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Tuesday, July 29, 2014

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Analysis for 'Aggregators'

  • Forget Orange, Binge-Viewing is the New Black

    Netflix released new research on binge-viewing among its subscribers today, revealing that 61% of them binge-view at least 2-3 episodes every few weeks. The data adds yet more weight to the binge-viewing story line: in September Nielsen found that 88% of Netflix subscribers have watched 3 or more episodes in the same day (70% for Hulu Plus) while research from Piksel found 94% of viewers binging in one way or another. (caveat, there's some apples vs. oranges in comparing the data)

    No other company has done more to promote binge-viewing than Netflix. Whereas the phenomenon started with viewers binging past seasons of shows like "Mad Men" or "Breaking Bad," Netflix has shrewdly capitalized by releasing all of its own original episodes at once, making binge-viewing a current season behavior as well. As a result, TV network executives must now ask whether their traditional approach of scheduling new episodes should be revamped.

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  • VideoNuze Podcast #206 - VideoSchmooze Wrap-up and 3 Key Takeaways

    I'm pleased to present the 206th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

    This week we discuss 3 of our key takeaways from this past Tuesday's VideoSchmooze, which over 230 industry executives attended. The morning was jam-packed with learning and insights, which I'll continue to share in the coming weeks, along with the session videos.

    First, Colin shares the observation of Craig Moffett, who was on the opening session, that many content providers are assuming Netflix/other OTT providers are not a substitute for pay-TV over time. Craig believes this is an incorrect assumption and that if content providers come to depend too heavily on digital licensing revenues from Netflix and others, they run the risk of addicting themselves, even if/when their core businesses suffer due to audiences shifting.

    Next, on the mobile video session I moderated, Silvia Lovato from PBSKids Digital shared the stunning data point that 75% of its viewership from its 2-5 year-old audience now occurs on mobile devices. I believe this has incredibly profound societal implications 10, 20 and 30 years down the road, as kids learn from the earliest age to expect programming fully on-demand.

    Last, we turn to Smart TVs. On the online video advertising session, John Nitti from ZenithOptimedia (who oversees $10 billion of client spending) Eric Franchi from Undertone said Smart TVs are too fragmented to be an appealing environment for advertisers for now. As more online viewing shifts to the big screen, it's imperative that advertising follow, but the separate ecosystems of each Smart TV manufacturer makes it difficult for both developers and advertisers for now. Some form of aggregation/streamlining must occur to create the scale advertising requires.

    Listen in to learn more!

    Click here to listen to the podcast (19 minutes, 16 seconds)




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  • Survey: 48% Of Pay-TV Subscribers “Cord Cheat” with OTT Services

    Digitalsmiths has released its quarterly survey on consumer behavior around pay-TV and VOD, finding that consumers are continuing to “cord cheat,” with 48% supplementing their pay-TV subscriptions with OTT services, up from 35% reported in Q2 '13. Most popular for these consumers was Netflix (42%), while for individual movie rentals Redbox kiosks took the lead at 17%.

    Digitalsmiths believes cord cheating is a big threat to pay-TV providers and said they must adapt and better support consumer expectations. According to the survey, the top reasons consumers are choosing OTT services like Netflix, Hulu or iTunes are because they are more convenient (53%), cheaper (48%) and allow full season TV viewing (31%).

    continue reading on VideoNuze iQ

     
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  • Introducing VideoNuze iQ Expert Series Video Interviews

    Following the launch of VideoNuze iQ - the hub for video data and analysis - in early October, I'm pleased today to unveil a new feature, our "Expert Series" video interviews. Expert Series are 20-minute video interviews with industry analysts and executives responsible for the critical new video research. So in addition to VideoNuze iQ's own analysis of newly released video research, you'll now also hear directly from the experts themselves.

    Kicking off the Expert Series is Jonathan Hurd, Director of Altman Vilandrie & Co., a strategy consulting firm focused exclusively on Telecom, Media and Technology. Jonathan oversees a comprehensive AV & Co. survey of consumer behaviors and attitudes toward traditional and new video services. In this Expert Series interview, Jonathan shares key highlights.

