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VideoNuze Report Podcast #78 - Oct. 22, 2010
Daisy Whitney and I are pleased to present the 78th edition of the VideoNuze Report podcast, for October 22, 2010.
This week Daisy and I focus our attention on Netflix's Q3 results, which were announced on Wednesday. The company added nearly 2 million net new subscribers, a new record. It has added almost 4.7 million subscribers in the first 3 quarters this year. Daisy and I discuss the results and add more color to my original analysis.
Click here to listen to the podcast (11 minutes, 48 seconds)
Click here for previous podcasts
The VideoNuze Report is available in iTunes...subscribe today!Categories: Aggregators, Podcasts
Topics: Netflix
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Netflix Racked Up Almost 2 Million Subscribers in Q3, A New Record
Netflix just reported Q3 '10 results and the eye-catching number is 1,932,000 net subscribers added in the quarter, a new record for the company, and
almost 4x as many as the 510,000 it added a year ago in Q3 '09. Netflix ended Q3 '10 with 16,933,000 subscribers, almost double the 8,672,000 subscribers the company had 2 years ago, at the end of Q3 '08. Revenue was up 31% to $553.2 million.
Netflix ascribed the growth entirely to streaming, with CEO Reed Hastings saying in a statement, "By every measure, we are now primarily a streaming company that also offers DVD-by-mail." That's the first time I've heard this positioning, and it is only partly true, as only 66% of subscribers watched 15 minutes of streaming video in Q3 (though up from 61% in Q2 '10), whereas my guess is that 95%+ of the company's subscribers still take out at least 1 DVD each month and the volume of overall viewership must still tilt heavily toward DVDs. (see update below)
Categories: Aggregators
Topics: Netflix
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Looking Ahead to Netflix's Q3 Results Today
Later today Netflix will report its Q3 results and if you're trying to get a sense of how over-the-top video is growing, there's no better company to look at. Netflix is the leader in paying subscribers viewing streaming Hollywood-quality video (at least 9 million/mo at the end of Q2), in availability on connected devices (200 and growing) and in offering the deepest catalog of movies/TV programs under subscription. As a result, its performance is as good a gauge as any for consumers' growing appetite for OTT video alternatives.
Q3 was a particularly productive quarter for Netflix in acquiring more content for streaming, arguably its most important priority as it transitions from its traditional DVD-by-mail business. The big content deal of Q3 was with premium cable network EPIX, but this quarter Netflix also inked new or expanded deals with Relativity Media, Warner Bros., NBCU and Nu Image/Milllenium Films. These deals have brought a combination of popular newer and classic movies along with recent-season TV episodes.
Categories: Aggregators
Topics: Netflix
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5 Items of Interest for the Week of Sept. 27th
It's Friday and that means that once again VideoNuze is featuring 5-6 interesting online/mobile video industry stories that we weren't able to cover this week. Have a look at them now, or take them with you for weekend reading!
Nielsen Unveils New Online Advertising Measurement
comScore Introduces Digital GRP `Overnights` in AdEffx Campaign Essential
Dueling initiatives from Nielsen and comScore were announced on Monday, aimed at translating online usage into comparable TV ratings information, including reach, frequency and Gross Ratings Points (GRPs). While online video ad buying is ramping up, the tools to measure viewership in a comprehensive way have been lacking. This is one of the main issues holding back content providers from participating in TV Everywhere.
Analyst: Cord-cutting fears overblown
New research shared this week by BTIG analyst Rich Greenfield concludes that less than 8% of the market is actually interested in cord-cutting. The big impediment: losing access to sports and cable programming, which is unlikely to migrate to free over-the-top alternatives. Greenfield's conclusion is that cord-cutting isn't a major threat to pay-TV operators over the next 3-5 years. Notwithstanding the research, another factor I'd point to that could tip cord-cutting the other way is consumers' belt-tightening. Much as nobody wants to lose access to programming, if the price is perceived as too high, they'll make compromises.
Why YouTube Viewers Have ADD and How to Stop It
Abandonment rates for online video have always been a concern, and using new research, Visible Measures CMO Matt Cutler now quantifies the behavior. Expect 20% of the audience to drop out within 10 seconds of hitting play, 33% by the 30 second mark and 44% by 60 seconds in. Pretty sobering data but incredibly important in thinking about content creation and monetization.
