. Let me explain.
Back in the early days of cable, its primary value proposition was purely improved reception. Many of the earliest cable systems were built in communities where over-the air broadcast signals were poor. Once those initial systems were built and then subsequently upgraded to have expanded capacity, the industry recognized that it needed to hang its hat on more than just the proposition of "better picture quality." Thus began a frenzied process of creating new specialty channels to appeal to specific audience segments. Initially these channels offered re-runs and other inexpensive shows they could get their hands on (who remembers that ESPN's early days featured ping-pong?). Eventually however, these channels would become original programming powerhouses in their own right.
Categories: Aggregators, Cable Networks, Cable TV Operators, Deals & Financings, Indie Video
Topics: Liberty Media, Next New Networks, TCI, YouTube
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It's NCAA March Madness On Demand Season Again
Speaking of sports, Turner Sports, CBS Sports and the NCAA announced this week that March Madness on Demand will be back online and free to users yet again. MMOD is by far the highest-profile sports event offered live online and the NCAA and networks just keep on improving it every year. For the 2011 tournament, the big new drawing card will be an iPad app, along with new features like personalized channel lineups, social interaction and live stats updates.
Categories: Broadcasters, Cable Networks, Sports
Topics: CBS, MMOD, NCAA, Turner Sports
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Disney Has Religion on Digital, ESPN Is At the Core
Disney held its annual investor day yesterday, and as usual, technology, and the opportunities it creates for the company, was at center stage. Disney
introduced a new initiative called "Disney Studio All Access" providing a central location for consumers to securely access the company's range of content. Though details were sketchy, key to the plan is more flexible consumer ownership and multi-device playback. For paid, downloadable video, that remains the holy grail.
Aside from the company's digital initiatives on the entertainment side of its house, the most important asset that Disney is trying to re-imagine digitally is ESPN. Just yesterday, the company announced a new distribution deal with Verizon, which emphasizes live online streaming of ESPN, ESPN2, ESPNU and ESPN Buzzer Beater. The deal is similar to one inked last September with Time Warner Cable, the country's 2nd-largest cable operator. No doubt others will follow.
Categories: Cable Networks, Cable TV Operators, Sports, Telcos
Topics: Disney, ESPN, Time Warner Cable, Verizon
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Time Warner Cable-LA Lakers Deal Is More Bad News For Pay-TV's Non-Sports Fans
If you live in the Los Angeles area and are not a sports fan, or you are a casual one, Time Warner Cable's new 20-year deal with the LA Lakers is more bad news. That's because, as I explained last week in "Not a Sports Fan? Then You're Getting Sacked For At Least $2 Billion Per Year," virtually all digital pay-TV subscribers in the LA area - sports fans or not - are going to be footing the bill for this massive deal.
The TWC-Lakers deal is just the latest example of how ever-higher monthly fees pay-TV distributors must fork over to carry sports networks help drive up subscription rates. In this case, TWC, the 2nd largest pay-TV operator, is
positioning itself to also be a major sports network owner, just as Comcast has with Comcast SportsNet. TWC's deal will help create an even bigger inequity for non-sports fans and casual fans than already existed. For this group of subscribers, who are primarily entertainment-oriented, and likely more on-demand focused in their viewership than ever, higher subscription rates - tied to a small cluster of very expensive sports networks - are inevitably going to drive them to drop their pay-TV service.
Categories: Cable Networks, Cable TV Operators, Sports
Topics: Hulu Plus, LA Lakers, Netflix, Time Warner Cable
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VideoNuze Report Podcast #87 - Feb. 11, 2011
Daisy Whitney and I are pleased to present the 87th edition of the VideoNuze Report podcast, for February 11, 2011.
In this podcast, Daisy and I do a deep dive into the role of sports in pay-TV packaging, based on my post from Monday, "Not A Sports Fan? Then You're Getting Sacked For At Least $2 Billion Per Year." I think this is a fascinating topic and something that has been under-reported even though it has huge implications for pay-TV subscription rates as over-the-top services gain awareness.
The basic premise of my post was that since a relatively small cluster of sports-oriented channels (e.g. ESPN, TNT, Regional Sports Networks and others) collectively cost pay-TV operators $10 per month, then the charges being incurred by non-fans and casual who fans who rarely, if ever watch these channels, could amount to at least $2 billion per year. Since writing the post and gaining feedback from various sources, it's actually quite possible that the annual charges incurred in exchange for little-to-no value could exceed $3 billion. Whatever the number is, it's very large, and effectively represents a massive subsidy that non-fans and casual fans pay each year because of escalating sports TV rights deals and astronomical player compensation.
Click here to listen to the podcast (17 minutes, 8 seconds)
Click here for previous podcasts
The VideoNuze Report is available in iTunes...subscribe today!
Categories: Cable Networks, Cable TV Operators, Podcasts, Satellite, Sports, Telcos
Topics: Comcast SportsNet, ESPN, Hulu, NESN, Netflix, Podcast, RSN, TNT
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VideoNuze Report Podcast #86 - Feb. 4, 2011
Daisy Whitney and I are pleased to present the 86th edition of the VideoNuze Report podcast, for February 4, 2011.
In today's podcast we discuss the content deal announced this week between Comcast and Time Warner that allows delivery to VOD, Xfinity TV online and iOS/Android tablets and smartphones. As I wrote in "Comcast-Time Warner Deal Shows Promise and Challenges of TV Everywhere," while the deal should be a template for others between pay-TV operators and cable TV networks, it also highlights many challenges that remain in realizing the companies' TV Everywhere vision.
