Posts for 'Amazon'

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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.

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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.

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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.

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Daisy Whitney and I are pleased to present the 54th edition of the VideoNuze Report podcast, for March 26, 2010.

This week Daisy starts us off by reviewing new research on the iPad's appeal as an ebook reader. Daisy also reviews sobering forecasts suggesting that the iPad is unlikely to change people's willingness to pay for content (regarding video specifically, Daisy and I agreed a while back that for now its impact for video specifically is likely to negligible). I'm not convinced the iPad will trigger a wave of people willing to pay for content, but I do believe any iPad research is still very preliminary. It's only when users get their hands on the device that we'll really start to learn how impactful it is. The iPad is of already available for pre-order and is set to debut in stores late next week.

We then shift topics and discuss my post from earlier this week, "Here's How Google TV Will Work - And What It Might Mean," in which I described Google's new set-top box and the company's strategy for entering the market. Google's move is likely to set off a fascinating negotiating dynamic with incumbent video service providers, and Daisy and I get into some more of the details.

(Note, Daisy's mic isn't working that well on this podcast, so please be patient)

Click here to listen to the podcast (14 minutes, 13 seconds)

Click here for previous podcasts

The VideoNuze Report is available in iTunes...subscribe today!

Following are 4 news items worth noting from the week of August 24th:

1. Time Warner Cable, Verizon launch TV Everywhere trials - Little surprise that Time Warner Cable announced its own TV Everywhere trial yesterday, given that former sister company Time Warner has been one of its biggest proponents. More interesting was Verizon launching a TV Everywhere initiative, which I regard as a pretty strong indicator that most or all service providers will eventually get on board. (The Hollywood Reporter has a story that DirecTV is in talks too for online distribution of TBS and TNT to start).

I have to give credit to Time Warner CEO Jeff Bewkes, TV Everwhere's key champion, who's clearly generated a groundswell of support. While some critics see TV Everywhere as being at odds with the "open Internet" ethos, I continue to think of it as a big win for consumers eager to get online access to their favorite cable programs. Assuming authentication is proven in during the trials I expect a speedy rollout.

2. Conde Nast distributes through boxee - I was intrigued by news that Conde Nast Digital will begin distributing video from its Wired.com and Style.com sites through boxee. boxee and others who connect broadband to TVs are valuable for magazines and other content providers who have long been shut out of the cable/satellite/telco distribution ecosystem, thereby unable to reach viewers' TVs. Years ago special interest magazines missed big opportunities to get into cable programming, allowing upstart cable networks to grow into far larger businesses (consider ESPN vs. Sports Illustrated, Food Network vs. Gourmet or CNBC vs. Forbes). Broadband gives magazines, belatedly, an opportunity to get back into the game.

3. Amazon announces 5 finalists in UGC ad contest - Have you seen the 5 finalists' ads in Amazon's "Your Amazon Ad" contest, announced this week? They're quite clever, with some amazing special effects. The contest is another great example of how brands are tapping users' talents, posing new competition to ad agencies. I haven't written about this in a while, but I continue to be impressed with how different brands are pursuing this path. Doritos has been the most visible and successful with its user-generated Super Bowl ads.

4. Microprojectors open up mobile video sharing opportunities - Maybe I've been living under a rock because I just read about "microprojectors" for the first time this week (I have a decent excuse since as I non-iPhone owner I wouldn't have a use for one, yet). As the name suggests, these are pocket-size projectors that allow you to output the video from your iPhone to project onto a large surface like a wall or ceiling. According to this NY Times review the quality is quite respectable, and is no doubt only going to improve. The mind boggles at what this could imply for sharing mobile video. Imagine bringing a kit - consisting of an iPhone, portable speakers and microprojector - to your friend's house, then plugging in and projecting either a live stream or an on-demand program for all to see.

Enjoy your weekend!

Following are 4 news items worth noting from the week of July 20th:

Apple reports blowout iPhone sales in Q2, continuing to drive market - It was another record quarter, as Apple reported selling 5.2 million iPhones, bringing to 21.4 the total sold to date. This despite acknowledging temporary shortages during the quarter. The iPhone continues to revolutionize the mobile market, and from my standpoint is the key catalyst for both recording and consumption of mobile video. This market is poised for significant growth as new smartphones hit the market along with fixed monthly data plans. Apps like MLB.com At Bat 2009, which offers live streams of games, are certain to be hits and emulated widely.

