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Hey Jason Kilar: You Should Go Back to Amazon and Compete Against Netflix
Not that Hulu's CEO Jason Kilar has asked for or needs my career advice, but in light of his controversial "speaking truth to power" blog post on the future of TV, which has wags all over the industry saying his tenure at Hulu is all but over, I'll offer it up anyway: he should go back to Amazon (where he was prior to Hulu) and run their soon-to-be-launched video subscription business that will compete directly against Netflix.
Categories: Aggregators, People
Topics: Amazon, Hulu, Jason Kilar, Netflix
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Comcast-Time Warner Deal Shows Promise and Challenges of TV Everywhere
If you're looking for a template of how pay-TV operators and cable networks need to be working together if they want to successfully combat the rise of Netflix and other over-the-top entrants, yesterday's long-term agreement between Comcast and Time Warner is a great example. Under the agreement, Comcast digital subscribers will gain access to popular programs and movies
from Turner Broadcasting networks like TNT, TBS, CNN, Cartoon Network and others, across multiple platforms, including Comcast's On Demand service, Xfinity TV online web site and companion iPad/iPhone and Android apps (which just last night began streaming full episodes). Importantly, Turner networks' viewers will also be able to view the same programs/movies on Turner web sites and online/mobile platforms. No extra charges to the consumer are planned.
The deal is a solid step forward in realizing the vision of TV Everywhere that both companies' CEOs laid out back in July, 2009 (see this video for more). And no doubt both companies want to make similar deals with others in the industry; Comcast with other cable TV network groups, and Time Warner with other pay-TV operators. Still, the fact that the two foremost proponents of TV Everywhere took a year-and-a-half to go from laying out their vision to actually announcing a deal underscores how arduous the full realization of the TV Everywhere model will be.
Categories: Cable Networks, Cable TV Operators
Topics: Charter, Comcast, Netflix, Nielsen, Time Warner
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VideoNuze Report Podcast #85 - Jan. 28, 2011
Daisy Whitney and I are back this week for the 85th edition of the VideoNuze Report podcast, for January 28, 2011.
In today's podcast, Daisy and I talk about the key highlights of my on-stage interview with Netflix's content chief Ted Sarandos at NATPE in Miami earlier this week. The interview has received wide media coverage (e.g. Paid Content, B&C, CNET, The Hollywood Reporter, The Wrap, Variety, Home Media). Daisy and I discuss a number of intriguing things that Ted said.
(Note: the interview with Ted was on Tuesday morning, and we recorded this podcast on Wednesday, before Netflix reported its huge Q4 '10 later in the day. Also, NATPE recorded the interview and I'll post it as soon as I have it.)
Click here to listen to the podcast (12 minutes, 59 seconds)
Click here for previous podcasts
The VideoNuze Report is available in iTunes...subscribe today!Categories: Aggregators, Podcasts
Topics: Netflix, Podcast, Ted Sarandos
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Netflix Tops 20 Million Subscribers; Adds Over 3 Million For First Time In a Single Quarter
It's official; Netflix has hit the milestone of 20 million subscribers, though just barely. Netflix added 3.08 million subscribers in Q4 '10, beating the high end of its guidance of 2,767,000 subscribers by about 10.9% to end 2010 with 20.01
million subs. It's the first time Netflix has added more than 3 million subscribers in a quarter; for the year it added over 7.7 million subs. To put the 3.08 million in perspective, it is more than 4 times the amount of subs added just 2 years ago in Q4 '08.
Netflix is very bullish on Q1 '11, providing domestic guidance of between 21.9 million and 22.8 million subscribers, which means a slight beat of the high end would mean a second consecutive quarter of 3 million additions. Netflix is also offering international guidance for the first time, of between 750K and 900K subscribers, which is all Canada. Netflix pointed to 3 ways it is achieving a virtuous cycle of subscriber growth: more content, more word-of-mouth and more R&D to improve the UI. More to come.Categories: Aggregators
Topics: Netflix
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Will Netflix Report 20 Million Subscribers Later Today?
