Posts for 'Netflix'

Yesterday, Canadian streaming service shomi (pronounced “Show Me”) announced that it was closing down as of November 30th. The news came just two years after its launch by two of Canada’s largest pay-TV operators, Shaw Communications and Rogers Communications. shomi’s future was in jeopardy ever since Shaw essentially exited the content business by selling all of its TV networks to Corus Entertainment for C$2.65 billion in April in order to focus on its pay-TV and broadband businesses. Shaw subsequently took a C$51 million write down for shomi. Rogers will now take a C$100-C$140 million hit.

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7Park Data has released an analysis of OTT viewership, finding among other things, that “Orange is the New Black” was Netflix’s most popular show in June in 15 of the 16 countries analyzed (in Ecuador OITNB was fourth, with “Full House” in the top spot). OITNB had its season 4 premier on June 16th, driving a 544% viewership increase from May to June.

Although Netflix released 12 of its originals’ season premieres in June, OITNB was the only one among the top 20 most-viewed. Following OITNB globally was “How I Met Your Mother,” “Pretty Little Liars,” “Supernatural” and “Family Guy.” In the U.S., specifically, OITNB was followed by “Family Guy,” “The Office,” “American Dad!” and “Friends.”

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Yesterday Amazon unveiled new search and recommendation features for its Fire TV and Fire TV Stick devices, aimed squarely at improving users’ experience with third-party SVOD services. The device updates are automatically downloaded and will enable universal voice search to over 75 video apps, including Netflix, HBO GO and soon HBO Now, as well as personalized recommendations across apps to be visible in custom rows on the Fire TV home page.

Both updates continue the evolution of Fire TV’s role as a hub for SVOD and free video services. That’s not a novel approach, as other devices like Roku, Chromecast and Apple TV are also aiming to be central hubs for online video. And arguably, Comcast is starting to take its first steps for X1 to also become a hub, by announcing plans to incorporate Netflix later this year.

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I'm pleased to present the 332nd edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

Earlier this week Netflix released its Q2 ’16 results, showing abysmal subscriber growth both domestically and internationally. Netflix largely blamed the downturns on rate increases that kicked in for longer-term subscribers and the media coverage of them.

In today’s podcast, Colin and I dig into what we believe is happening. As we both wrote earlier this week (here and here), competition and market saturation are playing a big role, resulting in much more fragile subscriber retention. Meanwhile Netflix may have miscalculated just how big the international opportunity really is, especially in newer markets. In particular, we’re both mystified how Netflix could have launched in 130 countries in January, and yet seen international subscriber additions decline by 36% year-over-year.

Overall, it’s an incredibly murky picture and the next few quarters will be pivotal in understanding how much growth still lies ahead for Netflix.

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Netflix reported disappointing domestic and international results for Q2 ’16, extending the company’s bumpy and unpredictable growth. Netflix added just 160K subscribers domestically (down from 900K in Q2 ’15, a quarter which now looks like it was an anomaly after all) and below its own 500K forecast. Meanwhile international subscribers increased by 1.52 million (vs. 2.37 million in Q2 ’15) and below the company’s forecast of 2 million additions.

In both cases, Netflix blamed price increases that were felt as “un-grandfathering” of older subscribers kicked in, which in turn led to higher churn. In the U.S. Netflix went one step further, blaming press coverage of the un-grandfathering process, which it believes led some subscribers to believe a new price increase was coming.

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I'm pleased to present the 330th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

Colin and I were both very enthusiastic about news earlier this week that Comcast will integrate Netflix into its X1 set-top box, a move we’ve been advocating for a while. In this week’s podcast we discuss how complicated this negotiation must have been, and why joint subscribers will be the big winners.

Surely a motivating factor for Comcast was the acknowledgment that viewers are spending more time on SVOD, which new research from IBM Cloud Video highlighted this week.

More specifically, the research showed how important video has become for Amazon Prime members, with 75% of them now watching. By not charging for video in Prime, Amazon is potentially a big disruptor in the video/TV industry down the road.

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Three-quarters of Amazon Prime members are watching the service’s video offerings, according to new survey data released by IBM Cloud Video. 61% of Prime members surveyed said they signed up for the service for the shopping benefits, but also watch the video, while another 14% said they signed up specifically for the video. Just 7% of members surveyed said they didn’t know about the video offerings, with another 18% saying they were aware, but didn’t watch.

