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VideoNuze Podcast #204 - Hulu Plus in the Pay-TV Bundle Sounds Smart; Amazon Originals Launch
I'm pleased to present the 204th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.
We start off this week discussing the latest Hulu rumor, that it is seeking a closer alignment with pay-TV operators for Hulu Plus. Colin and I both like the possibilities here, though we recognize numerous obstacles. From a user experience standpoint, the idea of finding all of a TV show's episodes in one place - from pilot to last night's -resonates with me and would be a huge step forward from today's silo'd worlds of SVOD/OTT and VOD/TV Everywhere.
Colin points out too that Hulu's owners are already key programming suppliers to pay-TV operators, giving Hulu a better shot at partnering than, say Netflix, has. Last but hardly least, Hulu's new CEO Mike Hopkins most recently ran distribution for Fox Networks, so his expertise is perfect for figuring out how to get Hulu Plus carriage with pay-TV operators.
We then shift to discussing the launch today, of Amazon Studios' first original, "Alpha House" starring John Goodman. While we're uncertain about its critical reception, we do believe that, given originals' strategic role supporting Prime, it's the first step of an aggressive agenda. Amazon is cleverly combining data, wisdom of the crowds and traditional TV skills to select which originals to pursue.
Listen in the learn more!
Click here to listen to the podcast (18 minutes, 42 seconds)
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The VideoNuze podcast is also available in iTunes...subscribe today!Categories: Aggregators, Cable TV Operators, Podcasts, TV Everywhere
Topics: Amazon, Clearleap, Hulu, Hulu Plus, Podcast, upLynk, Verizon
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VideoNuze Podcast #198 - How Chromecast's Tab Casting Convolutes Hulu's Value Prop
I'm pleased to present the 198th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.
Just as Hulu was announcing this week that Hulu Plus is now Chromecast-enabled, new research from Parks Associates revealed that 50% of people already using Chromecast to watch Hulu content on TV are actually watching the free Hulu.com service. They're able to do this by using Chromecast's "tab casting" feature to stream from a tab in the Chrome browser. Their behavior undermines a key Hulu Plus value proposition (and differentiator from Hulu.com) of being able to watch Hulu content on connected TVs.
This isn't random behavior either; the Parks research also revealed that 34% of Chromecast owners stream Hulu content to their TVs every day, with 43% watching Netflix this way.
In today's podcast, Colin and I talk about how Chromecast is convoluting Hulu's model and more broadly how technology and consumer behaviors continue to pressure Hollywood's licensing/windowing practices. As a Hulu Plus subscriber, Colin also shares 2 other wrinkles: first, that certain Hulu Plus content is just available for "web-only" viewing and NOT for connected devices like Roku, Xbox or Chromecast, and second, that in the case of the USA Network program "Psych," there are actually more recent episodes freely available on Hulu.com than there are on Hulu Plus. I've reached out to Hulu PR for comment and will update as appropriate.(UPDATE: A Hulu PR representative told me that permission to stream to devices is granted by the content provider and varies by show, so it's not possible to stream all Hulu Plus content to devices. More info about the policies is here.)
Click here to listen to the podcast (17 minutes, 41 seconds)
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The VideoNuze podcast is also available in iTunes...subscribe today!Categories: Aggregators, Broadcasters, Devices, Podcasts
Topics: Chromecast, Hulu Plus, Parks Associates, Podcast
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Hulu Plus Enables Chromecast
Hulu has announced that its Hulu Plus apps for Android and iPad are now Chromecast-enabled (iPhone coming soon). The Hulu Plus apps join the initial launch apps (Netflix, YouTube, Google Play), which were announced concurrent with the device's debut in late July.