Networks Have Sharing Issues With Hulu
Hulu's New Hoop
On the one hand, Hulu's network partners, ABC, NBC and Fox are reportedly pulling back ad inventory that Hulu is allowed to sell, yet on the other, Hulu is reportedly out aggressively selling ads in Hulu Plus, its subscription service. Meanwhile this week Hulu also announced that Hulu Plus will be accessible on both Roku devices and TiVo Premiere, as it continues chasing Netflix in the subscription game.
The New Apple TV Reviewed: It`s All About the Video
Apple TV devices started shipping this week, and reviews began popping up all over the web. This mostly positive review indicates that the user experience is solid, but that content selection is still skimpy. That's no surprise given how few deals Apple has struck to date. Yet to be seen is how Apple TV performs when it can access other iOS apps.Categories: Advertising, Aggregators, Analytics, Broadcasters, Devices
Topics: ABC, Apple TV, comScore, FOX, Hulu, NBC, Nielsen, Visible Measures, YouTube
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Both Roku and TiVo Get Hulu Plus Access
Hulu is extending access to its Hulu Plus subscription service to Roku devices and to TiVo Premiere. The service will be available to owners of these devices for $9.95/mo. Roku and TiVo follow availability of Hulu Plus on Samsung connected devices, Sony PS3 and the iOS devices.
Of course it's a real benefit to Hulu Plus subscribers to gain on-TV viewing through inexpensive connected devices, and no doubt we can expect more
devices to come, with boxee right at the top of the list. Still, with Hulu Plus following Netflix onto these devices, consumers are inevitably going to closely compare the two services. In this respect, as I've pointed out numerous times, most recently in the wake of Netflix's expanded deal with NBCU, Hulu Plus's content is going to look skimpy.
To be fair, for what it is - access to current and past seasons of broadcast programs, Hulu Plus is a great service. The problem is that DVRs already solve the current season episode value proposition for many (40% of homes and growing, according to Leichtman Research) while the prior seasons episodes are increasingly available on Netflix. Meanwhile, with TV Everywhere rolling out, Hulu Plus will be challenged to get access to cable TV network programs.
Expanding the number of devices that can access Hulu Plus is the right move (and a refreshing update after previously blocking free Hulu.com content). Nonetheless the big challenge for Hulu Plus remains getting more content.
What do you think? Post a comment now (no sign-in required).
Categories: Aggregators, Devices
Topics: Hulu Plus, Netflix, Roku, TiVo
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Netflix's Expanded NBCU Deal Further Marginalizes Hulu Plus
This morning Netflix announced its latest content licensing deal to bulk up the its streaming catalog, adding a range of programs from NBCU. It's a long list which includes next day access to Saturday Night Live (plus the full backcatalog), last season episodes for 30 Rock, The Office and Law&Order: SVU (in addition to renewing back episodes already available), plus past seasons of Friday Night Lights, Psych, Monk, Battlestar Galactica, Destination Truth and Eureka. Netflix didn't identify exactly how many total episodes the deal adds to streaming, but it's very substantial.
On the losing end of this deal is Hulu, and more specifically, its budding subscription service Hulu Plus (note the irony that one of Hulu's parent companies is NBCU). As I explained in late August, in "88% of Hulu Plus Content is Already Available for Free on Hulu.com," when it comes to content, Hulu Plus is getting squeezed from all sides, seriously limiting its ability to be much more than an outlet for delayed-release current season and past seasons' episodes of broadcast programs. This is an extremely narrow value proposition which is unlikely to gain widespread adoption.
Categories: Aggregators, Cable Networks
Topics: Hulu, Hulu Plus, NBCU, Netflix
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6 Things Pay-TV Operators Can Learn From Blockbuster's Fall
Blockbuster's bankruptcy filing was a long time in coming, but is still daunting when you think back to how omnipresent and powerful the company used to be. To be sure, there has been a lot of distracting M&A and corporate drama surrounding Blockbuster over the years which no doubt contributed to its decline. Still, there have been fundamental shifts in its business that Blockbuster missed.