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Yesterday, Recode reported that Comcast will integrate Netflix into its X1 set-top box. Loyal VideoNuze readers know that I’ve been advocating for this type of partnership for almost two years, back to when I articulated the benefits in “Why the Timing is Now Perfect for a Netflix-Comcast Partner Deal” in October, 2014. There are lots of benefits to Comcast and Netflix by partnering (as I’ll further explain below), but the biggest winners once the integration is complete later this year, are the companies’ mutual viewers.

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I'm pleased to present the 324th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

Earlier this week provided a synopsis of a fascinating article in Vulture describing the massive changes that big SVOD providers have brought to the TV production business. The most startling statistic is that the number of scripted TV shows has soared from 36 in 2005 to over 400 in 2015.

In today’s podcast we discuss the consequences of this explosion and speculate on whether all of this is sustainable, or whether a bubble has been created, and if so, what might cause it to burst. Colin is more optimistic that current production volumes can continue, while I’m more skeptical simply because SVOD business models are still in flux.

Another dimension to the value of more TV shows is how important both stacking rights for current seasons and access to back catalogs are becoming for the existing ecosystem. With VOD, binge-viewing and time-shifting all on the rise, there appears to be an emerging consensus on broader availability of TV shows. We explore all of this as well.

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Yesterday research firm Strategy Analytics released a forecast showing growth in domestic SVOD spending will slow slightly in 2016 vs. 2015 and then drop by almost 50% in 2021, to just 8% year-over-year. The 2016 slowdown is nominal - a $1.19 billion increase vs. a $1.21 billion increase in 2015, which could be easily tweaked by minor changes to churn rates, as just one example. Domestic SVOD spending in 2016 will be $6.62 billion, still an increase of 22% year-over-year, a growth rather most industries would happily take.

The key takeaway shouldn’t be the current year forecast, but rather what’s expected over the next 5 years, to 2021. Strategy Analytics Digital Media Director Michael Goodman said that the spending forecast was modeled assuming an 85% saturation rate of broadband households in 2021, comparable to pay-TV’s current adoption (60% of households currently subscribe to one or more SVOD services), with Netflix alone accounting for 53% of subscriptions.

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For those interested in a deep-dive look inside how dramatically the business of making TV shows has changed over the past several years, last week’s Vulture cover story, “The Business of Too Much TV,” is essential reading. At 10,000+ words, you’ll need to set aside a chunk of time to get through it, but it’s well worth it for a peek behind the curtain of how SVOD has influenced every aspect of TV production.

The biggest driver of change has been the massive increase in the number of scripted TV shows being made - from 36 in 2005 to over 400 in 2015. Cable TV networks were the initial cause of this explosion, but in the past several years it’s been the major SVOD services, Netflix, Amazon and Hulu, which have each turned to originals as a source of differentiation as competition has intensified.

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I'm pleased to present the 319th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

Colin and I are back from NABShow where I produced the 2-day Online Video Conference, which included 52 speakers over 15 sessions. One of the highlights for me was doing a keynote interview with Michael Paull, VP of Digital Video at Amazon who oversees the company’s new Streaming Partners Program (SPP).  

As I wrote yesterday, SPP will likely have a majority of U.S. SVOD services included this year, putting Amazon in the undisputed role as THE third-party distributor of SVOD in the U.S. Colin and I dig into why that is potentially so critical and the implications it could have for Netflix and the pay-TV industry. (Colin provides a personal example of how Amazon hooked him on a subscription to Tribeca Shortlist which he never would have found on his own).

We then transition to specific takeaways from NABShow. Colin notes that many vendors were demonstrating how online video can be delivered with guaranteed quality and user experiences, making online video every bit as good as TV itself. For pay-TV operators specifically, the imperative to move video services online has never been higher.

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Amazon is likely to have a majority of all SVOD services available in the U.S. included in its recently launched Streaming Partners Program (SPP) this year, setting the stage for the company to become the main third-party distributor for dozens of SVOD services. As this happens, there will be significant implications for the structure of the SVOD industry, not least of which will be changing the competitive dynamic between Amazon and Netflix, just as the latter’s domestic subscriber growth appears to be flattening. Another important implication would be Amazon’s impact on the U.S. pay-TV industry and role with cord-cutters.

Michael Paull, Amazon’s VP of Digital Video, who runs the SPP, told me during our keynote interview on Tuesday at the NABShow Online Video Conference that he expects “dozens” of SVOD services in the U.S. will become part of the SPP in the coming months. When added to the 30+ SVOD services already available in SPP, the result would be that the majority of U.S. SVOD services would be part of SPP. (Note, according to Parks Associates’ recent research there are 98 U.S. SVOD services aside from Netflix, Hulu and Amazon currently available).

