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VideoNuze Report Podcast #97 - Apr. 29, 2011
I'm pleased to present the 97th edition of the VideoNuze Report podcast, for April 29, 2011.
In this week's podcast, Daisy Whitney and I discuss Netflix's robust Q1 '11 results announced earlier this week. Netflix added 3.6 million subscribers in Q1, which is almost double the 1.7 million subscribers it added a year earlier in Q1 '10. Of the total, 3.3 million were in the U.S. bringing Netflix to a virtual tie with Comcast at 22.8 million subscribers (though as I always note, Comcast generates at least 5-6 times as much revenue per video subscriber as does Netflix). Still, with the Q1 growth, Netflix has grown by over 12 million subscribers in the past 6 quarters, an amazing stretch by any measure.
In the podcast we also discuss the more conciliatory tone Netflix struck toward the pay-TV industry, with CEO Reed Hastings going out of his way to tamp down concerns about imminent cord-cutting. We also comment on how Netflix appears to be adopting Apple's approach to under-promising and over-delivering quarterly results.
Click here to listen to the podcast (12 minutes, 53 seconds)
Click here for previous podcasts
The VideoNuze Report is available in iTunes...subscribe today!Categories: Aggregators, Podcasts
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Netflix Now In Virtual Tie With Comcast as Largest U.S. Video Subscription Service
Netflix just reported its Q1 '11 results, gaining 3.3 million subscribers in the U.S. to end the quarter with 22.8 million U.S. subscribers, in a virtual tie with Comcast as the largest U.S. video subscription service as measured by total subscribers. The 22.8 million total met the top end of its guidance range.
As I previously noted, Netflix ended 2010 with just over 20 million subscribers, but that amount included just over 500K international
subscribers (in Canada) which Netflix has now broken out for the first time. In the quarter Netflix also added 290K international subscribers to end the quarter at 800K subscribers. In total, Netflix now has 23.6 million subscribers. On another encouraging note, trial subscribers in Q1 '11 fell to 1.392 million, vs. 1.566 million at the end of 2010, accounting for 6.1% of ending subscribers, down from 8%.
Categories: Aggregators
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Netflix is Likely to Become the Largest U.S. Video Subscription Service When It Reports Q1 '11 Today
Netflix is likely to become the largest U.S. video subscription service - as measured by total subscribers - when it reports its Q1 '11 results at 4:05pm ET today. The milestone would be the latest evidence of Netflix's rapid accent as a major force in online distribution of Hollywood films and TV programs, as well as a central player in the unfolding battle for the digital living room.
Netflix ended 2010 with just over 20 million subscribers, and provided Q1 domestic ending subscriber guidance of between 21.9 million and 22.8 million subscribers. If Netflix slightly beats the high end of its guidance range it will eclipse Comcast, currently the largest video service provider, which ended 2010 with 22.802 million video subscribers.
Categories: Aggregators, Cable TV Operators
Topics: Amazon, Comcast, Netflix
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New Netflix Deals Show How Little "Dexter" and "Californication" Really Matter
A couple of weeks ago, in "Showtime Circles Its Wagons, But to What End?" I questioned Showtime's decision to withdraw from Netflix streaming rights toearly seasons of 2 of its hit shows, "Dexter" and "Californication." One of the points I made was that Netflix would survive this loss just fine because they have enough streaming content already, and more coming all the time.
Sure enough, Netflix has more than proved my point, announcing a deal last Friday with 20th Century Fox that gives it streaming rights to the first season of the Fox hit "Glee," the first 2 seasons of the FX favorite, "Sons of Anarchy" and the library of "Ally McBeal" and "The Wonder Years." Then this past Wednesday, Netflix announced a deal with Lionsgate for streaming rights to the first 4 seasons of AMC's signature series "Mad Men," with 3 more seasons to follow after their on-air run (Netflix already had the Canadian streaming rights to the show).
Categories: Aggregators, Cable Networks, Studios
Topics: 20th Century Fox, Lionsgate, Netflix
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YouTube Pursuing "Strategic Catalyst" Role for Industry
An article in the WSJ yesterday reported that YouTube may be planning to spend up to $100 million to commission low-cost web-only content as part of
a reorganization of the site into 20 "channels." While the article was short on details and YouTube wouldn't confirm anything, the initiative feels consistent with the "strategic catalyst" role I characterized YouTube as playing in the online video industry last month, following its acquisition of Next New Networks.
Categories: Aggregators, Indie Video
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YouTube Dominating Online Video Ad Business; $1.3 Billion Forecast in 2011
A new report this week from Citi analyst Mark Mahaney forecasted that YouTube revenue could exceed $1.3 billion in 2011 and rise to almost $1.7 billion in 2012 (see below). Mahaney's conclusion is based on YouTube driving higher video views and an improved ability to monetize these views with advertising. Google has of course been famously tight-lipped about YouTube's financial condition, other than to issue increasingly optimistic statements in its quarterly earnings calls.
