Netflix announced strong financial performance for Q1 '14 late yesterday, continuing its momentum from 2013. The company reported a total of 48.35 million global subscribers, including 35.67 million in the U.S. and 12.68 million internationally. That was up a total of 6.25 million subscribers vs. the end of 2013, and just slightly behind the 6.4 million subscribers added in Q4 '13.
I'm pleased to present the 218th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia. Both of us have continued to observe signs of how online video is coming of age, and today we discuss some of them.
We start with news that Comcast will begin selling episodes of "House of Cards" in its Xfinity online store. Putting aside the question of why someone would buy an episode for $1.99 when they could binge-view all 26 episodes in a month for $7.99, both of us thought it's noteworthy that the largest cable operator believes an online-only series is worth selling (and note too, the deal was done with Sony Pictures, and that Verizon also has been selling the series).
Then there was the report that Disney might acquire Maker Studios, a pure-play online video / YouTube content provider. While Colin and I get a chuckle out of the idea that the Disney flag could fly over Epic Rap Battles and PewDiePie, we agree it would be a smart bet to gain reach into the all-important millennial segment.
Then we turn to the $18 million investment by Warner Bros. in Machinima, an online video gamer-centric content creator also targeting millennials. The 2 companies already had a successful collaboration with the "Mortal Kombat: Legacy" web series. No doubt the new investment will spur more gamer-centric originals for distribution by Warner Bros.
We wrap up by discussing just how important millennials are to the video's future. Recent data suggest this group is still pretty glued into the pay-TV ecosystem, but their behaviors are changing fast, in turn leading established media companies to focus on online video more than ever.
Click here to listen to the podcast (17 minutes, 38 seconds)
I'm pleased to present the 216th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia. In today's podcast, we first discuss Disney Movies Anywhere, which launched this week. Both of us like it a lot (more of my take here). Colin believes it could also become a huge threat to UltraViolet if one other major studio were to adopt Disney's KeyChest technology.
Then we turn our attention to the Netflix-Comcast interconnection agreement, which has taken on a life of its own this week. It's rare when Colin and I see the world completely differently, but in this case, we do. Colin believes the deal sets a dangerous precedent because Netflix is being provided "extraordinary access" to Comcast's network and also that, going forward, if a content provider wants to get good performance on Comcast's network, it would have to do a deal with Comcast.
I don't see it this way. As I wrote earlier this week, the deal strikes me as business as usual, with the joint press release specifically saying "Netflix receives no preferential network treatment." Netflix made a business decision to negotiate directly with Comcast and manage/deliver their content themselves rather than work through a CDN which is what the vast majority of content providers do. This path obviously made sense for Netflix, but remember, it's in a somewhat unique situation because it accounts for 1/3 of all Internet traffic at certain times.
Because Netflix and Comcast said so little about the deal themselves, and because there is so much suspicion of Comcast (and other broadband ISPs) regarding net neutrality, market power, etc., a lot more has been read into this deal than I believe is warranted.
Colin and I have a very vigorous debate on these issues and ultimately agree to disagree :-)
Click here to listen to the podcast (30 minutes, 27 seconds)
There's lots of ink being spilled about yesterday's Netflix-Comcast interconnection agreement with some saying this is basically just "business as usual," while others are proclaiming that this is the "end of the Internet as we know it" and "evidence that net neutrality is required."
I'm not a network engineer, but since I've worked in the space long enough, I know enough to be dangerous. And from my vantage point, it seems like this is an appropriate, market-driven solution to a problem that is somewhat unique to Netflix, which now drives around 30% of the Internet's traffic during primetime hours.
Comcast has announced that it will acquire Time Warner Cable in an all-stock transaction valued at $45.2 billion. Comcast is already the biggest video and broadband provider in the U.S. and will now get even bigger, assuming the deal is approved. Comcast has committed to divest around 3 million of TWC's video subscribers to stay below 30% of the total U.S. pay-TV market, so the combined company would have approximately 30M video subscribers. Broadband subscribers would be a little less than 30M.
For me, the big takeaway from the deal is that in the broadband era, scale matters a lot - and to compete effectively, a company simply has to have it. Nearly ubiquitous broadband and wireless connectivity, plus massive proliferation of devices, have enabled online-only players to have easy access to massive global audiences. This context has helped fuel the rise of companies including Google, Facebook, Amazon, YouTube, Netflix, Twitter and many others. With innovative services and solid execution, it's now possible to create huge businesses quicker than ever.
Nielsen released its latest Digital Consumer Report yesterday, finding among things, that 52% of broadband-only homes in the U.S. are in the 18-34 age range. Nielsen notes this group accounts for fewer than 5% of total U.S. households, but believes it's important to understanding the future digital living room. Nielsen said 80% of this group owns game consoles and 41% tablets, both twice the rate of traditional TV households.
Categories: Broadband ISPs
I'm pleased to present the 211th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.
In today's podcast we review Netflix's stellar 2013 results, particularly focusing on international. Then we discuss how Verizon will use OnCue, part of the Intel Media assets it acquired earlier this week. Colin sees them as key to upgrading the current FiOS service. I think that's right short-term, but longer-term I see Verizon using the assets to launch a nationwide virtual pay-TV services delivered over both wired and wireless networks. If Verizon does, it could really shake up the industry.
Listen in to learn more!
Click here to listen to the podcast (21 minutes, 23 seconds)
A year ago, following Netflix's Q4 '12 earning report, I wrote "Netflix Q4 Earnings Improve, But It's Not Time to Pop the Champagne Just Yet." Well, now, following yesterday's strong Q4 '13 earnings report, I think it is that time as Netflix capped off a bona fide champagne year. Below are my key observations, broken into the same buckets as my analysis a year ago.
I'm pleased to present the 210th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.
2014 is shaping up to be another very busy year for all things video. In this week's podcast, Colin and I share our top trends to look for in 2014 and why. And in the spirit of accountability, we also review our 2013 predictions from a year ago - what we got right and what we got wrong.
Listen in to learn more!
Click here to listen to the podcast (23 minutes, 26 seconds - sorry, for running long, lots of content this week.)
Earlier today the DC Court of Appeals threw out the FCC's Open Internet net neutrality rules. Net neutrality advocates are upset with the FCC for pursuing an illogical regulatory path from the start. They are deeply worried that now, unencumbered by net neutrality regulations, big broadband ISPs (which also happen to be the biggest pay-TV providers) will begin to discriminate against third-party online video services by shunting them to "slow lanes" and charging new delivery "tolls."
I completely understand these concerns, but I for one don't envision any of this happening, at least not in the foreseeable future. Some of you are no doubt thinking - Will's naive, he's an idiot, he's a shill, etc. so let me explain.
Judging by the pre-show buzz, the main focus at this year's CES (which kicks off next Tuesday) will be on Ultra High-Definition TV, or "4K" TV. If this seems familiar, it's because UHDTVs were the main focus of last year's CES as well. Clearly TV manufacturers have settled on UHDTV as the next "big thing" to motivate consumers to upgrade. However, in 2013, UHDTV's high prices, impractically large screen sizes and lack of 4K content led to extremely limited adoption in the U.S. So the question is: will UHDTVs find better success in the U.S. in 2014?
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.
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)
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.
Listen in the learn more!
Click here to listen to the podcast (22 minutes, 29 seconds)
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.