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CBS Sees $3 Billion In New Distribution Revenue Ahead
CBS hosted an "Upfront for Investors" yesterday, and as The Hollywood Reporter noted, its executives envision potentially $3 billion in new,
high-margin revenue coming from retransmission consent payments, reverse compensation from TV affiliates, international TV syndication and emerging digital distributors. It was no coincidence that just this week CBS announced a 2-year distribution deal with Netflix for mainly library programs, that one analyst valued at $200 million.
Categories: Aggregators, Broadcasters
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With New CBS Deal, Netflix Reminds Amazon (and Hulu) Who's King of the Streaming Jungle
As if on cue, Netflix announced a new streaming deal with CBS this morning, just hours after Amazon took the wraps off its own new streaming feature for Prime users. Under the 2-year deal, Netflix will get episodes from classic
series like "Star Trek," "Frasier," "Cheers," "Twin Peaks," "Hawaii Five-O," "The Twilight Zone," and others. It will also include certain episodes from current shows like "Medium" and "Flashpoint." The companies had a previous streaming deal signed in late 2008 that covered series like "NCIS," "CSI" and "Numbers" which appears to have expired.
The new CBS agreement sends a strong message to Amazon that when it comes to premium content, Netflix is still king of the streaming jungle. If Amazon wants to compete title-for-title, it is going to have to spend aggressively for content. As I pointed out earlier today, Amazon is only likely to do this if it sees meaningful increases in Prime membership due to the new streaming feature, which I believe is unlikely.
Categories: Aggregators, Broadcasters
Topics: ABC, Amazon, CBS, Hulu, NBCU, Netflix
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Amazon Prime Instant Streaming Launches; Not a Netflix-Killer (Yet Anyway)
Amazon is announcing this morning that it has added streaming access to 5,000 movies and TV shows to the package of benefits its "Prime" members get, for no extra charge as part of their $79/year subscription. Amazon is offering a one month free trial to Prime to let new users test it out. The move had been widely rumored and of course the first company that comes to mind as being in the cross-hairs of Prime's streaming is Netflix. Those competitive concerns are legitimate, but for now, Prime isn't close to being a Netflix-killer.
The big Achilles heel of Prime is content selection. Though 5,000 titles sounds like a lot, it won't take long for experienced Netflix users tempted by a switch to Prime to recognize that most of these titles are already available on Netflix streaming as well. I did a quick comparison of 20 randomly-selected titles on Prime and found that with the exception of a few BBC Shakespeare titles and certain episodes of the PBS series "American Experience," everything on Prime is already available on Netflix streaming. In fact, for now Prime relies heavily on British programming and PBS. Though both provide quality productions, they are far from mainstream popularity in the U.S.
Categories: Aggregators
Topics: ABC, Amazon, Apple, EPIX, NBC, Netflix, Starz
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Redbox Subscription Still Coming
Redbox's president was talking up his company's upcoming subscription video service this week, though no launch dates or partner were identified. Redbox has big-time Netflix-envy and clearly believes it can compete. That will be easier said than done.
Categories: Aggregators, FIlms
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Netflix Gets Apple Subscription Exemption As CE Industry Love Continues
Speaking of Netflix (and who's not these days?), check out how Apple granted it an exemption from its 30% fee for its new App Store subscription model this
week. Publishers were rankled this week that the long-awaited subscription support fee was pegged so high, and Google seemed to seize on it, by introducing its "One Pass" service right on the heels of Apple's announcement, with a lower 10% cut and more flexible rules.
Categories: Aggregators, Devices
Topics: Apple, Google, Netflix
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Netflix Short-Seller Has Tail Between His Legs
Less than 2 months ago investor Whitney Tilson gained a lot of attention explaining his short position in Netflix stock. Now, with Netflix stock about 27% higher than where it was when he wrote his analysis, this week Tilsonthrew in the towel, closing out his short position. While Tilson made a couple of interesting points around margin compression due to Netflix's escalating content costs, and also potential competition, the short sale was flawed by Tilson's near total misunderstanding of Netflix's value proposition and why it resonates so powerfully with consumers, which is what helped Netflix add 7.7 million new subscribers in 2010. That, combined with Netflix stock's darling status, made Tilson's short bet an almost certain loser.
Categories: Aggregators
Topics: Netflix
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Apple Dominates Still Small Movie Download Business
Earlier this week IHS Screen Digest released market share estimates for major movie download or "EST" (electronic sell through) outlets in 2010, and no surprise, Apple's iTunes was atop the group, with a dominant 64.5% position. However, that was down 10 points from 2009, as Microsoft, Sony and others all gained share. IHS Screen Digest's research analyst Arash Amel noted that in 2011, Apple is going to face a potentially powerful new competitor in Wal-Mart, which acquired the Vudu VOD service early last year, which could turn the "iVOD" market into a 2 horse race.