Specifically, Netflix has been both a catalyst of Blockbuster's demise and also a big beneficiary. Now, with Netflix aggressively pursuing over-the-top streaming, it is inevitably going to put pressure on traditional pay-TV operators. So what might pay-TV operators learn from Blockbuster's bankruptcy? Here are 6 things. No doubt there are more.
Categories: Aggregators
Topics: Blockbuster, Netflix
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Netflix Makes Canadian Streaming Service Official
As expected, this morning Netflix officially announced its first non-U.S. offering, a streaming-only service in Canada, priced at CDN $7.99, including a 1-month trial. Netflix also announced Canadian content licensing deals with U.S. studios Lionsgate, MGM, Paramount, Sony, 20th Century Fox and Universal, plus Canadian distributors Alliance Films, Maple Pictures, eOne and Mongrel. In particular, Netflix called out the availability of movies like "Superbad," "A Beautiful Mind" and "Slumdog Millionaire" plus back episodes of AMC's "Mad Men" which are not available in the U.S. Conversely, some content available in the U.S. for streaming won't yet be available in Canada.
Categories: Aggregators, International
Topics: Netflix
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Netflix Launching Canadian Streaming Service on Wednesday
It looks like Netflix is set to launch its streaming-only service in Canada this Wednesday, according to a report in The Hollywood Reporter, which says CEOReed Hastings will do the unveiling in Toronto. Netflix announced on July 19th that it would launch in Canada, its first non-U.S. market.
There are pros and cons to Netflix entering the Canada without offering DVDs-by-mail. The main pros are that Netflix avoids the expense associated with both building out the DVD warehouses/delivery centers and the postage expense to send discs. The cons are that the content selection will be drastically lower than what's available in the U.S., which could disappoint Canadians eager to have the same American service. Even though Netflix has been aggressively adding to its streaming catalog, it's still a fraction of what's on DVD. And it's not clear yet whether all the streaming deals Netflix has recently cut include Canadian distribution rights.
Hastings has been candid in the past that Netflix will proceed cautiously with international expansion. There are a lot of new variables outside the U.S., including competition. Over the weekend there was a report that Amazon may be looking to acquire the remaining part of U.K.'s LoveFilm that it doesn't already own.
What do you think? Post a comment now (no sign-in required).
Categories: Aggregators, International
Topics: Amazon, LOVEFiLM, Netflix
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Sezmi Snags Another $17.3M; Positioned for Shift to Affordable Pay-TV Service?
Late last week Sezmi, the startup pay-TV replacement provider raised another $17.3M, bringing its total raised to date to $92M. Sezmi has intrigued me from the start both because of its clever hybrid broadcast/broadband delivery
architecture and its ability to be a full substitute for existing pay-TV services. Now, as Sezmi is poised to begin expanding is rollout, its value-pricing approach could find its mark with recession-weary consumers.
As I described last week in "Are Pay-TV Providers Getting Hit By a Perfect Storm in Q3?" increasingly expensive incumbent pay-TV services are up against a belt-tightening process that households across America are going through. While cable and satellite now eat up 1.4% of discretionary spending, negative income growth, higher savings rates and chronic unemployment/under-employment are forcing many households to re-evaluate their entertainment spending. Forking over $80, $100 or even $200+ per month to their cable, telco or satellite provider is no doubt coming under closer scrutiny.
Categories: Aggregators, Cable Networks, Cable TV Operators, Devices
Topics: SezMi
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5 Items of Interest for the Week of Sept. 13th
It's Friday and that means once again VideoNuze is featuring 5-6 interesting online/mobile video industry stories that we weren't able to cover this week. Read them now or take them with you for the weekend. Enjoy!
Meet YouTube's Most In-Demand Brand Stars
A fascinating look at how major brands are hiring amateurs who have gained large followings on YouTube to pitch their products. The concept of "celebrity spokesperson" is getting redefined in the online video era.
Logitech Revue with Google TV Coming 9/29 for $299, Dish Network Offering Discounts?
We may be less than 2 weeks away from Logitech's "Revue," the first implementation of Google TV, hitting the market, with Dish Network subscribers possibly getting a deeply discounted $179 offer. The connected device space is increasingly crowded and there's high anticipation to see how Google TV stacks up.