Netflix will report its Q4 and full year 2010 earnings later today. There's no question that the results will come in very strong given the momentum the company had going into the holiday quarter. But one interesting question is whether Netflix will surpass the 20 million subscriber mark for the first time. While the number holds no other particular value than it being large and round, it would still be a significant milestone and also make Netflix the second largest video subscription company, by subscriber count, in the U.S. behind only Comcast (who it will pass at some point in the 1st half of 2011).
For its part Netflix is forecasting to have ended Q4 with between 19 million and 19.7 million subscribers. That would represent an increase over Q3's 16,933,000 of between 2,067,000 to 2,767,000 subscriber additions. To hit the 20 million number, Netflix would have to gain 3,067,000 subscribers, or about 10.8% more than the high end of its guidance. One way to gauge the likelihood of this happening is to look at the company's recent actual subscriber additions vs. its guidance. Per the chart below, in 2 of the last 3 quarters, the company has in fact beaten the high end of its forecast, in Q1 '10 (by 10.9%) and in Q3 '10 (by 13.7%). It's also worth noting that Q4 '09's sub gain of 1,159,000 was more than double its Q3 '09 addition of 510,000. While I wouldn't expect a Q4 '10 to Q3 '10 ratio like that, if it were to happen then Netflix would be far above 3 million in Q4.
Categories: Aggregators
Topics: Netflix
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Amazon Acquires LOVEFiLM Making Netflix's European Expansion a Lot Harder
Amazon announced this morning that it has bought the remaining 58% of European DVD-by-mail and online subscription service LOVEFiLM. Amazon
gained its stake in 2008 when LOVEFiLM acquired Amazon's European DVD rental business (Amazon also invested in LOVEFiLM as part of the deal). Given Amazon's position, the new deal, said to be worth around $320 million, was widely rumored.
Though the companies offered no insight in the press release as to what prompted the move, I think it can be interpreted as a bid by Amazon to make Netflix's expansion into the European market much harder. Netflix expanded into Canada last September with a streaming-only service and has continued to beef up the content selection offered there, even as stories have emerged that Canadian broadband ISPs' consumption caps can generate incremental fees for heavy Netflix users. Nonetheless, Netflix has been bullish about its near-term profitability expectations in Canada and executives have made no secret of the company's intention to expand further internationally, with Europe certainly in the bullseye.
Categories: Aggregators, Deals & Financings, FIlms, International
Topics: Amazon, LOVEFiLM, Netflix
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In Approving Comcast-NBCU, the FCC Blesses the Cable Model
Reading yesterday's FCC press release approving the Comcast-NBCU transaction, my main reaction was that rather than using the opportunity to try to force fundamental changes in the core cable business model, the FCC, through its key conditions, instead essentially blessed it.
Comcast - and by extension other pay-TV operators - must be delighted that their core packaging and pricing philosophies were basically untouched. Cable networks and studios should also be happy that their ability to monetize
through the monthly affiliate model remained intact as was their flexibility to monetize online (mostly). As a result, the large ecosystem of participants in the video ecosystem (e.g. talent, production personnel, etc.) should also be happy that their economic well-being won't be disrupted. Lastly, investors in the pay-TV ecosystem should also be happy; it's always a good day when the government chooses not to meddle in markets that are working pretty nicely from investors' perspective.
To get more specific, in the press release there are 7 key conditions under the heading, "Protecting the Development of Online Competition" that Comcast and/or Comcast/NBCU are required to follow. These relate to online video and I have listed them out below. After each one I have added my analysis/reactions.
Categories: Cable Networks, Cable TV Operators, Deals & Financings, Regulation
Topics: Comcast, FCC, NBCU, Netflix
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On-Stage Interview With Netflix's Content Chief Ted Sarandos, Next Week in Miami Beach
Please join me in Miami Beach next Tuesday, January 25th when I'll be doing an exclusive one-hour interview with Netflix's chief content officer Ted Sarandos at the annual NATPE Market conference. The session is sponsored by William Morris Endeavor. The NATPE Market conference runs from next Monday to Wednesday at the luxurious Fontainebleau Resort.
Ted is Netflix's point person for the company's lengthy list of recent content deals (e.g. EPIX, Disney/ABC, NBCU, Relativity Media, etc.) that have powered the popularity of Netflix's streaming service. Among the topics we'll discuss include how Netflix decides what type of content to pursue, how these deals are typically structured, how big Netflix's budget is for ongoing content acquisition, which connected devices are most popular for Netflix streaming use, which competitors he's most worried about, and what's on the roadmap for 2011 and beyond.
