When HBO Now launched in April, 2015, its $14.99/month price was well above competing SVOD services such as Netflix ($11.99/month), Hulu (ad-free $11.99/month) and Amazon ($8.99/month or included with Prime for $99/year). On the one hand, an argument could be made that an HBO subscription is more valuable due to HBO’s rich library and therefore should be priced higher than newer competitors. But HBO’s market-skimming high price strategy means its more aggressively priced competitors are growing far faster than HBO, enabling them to have greater scale, which will be the key to future success.
In a move that was long, long overdue, Netflix announced yesterday that it was enabling downloading of content to iOS and Android mobile devices. Not all shows and movies are available for download, but importantly, it looks like most, if not all, of Netflix’s original productions are included. I tried downloading last night and it worked perfectly.
I’ve been saying since 2012 that downloading is a bona fide killer app, after I first started using TiVo’s excellent downloading feature to watch recordings on my iPad when traveling. Amazon totally understood the value of downloading as well, enabling it back in September, 2015. In a press release that both touted the new feature and implicitly tweaked Netflix, Amazon proclaimed it as “The First and Only Subscription Streaming Service to Offer This Feature.”
I'm pleased to present the 347th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.
On this week’s podcast we discuss Facebook’s video ambitions. Colin was in London at the OTT TV World Summit where he saw a fascinating presentation by Matthew Corbin, who’s in global product marketing for Facebook. Colin shares highlights of what he learned, including how Facebook thinks of itself as the “world’s discovery agent.” Matthew said Facebook thinks of itself “not as a broadcast network, but as a network of broadcasters,” which feels like an apt description. Combined with Facebook’s targeting capabilities, this translates to lots of potential.
On Facebook’s Q3 ’16 earnings call, CEO Mark Zuckerberg also highlighted how he wants video to be at the center of all of Facebook’s apps and services. It’s becoming clearer that the primary way Facebook is going to be able to continue its torrid revenue growth is by shifting over more TV ad spending, hence the push toward video.
After discussing Facebook, we shift gears and spend 5 minutes reviewing the excellent Comcast-Netflix integration which I wrote about earlier this week.
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Click here to listen to the podcast (23 minutes, 26 seconds)
Comcast announced on Friday that the integration of Netflix into its X1 set-top box would launch this week. But when I checked my X1 on Friday evening it was already available, so I spent some time over the weekend giving it a test drive. Below is a 12-minute demo video I created that highlights the key benefits of the integration and how expertly it was done.
As VideoNuze readers know, I’ve had the X1 since its debut, back in July, 2012. I was immediately enthusiastic about its clean and highly responsive web-like UI as well as its ability to quickly retrieve on-demand content. More recently, the voice-powered remote control has delivered even more value. But the biggest potential benefit I’ve always envisioned for X1 was its ability to handle IP apps, giving Comcast a breakthrough way to provide a seamless experience between its own video services and those delivered over-the-top via broadband (e.g. Netflix, Amazon, YouTube, etc.).
It seems the only thing predictable about Netflix’s subscriber growth these days is its unpredictability. After badly missing its target subscriber additions both domestically and internationally in Q2 ’16, yesterday’s Q3 ’16 earnings report showed Netflix beating its Q3 forecast, including by a huge amount in international. Domestically, Netflix added 370K subscribers vs. its forecast of 300K, while internationally it added 3.2 million, well ahead of the 2 million it forecast.
Yesterday YouTube announced YouTube Go, a new mobile app that provides sophisticated new features for offline video use. While YouTube Go will initially only be available in India, it will no doubt be introduced in other geographies once proven in.
YouTube Go builds on YouTube’s embrace of downloading for offline viewing in India and other Asian territories begun nearly two years ago with the introduction of YouTube Offline, which allowed downloading of certain videos for viewing within 48 hours. Earlier this year YouTube added the “Smart Offline” feature that allows users to schedule their downloads to take advantage of off-peak data use.
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.
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.”
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.
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.
Listen now to learn more!
Click here to listen to the podcast (24 minutes, 20 seconds)
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.
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.
Listen now to learn more!
Click here to listen to the podcast (24 minutes, 9 seconds)
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.
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.
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.
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.
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.
Listen now to learn more!
Click here to listen to the podcast (23 minutes, 41 seconds)
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).
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.