    The survey data underscores online video's rapid adoption and benefits, along with Netflix's dominance and the rise of tablet/smartphone viewing. But it also clarifies that, for now, cord-cutters' main motivation is mainly economic. Importantly, the survey also shows the durability of live broadcast TV, even among millennials, along with the appeal of pay-TV subscriptions and TV Everywhere.

    The video interview is embedded below and Jonathan's slides are available here. You can connect directly with Jonathan at jhurdATaltvil.com. I welcome your feedback on the new Expert Series format.

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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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  • Binge-Viewing Popularity Exposes Tensions Between OTT and VOD, TV Everywhere Priorities

    Binge-viewing is a bona fide phenomenon that's not only changing consumers' TV viewing behaviors, but also creating fissures in the TV industry. Recently, in "For U.S. Cable Operators, Netflix Partnerships Are Fraught With Risk," I outlined how binge-viewing is driving a competitive dynamic over content rights between Netflix and pay-TV operators' VOD and TV Everywhere plans. Adding further detail, this past Friday, Vulture published an excellent article with specific examples of how this battle is brewing.

    According to Vulture, FX and Turner are telling studios from which they obtain TV shows that they need rights to stream the full current season of shows (known as "stacking" rights) not just the most recent 3-5 episodes. Part of the networks' rationale is they need to give late-coming viewers an easy path to watch from the beginning of a season, rather than just enabling existing viewers a way to catch up.

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  • After a Strong Q3, When Will it be Time to Talk About Netflix as a Cord-Cutting Catalyst?

    Netflix now has over 40 million global subscribers, including over 31 million is the U.S. alone, after reporting strong Q3 2013 results. Domestically, Netflix now has more subscribers than the biggest pay-TV operator (Comcast) and the biggest premium cable network (HBO).

    Every research report I've seen continues to verify that to date Netflix is NOT driving cord-cutting (which is relatively small anyway). Still I can't help but ask the question in light of the company's renewed momentum: though it's fully justifiable to consider Netflix as an augment to pay-TV service today, is it fair to continue thinking of it that way forever? In other words, could a very different Netflix - as it might look, say, 3 years from now - become more of a substitute for pay-TV service for certain people?

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  • VideoNuze Podcast #200 - Debating Whether Cable Operators Should Partner With Netflix

    I'm pleased to present the 200th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia. This week we debate whether U.S. cable operators should partner with Netflix, a prospect that was reported this past Monday by the WSJ.

    Colin and I have very different opinions on the topic - I believe that on balance it would be disadvantageous for operators to partner and integrate Netflix into their experiences while Colin thinks it would be beneficial for them. As I wrote earlier this week, I think that operators helping Netflix get bigger and stronger ultimately means it becomes a stronger competitor and therefore a more potent cord-cutting and shaving threat.

    Conversely, Colin believes integrating Netflix (as a couple of European operators are doing) would help their subscribers' user experience, which should be their overriding goal. Colin doesn't see Netflix as a threat, even as it looks more and more like HBO over time. I think that's underestimating Netflix's competitive potential. Rather than partnering with Netflix, operators should be doing everything possible to enhance their TV Everywhere and VOD initiatives.

    Listen in the learn more!

    Click here to listen to the podcast (22 minutes, 29 seconds)


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  • YouTube Now Getting 40% of Its Views on Mobile, Up From 6% In 2011

    YouTube is now getting nearly 40% of its views from mobile devices, up from 6% in 2011. That nugget was shared by Google's CEO Larry Page in its Q3 2013 earnings call yesterday. YouTube is the latest content provider to share strong mobile viewership data; in the past several weeks BBC said its iPlayer mobile views are now up to 32% of total, VEVO said 50% of its views are mobile and PBS Kids said 75% of its are mobile.

    These are clearly leaders in mobile and their viewership shows mobile's potential. More often these days, I'm hearing content providers say 20-30% is the range for their mobile views. Note, if you want to learn more about mobile video, both VEVO and PBS Kids (along with ESPN and Beachfront Media) will have executives speaking on the mobile video session at VideoSchmooze on Dec. 3rd (early bird discounted registration is now available).

    continue reading on VideoNuze iQ

     
  • For U.S. Cable Operators, Netflix Partnerships Are Fraught With Risk

    The WSJ has reported that Netflix is holding early stage discussions with at least two U.S. cable operators, Comcast and Suddenlink, about having its app included in their set-top boxes. I've been seeing a lot of arguments for why Netflix partnerships would be good for cable operators, but it seems to me there would be a lot of risk involved for them if such deals materialized.

