4C - leaderboard - 4-25-18

Analysis for 'Netflix'

  • SVOD’s Big Night at the Emmys

    If you’re looking for more evidence of how SVOD is changing the TV landscape, look no further than last night’s Emmy Awards. The 3 big SVOD providers, Amazon, Hulu and Netflix combined to win a record 35 Emmys, up from 32 in 2017. Netflix itself won 23 Emmys, tying HBO for top honors, with Amazon winning 8 and Hulu winning 4.

    Netflix’s big winner was “The Crown” which took home 5 Emmys. All of Amazon’s awards were for “The Marvelous Mrs. Maisel” including outstanding comedy series, lead actress (Rachel Brosnahan), supporting actress (Alex Borstein) and writing and directing for Amy Sherman-Palladino. Maisel tied with Saturday Night Live for second place behind “Game of Thrones” which won 9, including outstanding drama series.

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  • Comcast Drops Fox Bid, Foregoing A Major Opportunity With Hulu

    Comcast has officially dropped out of the bidding for the 21st Century Fox assets, clearing the path for Disney to move forward. Comcast still plans to pursue Sky in the UK. But by dropping its Fox bid, Comcast has also foregone the opportunity to take control of Hulu (by virtue of combining its 30% stake with Fox’s 30% stake). Presumably now Disney will take control of Hulu.

    I believe this is a major missed opportunity for Comcast, leaving the company under-optimized in the fast-changing premium video industry. As we all know, today’s key industry themes include the rise of cord-cutting and consumers’ move to lower cost skinny bundles, the shift to on-demand viewing, with the accompanying growth of ad-free SVOD services (e.g. Netflix, Amazon, Hulu), the rapid adoption of connected TV and mobile devices for viewing and the nationalization/globalization of video services, among others.

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  • Netflix is Bedeviled by Domestic Subscriber Forecasting

    Netflix reported a large miss on its subscriber forecast in Q2, with 670K net additions in the U.S. (44% below its forecast of 1.2 million) and 4.47 million net additions internationally (10% below its forecast of 5 million). From my standpoint, the international miss is almost irrelevant because the segment includes so many different countries with so many different adoption patterns that Netflix is still new to understanding. With all of those moving pieces, missing by just 10% isn’t too shabby.

    Conversely, the domestic miss of 44% is a real head-scratcher which I believe raises, yet again, real questions around how well the company understands the dynamics of the domestic SVOD market, how much growth remains and how well its forecasting function is run. For eager investors, who have bid up the stock on lofty expectations, getting a handle on these issues seems critical.

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  • VideoNuze Podcast #427: HBO’s Risky Path Forward Under AT&T

    I’m pleased to present the 427th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

    AT&T wants HBO to up its game - producing more content, gaining more subscribers and increasing engagement, in a bid to stay competitive in the streaming era. On today’s podcast, Colin and I explore why the new approach makes sense directionally, but also carries big risks. Can HBO scale up its production spending and broaden its distribution while retaining its brand positioning? It won’t be an easy feat.

    While AT&T isn’t highlighting Netflix as its key competitor, it’s clearly implied. And this week’s Emmy nominations, which saw HBO eclipsed for the first time in 17 years as the most honored network (by Netflix), is a clear sign of the times. Astoundingly, Netflix has gone from just 14 nominations 6 years ago to an industry-leading 112 this year.

    Beyond the HBO-Netflix content battle, Netflix continues raising the stakes on SVOD user experience. As we also dig into, this week Netflix announced “Smart Downloads,” a clever way of enhancing offline viewing, which will no doubt delight millions of its subscribers.

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  • Netflix Evolves from Avowed Downloading Skeptic to Impressive Innovator

    Yesterday Netflix announced a very cool new feature called “Smart Downloads,” which automatically deletes an episode you’ve downloaded and finished watching on your mobile device, triggering the download of the subsequent episode. The process happens as soon as you’ve connected to WiFi and occurs invisibly in the background. Smart Downloads is available for Android devices now and for iOS devices later this year.

    Smart Downloads is a clever way of automating a manual process, so that users always have something downloaded and ready to watch (although having to manually download a TV episode clearly falls in the category of “first world problems”). Smart Downloads is a a savvy move by Netflix to increase subscribers’ engagement time, which in turn leads to higher satisfaction and better retention. But perhaps most fascinating about Smart Downloads is that it illustrates how fully and quickly Netflix has evolved from an avowed downloading skeptic to an impressive innovator.