8 minute video of Amazon's Jeff Bezos discussing lessons learned and Zappos acquisition - You couldn't miss news this week of Amazon acquiring Zappos for around $900M, its largest deal ever. Interestingly, Amazon posted a video on YouTube of Bezos discussing the deal, but not until he walked through several maxims of Amazon's success (obsess over customers, think long term, etc.). The video is extremely informal, with Bezos flipping hand-scrawled notes on an easel and improvising funny anecdotes. It has a slightly random feel (until he gets to the Zappos part, you start to wonder, what's the point of all this?), but I give Amazon and Bezos lots of credit for using video in a totally new way to communicate with stakeholders. I'd love to see more CEOs do the same.

Is Disney CEO Bob Iger serious about creating a subscription site for its online video? This week at Fortune's Brainstorm conference, Iger floated the idea that Disney will offer movies, TV shows and games for paying subscribers. The timing seems more than coincidental as Comcast gears up for its On Demand Online trial. Is Iger serious about this, or is it a head fake from Disney so it can try to negotiate incremental payments from Comcast and others seeking to distribute Disney content online? It's hard to tell, but I'd be curious to see what Disney has in mind for its possible subscription service. Consumers hate the idea of paying twice for anything (even paying once is not so popular), so if Disney is somehow going to create another window where they charge for access to content that's still on, or was recently on cable, that would be an awkward model.

"Mad Men" coming to Comcast's On Demand Online trial - Speaking of the Comcast trial, I was thrilled to hear from David Evans, SVP of Broadband at Rainbow Media (owners of AMC, the network behind Mad Men) at yesterday's CTAM Teleseminar that the show will be included in Comcast's trial and presumably in rollout. David is very bullish on online distribution and the larger TV Everywhere concept, though cautioned that there are many rights-related issues still hanging out there. I'm a huge Mad Men fan (whose new season starts on Aug 16th) and the idea that I don't have to worry about recording each episode or managing space on my DVR, and that I can watch remotely when I'm on the road, all underscore TV Everywhere's value.

Amid the chatter over the past few days about Amazon possibly buying Netflix, Kara Swisher at All Things Digital today instead suggested that Microsoft would make a better Netflix acquirer. Her sentiments echoed my Dec '08 prediction that Microsoft would acquire Netflix at some point in '09. It was admittedly a "long ball" call on my part (especially since I had zero inside dope), but one which actually makes even more sense 7 months later.

Why? Because Comcast and the cable industry's aggressive new TV Everywhere/On Demand Online initiatives make Netflix more valuable than ever for any company looking to offer a subscription-based, broadband-delivered video service. Outside the cable/satellite/telco industries themselves, Netflix - with its 10 million+ current DVD-by-mail subscribers - is the only serious subscription video provider. Its recent stellar performance shows the durability of its model even in the face of the ongoing recession. And it continues to build out its streaming service with various device partners (including notably Xbox 360).

If Comcast succeeds with On Demand Online (and since the technical trial hasn't even begun yet, that's still a big "if"), and other cable operators quickly follow suit, the broadband video industry is poised for a fundamental shift away from ad-only business models to hybrid models where subscriptions are key. Any current or aspiring premium video provider that does not have an established subscription approach is going to be disadvantaged in its access to high-quality programming and ongoing product development resources. CBS's addition to Comcast's trial shows that even broadcasters are beginning to position themselves in the subscription mix.

My full rationale for why Netflix is so appealing for Microsoft is laid out in the Dec post, so I won't restate it here. Of course nobody outside the companies involved knows if any of the M&A chatter is for real. But if it is, my bet is still that Microsoft is the acquirer to watch, not Amazon. I suspect we'll see other analysts making a similar case if things heat up.

What do you think? Post a comment now.

Two highly related broadband video themes - HD delivery and convergence between broadband and TV - are both picking up steam at this week's NAB show. Among the key announcements are:

Adobe extending Flash into digital home devices

Move Networks acquiring Inuk Networks (announced just this morning)

Akamai detailing HD monetization opportunities in new white paper with IDC

Microsoft releasing "Smooth Streaming" HD delivery feature in its IIS Media Services

Limelight supporting Microsoft's IIS and Adobe Flash Media Server 3.5

Brightcove and Adobe expanding its partnership to enable delivery higher-quality long-form programming, among other things

CDNetworks commercially deploying first Adobe Flash Media Server 3.5 for first time

And separate from the show, TiVo and Roku supporting Amazon VOD HD titles

The entire broadband video ecosystem is getting more and more focused on both HD delivery and convergence. However, the former, which is primarily an infrastructure upgrade, is easier to execute on than the latter, which almost always requires users to buy and install some new device (either single or multi-purpose). Given the lousy economy and natural replacement cycles, this means that for many users, those gorgeous online HD experiences will be viewed on their computers for some time to come.