Categories: Aggregators, Events, People
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5 Items of Interest for the Week of Jan. 10th
Even though I was very focused this week on the CES "takeaways" series, there was still plenty of news happening in the online and mobile video industries. So as in the past, I'm pleased to offer VideoNuze's end-of-week feature highlighting 5-6 interesting online/mobile video industry news items that we weren't able to cover this week. Enjoy!
Level 3 fights on in Comcast traffic dispute
Level 3 is showing no signs of relenting on its accusations that Comcast is unfairly trying to charge the CDN for Internet traffic it delivers to Comcast's network. In an interview this week, Level 3 said it may use the "Open Internet" provisions of the FCC's new network neutrality rules to press its case. Level 3's challenge is coming at the 11th hour of the FCC's approval process of the Comcast-NBCU deal; it's not really clear if Level 3 is having any impact on slowing the approval, which appears imminent.
Comcast-NBCU deal challenged over online video proposal
Speaking of challenges to the Comcast-NBCU deal, word emerged this week that Disney is voicing concern over the FCC's proposed deal condition that would force Comcast to offer NBC programming to any party that had concluded a deal with one of NBC's competitors for online distribution. The Disney concern appears to be that the condition would have an undue influence on how the online video market evolves and how Disney's own deals would be impacted. While the FCC should be setting conditions to the deal, the Disney concerns highlights how, in a nascent, fast-moving market like online video, government intervention can cause unintended side effects.
YouTube is notching 200 million mobile video views/day
As if on cue with my CES takeaway #3, that mobility is video's next frontier, YouTube revealed this week that it is now delivering 200 million mobile views per day, tripling its volume in 2010. That would equal about 6 billion views per month, which is remarkable. And that amount is poised to increase, as YouTube launched music video site VEVO for Android devices. YouTube clearly sees the revenue potential in all this mobile video activity; it also said that it would append a pre-roll ad in Android views for tens of thousands of content partners.
Google creates video codec dust-up
Google stirred up a hornet's nest this week by announcing that it was dropping support for the widely popular H.264 video codec in its Chrome browser, in favor of its own WebM codec, in an attempt to drive open standards. Though Chrome only represents about 10% market share among browsers (doubling in 2010 though), for these users, it means they'll need to use Flash to view non-WebM ended video. There are a lot of downstream implications of Google's move, but for space reasons, rather than enumerating them here, check out some of the great in-depth coverage the issue has received this week (here, here, here, here).
Netflix usage drives up Canadian broadband bills
An interesting test of Canadian Netflix streaming showed that a user there might have to pay an incremental $12/month under one ISP's consumption cap. That would be more than the $7.99/mo that the Netflix subscription itself costs, leading to potential cord-shaving behavior. This type of upcharge hasn't become an issue here in the U.S. because even ISPs that have caps have set them high relative to most users' current consumption. But if streaming skyrockets as many think it will, and the FCC allows usage-based billing, this could fast become a reality in the U.S. as well.
Categories: Aggregators, Broadband ISPs, Broadcasters, Cable TV Operators, CDNs, Deals & Financings, International, Mobile Video, Regulation, Technology
Topics: Comcast, Disney, FCC, Google, Level 3, NBCU, Netflix, WebM, YouTube
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CES Takeaway #2: Don't Count Out the Pay-TV Operators
(Note: Each day this week I'll be writing about one key takeaway from CES 2011.)
If you've been thinking that pay-TV operators were imminent roadkill due to burgeoning "over-the-top" consumption and imminent cord-cutting mania, then important news from CES 2011 should cause you to reassess your assumptions. Instead of new technology undermining pay-TV businesses (which is too often how media characterizes things), the largest operators are starting to show how technology can be used to create compelling new value for their subscribers and enhance their competitiveness even as they relinquish a little control.