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  • With Netflix Envy, AT&T Begins Revamp of HBO’s Success Formula

    Just weeks after closing its acquisition of Time Warner, AT&T has begun the process of revamping HBO’s traditional success formula, with Netflix envy apparently the main catalyst. According to a new NY Times article detailing a town hall meeting that Warner Media CEO John Stankey had with HBO employees, the new strategy boils down to wanting HBO to produce vastly more content with a goal of driving up engagement time and growth.

    That sounds a lot like the formula that Netflix has employed for years, spending billions of dollars per year on scores of original programs in a global land grab for subscribers, while de-emphasizing profit maximization. Of course Wall Street has fallen in love with Netflix’s approach. Conversely, HBO has pursued a more limited “boutique” content strategy, with a few key marquee programs, while maximizing profitability.

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  • VideoNuze Podcast #421: Comcast-Fox, SVOD Movies, Reduced Ad Loads

    I’m pleased to present the 421st edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

    On this week’s podcast we cover 3 different topics. First up is Comcast’s announcement this week this it plans an all-cash offer for the Fox assets Disney has agreed to buy. We don’t have time to fully analyze the move, but both of us see it as a bold doubling-down by Comcast on the traditional multichannel TV model. We speculate about whether Comcast should diversify with a skinny bundle offering, as I described yesterday in taking control of Hulu.

    Next up we discuss new research from ACSI focused on the lagging role of movies in SVOD and Netflix specifically (which is being addressed with 86 releases in 2018). Lastly, we turn to data from Advertiser Perceptions showing ad buyers are only willing to pay a small premium to be in lighter ad load environments. I’ve previously speculated about whether the math would work for TV networks by reducing their ad loads.

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  • Why Comcast Should Take Control of Hulu

    Yesterday’s confirmation by Comcast that it is preparing an all-cash bid for Fox assets that would top Disney’s current bid came as no surprise. All that remains now for this corporate drama to go into overdrive is the decision on June 12th in the AT&T-Time Warner court case. If that deal is approved (which I believe is likely), Comcast is expected to formalize its Fox offer almost immediately. As these machinations continue, one looming question is what will become of Hulu?

    Hulu is of course a joint venture among Disney, Fox and Comcast (via its NBCUniversal acquisition), with each company owning 30% and Time Warner owning 10% (that’s rounding as Hulu employees also own a piece). That means the ultimate owner of the Fox assets - Disney or Comcast - will also become a majority owner of Hulu. It seems to me Hulu would be more valuable to Comcast, and indeed Comcast should be angling to try to figure out how to take control of Hulu regardless of how the larger Fox deal sorts out. Why?

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  • VideoNuze Podcast #416: Netflix’s Impressive Q1; Amazon and Best Buy Partner for Smart TVs

    I’m pleased to present the 416th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

    Netflix reported its Q1 ’18 results earlier this week and once again the performance was very strong, with revenue up 43% and average paid streaming subscribers up 25% to 125 million globally. Colin and I discuss what’s driving the company. With 55.1 million paid U.S. subscribers at the end of Q1, it’s possible that Netflix will hit 60 million by the end of 2018, which is the low end of the range of 60-90 million the company has long said it believed it could achieve.

    We then turn to discussing Amazon’s new deal with Best Buy for its “Fire TV Edition” smart TVs, which were announced earlier this week. We agree that the move is yet another aggressive step in Amazon’s goal to dominate both the living room and whole home. Amazon’s CEO Jeff Bezos also announced this week that Prime has hit 100 million subscribers with video continuing to drive acquisition and retention. Colin and I both see Amazon expanding further by launching a skinny bundle pay-TV service sometime in 2018.

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  • VideoNuze Podcast #413: Spielberg’s Backward-Looking View On Netflix’s Cannes Film Festival Ban

    I’m pleased to present the 413th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

    This week Colin and I wade into the debate over Netflix’s films being banned from consideration at the Cannes Film Festival. We were both struck by Steven Spielberg’s support of the ban, as it seems to us backward-looking and dependent on an outdated definition of what constitutes a “film.” That said, we both understand the deep cultural and economic motivations behind banning Netflix. This week’s BBC report that younger viewers are now consuming more Netflix than BBC content reinforces the global vs. local battle that’s unfolding.