Categories: Advertising, Aggregators
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Former Blockbuster CEO and Investor Square Off Over Company's Failure
Coincidentally, as I was writing "Could HBO be the Next Blockbuster?" an essay appeared in Harvard Business Review this week by former Blockbuster CEO John Antioco describing his experience at the company and interactions with activist investor Carl Icahn. After the essay Icahn responds, to which Antioco then responds. It's a fascinating exchange.
Categories: Aggregators
Topics: Blockbuster, Netflix
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Ohio University Clamps Down on Students' Netflix Use
How popular is Netflix among college students? Apparently so much that Ohio University, a 32,000 student campus, this week imposed a bandwidth cap on its students of a puny 5 MB when it found that 60% of its bandwidth was beingused for entertainment purposes, 28% of which was for Netflix (I think that means that 17% of bandwidth was being used for Netflx). The situation had gotten so bad that students and faculty weren't able to access the web-based curriculum management system. Much as I'm a fan of Netflix streaming, it's good to see OU trying to get its students back to hitting the books. Categories: Aggregators, Broadband ISPs
Topics: Netflix, Ohio University
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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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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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Netflix Lays Down Its Bets on "House of Cards"
Netflix served notice of its official arrival on the Hollywood scene this afternoon, announcing a bold deal for first-run rights to the new David Fincher directed TV series, "House of Cards," starring Kevin Spacey. Whereas the company has built a base of 20 million plus subscribers and a streaming franchise largely on catalog movies and TV series, the first-run deal signals that the company will not rest on its successful content acquisition strategy.
In my analysis of the rumored deal (as it stood just a couple days ago), I pointed to three ways that a first-run deal for "House of Cards" contrasted with Netflix's traditional approach. Having discussed the deal with a Netflix spokesman this afternoon, and having read other interviews and analysis, this afternoon, following are updates on those three items:
Categories: Aggregators
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Hulu Also Making Move Into Original Video Production
While Netflix got a lot of attention this week for possibly moving to distribute an original TV series, "House of Cards," an interesting scoop in Adweek notes
that Hulu may also be looking to ramp up its original production efforts. According to the article, Hulu has been building two content groups, one focused on branded entertainment and the other on niche comedy and documentaries.
Categories: Aggregators, Branded Entertainment, Indie Video
Topics: ABC, FOX, Hulu, NBC, Netflix
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VideoNuze Report Podcast #92 - Mar. 18, 2011
I'm pleased to present the 92nd edition of the VideoNuze Report podcast, for March 18, 2011.
In this week's podcast, Daisy Whitney and I discuss Netflix's rumored $100 million deal for first-run rights to "House of Cards," a new TV series directed by David Fincher and starring Kevin Spacey. As I wrote earlier this week, the deal would be a very significant shift in strategy for Netflix, and Daisy and I get into some of the details.
On a related note, yesterday I posted the audio recording of an interview I did with Netflix's chief content officer Ted Sarandos at the NATPE conference in January. Ted didn't allude to any first-run deals in that interview, but he did talk about his interest in bidding against HBO for the rights to Warner Bros. films when their deal was up for renewal among other topics.
Click here to listen to the podcast (13 minutes, 12 seconds)
Click here for previous podcasts
The VideoNuze Report is available in iTunes...subscribe today!Categories: Aggregators, Podcasts
Topics: HBO, Netflix, Podcast, Warner Bros.
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Audio Interview With Netflix's Chief Content Officer Ted Sarandos
I'm pleased to provide an audio recording of an on-stage one-on-one interview I did with Netflix's chief content officer Ted Sarandos, at the NATPE Market conference on January 25th. I've been meaning to post this for a while, but experienced a few technical issues in getting it done. The interview is particularly timely given news this week that Netflix may be looking to distribute its first original TV series, "House of Cards," directed by David Fincher and starring Kevin Spacey.
In this wide-ranging interview, Ted and I discuss topics such as Netflix's content acquisition strategy, how it decides how much to spend on licensing, the critical role that data plays in informing Netflix's decision-making, the future of the DVD business and lots more. Of note, this is the interview in which Ted said that Netflix would bid against HBO for Warner Bros. films when those parties' distribution deal comes up for renewal in a couple of years and that Netflix had the resources to fully compete. That declaration was a departure from Netflix's traditional public posture about working closely with premium cable networks rather than disrupting them, and set off a raft of media coverage.
Categories: Aggregators, People
Topics: HBO, Netflix, Warner Bros.