Pre-order a Boxee Box Now
Speaking of connected devices, Boxee announced this week that pre-ordering is available from Amazon for its Boxee Box connected device, manufactured by D-Link. Like Google TV, but unlike Apple TV or Roku, Boxee offers the prospect of browsing the full Internet for video, not just what's been integrated with the device.
Samsung Reveals Tablet Launch Plans
Meanwhile the strongest potential competitor to the iPad, Samsung's "Tab" will begin shipping in just a few weeks, with availability from all 4 major U.S. wireless carriers. The Tab is very focused on mobile video, running Android 2.2 which supports Flash 10.1. That means Hulu and all other Flash-based video should work, significantly expanding the universe of choices beyond what is available on the iPad. No pricing yet, but the Tab looks like a meaningful iPad alternative.
Ivi Seeks to Become an Online Cable System
Can an online service retransmit network TV through the Internet, and charge for it without having any underlying agreements in place with the networks themselves? That's what Ivi, which unveiled its software this week, is attempting to do, pointing to U.S. copyright law as making its offer legit. We'll see; with TV networks gaining no new revenue coming in plus the risk of cannibalization we should expect them to raise vigorous legal challenges.
Categories: Aggregators, Brand Marketing, Broadcasters, Devices, Mobile Video
Topics: Boxee, D-Link, Google TV, Ivi, Logitech, Samsung, YouTube
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Google Poaches Key Netflix Executive to Run Content Partnerships
Here's an interesting executive change: Google has apparently nabbed Netflix VP, Digital Content Acquisition Robert Kyncl to be its new VP, Content Partnerships. AllThingsD.com is reporting the move, though neither side has confirmed. The Google role has been open since David Eun moved over to AOL as President of Media last February.
Assuming the move is true, it would be a key step forward for Google - and more specifically YouTube - in gaining access to premium content. Kyncl would bring not just his relationships with Hollywood, but an insider's
understanding of the economics behind all of Netflix's streaming deals with partners such as Epix, Warner Bros., Universal, ABC, Starz and others. That kind of credibility and insight would be a huge boon to YouTube, which has made some progress with premium content providers (e.g. Univision, WWE, etc), but has still had trouble breaking through. Google certainly has the stature to be a major distributor of premium content, but actually getting things done in Hollywood is notoriously tricky for outsiders.
Categories: Aggregators, People
Topics: Google, Netflix, YouTube
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5Min Expands Reach With Dailymotion Partnership
5Min, a leader in online video syndication, will distribute its 200K lifestyle and how-to videos to aggregator Dailymotion, in a partnership deal announced this morning. For 5Min and its content partners, Dailymotion with its 66
million monthly unique visitors, offers a huge additional audience. For its part, Dailymotion gets a curated library of premium quality content across 21 categories such as sports, health, travel, games and others. A quick check of Dailymotion today indicates the 5Min integration is not yet live.
5Min has been an early leader in video syndication, using its "VideoSeed" technology to understand publishers' text pages and then contextually match relevant content to them, from content partners like IGN, Hearst, Meredith, Scripps and others. Premium content providers have been attracted to work with 5Min because it drives significant incremental viewership of their videos beyond their own destination web sites.
Categories: Aggregators, Syndicated Video Economy
Topics: 5Min, DailyMotion
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Hulu Opening Development Center in Seattle
Hulu is opening a development center in Seattle by the end of the year, according to a blog post by Richard Tom, VP, Platform Technology this
morning. According to the company's job section it's currently recruiting for 27 open positions, with most in its LA office and a half dozen in China. As the company scales up in Seattle, it sounds like the number of recruits will grow.
Tom notes in his post that almost half the LA development team has some experience in Seattle, and given CEO Jason Kilar came from Amazon, the move makes sense. There's also a huge technical community in the area, lead of course by thousands of current and former Microsofties. One lure for prospective employees will no doubt be stock options; Hulu is rumored to be exploring an IPO later this year. I've been skeptical of the timing given the uncertainty that remains in both Hulu's ad and subscription models, but given the excitement over online video, Hulu could find a receptive market.