I think that's actually OK though. By proliferating online HD delivery, users will increasingly be getting a taste of what would be available to them if their broadband was connected to their TVs. Further, plenty of early adopters will become evangelists, showing off online HD experiences for their friends and families. Making things more tangible will help create the necessary promotional tailwind that convergence devices need to succeed.

Convergence has been a long time in coming, but the elements are now beginning to fall into place. I believe that the more HD content that's available online, the faster the convergence device market will develop.

What do you think? Post a comment now.

Blockbuster and TiVo have announced that Blockbuster OnDemand movies will be available on TiVo devices. Though I'm all for creating more choice for viewers to gain access to the content they seek, in this case I don't see the deal creating a ton of new value in the market, as it comes 6 months after Netflix and TiVo announced that Netflix's Watch Instantly service would be available on TiVo devices and nearly 2 years after Amazon and TiVo made Amazon's Unbox titles available for purchase and download to TiVo users. It looks like the main differentiator here is that Blockbuster will begin selling TiVos in their network of physical stores.

The deal underscores the flurry of partnership activity now underway (which I think will accelerate) between aggregators/content providers and companies with some kind of device enabling broadband access to TVs. I believe the key to these deals actually succeeding rests on 2 main factors: the content offering some new consumer value (selection, price, convenience, exclusivity, etc.) and the access device gaining a sufficiently large footprint. Absent both of these, the new deals will likely find only limited success.

Consumers now have no shortage of options to download or stream movies, meaning that announcements along the lines of Blockbuster-TiVo break little new ground. To me, a far more fertile area to create new consumer value is offering online access to cable networks' full-length programs. As I survey the landscape of how premium quality video content has or has not moved online, this is the category that has made the least progress so far. That's one of the reasons I think the recent Comcast/Time Warner Cable plans are so exciting.

With these plans in the works, but no timetables yet announced, non-cable operators need to be thinking about how they too can gain select distribution rights. There's still a lot of new consumer value to be created in this space. Given lucrative existing affiliate deals between cable networks and cable/satellite/telco operators, I admit this won't be easy. However, Hulu's access to Comedy Central's "Daily Show" and "Colbert Report" does prove it's possible.

We're well into the phase where premium video content is delivered to TVs via broadband. Those that bring distinctive content to large numbers of consumers as easily as possible will be the winners.

What do you think? Post a comment now.

Following are 3 key themes from VideoNuze in January:

Broadband video marches to the TV - At CES in early January there were major announcements around connecting broadband to TVs, either directly or through intermediary devices (a recap of all the news is here). All of the major TV manufacturers have put stakes in the ground in this market and we'll be seeing their products released during the year. Technology players like Intel, Broadcom, Adobe, Macrovision, Move Networks, Yahoo and others are also now active in this space. And content aggregators like Netflix and Amazon are also scaling up their efforts.

Some of you have heard me say that as amazing as the growth in broadband video consumption has been over the last 5 years, what's even more amazing is that virtually all of it has happened outside of the traditional TV viewing environment. Consider if someone had forecasted 5 years ago that there would be this huge surge of video consumption, but by the way, practically none of it will happen on TVs. People would have said the forecaster was crazy. Now think about what will happen once widespread TV-based consumption is realized. The entire video landscape will be affected. Broadband-to-the-TV is a game-changer.

Broadband video advertising continues to evolve - The single biggest determinant of broadband video's financial success is solidifying the ad-supported model. For all the moves that Netflix, Amazon, iTunes and others have made recently in the paid space, the disproportionate amount of viewership will continue to be free and ad-supported.

This month brought encouraging research from ABC and Nielsen that online viewers are willing to accept more ads and that recall rates are high. We also saw the kickoff of "the Pool" a new ad consortium spearheaded by VivaKi and including major brands and publishers, which will conduct research around formats and standards. Three more signs of advertising's evolution this month were Panache's deal with MTV (signaling a big video provider's continued maturation of its monetization efforts), a partnership between Adap.tv and EyeWonder (further demonstrating how ecosystem partners are joining up to improve efficiencies for clients and publishers) and Cisco's investment in Digitalsmiths (a long term initiative to deliver context-based advanced advertising across multiple viewing platforms). Lastly, Canoe, the cable industry's recently formed ad consortium continued its progress toward launch.