Categories: Aggregators, Downloads, FIlms
Topics: Apple, IHS Screen Digest, iTunes, Microsoft, Sony, UltraViolet, Wal-Mart
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Hey Jason Kilar: You Should Go Back to Amazon and Compete Against Netflix
Not that Hulu's CEO Jason Kilar has asked for or needs my career advice, but in light of his controversial "speaking truth to power" blog post on the future of TV, which has wags all over the industry saying his tenure at Hulu is all but over, I'll offer it up anyway: he should go back to Amazon (where he was prior to Hulu) and run their soon-to-be-launched video subscription business that will compete directly against Netflix.
Categories: Aggregators, People
Topics: Amazon, Hulu, Jason Kilar, Netflix
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Hulu's Saga Continues
Yesterday the WSJ ran a lengthy piece on Hulu, focusing mainly on the rancorous relationships among Hulu's owners and the tight position the company has found itself in. One juicy new tidbit was that CEO Jason Kilar threatened to quit over resistance to his proposal that Hulu Plus be priced at
$4.99/mo. Though I've long been a fan of Hulu's user experience, the company has been severely pinched from a content perspective. As the WSJ article points out, as Hulu's parents have sold their programs to Netflix and explored doing their own thing, Hulu is getting painted into a corner.
Hulu has also been dogged by its parents' push for retransmission consent payments which are compelling the networks to shift away from making their programs freely available online. Then there's the TV Everywhere issue; as pay-TV operators want to add value to their own services as part of their retrans deals, Hulu is the odd man out. Now Hulu is apparently considering becoming a "virtual cable operator" whatever that means exactly. Bottom line: it's getting harder and harder to see how Hulu can zigzag to ultimate success.Categories: Aggregators
Topics: Hulu
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VideoNuze Report Podcast #85 - Jan. 28, 2011
Daisy Whitney and I are back this week for the 85th edition of the VideoNuze Report podcast, for January 28, 2011.
In today's podcast, Daisy and I talk about the key highlights of my on-stage interview with Netflix's content chief Ted Sarandos at NATPE in Miami earlier this week. The interview has received wide media coverage (e.g. Paid Content, B&C, CNET, The Hollywood Reporter, The Wrap, Variety, Home Media). Daisy and I discuss a number of intriguing things that Ted said.
(Note: the interview with Ted was on Tuesday morning, and we recorded this podcast on Wednesday, before Netflix reported its huge Q4 '10 later in the day. Also, NATPE recorded the interview and I'll post it as soon as I have it.)
Click here to listen to the podcast (12 minutes, 59 seconds)
Click here for previous podcasts
The VideoNuze Report is available in iTunes...subscribe today!Categories: Aggregators, Podcasts
Topics: Netflix, Podcast, Ted Sarandos
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Netflix Tops 20 Million Subscribers; Adds Over 3 Million For First Time In a Single Quarter
It's official; Netflix has hit the milestone of 20 million subscribers, though just barely. Netflix added 3.08 million subscribers in Q4 '10, beating the high end of its guidance of 2,767,000 subscribers by about 10.9% to end 2010 with 20.01million subs. It's the first time Netflix has added more than 3 million subscribers in a quarter; for the year it added over 7.7 million subs. To put the 3.08 million in perspective, it is more than 4 times the amount of subs added just 2 years ago in Q4 '08.
Netflix is very bullish on Q1 '11, providing domestic guidance of between 21.9 million and 22.8 million subscribers, which means a slight beat of the high end would mean a second consecutive quarter of 3 million additions. Netflix is also offering international guidance for the first time, of between 750K and 900K subscribers, which is all Canada. Netflix pointed to 3 ways it is achieving a virtuous cycle of subscriber growth: more content, more word-of-mouth and more R&D to improve the UI. More to come.Categories: Aggregators
Topics: Netflix
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Will Netflix Report 20 Million Subscribers Later Today?
Netflix will report its Q4 and full year 2010 earnings later today. There's no question that the results will come in very strong given the momentum the company had going into the holiday quarter. But one interesting question is whether Netflix will surpass the 20 million subscriber mark for the first time. While the number holds no other particular value than it being large and round, it would still be a significant milestone and also make Netflix the second largest video subscription company, by subscriber count, in the U.S. behind only Comcast (who it will pass at some point in the 1st half of 2011).