Click here to listen to the podcast (12 minutes, 17 seconds)
Click here for previous podcasts
The VideoNuze Report is available in iTunes...subscribe today!Categories: Cable Networks, Cable TV Operators, Podcasts
Topics: Comcast, Time Warner
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Comcast-Time Warner Deal Shows Promise and Challenges of TV Everywhere
If you're looking for a template of how pay-TV operators and cable networks need to be working together if they want to successfully combat the rise of Netflix and other over-the-top entrants, yesterday's long-term agreement between Comcast and Time Warner is a great example. Under the agreement, Comcast digital subscribers will gain access to popular programs and movies
from Turner Broadcasting networks like TNT, TBS, CNN, Cartoon Network and others, across multiple platforms, including Comcast's On Demand service, Xfinity TV online web site and companion iPad/iPhone and Android apps (which just last night began streaming full episodes). Importantly, Turner networks' viewers will also be able to view the same programs/movies on Turner web sites and online/mobile platforms. No extra charges to the consumer are planned.
The deal is a solid step forward in realizing the vision of TV Everywhere that both companies' CEOs laid out back in July, 2009 (see this video for more). And no doubt both companies want to make similar deals with others in the industry; Comcast with other cable TV network groups, and Time Warner with other pay-TV operators. Still, the fact that the two foremost proponents of TV Everywhere took a year-and-a-half to go from laying out their vision to actually announcing a deal underscores how arduous the full realization of the TV Everywhere model will be.
Categories: Cable Networks, Cable TV Operators
Topics: Charter, Comcast, Netflix, Nielsen, Time Warner
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WealthTV-Roku Deal Isn't a Predictor Of An A La Carte Future
(Friday update #3) The was a flutter of excitement this week by some who interpreted a new deal by WealthTV to make its 24/7 linear feed available to Roku users as evidence of an a la carte future. But that hope would be misplaced; WealthTV, a network with minimal pay-TV carriage (though a litany of regulatory appeals), bears no resemblance to widely distributed cable networks like USA, MTV and Discovery whose lifeblood is monthly pay-TV carriage fees.
Even though WealthTV's proposed $2.99/mo subscription fee is more than any of these networks receive, WealthTV's retail model means its subscriber penetration will be a tiny fraction of these cable nets, and that's after necessarily heavy marketing and promotion. Don't get me wrong, Roku and other connected devices are doing a fabulous job of bringing online content to TVs. But getting top-notch, current cable programs is nowhere on the horizon. This is doubly true given that this week's FCC approval of Comcast-NBCU was an explicit blessing of the cable model.
Categories: Cable Networks, Devices
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In Approving Comcast-NBCU, the FCC Blesses the Cable Model
Reading yesterday's FCC press release approving the Comcast-NBCU transaction, my main reaction was that rather than using the opportunity to try to force fundamental changes in the core cable business model, the FCC, through its key conditions, instead essentially blessed it.
Comcast - and by extension other pay-TV operators - must be delighted that their core packaging and pricing philosophies were basically untouched. Cable networks and studios should also be happy that their ability to monetize
through the monthly affiliate model remained intact as was their flexibility to monetize online (mostly). As a result, the large ecosystem of participants in the video ecosystem (e.g. talent, production personnel, etc.) should also be happy that their economic well-being won't be disrupted. Lastly, investors in the pay-TV ecosystem should also be happy; it's always a good day when the government chooses not to meddle in markets that are working pretty nicely from investors' perspective.
To get more specific, in the press release there are 7 key conditions under the heading, "Protecting the Development of Online Competition" that Comcast and/or Comcast/NBCU are required to follow. These relate to online video and I have listed them out below. After each one I have added my analysis/reactions.
Categories: Cable Networks, Cable TV Operators, Deals & Financings, Regulation
Topics: Comcast, FCC, NBCU, Netflix
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Online/Mobile Video's Top 10 of 2010
2010 was another spectacular year of growth and innovation in online and mobile video, so it's no easy feat to choose the 10 most significant things that happened during the year. However, I've taken my best shot below, and offered explanations. No doubt I've forgotten a few things, but I think it's a pretty solid list. As much as happened in 2010 though, I expect even more next year, with plenty of surprises.
My top 10 are as follows:
Categories: Advertising, Aggregators, Broadband ISPs, Broadcasters, Cable Networks, Cable TV Operators, Deals & Financings, Devices, Mobile Video, Regulation, Satellite, Technology, Telcos
Topics: 4G, Android, Apple, Google TV, iPad, Net Neutrality, Netflix, YouTube
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Starz's 2-Year Results Defy Warnings of "Cord-Shaving"
If you're looking for evidence that the pay-TV industry is imperiled by the rise of over-the-top services that are going to cause subscribers to cut the cord, a good early indicator of such behavior would be whether "cord-shaving," i.e. the reduction of services like premium channels, additional outlets and DVR services, is happening already. But a look at the premium channels Starz and Encore - whose content is fully available for streaming on Netflix - suggests no evidence of cord-shaving is yet occurring.
As the graph below shows, since October, 2008, when Starz announced that Netflix had signed a distribution deal for "Starz Play," total U.S. subscribers to the Starz and Encore channels have actually increased slightly from 49 million to 49.4 million. During this time period there's been relatively little fluctuation, with only a temporary dip in the 2nd half of last year that was probably more related to the channels being temporarily out of their Comcast deal, and therefore losing some of their promotional backing. Further, for the first 9 months of 2010, Starz's revenue was $929 million and cash flow was $305 million, up from the same period in 2008, when revenue was $826 million and cash flow was $220 million.
Categories: Aggregators, Cable Networks
Topics: Disney, Encore, HBO, Netflix, Sony, Starz
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