At CES, pay-TV announcements focused primarily on 2 areas: extending viewing to tablet computers and eliminating the set-top box by delivering full channel line-ups over broadband to connected TVs. Comcast, the largest U.S. pay-TV operator, made announcements spanning both: live, in-home access on iPads, with on-demand access outside the home, plus Xfinity TV access on certain Samsung connected TVs and on its new Galaxy Tab tablet. Time Warner Cable announced deals with both Samsung and Sony to deliver its line-up to certain connected TVs as well. Dish Network also unveiled its "Remote Access" service for Android tablets, allowing both live and on-demand viewing using the Sling Adapter (it had announced this for iPads in December). Last fall, Dish was also the first pay-TV operator to integrate with Google TV.
Categories: Cable TV Operators, Devices, Satellite, Telcos
Topics: AT&T, Comcast, Netflix, Samsung, Sony, Time Warner Cable, Verizon
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CES Takeaway #1: Broadcast TV Networks Were Missing In Action
(Note: Each day this week I'll be writing about one key takeaway from CES 2011.)
Broadcast TV networks were conspicuously absent from the buzz of last week's CES 2011, even through one of the main themes of the show was enhanced video viewing through connected devices. Aside from a deal giving boxee the right to sell CBS episodes, and an expected, forward-looking announcement that Hulu Plus would soon be available on Android-powered devices, broadcast TV networks didn't participate in any of the excitement around new connected and mobile devices.
Their absence was both a missed opportunity, and also a clear illustration of how backward-looking their posture toward connected devices is. At a time when the entire CE industry sees the big prize of untethering video viewing from the living room, while creating boundless opportunities for new interactivity and higher engagement, the broadcast TV networks and Hulu have taken exactly the opposite approach, choosing to block access to their programs by connected devices, even though these programs are already available online.
I've previously written about the folly of broadcasters trying to force an artificial distinction between computer and TV screens (here and here with respect to Google TV), noting that their motivation for doing so is the pot of gold they see in retransmission consent payments from pay-TV distributors. But while those payments are a bonanza, they shouldn't come at the price of non-participation with connected devices. Indeed, three key things broadcasters risk by shunning connected devices emerged at CES last week.
Categories: Broadcasters, Devices
Topics: Boxee, CBS, CES, Hulu, Netflix, Orb BR, SnapStick
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VideoNuze Report Podcast #83 - Jan. 7, 2011
Daisy Whitney and I are back this week for the 83rd edition of the VideoNuze Report podcast, for January 7, 2011, the first of this new year.
Today we discuss 3 news items from CES this week: Netflix gaining a dedicated remote control button on 11 different CE companies' connected devices, Comcast launching live and on-demand TV on tablet computers and Cisco's new "Videoscape" TV platform. Enjoy!
Click here to listen to the podcast (13 minutes, 43 seconds)
Click here for previous podcasts
The VideoNuze Report is available in iTunes...subscribe today!
Categories: Aggregators, Cable TV Operators, Podcasts, Technology
Topics: CES, Cisco, Comcast, Netflix
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With New Netflix Button, Mutual Love Affair With CE Industry Continues
The mutual love affair between the consumer electronics industry and Netflix continues on, with today's announcement that 11 different CE companies will create a dedicated Netflix button on their remote controls for certainconnected TVs, Blu-ray players and set-top boxes. The unusual move is the latest sign of how interdependent the success of CE companies' connected devices and Netflix's burgeoning popularity have become.
The love affair was born out of CE companies' recognition of the old adage that compelling content and applications are critical to inducing consumers to buy the next snazzy gadget. Case in point: Blu-ray disc player sales were stagnating until connectivity was added, enabling access to Netflix and other streaming content. As a result, in the first 9 months of 2010, around 2.4 million players were sold in the U.S., up 96% from the prior year's period, according to NPD Group.
Categories: Aggregators, Devices
Topics: and Toshiba. Sharp, Dynex, Haier, Memorex, Netflix, Panasonic, Samsung, Sharp, Sony, Sony, Toshiba
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Online/Mobile Video's Top 10 of 2010
2010 was another spectacular year of growth and innovation in online and mobile video, so it's no easy feat to choose the 10 most significant things that happened during the year. However, I've taken my best shot below, and offered explanations. No doubt I've forgotten a few things, but I think it's a pretty solid list. As much as happened in 2010 though, I expect even more next year, with plenty of surprises.