For its part Netflix is forecasting to have ended Q4 with between 19 million and 19.7 million subscribers. That would represent an increase over Q3's 16,933,000 of between 2,067,000 to 2,767,000 subscriber additions. To hit the 20 million number, Netflix would have to gain 3,067,000 subscribers, or about 10.8% more than the high end of its guidance. One way to gauge the likelihood of this happening is to look at the company's recent actual subscriber additions vs. its guidance. Per the chart below, in 2 of the last 3 quarters, the company has in fact beaten the high end of its forecast, in Q1 '10 (by 10.9%) and in Q3 '10 (by 13.7%). It's also worth noting that Q4 '09's sub gain of 1,159,000 was more than double its Q3 '09 addition of 510,000. While I wouldn't expect a Q4 '10 to Q3 '10 ratio like that, if it were to happen then Netflix would be far above 3 million in Q4.
Categories: Aggregators
Topics: Netflix
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Amazon Acquires LOVEFiLM Making Netflix's European Expansion a Lot Harder
Amazon announced this morning that it has bought the remaining 58% of European DVD-by-mail and online subscription service LOVEFiLM. Amazon
gained its stake in 2008 when LOVEFiLM acquired Amazon's European DVD rental business (Amazon also invested in LOVEFiLM as part of the deal). Given Amazon's position, the new deal, said to be worth around $320 million, was widely rumored.
Though the companies offered no insight in the press release as to what prompted the move, I think it can be interpreted as a bid by Amazon to make Netflix's expansion into the European market much harder. Netflix expanded into Canada last September with a streaming-only service and has continued to beef up the content selection offered there, even as stories have emerged that Canadian broadband ISPs' consumption caps can generate incremental fees for heavy Netflix users. Nonetheless, Netflix has been bullish about its near-term profitability expectations in Canada and executives have made no secret of the company's intention to expand further internationally, with Europe certainly in the bullseye.
Categories: Aggregators, Deals & Financings, FIlms, International
Topics: Amazon, LOVEFiLM, Netflix
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YouTube Charges $375K Per Day for Home Page Masthead Ads, Plus Other Fun Facts
The February edition of Fast Company magazine, which features a lengthy piece on YouTube, includes a number of interesting data points. One that caught my eye is that YouTube charges $375,000 per day for a home page
"masthead" ad (these are the rich media 970x250 ads that occupy the top third to half of the home page). According to the article, the home page generates an average of 45 million views per day (though it's not clear if that's U.S.-only or global). A companion article notes that the home page gets 18 million visitors in the U.S. only.
The ad running today, for Lexus's new CT 200h hybrid is a typical masthead implementation: graphics rich, with embedded video, and links to a series of original, branded videos (in this case "Darkcasting" vignettes). Last September, in "YouTube Gets Center Stage in Google's New 'Watch This Space' Ad Campaign," I noted that the premier brands that used the masthead unit in the previous month included Sony Pictures, Lionsgate, Showtime, NBC, Mattel, EA, T-Mobile, American Express and others. Each has its own creative execution that often extended far beyond what's typically seen in rich media display ads (my favorite example continues to be the Sly Stallone ad for the movie "The Expendables").Categories: Advertising, Aggregators
Topics: Fast Company, YouTube
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On-Stage Interview With Netflix's Content Chief Ted Sarandos, Next Week in Miami Beach
Please join me in Miami Beach next Tuesday, January 25th when I'll be doing an exclusive one-hour interview with Netflix's chief content officer Ted Sarandos at the annual NATPE Market conference. The session is sponsored by William Morris Endeavor. The NATPE Market conference runs from next Monday to Wednesday at the luxurious Fontainebleau Resort.
Ted is Netflix's point person for the company's lengthy list of recent content deals (e.g. EPIX, Disney/ABC, NBCU, Relativity Media, etc.) that have powered the popularity of Netflix's streaming service. Among the topics we'll discuss include how Netflix decides what type of content to pursue, how these deals are typically structured, how big Netflix's budget is for ongoing content acquisition, which connected devices are most popular for Netflix streaming use, which competitors he's most worried about, and what's on the roadmap for 2011 and beyond.
Categories: Aggregators, Events, People
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5 Items of Interest for the Week of Jan. 10th
Even though I was very focused this week on the CES "takeaways" series, there was still plenty of news happening in the online and mobile video industries. So as in the past, I'm pleased to offer VideoNuze's end-of-week feature highlighting 5-6 interesting online/mobile video industry news items that we weren't able to cover this week. Enjoy!