    We contrast to this backward-looking approach, by highlighting how Hulu has embraced a viewer-first model, which appears to really be paying off for the service. There are lessons local broadcasters around the world could gain from observing Hulu’s model, starting with giving viewers as much choice as possible.

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  • Oscars are Latest Marquee TV Event in 2018 to Suffer Viewing Decline as Audiences Splinter

    Preliminary overnight numbers for the Oscars show an 18.9 rating in prime time, down 16% vs. 2017’s 22.4 rating. The overnight rating is a new record low for the Oscars, and importantly continues the dismal showing for 2018’s marquee TV events: Golden Globes (-5% vs. 2017), Super Bowl (-7% vs. 2017, worst in 9 years), Olympics (-7% vs. 2014, worst ever) and Grammys (-24% vs. 2017, worst in 9 years). Clearly TV’s biggest events are losing their luster.

    There are always challenges particular to each event (e.g. Olympics time zone issues, Patriots fatigue, etc.). In the case of the Oscars, an ongoing problem is the disconnect between best picture winners and box office performance. A fascinating WSJ article on Friday detailed how only 4 best picture winners in the past 12 years have been among their year’s 25 highest-grossing movies, with none cracking the top 15. In the current era of superheroes, animation and franchise movies, thoughtful best picture nominees simply don’t draw the biggest audiences, in turn diminishing the Oscars’ relevance (2018 could be a quasi-exception with “Black Panther”).

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  • VideoNuze Podcast #407: Netflix Has Erased Up to $6 Billion of TV Ad Inventory; YouTube TV Improves

    I’m pleased to present the 407th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

    First up this week, Colin explains a very interesting analysis he has done indicating that Netflix viewership may be erasing up to $6 billion in TV ad inventory annually, which could be up to 8% of the market. Colin explains how all the binge-viewing that’s going on is taking time away from ad-supported TV, a trend that is only accelerating.

    Part of the TV industry’s solution to this problem is to make ad-supported TV available more inexpensively through so-called “skinny bundles” or “vMVPDs.” One of these, YouTube TV, this week announced it added the Turner networks and plans to raise its rate by $5 per month. We discuss how YouTube TV appears to be gaining momentum and what Google’s long game likely is.

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  • Netflix Hits a Grand Slam in Q4 ’17 Powered by Hit Content

    Netflix hit a grand slam in Q4 ’17, adding a total of 8.3 million global subscribers, the biggest in the company’s history and up 18% compared to 7.05 million added in Q4 ’16 and a forecast of 6.3 million. Domestically, Netflix added 1.98 million vs. 1.93 million in Q4 ’16 and ahead of the 1.25 million forecast. Internationally, Netflix added 6.36 million vs. 5.12 million in Q4 ’16 and above the forecast of 5.05 million. Netflix executives did not break down regional results, instead saying performance was “strong across the board.”

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  • VideoNuze Podcast #402: Hulu’s Growth, DVDs Fall and CES Recap

    I’m pleased to present the 402nd edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

    This week we start by discussing Hulu’s growth to over 17 million subscribers, which it reported earlier this week. Both of us are impressed by the numbers, which makes Hulu a firm #3 in the SVOD market. The key number that we’d like to know is how many new subscribers are taking the ad-supported version, which has dominated in the past.

    Hulu’s and SVOD’s growth have come at the expense of viewers owning and renting video, as Colin explains in his review of recent Q4 ’17 DEG data. DVDs fell a whopping 22% vs. Q4 ’16 and rentals were down as well. The only category that grew was SVOD. Related, the dominance of SVOD makes me wonder how Apple is going to monetize its high-profile original TV shows. If Apple sticks with a transactional model it will be facing serious headwinds.

    Finally, Colin shares a few thoughts on CES product news from Samsung, LG and Intel.

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  • VideoNuze Podcast #400: The Top 10 Online Video Stories of 2017

    I'm pleased to present the 400th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

    In this week’s podcast Colin and I discuss our top 10 online video stories of 2017. It’s been another incredibly busy year with tons of industry innovation and progress. As always, it has been a lot of fun to analyze all of this and report on it. Let us know what you think of our choices, whether you agree or disagree!

