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Could HBO be the Next BLOCKBUSTER?
Last week, amid rumors that Netflix was planning to bid for the new "House of Cards" TV series, directed by David Fincher (a deal finally confirmed late Friday afternoon), there was no shortage of media coverage asking, "Could
Netflix be the next HBO?" As interesting a question as that one is, here's one that's even more intriguing, and provocative: "Could HBO be the next BLOCKBUSTER?" At first blush, the comparison might seem ridiculous, and admittedly there are numerous differences between the two. But there are some troubling similarities which should be causing the HBO executive team to now be on high alert.
Categories: Aggregators, Cable Networks, Technology
Topics: HBO, Netflix, Time Warner
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Netflix Lays Down Its Bets on "House of Cards"
Netflix served notice of its official arrival on the Hollywood scene this afternoon, announcing a bold deal for first-run rights to the new David Fincher directed TV series, "House of Cards," starring Kevin Spacey. Whereas the company has built a base of 20 million plus subscribers and a streaming franchise largely on catalog movies and TV series, the first-run deal signals that the company will not rest on its successful content acquisition strategy.
In my analysis of the rumored deal (as it stood just a couple days ago), I pointed to three ways that a first-run deal for "House of Cards" contrasted with Netflix's traditional approach. Having discussed the deal with a Netflix spokesman this afternoon, and having read other interviews and analysis, this afternoon, following are updates on those three items:
Categories: Aggregators
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Still No Consensus On Broadband ISP Usage Cap Policies
AT&T made big headlines this week for unveiling a plan to cap monthly usage by its DSL subscribers at 150GB and its U-Verse subscribers at 250GB. Whereas other broadband ISPs like Comcast have long had a 250GB cap in place, what's different about AT&T's plan is that it is proactively saying it will charge $10 for every 50GB users exceed the limit. Other ISPs have tended to use the cap solely as a mechanism for throttling the tiny portion of users who exceed the cap, rather than as a way of generating extra revenue.
Categories: Broadband ISPs
Topics: AT&T, Comcast, FCC, Netflix, Verizon
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Hulu Also Making Move Into Original Video Production
While Netflix got a lot of attention this week for possibly moving to distribute an original TV series, "House of Cards," an interesting scoop in Adweek notes
that Hulu may also be looking to ramp up its original production efforts. According to the article, Hulu has been building two content groups, one focused on branded entertainment and the other on niche comedy and documentaries.
Categories: Aggregators, Branded Entertainment, Indie Video
Topics: ABC, FOX, Hulu, NBC, Netflix
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VideoNuze Report Podcast #92 - Mar. 18, 2011
I'm pleased to present the 92nd edition of the VideoNuze Report podcast, for March 18, 2011.
In this week's podcast, Daisy Whitney and I discuss Netflix's rumored $100 million deal for first-run rights to "House of Cards," a new TV series directed by David Fincher and starring Kevin Spacey. As I wrote earlier this week, the deal would be a very significant shift in strategy for Netflix, and Daisy and I get into some of the details.
On a related note, yesterday I posted the audio recording of an interview I did with Netflix's chief content officer Ted Sarandos at the NATPE conference in January. Ted didn't allude to any first-run deals in that interview, but he did talk about his interest in bidding against HBO for the rights to Warner Bros. films when their deal was up for renewal among other topics.
Click here to listen to the podcast (13 minutes, 12 seconds)
Click here for previous podcasts
The VideoNuze Report is available in iTunes...subscribe today!Categories: Aggregators, Podcasts
Topics: HBO, Netflix, Podcast, Warner Bros.
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Audio Interview With Netflix's Chief Content Officer Ted Sarandos
I'm pleased to provide an audio recording of an on-stage one-on-one interview I did with Netflix's chief content officer Ted Sarandos, at the NATPE Market conference on January 25th. I've been meaning to post this for a while, but experienced a few technical issues in getting it done. The interview is particularly timely given news this week that Netflix may be looking to distribute its first original TV series, "House of Cards," directed by David Fincher and starring Kevin Spacey.