As a side-note, Hulu CTO Eric Feng recently left Hulu to become technical advisor to Al Gore at the venture firm Kleiner Perkins.
Categories: Aggregators
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YouTube Gets Center Stage in Google's New "Watch This Space" Ad Campaign
Last Thursday Google announced a new ad campaign promoting its display advertising opportunities called "Watch This Space." Having seen it in action for the first time, on the AllThingsD.com web site the last 2 days, it is clear that Google is giving YouTube center stage in this campaign. It's the first time I'm aware of that ad opportunities on YouTube have been so heavily promoted and I believe signals the growing importance of YouTube in Google's overall ad business.
The 300x600 Google ad unit (see below) expands to show 3 clickable tabs:
Categories: Advertising, Aggregators
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5 News Items of Interest for the Week of Aug 30th
In a week dominated by Apple's new products, there actually was some other interesting online/mobile video industry news this week. Continuing VideoNuze's new Friday feature of highlighting 5-6 stories that we didn't cover this week, below are a collection of items for your weekend reading pleasure.
YouTube Ads Turn Videos Into Revenue
The 800-pound gorilla of the online video industry is reportedly closing in on profitability, based partly on ads running against user-uploaded copyrighted material. By detecting these uploads and offering the underlying rights owners the choice to have their video taken down or leave it up and generate revenue, many are choosing the latter. YouTube continues to evolve from its UGC roots.
Samsung, Toshiba Unveil Google-Based iPad Rivals
The battle line between Apple's "i" devices and those running Google's Android will ramp up, with mobile video set to follow, as Samsung and Toshiba plan to sell tablet computers in the coming months. Though the iPad is of to a strong start, it looks like it won't enjoy the same market dominance as the iPhone did as competitors jump into the tablet market quickly.
Google TV: Up to $300 Price Premium?
The components to enable Google TV could add $300 to the retail price of a television. If accurate this would put Google TV at a big competitive disadvantage given the trend toward lower-priced connected devices such as this week's $99 Apple TV and Roku's price cuts.
A Look Back: Lessons Learned From TV Everywhere a Year After Deployment
Marty Roberts, VP of Sales and Marketing for thePlatform, which has powered a number of TV Everywhere rollouts, offers insights based on the company's experience. Topics include authentication, content ingest, parental controls, discovery and content security. TV Everywhere is still in a nascent stage, but pay-TV providers should be following early lessons and moving quickly.
ShowUHow Scores $3 Million Series A Backing for Video Instruction Guides
A startup site that offers video instruction guides for various types of products that need to be assembled illustrates how valuable video can be for how-to video applications.
Categories: Advertising, Aggregators, Cable TV Operators, Deals & Financings, Devices, Startups
Topics: Apple, Google TV, Samsung, ShowUHow, thePlatform, Toshiba, YouTube
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Putting Premium Content Within an Arm's Length of Desire
Robert Woodruff, the long-time president of Coca-Cola, had a famous quote summing up his ambition for the fizzy brown water: "I want Coke to be within an arm's length of desire." Given the initiatives of Apple, Google, Netflix, Hulu, Amazon, Sony, pay-TV operators, Roku, TiVo, gaming consoles and numerous others, a spin on the Woodruff quote might well be, "They're all putting premium content within an arm's length of desire." It's no exaggeration to say that we are on the cusp of unprecedented consumer access to premium content - both current and past seasons' TV programs along with archived and new-release movies.
The choices being presented to consumers are dizzying, and are poised to become increasingly complex. With Apple's announcement yesterday of a $99 Apple TV connected device, and 99-cent rentals from ABC and Fox (and others no doubt to follow), another relatively low-cost option for viewing premium content will be available. Not to be outdone, Amazon also unveiled its own 99-cent option yesterday, for downloads of TV programs, though the durability of this offer isn't yet clear. And Sony too announced a new service called Qriocity to delivery its content to its connected devices.
Categories: Aggregators
Topics: Amazon, Apple, Netflix, Sony
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Amazon Must Offer DVDs-by-Mail As Well As Streaming to Fully Compete With Netflix
The WSJ is reporting that Amazon is gearing up to offer a subscription service to stream catalog TV shows and movies. Amazon has long offered content on a VOD rental and purchase basis, but a subscription move would put the retail giant into direct competition with Netflix, the current 800-pound gorilla of the TV/movie streaming market.