Level 3 fights on in Comcast traffic dispute
Level 3 is showing no signs of relenting on its accusations that Comcast is unfairly trying to charge the CDN for Internet traffic it delivers to Comcast's network. In an interview this week, Level 3 said it may use the "Open Internet" provisions of the FCC's new network neutrality rules to press its case. Level 3's challenge is coming at the 11th hour of the FCC's approval process of the Comcast-NBCU deal; it's not really clear if Level 3 is having any impact on slowing the approval, which appears imminent.
Comcast-NBCU deal challenged over online video proposal
Speaking of challenges to the Comcast-NBCU deal, word emerged this week that Disney is voicing concern over the FCC's proposed deal condition that would force Comcast to offer NBC programming to any party that had concluded a deal with one of NBC's competitors for online distribution. The Disney concern appears to be that the condition would have an undue influence on how the online video market evolves and how Disney's own deals would be impacted. While the FCC should be setting conditions to the deal, the Disney concerns highlights how, in a nascent, fast-moving market like online video, government intervention can cause unintended side effects.
YouTube is notching 200 million mobile video views/day
As if on cue with my CES takeaway #3, that mobility is video's next frontier, YouTube revealed this week that it is now delivering 200 million mobile views per day, tripling its volume in 2010. That would equal about 6 billion views per month, which is remarkable. And that amount is poised to increase, as YouTube launched music video site VEVO for Android devices. YouTube clearly sees the revenue potential in all this mobile video activity; it also said that it would append a pre-roll ad in Android views for tens of thousands of content partners.
Google creates video codec dust-up
Google stirred up a hornet's nest this week by announcing that it was dropping support for the widely popular H.264 video codec in its Chrome browser, in favor of its own WebM codec, in an attempt to drive open standards. Though Chrome only represents about 10% market share among browsers (doubling in 2010 though), for these users, it means they'll need to use Flash to view non-WebM ended video. There are a lot of downstream implications of Google's move, but for space reasons, rather than enumerating them here, check out some of the great in-depth coverage the issue has received this week (here, here, here, here).
Netflix usage drives up Canadian broadband bills
An interesting test of Canadian Netflix streaming showed that a user there might have to pay an incremental $12/month under one ISP's consumption cap. That would be more than the $7.99/mo that the Netflix subscription itself costs, leading to potential cord-shaving behavior. This type of upcharge hasn't become an issue here in the U.S. because even ISPs that have caps have set them high relative to most users' current consumption. But if streaming skyrockets as many think it will, and the FCC allows usage-based billing, this could fast become a reality in the U.S. as well.
Categories: Aggregators, Broadband ISPs, Broadcasters, Cable TV Operators, CDNs, Deals & Financings, International, Mobile Video, Regulation, Technology
Topics: Comcast, Disney, FCC, Google, Level 3, NBCU, Netflix, WebM, YouTube
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VideoNuze Report Podcast #83 - Jan. 7, 2011
Daisy Whitney and I are back this week for the 83rd edition of the VideoNuze Report podcast, for January 7, 2011, the first of this new year.
Today we discuss 3 news items from CES this week: Netflix gaining a dedicated remote control button on 11 different CE companies' connected devices, Comcast launching live and on-demand TV on tablet computers and Cisco's new "Videoscape" TV platform. Enjoy!
Click here to listen to the podcast (13 minutes, 43 seconds)
Click here for previous podcasts
The VideoNuze Report is available in iTunes...subscribe today!
Categories: Aggregators, Cable TV Operators, Podcasts, Technology
Topics: CES, Cisco, Comcast, Netflix
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With New Netflix Button, Mutual Love Affair With CE Industry Continues
The mutual love affair between the consumer electronics industry and Netflix continues on, with today's announcement that 11 different CE companies will create a dedicated Netflix button on their remote controls for certainconnected TVs, Blu-ray players and set-top boxes. The unusual move is the latest sign of how interdependent the success of CE companies' connected devices and Netflix's burgeoning popularity have become.
The love affair was born out of CE companies' recognition of the old adage that compelling content and applications are critical to inducing consumers to buy the next snazzy gadget. Case in point: Blu-ray disc player sales were stagnating until connectivity was added, enabling access to Netflix and other streaming content. As a result, in the first 9 months of 2010, around 2.4 million players were sold in the U.S., up 96% from the prior year's period, according to NPD Group.
Categories: Aggregators, Devices
Topics: and Toshiba. Sharp, Dynex, Haier, Memorex, Netflix, Panasonic, Samsung, Sharp, Sony, Sony, Toshiba
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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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