    Helping Netflix become bigger and stronger would be disadvantageous for cable operators. First and foremost, this would be felt in the area of content rights. By securing past seasons of TV programs, Netflix has driven the binge-viewing phenomenon and become its biggest beneficiary. I expect binge-viewing will only gain in popularity going forward as more people experience it and more devices make it ever easier to do. Adoption of binge-viewing means those distributors with strong video libraries will do better.

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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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  • 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.

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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.

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  • VideoNuze Podcast #192 - More on Netflix's and Amazon's Role in the CBS-TWC Retrans Dispute

    I'm pleased to present the 192nd edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

    In this week's discussion, we talk more about the unexpected role that Netflix and Amazon are playing in the CBS-Time Warner Cable retransmission consent dispute, which has knocked CBS off the air in major markets like NYC, LA, Dallas and elsewhere. As I wrote earlier this week, though "retrans" disputes have become commonplace, a new wrinkle in this particular one is that digital distribution rights are actually the main sticking point.

    Having made lucrative digital deals with both Netflix and Amazon, CBS is justifiably reluctant to simply throw digital access to its programs into a deal with TWC, as it has in the past. The standoff highlights the uphill battle that pay-TV operators are having gaining content rights for their TV Everywhere services, which remain like Swiss cheese, with major holes in program availability. It also underscores the transformational role OTT powerhouses like Netflix and Amazon are having on the broader TV industry.

    Further, Colin believes there's an opportunity for new market entrants (e.g. Intel Media, Sony, Apple, Google, etc.) to bid for both digital and linear rights, and then package access for consumers in inventive new ways. Colin sees broadband's lower cost of delivery creating a big advantage for these new players. I'm skeptical however, noting that the huge expense involved in licensing content and promoting a service from scratch would more than outweigh delivery savings. But, with so much change happening in the market these days, nothing can be counted out.

    Click here to listen to the podcast (19 minutes, 25 seconds)




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  • Who'd Have Thunk It? Netflix and Amazon Are Playing a Central Role in CBS-TWC Retrans Dispute

    Disputes between broadcasters and pay-TV operators over so-called "retransmission consent" fee payments are a dime a dozen. Broadcasters, seeking their slice of the monthly fees pay-TV operators pay cable TV networks, have bargained hard for this new revenue stream. In this sense, the current CBS-Time Warner Cable retrans standoff is business as usual. What is new, however, is that digital rights - and more specifically the huge licensing fees that OTT's richest players, Netflix and Amazon, are now paying - have taken a central role in this particular drama.

    As the WSJ reported last Friday, the real obstacle between CBS and TWC isn't what TWC will pay to retransmit the CBS signal, but rather what digital rights will be included, and at what incremental cost. Five years ago, these rights were a virtual throwaway, but now it's a totally different situation. Here's what changed:

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  • VideoNuze Podcast #190 - TiVo-Netflix Research; Amazon Ups the Ante for Video Rights

    I'm pleased to present the 190th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

    We start our discussion with data that TiVo Research and Analytics (TRA) released this past Monday, which concluded, among other things, that Netflix does not cannibalize traditional TV viewing. TRA also identified the percentage of respondents who subscribe to Netflix (and other services) who watched "House of Cards." Using these numbers, Colin calculates that about 10 million people watched the program, a healthy amount by any standard (Netflix hasn't publicly released HoC's audience). Colin sees a class of "super-viewers" whose traditional TV consumption is augmented by, not substituted with, Netflix.

    One thing that caught my attention in the TRA data was that while Netflix had a 57% adoption rate among respondents, Amazon Prime was right behind it, at 50% (Hulu Plus was further back at 18%). To be fair, it's not clear whether these Prime members are actually watching video included in Prime, or are mainly focused on the unlimited shipping benefit. But, assuming that many DO watch video, it's an impressive number for Amazon, and underscores how far Prime has come in the 2 1/2 years since Instant Videos were launched.