However, for Amazon to effectively compete head-on with Netflix it would need to secure comparable streaming rights, which is probably doable, albeit costly. More importantly though, Amazon would also need to offer a full
selection of DVDs, delivered by mail, and the infrastructure to support it. In some ways that's a much tougher challenge, and whether Amazon wants to take this on is a huge open question.
Categories: Aggregators
Topics: Amazon, Hulu Plus, Netflix
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Over 88% of Hulu Plus Content is Already Available for Free on Hulu.com
A new analysis of all the content available on Hulu Plus reveals that over 88% of all the full-length TV program episodes available in the $10/mo subscription service are already freely accessible on Hulu.com. For clips, it's almost 98%. Research firm One Touch Intelligence found that out of 28K+ episodes on Hulu Plus, just 3,345 of them can't also found on Hulu.com. Two-thirds of these incremental program episodes are sourced from Hulu's broadcast TV network partners/owners, ABC, Fox and NBC.
In fairness, Hulu Plus has been live for less than 60 days and will no doubt will be adding more content down the road. But for now the high proportion of free availability diminishes the Hulu Plus value proposition for Hulu.com
users considering an upgrade. In addition, the relatively small amount of incremental episodes risks inducing churn, particularly for heavy users most familiar with the service, as they come to realize much of what they've paid to watch is actually available for free. Compounding the problem, Hulu Plus viewers see the same quantity of ads as do free Hulu.com users, so there's no ad-avoidance benefit to subscribing either.
Categories: Aggregators, Broadcasters
Topics: ABC, FOX, Hulu, Hulu Plus, NBC, Netflix
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5 News Items of Interest for the Week of Aug 16th
I've received positive feedback on the Friday feature I introduced 2 weeks ago, highlighting 5-6 of the most intriguing online and mobile video industry news items that I noticed during the week. As a result, I'm continuing on today and look forward to your further reactions.
As a reminder, each day in the right column of both the VideoNuze web site and email you'll find the "Exclusive News Roundup" which includes the most relevant online and mobile video industry articles that I've curated from numerous sources around the web. Typically there are 35-40 links rounded up each week, which means VideoNuze now has thousands of links available, all fully searchable. This is an invaluable resource when doing research and I encourage you to take a look next time you're hunting for a specific piece of online/mobile video information.
Now on to this week's most intriguing news:
Hulu is Said to Be Ready for an I.P.O.
The big news leading off the week was that Hulu is testing the waters for a public offering valuing the company at $2 billion. Investors beware: while ad sales are up, exclusive deals with key TV networks are short-term, subscription service Hulu Plus is still unproven and competition from Netflix and others is intensifying. If the deal works, it will be a huge milestone for the company.
Rumored $99 iTV Could Pave Way for $2,000 Apple-Connected Television
A Wall Street analyst conjectures that Apple is well-positioned to offer a high-end, connected TV. Apple has been on the sidelines as online video makes its way to the TV, surely this won't remain the case forever.
Netflix Lust for "True Blood" Is Unrequited As HBO Blocks Path
Though Netflix just landed Epix, it is unlikely to get a deal with HBO any time soon, as the big premium network is committed to its current distribution partners, and to its own online extension, HBO Go. Netflix will still find plenty of other willing partners given its strong motivation to acquire streaming content rights.
In Battle of Smartphones, Google Has the Right Answer
With Google's Android phones proliferating, the iPhone's market share is slipping. And with Android tablets coming, the iPad will soon be in the crosshairs from competitors. For mobile video this means more choices and flexibility.
Net Profits for BermanBraun
Big ad agency Starcom MediaVest commits up to a $100 million to upstart Hollywood producer for deeper brand integrations. More evidence that ad spending is moving online and in more creative ways.Categories: Advertising, Aggregators, Cable Networks, Deals & Financings, Devices, Mobile Video
Topics: Apple, BermanBraun, Google, HBO, Hulu, Netflix, Starcom MediaVest
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