I'm not a Hulu Plus subscriber so I haven't tested with Chromecast, but from the company's blog post, it looks like all the existing apps' features are maintained, with integrated one touch casting to the TV via Chromecast the only change. In my original post on Chromecast, I noted that a key Chromecast advantage for content providers was that it leveraged existing apps, and via a simple SDK could enable the integrated casting capability. This means Chromecast updates are relatively simple and inexpensive to execute - both huge factors in getting content providers' much-coveted attention.Categories: Aggregators, Devices, Mobile Video
Topics: Chromecast, Hulu Plus
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Nielsen: 88% of Netflix and 70% of Hulu Plus Users Now Binge-Viewing
Nielsen released additional data from its Q2 2013 Cross Platform report substantiating the trend toward "binge-viewing." Nielsen found that a whopping 88% of Netflix users and 70% of Hulu Plus users say they watch 3 or more episodes of the same show in one day.
The Nielsen data is directionally in line with survey results that Piksel released last week showing 94% of respondents engage in some type of binge-viewing behavior, either watching episodes together as quickly as possible, watching 1 or 2 every few days, or some combination of the two behaviors.Categories: Aggregators, Regulation, Video On Demand
Topics: Hulu Plus, Netflix, Nielsen
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Can Free, Ad-Supported Online Video Make the Hard Leap to a Paid, Subscription Model?
Three items last week brought to mind one central question I've long wondered about: can traditionally free, ad-supported online video providers make the leap to a paid, subscription model? The first item was a long piece in Variety that chronicled the struggles the first set of YouTube content partners trying subscriptions is having upselling their free viewers. Second, Reuters broke the news that Machinima, one of the biggest online video players (and a big YouTube partner) is planning to go it alone in creating its own subscription service to complement its free, ad-supported offering. And third was the milestone news that Netflix, by far the most successful online subscription service, garnered 14 Emmy nominations, including 9 for "House of Cards" alone.
How do these all tie together?Categories: Advertising, Indie Video
Topics: Amazon, Hulu Plus, Machinima, Netflix, YouTube
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Watching TV Shows on DVR is More Than Twice as Popular as SVOD
SVOD services like Netflix, Hulu Plus and Amazon Prime Instant Video are all the all the rage these days and a core part of their popularity is their ever-expanding library of TV series. No question, binge-viewing a TV season or series on an SVOD service is now one of life's little pleasures.
In SVOD's wake, one technology that always seems to get overshadowed is the DVR. But, according to data from NPD, watching TV shows on DVRs is actually more than twice as popular as watching them on SVOD services like Netflix. When asked how they watched TV shows in Q1 '13, viewers cited DVR/TiVo 42%, and SVOD 16%. As seen in the chart below, DVR/TiVo was in third place, after linear viewing on the TV network itself.Categories: DVR
Topics: Amazon, Hulu Plus, Netflix, NPD
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This Holiday Season, Video Apps' Purpose is to Sell Devices
It's no secret that consumer electronics makers have long relied on content to help sell their devices. After all, people buy devices because of what they can do, or consume, on them, just ask Apple, whose iTunes store is the linchpin to its iOS devices' success. However, as the all-important holiday season approaches, there's new evidence that video apps specifically are being embraced by CE providers (loosely defined) to drive their devices' value propositions.
Categories: Devices
Topics: Amazon, Barnes & Noble, HBO GO, Hulu Plus, Netflix, Roku, Xbox 360
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Time Warner Cable-LA Lakers Deal Is More Bad News For Pay-TV's Non-Sports Fans
If you live in the Los Angeles area and are not a sports fan, or you are a casual one, Time Warner Cable's new 20-year deal with the LA Lakers is more bad news. That's because, as I explained last week in "Not a Sports Fan? Then You're Getting Sacked For At Least $2 Billion Per Year," virtually all digital pay-TV subscribers in the LA area - sports fans or not - are going to be footing the bill for this massive deal.
The TWC-Lakers deal is just the latest example of how ever-higher monthly fees pay-TV distributors must fork over to carry sports networks help drive up subscription rates. In this case, TWC, the 2nd largest pay-TV operator, is
positioning itself to also be a major sports network owner, just as Comcast has with Comcast SportsNet. TWC's deal will help create an even bigger inequity for non-sports fans and casual fans than already existed. For this group of subscribers, who are primarily entertainment-oriented, and likely more on-demand focused in their viewership than ever, higher subscription rates - tied to a small cluster of very expensive sports networks - are inevitably going to drive them to drop their pay-TV service.