    Colin and I discuss Amazon's broader agenda and how its aggressive pursuit of video is strategic in supporting both Prime and the Kindle ecosystem (all of which I described in my post this past Monday). Given Amazon's willingness to operate on razor-thin margins, I foresee the price for licensing high-quality content continuing to rise, which will in turn pinch profitability (and subscriber growth) at pure play OTT providers like Netflix.

    Click here to listen to the podcast (16 minutes, 48 seconds)




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  • Video is Now the Top Driver of New Members for Amazon Prime, as Licensing and Originals Soar

    Google's new Chromecast device dominated the video landscape last week, making it easy to miss a highly noteworthy news nugget from Amazon: on its Q2 '13 earnings call last Thursday, Thomas Szkutak, the company's SVP/CFO said, "We're having new Prime members come to Amazon largely because of video." Szkutak's comment was a stark reminder of how far video has come for Amazon in the 2 1/2 years since it was first included in the $79/year Prime service.

    Video - and other content/apps - are critical to Amazon because they all support two of the company's most important consumer-facing priorities: growing its highly profitable and sticky Prime service and supporting its line of Kindle devices in the fiercely competitive tablet market. Amazon's ability to successfully use video in service to these other businesses no doubt helps drive its willingness to spend heavily on content licensing and also to invest in its own original productions.

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  • Netflix's Q2 Video Q&A is a Model For Others to Follow

    Late yesterday Netflix reported its Q2 2013 results that were mostly solid, although U.S. net subscriber additions were a little lower than many expected. Beyond the results themselves, it was the method by which they were discussed that was noteworthy - for the first time via a live-streamed video Q&A session, powered by Google Hangouts (embedded below). CEO Reed Hastings, CFO David Wells and Chief Content Officer Ted Sarandos were peppered with questions from CNBC reporter Julia Boorstin and BTIG analyst Rich Greenfield.

    As Hastings said upfront, the format was meant to emulate a more informal, "fireside chat" style discussion, as opposed to the typical, highly structured quarterly audio conference call with Wall St. analysts. No doubt reactions to the video Q&A are subjective, but I liked it a lot and believe it should be a model for other companies to follow. Importantly, the Q&A was another example of the expansive role online video can play not just in entertainment, but also in communications.

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  • Hulu Owners Realize "You Can't Have Your Cake and Eat It Too"

    Last Friday afternoon, Hulu's owners Disney, Fox and NBCU/Comcast (note NBCU/Comcast is a passive owner) announced that they wouldn't be selling Hulu, despite an active bidding process. Instead, the companies will retain their interests and plan to invest $750 million in Hulu to grow it. Although the principal reason for the sale was a disagreement over Hulu's business strategy, the announcement said Fox and Disney are "fully aligned in our collective vision and goals for the business (although what they actually are were not disclosed).

    This was the second time a Hulu sale failed to materialize and I believe that once again, the reason was that Hulu's owners realized "you can't have your cake and eat it too." Translation: Disney and Fox wanted to retain all kinds of content rights and flexibility, yet still wanted a very high valuation for the business. Since Hulu's next-day broadcast rights are at the core of its valuation, Disney and Fox's attempt to chip away at them led bidders to reduce what they were willing to pay, obviously beyond the level at which Fox and Disney felt it was still worthwhile selling the business.

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  • 3 Reasons Hulu's Owners Are Justifiably Bargaining Hard Over Content Rights

    Final bidding was scheduled to close last Friday in the Hulu sale process, with the list of potential buyers apparently narrowed to DirecTV, Chernin Group/AT&T and Guggenheim Digital Media. According to various reports (here and here), Hulu's active owners Disney and Fox (Comcast is a passive owner) have been insisting on a number of content licensing related deal points.

    Hulu's next-day access to its 3 broadcast owners' hit shows has always been the heart of the company's value proposition. But a lot has changed in the online video landscape since Hulu was initially formed in March, 2007. As a result, in my view, there are at least 3 key reasons Hulu's owners are justified in bargaining hard over content licensing rights: the importance of TV Everywhere, the growth of well-funded over-the-top licensees and the potential of online video advertising. Following, I delve into each.

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