In this wide-ranging interview, Ted and I discuss topics such as Netflix's content acquisition strategy, how it decides how much to spend on licensing, the critical role that data plays in informing Netflix's decision-making, the future of the DVD business and lots more. Of note, this is the interview in which Ted said that Netflix would bid against HBO for Warner Bros. films when those parties' distribution deal comes up for renewal in a couple of years and that Netflix had the resources to fully compete. That declaration was a departure from Netflix's traditional public posture about working closely with premium cable networks rather than disrupting them, and set off a raft of media coverage.
Categories: Aggregators, People
Topics: HBO, Netflix, Warner Bros.
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A Netflix Deal For "House of Cards" Would Be a Big Shift In Its Strategy
A report late yesterday by Deadline.com, that Netflix is potentially going to bid $100 million to stream/broadcast the new David Fincher/Kevin Spacey TV series "House of Cards" has been ricocheting around the Internet like a pinball since. Deadline also reported that Netflix is bidding against HBO and AMC and could take the unusual step of not even piloting the series before making this huge financial commitment. As a close observer of Netflix's rise over the past several years, the move would break with several key tenets of the company's success formula. Though I've learned to never say never, following are a few Netflix strategies that would be changed with a deal for "House of Cards":
Categories: Aggregators
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Blockbuster Staggers to a Sale
The wrangling over what should become of Blockbuster's carcass seemed to reach a resolution yesterday as the judge presiding over the company's bankruptcy approved its proposed auction process. For those who haven't been following the drama, potential acquirers - mostly a group of hedge funds - have been fighting with movies studios that are Blockbuster's creditors, over the company's fate, with some recently calling for an outright liquidation.
The Blockbuster story is a cautionary tale about what happens when companies don't pay attention to changing market conditions. No company was better positioned, and with a better brand, than Blockbuster, to take advantage of the shift to digital distribution. But Blockbuster was slow to adapt, its strategy and execution were flawed, and it had the bad luck of running into an extremely capable upstart in Netflix.
Here's a picture of the last Blockbuster in my area I snapped earlier this week; I'm guessing you've witnessed this scene in your neighborhood as well. You gotta love the irony of the tag line "THIS LOCATION ONLY."
Categories: Deals & Financings
Topics: Blockbuster, Netflix
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Movie Windows Back in the Spotlight
Movie windows were back in the spotlight this week as Hollywood executives continue to air out their anxiety over digital distribution's impact. In a pair of articles (here and here), Home Media Magazine covered remarks by Disney CFO Jay Rasulo and Time Warner CEO Jeff Bewkes at the Deutsche Bank conference in Palm Beach, FL. Rasulo put his finger on Hollywood's challenge of how to "re-work release windows to generate incremental revenue, without cannibalizing existing revenue streams and upsetting distribution partners."
However, as Disney knows from its experiment last year of accelerating the DVD release of "Alice in Wonderland," which raised the ire of British theater owners, balancing these objectives is no easy feat. Meanwhile, as "Premium Video-on-Demand," an early window release plan for $30-$40 per movie approaches, theater owners' unhappiness will become even more apparent.
Categories: Aggregators, FIlms, Studios
Topics: Disney, Netflix, Time Warner
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Op-Ed in the L.A. Times and NPR Interview
I was very pleased to have an op-ed piece published in the L.A. Times this week, "Pay-TV's Full-Court Press" in which I explained how the recent Time Warner Cable deal with the L.A. Lakers is going to be very costly for pay-TV subscribers in the L.A. area, whether they are sports fans or not. The piece echoes points I made last month in "Not A Sports Fan? Then You're Getting Sacked For At Least $2 Billion Per Year."
Producers at the main L.A. NPR affiliate, KCRW noticed the op-ed and called for an interview on the "Which Way, LA?" program with Warren Olney which runs at 7pm weekdays. The recording is here, and my interview segment starts about 1 minute into the broadcast. I continue to believe that the huge cost for pay-TV's non-sports fans and casual fans to receive expensive sports networks they don't watch is ultimately going to cause them to re-evaluate the value of their pay-TV subscriptions. With the rise of lower cost and free over-the top options like Netflix and Hulu - plus the proliferation of connected devices - entertainment-minded consumers will be very tempted to save money by reducing their pay-TV service.Categories: Sports
Topics: Hulu, KCRW, LA Times, Netflix
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Comcast's Roberts: "What used to be called 'reruns' on television is now called Netflix."