Categories: Cable Networks, Cable TV Operators, Sports
Topics: Hulu Plus, LA Lakers, Netflix, Time Warner Cable
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5 Items of Interest for the Week of Dec. 12th
Happy Friday. Once again I'm pleased to offer VideoNuze's end-of-week feature analyzing 5-6 interesting online/mobile video industry news items from the week that we didn't have a chance to cover previously. This week I'm changing the format a little bit, creating an individual post for each item. I'm doing this in response to reader interest in being able to share individual items (not the whole group) more easily. Let me know what you think of the new format. Here they are:
1. Potential YouTube-Next New Networks deal is a bit of a head-scratcher
2. Here's a great example of why TV Everywhere matters so much to the pay-TV industry
3. Hulu's Kilar: "Hulu Plus now a material portion" of revenues
4. Google not ready to announce fiber winning communities
5. Tiffany shows online video works for luxury retailers
Read them now or check them out this weekend!Categories: Aggregators, Broadband ISPs, Cable Networks, Cable TV Operators, Commerce, Deals & Financings, Indie Video, Satellite, Telcos
Topics: Google, Hulu Plus, Netflix, Next New Networks, Tiffany, YouTube
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Hulu's Kilar: "Hulu Plus now a material portion" of Revenues
I was surprised to hear Hulu CEO Jason Kilar say in this short CNBC interview that while advertising accounts for the bulk of its revenues, Hulu Plus is "already accounting for a material portion" of its revenues. In the interview, Kilar had previously mentioned that in 2010 Hulu would generate $260 million in revenues, compared to $108 million in 2009, an impressive jump that beat its internal target of $190 million.
However, it's hard to see how, just a month after its formal launch, Hulu Plus could already be material to Hulu's performance. Even if it had 500,000 subscribers (which feels optimistic), that would be $4 million/mo (at its $8/mo rate) in subscription revenue, whereas Hulu may well be generating $25-30 million/mo in ad revenue to get to the $260M figure. Maybe it's just a definition of what's "material." As I've said before though, the bigger question is how Hulu Plus competes on the content acquisition front. With the recent Disney-ABC and NBCU content deals, Netflix is undermining Hulu Plus' core broadcast TV value proposition and people who subscribe to both Netflix and Hulu Plus will quickly see this.Categories: Aggregators
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5 Items of Interest for the Week of Dec. 5th
Once again I'm pleased to offer VideoNuze's end-of-week feature highlighting and discussing 5-6 interesting online/mobile video industry news items that we weren't able to cover this week. Read them now or take them with you this weekend!
Categories: Advertising, Aggregators, Broadcasters, Cable TV Operators, Mobile Video, Telcos
Topics: ABC, Disney, eMarketer, Hulu Plus, Netflix, Nielsen, TV Everywhere, Verizon Wireless
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Report: 4% of Hulu Users Subscribe to Hulu Plus; Of Them 88% Also Subscribe to Netflix
A new report being released today by One Touch Intelligence has found that 4% of surveyed Hulu.com users are subscribing to Hulu Plus and that of them, 88% of them are also Netflix subscribers. The survey included 970
individuals who subscribe to both a pay-TV service and a broadband Internet service, and have streamed or downloaded at least one TV show or movie in the past month. Of the 970 individuals, 612 of them said they use the free Hulu.com service at least weekly, with 25 of them subscribing to Hulu Plus. Of the 25, 22 of them also subscribe to Netflix.
On the one hand, the 4% penetration is noteworthy, since Hulu has yet to advertise the Hulu Plus service beyond its own site. That was reflected in the relatively narrow awareness of the service, with 68% of Hulu.com users who are not subscribing to Hulu Plus saying they are either "barely" familiar with Hulu Plus or not familiar with it at all.