Broadband Inauguration - Lastly, January witnessed the momentous inauguration of President Barack Obama, causing millions of broadband users to (try to) watch online, often at work. What could have been a shining moment for broadband delivery instead turned into a highly inconsistent and often frustrating experience for many.

In perspective this was not all that surprising. The Internet's capacity has not been built to handle extraordinary peak load. However on normal days, it still does a pretty good job of delivering video smoothly and consistently. As I wrote in my post mortem, hopefully the result of the inauguration snafus will be continued investment in the infrastructure and technologies needed to satisfy growing demand. That's been the hallmark of the Internet, underscored by the fact that 70 million U.S. homes now connect to the 'net via broadband vs. single digit millions just 10 years ago. I remain confident that over time supply will meet demand.

What do you think? Post a comment now.

Netflix's Q4 earnings and business metrics released late Monday are resounding evidence of how important the company's Watch Instantly streaming feature is becoming to its future. Netflix ended '08 with just under 9.4 million subscribers, up 26% for the year. In Q4 '08 it added almost 2.1M gross subs (39% better than in Q4 '07) and 718K net subs (59% better than in Q4 '07). The company generated $51M in free cash flow in Q4 alone, more than in all of 2007. Did someone say there's a recession going? Not for Netflix it seems.

But here's the really interesting news: on the earnings call CEO Reed Hastings pinned the company's ability to beat its Q4 subscriber growth guidance on underestimating "the positive impact of the introduction of the multi-function CE devices from LG Electronics, Samsung, Microsoft and TiVo that promote Netflix streaming." He further added that "streaming is energizing our growth." Those are pretty strong validations of the company's broadband and CE strategy. (Btw, SeekingAlpha has the full transcript here. If you're a Netflix follower like me, it's a must-read.)

Hastings highlighted the LG and Samsung Blu-ray players as having a high connect rate in the 4th quarter, though noting that in terms of gross numbers Xbox and TiVo were more significant simply because their installed bases are so much larger. It's also important to know that Netflix is paying spiffs to CE partners to generate new Netflix subscribers. That further enhances the relationship between Netflix and its CE-partners. On the one hand Netflix content is both a competitive differentiator for these brands' and a generator of cash while on the other CE partners are a driver of both new subs and streaming adoption for Netflix.

Hastings noted that Netflix is in discussions with all major CE companies to "broadly cover the Blu-ray category and Internet TV category over the next few years." In the coming years, expect Netflix to be the content locomotive for marketing broadband-enabled devices the same way that "Intel Inside" was once the technology locomotive for marketing PCs. What other content provider is going to come close to such ubiquity? Possibly Amazon, whose pay-per-download model could actually be complimentary to Netflix in driving more device adoption. But certainly not Apple, which seems intent to yoke its massive iTunes video library to the proprietary Apple TV box in a fruitless (my opinion) attempt to recreate its iPod success.

Netflix's eventual device ubiquity is going to open up vast opportunities for the company. As I've said in prior posts, in combination with its affordable subscription model and well-respected brand name, Netflix could well become the prime potential "over-the-top" competitor to incumbent video service providers (cable/satellite/telco).

The fly in the ointment remains Watch Instantly's content selection, which is still a shadow of the DVD-by-mail catalog. VideoNuze readers know that I've been a forceful proponent of Netflix bolstering the number of broadcast network programs in its streaming catalog. Yet I think it's clear from Netflix CFO Barry McCarthy's comments on the call that Netflix isn't planning any home run initiatives when it comes to building the streaming catalog. He notes that the level of online content spending "will be paced by our success with streaming and our determination to continue to deliver strong earnings growth."

I generally favor that kind of steady-Eddie approach. But in this case I'd hate to see Netflix give too much weight to smoothly-growing earnings (which of course act to defend its stock price) at the expense of missing out on the big first-mover advantages it is sitting on. In fact, a key part of my prediction that Netflix could well be acquired this year (in my opinion by Microsoft, but who knows...) is that a deep-pocketed acquirer who can insulate Netflix from Wall Street's earnings expectations would be able to build Watch Instantly's library with far more vigor and hence make Netflix an even more formidable competitor.

Only time will tell on that front. Meanwhile Netflix's outstanding Q4 - in the face of a titanic economic slowdown - is tangible evidence that the company is on a path to play a far larger role in entertainment distribution in the broadband era.

What do you think? Post a comment now.