My top 10 are as follows:
Categories: Advertising, Aggregators, Broadband ISPs, Broadcasters, Cable Networks, Cable TV Operators, Deals & Financings, Devices, Mobile Video, Regulation, Satellite, Technology, Telcos
Topics: 4G, Android, Apple, Google TV, iPad, Net Neutrality, Netflix, YouTube
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Starz's 2-Year Results Defy Warnings of "Cord-Shaving"
If you're looking for evidence that the pay-TV industry is imperiled by the rise of over-the-top services that are going to cause subscribers to cut the cord, a good early indicator of such behavior would be whether "cord-shaving," i.e. the reduction of services like premium channels, additional outlets and DVR services, is happening already. But a look at the premium channels Starz and Encore - whose content is fully available for streaming on Netflix - suggests no evidence of cord-shaving is yet occurring.
As the graph below shows, since October, 2008, when Starz announced that Netflix had signed a distribution deal for "Starz Play," total U.S. subscribers to the Starz and Encore channels have actually increased slightly from 49 million to 49.4 million. During this time period there's been relatively little fluctuation, with only a temporary dip in the 2nd half of last year that was probably more related to the channels being temporarily out of their Comcast deal, and therefore losing some of their promotional backing. Further, for the first 9 months of 2010, Starz's revenue was $929 million and cash flow was $305 million, up from the same period in 2008, when revenue was $826 million and cash flow was $220 million.
Categories: Aggregators, Cable Networks
Topics: Disney, Encore, HBO, Netflix, Sony, Starz
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Netflix CEO Hastings Defends Company's Lofty Stock Price in 2,000 Word Post
Netflix CEO Reed Hastings isn't being shy about his company's soaring valuation, posting a 2,000 word defense on the Seeking Alpha blog. The relatively unusual move comes in response to an earlier post by investorWhitney Tilson explaining why the stock is due for a decline in 2011. The two men are friends and joint backers of charter schools. Hastings says somewhat tongue in cheek up front that his "desire is to increase (Tilson's) odds of making money next year so he can donate even more to the charter public schools that we both think are important to our country's future."
Categories: Aggregators
Topics: Netflix
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Hulu Pulls IPO Due to Lack of Long-Term Content Rights
The WSJ is reporting that Hulu has pulled its widely-rumored plan for an initial public offering next year due to lack of long-term rights to distribute its three broadcast TV network owners' content. The WSJ says the company may
look at other options to raise capital. Hulu's exclusive short-term distribution deals with owners ABC, FOX and NBC are the company's primary asset, and no doubt banks and other would-be investors closely scrutinized whether the rights would be extended.
As I wrote last April, from a content rights perspective, Hulu is getting squeezed from all sides. Pay-TV providers are ramping up their TV Everywhere rollouts and are trying to lock down online distribution rights themselves, sometimes as part of retransmission consent deals. The NBC rights in particular are subject to extra uncertainty longer-term as Comcast takes over the network. As the biggest subscription TV provider, which is rolling out its own online capabilities, Comcast has little incentive to support an online competitor.
Categories: Aggregators, Broadcasters, Deals & Financings
Topics: ABC, Comcast, FOX, Hulu, NBC, Netflix
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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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VideoNuze Report Podcast #82 - Dec. 17, 2010
Daisy Whitney and I are back this week for the 82nd edition of the VideoNuze Report podcast, for December 17, 2010. This will be the final podcast of 2010 and we both want to wish our listeners happy holidays. Daisy and I have have had lots of fun cranking out 32 podcasts this year on all the most important industry topics. We're looking forward to continuing on in 2011.
And speaking of 2011, in this final podcast of the year we turn our sights ahead and discuss the 6 key online/mobile video trends that The Diffusion Group's Colin Dixon and I outlined during Wednesday's webinar (replay and slides available here). Daisy and I focus the bulk of the podcast on two of these predictions: how Netflix will strain under its spectacular growth, and how pay-TV subscriber losses will mount and cord-cutting perceptions could become reality.
Click here to listen to the podcast (13 minutes, 16 seconds)
Click here for previous podcasts
The VideoNuze Report is available in iTunes...subscribe today!Categories: Aggregators, Podcasts, Predictions
Topics: Netflix, Podcast, Predictions
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