Categories: Aggregators
Topics: Hulu Plus, Netflix, One Touch Intelligence
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Listening To Hulu's Jason Kilar: Motherhood, Apple Pie - And Reality
Listening to Hulu's CEO Jason Kilar today at NewTeeVee Live, it's hard not to admire what he and the Hulu team have accomplished. For the first time,Jason disclosed 2010 projected revenues of $240 million, up 10-fold from $24 million in '08 and $108 million in '09, which is pretty impressive growth. As always, Jason's message is extremely user-centric and forward-looking. Hearing him speak, you definitely get a sense of the positive, relentless efforts he's led to improve the service.
A key part of Jason's message is that premium video should, and will be available anytime, anyplace and on any device in the future. It's a wonderful "motherhood and apple pie" message that's hard to argue with as a viewer. Unfortunately it's also a message that's bumping up against some hard realities in the TV business that Hulu is going to have to surmount to ultimately succeed. Here are at least a few of them:
Categories: Advertising, Aggregators, Broadcasters
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6 Items of Interest for the Week of Oct. 18th
It was another busy week for online/mobile video, and so VideoNuze is continuing its Friday practice of curating 5-6 interesting industry news items that we weren't able to cover this week. Read them now or take them with you this weekend!
Networks block Google TV to protect themselves
Yesterday news started breaking that ABC, CBS and NBC are blocking access by Google TV. There are numerous concerns being cited - potential disruption of advertising, encouraging cord-cutting, incenting piracy, diminished branding, unsatisfactory ad splits with Google, and general worry about Google invading the living room. Each item on its own is probably not enough to motivate the blocking action, but taken together they are. Still, doesn't it feel a little foolish that broadcasters would differentiate between a computer screen and a TV screen like this? For Google, it's more evidence that nothing comes easy when trying to work with Hollywood. I'm trying to find out more about what's happening behind the scenes.
TWC Lines Up For ESPN Online Kick
An important milestone for TV Everywhere may come as early as next Monday, as #2 cable operator Time Warner is planning to make ESPN viewing available online to paying subscribers. Remote access is part of the recent and larger retransmission consent deal between Disney and TWC. TV Everywhere initiatives have been slow to roll out, amid cable programmers' reluctance. Further proving that remote authenticated access works and that it's attractive with a big name like ESPN would increase TV Everywhere's momentum.
Hulu Plus, Take Two: How's $4.95 a Month?
Rumors are swirling that Hulu may cut the price of its nascent Hulu Plus subscription service in half, to $4.95/mo. That would be a tacit recognition of Hulu Plus's minimal value proposition, largely due to its skimpy content offering. As I initially reported in August, over 88% of Hulu Plus content is available for free on Hulu.com. More important, Netflix's streaming gains have really marginalized Hulu Plus. Netflix's far greater resources and subscriber base have enabled it to spend far bigger on content acquisition. Even at $4.95, I continue to see Hulu Plus as an underwhelming proposition in an increasingly noisy landscape.
Viacom Hires Superstar Lawyer to Handle YouTube Appeal
Viacom is showing no signs of giving up on its years-long copyright infringement litigation against Google and YouTube. This week the company retained Theodore Olson, a high-profile appellate and Supreme Court specialist to handle its appeal. While most of the world has moved on and is trying to figure out how to benefit from YouTube's massive scale, Viacom charges on in court.
Verizon to sell Galaxy Tab starting November 11th for $599.99
Verizon is determined to play its part in the tablet computer craze, this week announcing with Samsung that it will sell the latter's new "Tab" tablet for $600 beginning on November 11th. The move follows last week's announcement by Verizon that it will begin selling the iPad on Oct. 28th, which was widely interpreted as the first step toward Verizon offering the iPhone early next year. Apple currently owns the tablet market, and it remains to be seen whether newcomers like the Tab can break through. For his part, Apple CEO Steve Jobs said on Apple's earnings call this week that all other tablets are "dead on arrival." Note, if you want to see the "Tab" and learn more about how connected and mobile devices are transforming the video landscape, come to the VideoSchmooze breakfast at the Samsung Experience on Wed., Dec. 1st.