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Amazon has launched an $8.99/month standalone plan for its Prime Video service, breaking it out of the overall Prime service for the first time. The company is also offering a $10.99/month option for Prime itself, a first time departure from the traditional annual approach.

The standalone plan for Prime Video means that for the first time Amazon’s video service can be valued by consumers on an apples-to-apples basis with other SVOD services without being clouded by other Prime benefits. By bundling video with Prime Amazon was able to introduce video to millions of Prime subscribers without them having to make an incremental purchase decision, enabling buzz to build about Prime’s original programming.

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Here’s a measure of how dominant the big three SVOD services (Netflix, Amazon and Hulu) are in the US: according to new OTT data from Parks Associates, just 5% of all broadband homes subscribe to one or more of the 98 SVOD services available in the US aside from the big three. Among the 98 services Parks counted are high-profile offerings like HBO Now, CBS All Access and Sling TV.

At the end of 2015, there were approximately 96.3 million broadband homes in the US, according to Leichtman Research. So that would mean that about 4.8 million broadband homes were subscribing to one or more of the 98 SVOD services outside of the big three. Parks did not specify the actual subscriber levels of any of the 98 SVOD services.

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New research from Pivotal Research Group, based on Nielsen data, reveals that at the end of February, 2016, SVOD services were in over 50% of U.S. TV households, up from 43% in February 2015. The SVOD services included are Netflix, Amazon Prime and Hulu.

No surprise, Netflix is by far the most popular SVOD service, in 45% of U.S. homes (up from 38% a year ago), followed by Amazon Prime in 21% of homes (up from 15% a year ago) and then Hulu in 10% of homes (up from 7% a year ago).

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I'm pleased to present the 308th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

In today’s podcast we discuss a number of different items that hit our radar this week. We start with Facebook’s growing impact in video, which was detailed on the company’s earning call earlier this week.

We then transition recent research from Nielsen which Colin analyzed, showing the level of viewership by device.

Next up, Colin and I were watching reports from the Sundance Film Festival noting the aggressive bidding by Amazon and Netflix, underscoring another industry segment being disrupted by SVOD. Last, we touch on the problems Netflix is already running into with its international expansion. Indonesia was the latest country to raise red flags on Netflix’s content this week.
 
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I'm pleased to present the 307th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

Netflix reported its Q4 ’15 results this week, beating its forecast for international subscriber growth while falling short on domestic subscribers, for the second quarter in a row. We have our differences in how we interpret the results, with Colin focusing much more on the international story, while I’m paying more attention to the domestic shortfall.

Still, Colin and I agree that Netflix will be defined more as an international company going forward and will face a slew of new challenges addressing disparate countries around the world. How they navigate these challenges will greatly impact their future performance.

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Netflix reported its Q4 ’15 and full year results yesterday, showing a second quarterly slowdown in U.S. subscriber growth, offset by accelerating international subscriber growth.

In Q4 ’15 Netflix added just 1.56 million subscribers in the U.S., down from 1.9 million in Q4 ’14 and below the company’s forecast of 1.65 million. It was also the lowest number of additions in 4 years. In Netflix’s letter to shareholders, it cited “high penetration in the U.S. seems to be making net additions harder than in the past” and new credit/debit card rollovers continuing to be a “background issue” (the latter was cited by the company as the main issue for the big shortfall in Q3 ’15). Both of these points were reinforced on the video earnings review call.

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I'm pleased to present the 305th edition of the VideoNuze podcast  and the first of 2016, with my weekly partner Colin Dixon of nScreenMedia.

This week we dig further into Netflix’s rollout to 130 additional countries and more specifically, the implications of its “content globalization” experiment that I wrote about yesterday. We discuss the pros and cons of the company’s “produce locally, distribute globally” approach. With Netflix’s viewer data, I continue to believe the company has a big opportunity to leverage its international reach in ways we’ve never seen before. It also has a potentially powerful competitive differentiator.

However, Colin points out a few gotchas, including that Netflix is only deploying in 20 languages, the single price of the Netflix global player means it will be very expensive in lower-wage countries and the risk that government censors in some countries may intervene given some of Netflix’s racier programming. These are all great points, and will make it even more interesting to see how the international expansion goes.

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