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.
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Click here to listen to the podcast (19 minutes, 16 seconds)
Amazon's PR machine is gearing up to support the company's imminent push into original programming, with a high-profile piece on Saturday in the Wall Street Journal and today in the NY Times. In both, Amazon video executives are quoted explaining the process by which Amazon selected its first crop of originals, with a particular focus on Garry Trudeau's "Alpha House," the first series that will launch on November 15. No doubt we'll see lots more PR around Amazon's subsequent originals' release.
The PR emphasis is a departure for famously reticent Amazon, but its presence is a sign of how strategic original video has become for the company, and how high the stakes are for it to succeed. Over the past 2 years Amazon has become much more competitive with Netflix in licensing hit TV programs from networks and studios to be included for its Prime members. Now the battleground is shifting to originals.
Categories: Indie Video
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.
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?
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.
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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.
(Note: I will NOT disclose anything about last night's series finale, so fans, you're safe to read on without spoilers.)
Last night was the series finale of the hit AMC show "Breaking Bad." I count myself among the millions of super-fans who fell in love with the series from the start and have been loyal ever since. Importantly though, my viewing experience with Breaking Bad distinguished itself from every other TV show I've ever watched: it was the first one where I watched every single episode on-demand and without ads.
In fact, my experiences with Breaking Bad perfectly illustrate so many of the video industry themes I write about on VideoNuze each day that I thought it would be worth sharing some of them and what I learned.
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.
I'm pleased to present the 194th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia. First up this week we discuss CBS CEO Leslie Moonves' remarks on CNBC essentially declaring victory in the company's retrans dispute with Time Warner Cable because it had preserved its ability to license its programs to Netflix and Amazon. Listeners will recall that 3 weeks ago on the podcast we talked about how OTT licensing was at the heart of the dispute and the consequences for TV Everywhere.
Next we transition to questioning whether there's any real benefit for TV networks and pay-TV operators to stream linear channels to connected TVs. Colin observes that recent data from the BBC indicating very low levels of linear streaming on connected TVs appears to question the value of the Disney-Apple TV and Time Warner Cable-Xbox 360 deals. We speculate that these are mainly meant for 2nd or 3rd TVs that don't have pay-TV set-top boxes.
Last, we chat briefly about the massive 3-part series that the NY Times ran just before Labor Day on ESPN's dominant role in college football - a long, but fascinating read. As I wrote, it's well worth the time for anyone interested in the influence of big time TV money not only on college sports but also on the broader American higher education system.
Click here to listen to the podcast (17 minutes, 41 seconds)
I'm pleased to present the 193rd edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia. This week Colin and I discuss our experiences with Chromecast, adding details to our respective previous posts (here and here), as well as our initial podcast from a few weeks ago just after the device was announced.
Overall, we're both very positive about Chromecast. Among other things, we like the easy set-up, the "tab-casting" feature, and of course, the low price of $35. We both believe it is hugely strategic for YouTube and other video providers who are outside the pay-TV universe to gain access to the living room. Colin has had a few issues with Netflix crashing his Nexus 4 when trying to use Chromecast (though when it has worked the quality has been strong) and he has had trouble using Chromecast's capability of turning the TV on and off.
I haven't had any problems using Netflix, though the streaming quality feels slightly lower than when I watch on my iPad or via my connected Blu-ray player. I did have problems with Chromecast when trying to watch golf and suspect it would be difficult to watch faster-action sports.
Still, we're both impressed and believe Google deserves lots of credit. We're both expecting big things from Chromecast this holiday season.
On a closing note, we'd like to thank all of you for listening to our weekly podcasts. It's been an incredibly busy summer for online video and we both believe the best is yet to come. For those of you with a long Labor Day weekend ahead, enjoy, and we'll see you in September!
Click here to listen to the podcast (20 minutes, 16 seconds)
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)
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:
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.
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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.
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?
Netflix's original series "House of Cards" received 9 Emmy nominations this morning including in 3 of the marquee categories best drama, best actor (Kevin Spacey) and best actress (Robin Wright). The nominations were a first for online original programming and therefore are a bona fide milestone for the rapidly growing online video medium. In addition, Netflix picked up 3 Emmy nominations for "Arrested Development."
While Netflix bet big to put HoC in a league with cable stalwarts - and other best drama nominees "Game of Thrones," "Breaking Bad," "Homeland" and "Mad Men" plus the lone broadcast series "Downton Abbey" - an intriguing question to ask is whether the HoC nominations signal the beginning of an Emmy trend for online original programs or whether HoC is more of an outlier? In other words, can online get on the same type of award-winning growth curve for its originals as cable networks have over the last 20 years, helping drive pay-TV subscriber acquisition and retention?
I'm pleased to present the 186th edition of the VideoNuze weekly podcast with my weekly partner Colin Dixon of nScreenMedia. Colin attended a CDN conference earlier this week first shares observations on the potential long-term rollout of 4K TV and HEVC, along with the deployment of Netflix's Open Connect CDN based on conversations with Netflix and Time Warner Cable.
Next we turn to data from NPD earlier this week indicating that for watching TV shows, DVR usage is more than twice as popular as SVOD services like Netflix, Hulu Plus, Amazon, which I wrote about earlier this week. Colin caveats the data, noting that in SVOD-specific homes he believes the usage is stronger than NPD suggests.
Lastly we touch on news that Samsung will be selling curved TVs, for $13K apiece. Colin and I are skeptics, to say the least.
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Click here to listen to the podcast (16 minutes, 28 seconds)
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.
I'm pleased to present the 177th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia. Earlier this week, Netflix reported solid results for Q1 '13, adding a total of about 3 million new subscribers, 2 million in the U.S. and a million internationally. Netflix projects it can ultimately obtain 60-90 million U.S. subscribers, which would be 2-3 times as many as HBO, the biggest "premium TV" network.
As I wrote earlier this week, if that were to occur - and it's still a big if - it would mean Netflix would have to get a lot of middle and lower income American homes to layer on another $8/mo or more to their already substantial pay-TV bills, OR there would have to be material cord-cutting that essentially frees up household budget for SVOD subscriptions. Colin suggests a third way, which would be "cord-shaving" - subscribers cutting back on existing pay-TV services like sports networks or premium channels to make room for Netflix in their budgets.
That of course leads to the question of what HBO might do as it observes Netflix's continued growth. It's hard to see HBO standing still, yet, for reasons HBO has discussed in the past, unbundling itself from pay-TV would be a huge step for the company. Last but not least, Amazon - which become Netflix's biggest U.S. SVOD competitor - is rumored to have a set-top box introduction planned, which could also shift the competitive balance in the U.S. Bottom line, there are a lot of twists and turns yet to occur in SVOD in the U.S.
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Click here to listen to the podcast (19 minutes, 6 seconds)
Netflix reported solid Q1 results yesterday, gaining 2 million streaming subscribers in the U.S. and another 1 million internationally. Netflix now has 27.9 paying subscribers in the U.S. and 6.33 paying subscribers internationally. With growth re-started since the 2011 Qwikster debacle, a persistent question is how big can Netflix become in the U.S.?
Traditionally many have thought the answer is in the 30 million subscriber range, which is where the biggest premium channel, HBO, has pretty much leveled out. This line of thinking assumes that Netflix is essentially another premium channel and consumers will treat it as such.
But Netflix's CEO Reed Hastings always answers the size question by asserting that Netflix can grow to become 2-3 times HBO's size, implying 60-90 million subscribers ultimately. He points to differentiators like Netflix having more content, being less expensive and available on more devices, having greater personalization, etc.