One-Third of US Adults Skip Live TV: Report
A fascinating new study from Say Media (the entity formed from the recent merger of VideoEgg and Six Apart), suggesting that 56 million, or one-third of adult Internet users, have reduced their live TV viewership. The research identified 2 categories: "Opt Outs" (22 million) who don't own a TV or haven't watched TV in the last week and stream more than 4 hours/week, and "On Demanders" (34 million) who also stream more than 4 hours/week and report watching less live TV than they did a year ago. Not surprisingly, relative to Internet users as a whole, both Opt Outs and On Demanders skew younger and higher educated, though only the latter had higher income than the average Internet user. This type of research is important because the size of both the ad-supported and paid markets for live, first-run TV is far larger than catalog viewing. To the extent its appeal is diminishing as this study suggests poses big problems for everyone in the video ecosystem.
Categories: Aggregators, Broadcasters, Cable Networks, Cable TV Operators, Devices, Mobile Video, Telcos
Topics: ABC, Apple, CBS, ESPN, Google TV, Hulu Plus, iPad, NBC, Samsung, Say, Time Warner Cable, TV Everywhere, Verizon, Viacom, YouTube
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VideoNuze Report Podcast #77 - Oct. 15, 2010
Daisy Whitney and I are pleased to present the 77th edition of the VideoNuze Report podcast, for October 15, 2010.
This week we start by discussing the sizzling online video ad business. On Tuesday, the IAB and PriceWaterhouse Coopers reported that online video ads were the best performing category of Internet advertising, up 31% in the first half of '10 vs. first half of '09, to $627 million. That came amid a broader surge in Internet advertising, which tallied over $12 billion in first half revenues, a new record. Google added an exclamation mark to these results by reporting a 23% increase in Q3 revenues late yesterday. Daisy and I talk through some of the key drivers of the video ad business and how things look going forward.
I see the mass adoption of connected devices, which enable the viewing of long-form online video on TVs, as one of the most important drivers of online ad revenue. As consumers begin to watch more online video on their HDTVs, in the comfort of their living rooms, viewership will inevitably rise, creating even more ad inventory. One example of this is Hulu Plus, which recently announced it would be available on both Roku and TiVo.
In the podcast we discuss the connected devices theme and I note that the next VideoSchmooze breakfast/panel I'll be hosting in NYC, on Dec. 1st, will focus on the roles that both connected and mobile devices have in transforming the video landscape. This holiday season is going to mark an important period of growth for these devices and our panel will help us understand the implications.
Lastly - as some of you may know, Daisy's first fiction book, "The Mockingbirds," is being published by Little, Brown on Nov. 2. It's an incredibly exciting milestone for Daisy, and she shares the social media/video promotional campaign she's created using Facebook, Twitter and others. It's a great illustration of how the tools we talk about each day can be used effectively.
Click here to listen to the podcast (11 minutes, 49 seconds)
Click here for previous podcasts
The VideoNuze Report is available in iTunes...subscribe today!Categories: Advertising, Devices, Events
Topics: Google, Hulu Plus, Podcast, VideoSchmooze
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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 moredevices 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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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 Key Takeaways from Netflix's Q2 '10 Results
Netflix reported its Q2 '10 results late yesterday and once again the company turned in an impressive performance. Netflix added 1,034,000 subscribers, by far its best Q2 ever, to end the quarter at just over 15 million subs. Netflix
CEO Reed Hastings said right up front in the management discussion that streaming is the key catalyst in the company's accelerating growth, with 61% of current subs now streaming at least 15 minutes in Q2, up from 55% in Q1 '10 and 48% in Q4 '09. After reviewing the company's Q2 results and listening to the earnings call, following are my 5 key takeaways:
1. Netflix really is becoming more about streaming with each passing quarter
It's hard to underestimate the pervasive role streaming now has on the company, in its value proposition, subscriber acquisition model, content acquisition approach, DVD and postage expenses, competitive situation, technology infrastructure and R&D agenda, partnerships, etc.