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A Netflix Deal For "House of Cards" Would Be a Big Shift In Its Strategy
A report late yesterday by Deadline.com, that Netflix is potentially going to bid $100 million to stream/broadcast the new David Fincher/Kevin Spacey TV series "House of Cards" has been ricocheting around the Internet like a pinball since. Deadline also reported that Netflix is bidding against HBO and AMC and could take the unusual step of not even piloting the series before making this huge financial commitment. As a close observer of Netflix's rise over the past several years, the move would break with several key tenets of the company's success formula. Though I've learned to never say never, following are a few Netflix strategies that would be changed with a deal for "House of Cards":
Categories: Aggregators
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Movie Windows Back in the Spotlight
Movie windows were back in the spotlight this week as Hollywood executives continue to air out their anxiety over digital distribution's impact. In a pair of articles (here and here), Home Media Magazine covered remarks by Disney CFO Jay Rasulo and Time Warner CEO Jeff Bewkes at the Deutsche Bank conference in Palm Beach, FL. Rasulo put his finger on Hollywood's challenge of how to "re-work release windows to generate incremental revenue, without cannibalizing existing revenue streams and upsetting distribution partners."
However, as Disney knows from its experiment last year of accelerating the DVD release of "Alice in Wonderland," which raised the ire of British theater owners, balancing these objectives is no easy feat. Meanwhile, as "Premium Video-on-Demand," an early window release plan for $30-$40 per movie approaches, theater owners' unhappiness will become even more apparent.
Categories: Aggregators, FIlms, Studios
Topics: Disney, Netflix, Time Warner
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VideoNuze Report Podcast #91 - Mar. 11, 2011
I'm pleased to present the 91st edition of the VideoNuze Report podcast, for March 11, 2011.
In this week's podcast, Daisy Whitney and I discuss YouTube's acquisition of independent online video producer Next New Networks. As I explained in my post earlier this week, while it's tempting to see Google/YouTube becoming a content creator itself with the deal, instead I think of the move as taking a page from the cable industry's early playbook. YouTube is trying to play the role of "strategic catalyst" for online video creators, similar to what early cable TV operators did for early cable TV networks. Daisy doesn't see it quite the way I do however, which might suggest I'm giving YouTube more credit than they deserve. We'll see how it plays out over time.
Then we talk briefly about "ELEVATE: Online Video Advertising Summit," a new 1-day conference I announced earlier this week. Note, just as I finish up inviting Daisy to participate, the gremlins attacked and the podcast recording unexpectedly stopped. For those of you interested in her response, she said "she'd be happy to join us, that is if she's not in Paris at the time." Ahhh, choices, choices.
Click here to listen to the podcast (13 minutes, 41 seconds)
Click here for previous podcasts
The VideoNuze Report is available in iTunes...subscribe today!
Categories: Aggregators, Deals & Financings, Events, Indie Video, Podcasts
Topics: ELEVATE, Next New Networks, YouTube
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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 Googleand 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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Amazon is Still a Paper Tiger in Online Video Subscriptions
Since Amazon introduced a streaming video benefit in its Prime service almost 2 weeks ago, there have been plenty of people suggesting that the move was a game-changer in online video subscriptions. Eventually that may be the case. But for now, Amazon's streaming video strategy appears very underwhelming and is unlikely to change industry dynamics much at all. When compared to the effort and resources Amazon has put into the Kindle, for example, streaming video looks more like a side project than a high-priority company initiative.
As I wrote in my initial review, the pervasive problem in Amazon's approach to streaming video is the absence of a clearly defined video brand or value proposition. The fact that Amazon decided to staple video streaming onto the Prime membership program says a lot about how Amazon views video for now: as a supporting player to more important company revenue drivers like Prime, rather than a star in its own right.
Categories: Aggregators
Topics: Amazon
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Comcast's Roberts: "What used to be called 'reruns' on television is now called Netflix."
An interview with Comcast's CEO Brian Roberts in today's WSJ has an instantly classic quote that will no doubt be making the rounds. In response
to the interview question, "Do you feel pressure from the growing number of deals Netflix Inc. is striking with content owners, including, recently, CBS?" Roberts responded, "What used to be called 'reruns' on television is now called Netflix." Ouch!
Of course, Roberts, and other pay-TV executives, have taken great pains to assert that new over-the-top services aren't competing with their core video subscription services. Those assertions came under fire last year as the pay-TV industry lost subscribers for the 2nd and 3rd quarters, leading to wildly over-hyped predictions of cord-cutting, which have abated as 4th quarter subscriber losses improved. Still, there's no denying that Netflix, which added almost 8 million subscribers in 2010 to surpass 20 million, has a lot of momentum and eventually could be viewed as part of pay-TV substitute package. Come early April, when Q1 '11 results are released and Netflix almost certainly edges out Comcast to be the largest video subscription service in the U.S., the Netflix luster will only grow further.
Categories: Aggregators, Broadband ISPs, Cable TV Operators
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