An interview with Comcast's CEO Brian Roberts in today's WSJ has an instantly classic quote that will no doubt be making the rounds. In response
to the interview question, "Do you feel pressure from the growing number of deals Netflix Inc. is striking with content owners, including, recently, CBS?" Roberts responded, "What used to be called 'reruns' on television is now called Netflix." Ouch!
Of course, Roberts, and other pay-TV executives, have taken great pains to assert that new over-the-top services aren't competing with their core video subscription services. Those assertions came under fire last year as the pay-TV industry lost subscribers for the 2nd and 3rd quarters, leading to wildly over-hyped predictions of cord-cutting, which have abated as 4th quarter subscriber losses improved. Still, there's no denying that Netflix, which added almost 8 million subscribers in 2010 to surpass 20 million, has a lot of momentum and eventually could be viewed as part of pay-TV substitute package. Come early April, when Q1 '11 results are released and Netflix almost certainly edges out Comcast to be the largest video subscription service in the U.S., the Netflix luster will only grow further.
Categories: Aggregators, Broadband ISPs, Cable TV Operators
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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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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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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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VideoNuze Report Podcast #87 - Feb. 11, 2011
Daisy Whitney and I are pleased to present the 87th edition of the VideoNuze Report podcast, for February 11, 2011.
In this podcast, Daisy and I do a deep dive into the role of sports in pay-TV packaging, based on my post from Monday, "Not A Sports Fan? Then You're Getting Sacked For At Least $2 Billion Per Year." I think this is a fascinating topic and something that has been under-reported even though it has huge implications for pay-TV subscription rates as over-the-top services gain awareness.
The basic premise of my post was that since a relatively small cluster of sports-oriented channels (e.g. ESPN, TNT, Regional Sports Networks and others) collectively cost pay-TV operators $10 per month, then the charges being incurred by non-fans and casual who fans who rarely, if ever watch these channels, could amount to at least $2 billion per year. Since writing the post and gaining feedback from various sources, it's actually quite possible that the annual charges incurred in exchange for little-to-no value could exceed $3 billion. Whatever the number is, it's very large, and effectively represents a massive subsidy that non-fans and casual fans pay each year because of escalating sports TV rights deals and astronomical player compensation.
Click here to listen to the podcast (17 minutes, 8 seconds)
Click here for previous podcasts
The VideoNuze Report is available in iTunes...subscribe today!
Categories: Cable Networks, Cable TV Operators, Podcasts, Satellite, Sports, Telcos
Topics: Comcast SportsNet, ESPN, Hulu, NESN, Netflix, Podcast, RSN, TNT
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Not a Sports Fan? Then You're Getting Sacked For At Least $2 Billion Per Year
Last night 100 million plus people tuned into the Super Bowl, once again highlighting the game's singular popularity. But aside from this huge once per year spike in sports enthusiasm, a simple fact remains: if you subscribe to pay-TV services and are not a sports fan (or are just a casual one), you are paying a lot of money each month for very expensive sports-oriented cable TV channels which you mostly don't watch. This degree of wasteful overspending, which could amount to at least $2 billion every year (as I'll detail below), creates a mile-wide opportunity for entertainment-oriented over-the-top entrants to prosper.
The value of sports programming was a topic we tackled last week at the MIT Enterprise Forum (panelists included Mark Cuban, Avner Ronen, Paul Sagan and me). Moderator Woody Benson challenged us at the start with how he could reduce his current $260/mo cable bill. As part of the discussion, Mark volunteered that pay-TV operators probably spend around $10 per month in licensing fees just for sports-oriented cable channels (these include channels like ESPN and its sister networks, TNT, and Regional Sports Networks, "RSNs" like NESN and Comcast SportsNet here in the Boston area and others). Mark estimated that this adds up to about 25% of the total monthly amount pay-TV operators spend on programming. My sense is that Mark's $10 per month amount might be a little high, but since he owns the NBA's Mavericks and sees the TV deals, he's in a good position to know.
(The video starts with about 40 minutes of one-on-one discussion between Mark and Woody and then shifts to the full panel)
Categories: Sports
Topics: Comcast SportsNet, ESPN, NESN, Netflix, RSN, TNT
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