Though 61% of all subs are now using streaming, I would guess that practically all recently added subs are. The company is going through quite a transition. This quarter, CFO Barry McCarthy mentioned that early streaming adopter's behavior of reduced DVD usage has now reached Netflix's mainstream subscriber base. DVD shipments are still growing, but at a slower rate, due to streaming-for-disc substitution, which in turn improves margins (it costs Netflix around $.85-$.90 round-trip to deliver a disc and less than a nickel to deliver a full streaming movie). Anecdotally I continually hear about users now first surfing Netflix's streaming catalog before they surf the cable dial.
2. Exclusive content gains in importance, increasing competition for movies
I've long believed that Netflix's move into streaming would eventually compel it to license movies that would have traditionally gone to premium networks like HBO/Showtime/Epix. Netflix's growing financial strength, brand loyalty and large sub base all position it as a potent new outlet for movies.
When I interviewed CEO Reed Hastings in May, he maintained that Netflix wants to be an outlet for premium cable networks rather than a competitor. Now however, Netflix is saying "At this point we can start to afford some major TV shows and movies on an exclusive basis, and plan going forward on a mix of more-expensive exclusive content and lower-cost non-exclusive content." That means Netflix is essentially going to compete for content with traditional premium TV networks. This will begin modestly, as with its recent Relativity Media deal for exclusive rights to a smallish set of its movies. And Netflix will still be a great outlet for premium networks' stellar original programming. But it will clearly be another voice at the negotiating table for electronic distribution of movies.
3. Going forward, TV is as important as movies
While Netflix is traditionally associated with movies, with streaming moving to center stage, Netflix now sees licensing TV shows as equally important. To the extent that its licenses are exclusive and/or pre-empt traditional distribution paths, this could be quite significant. Recent acquisitions of full seasons of shows such as 24, Nip/Tuck, The Family Guy and others, from networks/producers such as Fox, MTV and Warner Bros is an indication of Netflix's push into TV, with an emphasis on catalog, not current seasons. As Netflix grows its roster of TV programs I see at least 2 key implications: first, that Hulu Plus's value proposition gets pinched (more on that below), and second, that the traditional role of TV syndication for re-runs gets narrowed.
4. Competition from Hulu Plus and multichannel video programming distributors (MVPDs)
During Q2 Hulu Plus launched and there's been a lot of speculation about how competitive it is with Netflix streaming. Hastings acknowledged Hulu as a direct competitor and that "we're not going to underestimate them." Still, on the earnings call he also noted "they're too small to matter yet." I agree Hulu Plus should be on Netflix's radar, but with Netflix making an aggressive move into TV, Hulu Plus has steep challenges to compete and grow beyond its core broadcast network catalog. The issue comes down to resources. In this battle, Netflix is Goliath, able to write far bigger checks to Hollywood than can Hulu. The recent Nip/Tuck example is illustrative - a reasonably popular, tier 2 cable network show that Netflix won.
While Netflix acknowledges Hulu Plus, it's real competitive concern is how it fits into a landscape dominated by MVPDs (or pay-TV provider as I usually call them). Netflix believes it is a low cost supplement to pay-TV and not a replacement that causes cord-cutting. In the May interview Hastings called TV Everywhere efforts "frustratingly brilliant" and while their rollout has been underwhelming, if they start to ramp up that could put pressure on Netflix's growth. We'll see.
5. Netflix availability on 100 million devices is huge competitive barrier
Netflix also said yesterday that by end of year it expects its streaming to be available on 100 million devices (e.g. Blu-ray, gaming consoles, connected TVs, iPads, Roku, etc.). In a world that still lacks application integration standards, Netflix has done the heavy lifting to get onto all of these devices that nobody else has (by contrast for example, Hulu Plus is only available on iPad/iPhone/iPod and Samsung connected devices). While others scramble to catch up, Netflix is already moving on to improve its streaming experience, for example, planning a new UI for PS3 among other things. Until connected devices embrace an open, standardized, browser-based model (which will begin with Google TV's launch later this year), Netflix has erected a huge competitive barrier. Once again, having deep pockets has real benefits.
What do you think? Post a comment now (no sign-in required).Categories: Aggregators
Topics: Hulu Plus, Netflix, Relativity Media
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