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    Unless there’s some big news, this will be my last post for 2017.

    Happy Holidays to all!

     
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  • VideoNuze Podcast #398: Pay-TV’s Programming Costs, Netflix Embraces Downloading, Facebook Starts Pre-Rolls

    I’m pleased to present the 398th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia. Many thanks to Brightcove, our podcast sponsor, which, with SpotX and the IAB Tech Lab, shared a great presentation at last week’s SHIFT event about how server side ad insertion complements programmatic (session video is here).

    First up on this week’s podcast, Colin shares his thoughts about why programming costs are likely to continue rising for pay-TV operators, counter to Charter’s CEO Tom Rutledge belief that they’ll moderate. Colin details his reasoning, which could portend higher subscriber bills and therefore more cord-cutting.

    Next, we discuss Netflix’s surprised reaction to the popularity of downloading among its subscribers. I had a laugh out loud moment reading about it earlier this week, since Netflix was steadfastly against downloading until a year ago, when, having been leap-frogged by Amazon, it finally began offering the feature. Netflix’s bias against downloading has been really bizarre and showed a real disconnect in understanding its subscribers.  

    Speaking of reversals, Facebook has had a change of heart about running pre-rolls and now plans to introduce them in Watch. Colin and I discuss why Facebook made the change and what it means for the industry.

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  • VideoNuze Podcast #392: There’s Netflix and There’s Everyone Else

    I’m pleased to present the 392nd edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

    Netflix reported another strong quarter earlier this week, adding 5.3 million subscribers, and also forecasting an increase in its content spend in 2018 to $7-8 billion. On today’s podcast we discuss the results and what’s ahead.

    Despite Netflix’s successful quarter, Colin and I both observed some ambiguity on the part of its executives in explaining what actually drove the subscriber additions. Overall industry momentum, original content, or both? It’s not clear.

    What is clear however is that with Netflix now up to 109 million global subscribers, we’ve moved into a phase where there’s Netflix and there’s everyone else. No other company has close to Netflix’s global footprint or content budget. To put the content budget alone in context, in 2018 it will likely be 3-4x of what mighty HBO spends. Size clearly has its advantages.

    Colin and I explore what this all means for the industry going forward.

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  • Netflix Rumbles On, But It’s Still Hard to Discern Original Content’s Role

    Netflix reported a strong Q3 ’17, growing domestic subscribers by 850K and international subscribers by 4.45 million. Those compared to Q3 ’16 of 370K domestic and 3.2 million international. Adding 5.3 million subscribers in a single quarter, off a base of approximately 100 million is certainly nothing to sneeze at. But yesterday's earnings call with company executives once again raised the question of what’s actually driving the growth? Netflix itself has offered ambiguous answers.

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  • For Disney’s New OTT Service, Success is All About the Price

    Though it won’t launch until late 2019, anticipation for Disney’s entertainment-focused OTT service further increased last week when CEO Bob Iger said at the Bank of America investor conference that the Marvel and Star Wars films would be a part of the service. Whether they too would move over from Netflix was a key unanswered question when Disney initially announced the OTT plan last month.

    Iger also detailed everything that’s intended to be included in the service: the entire output of the Disney studio plus Pixar and Marvel, 4-5 original live-action movies exclusively for OTT, a library of 400-500 films, 4-5 original Disney-branded TV series and 3-4 TV movies per year, 7,000 episodes of Disney branded TV, including recent seasons of Disney Channel programming (though not in-season episodes) and thousands of shorts.

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  • VideoNuze Podcast #386: Roku’s IPO, T-Mobile-Netflix Promo, Hulu-Spotify Bundle, Newsy to Cable TV

    I’m pleased to present the 386th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

    After taking a couple weeks off from the podcast, Colin and I are back, and today we discuss 4 different industry stories that have caught our attention. First up, just before Labor Day, Roku filed its S-1 IPO document, sharing financial details for the first time. Colin and I are both struck by the strength of Roku’s “platform revenues” and believe the company’s strategy of innovating with low-priced streaming devices to gain market share has opened up many revenue options (though Colin’s a bit worried about Roku losing its valuable neutrality position in the wake of launching the Roku Channel this week).

    We then move on to T-Mobile’s plan to give away Netflix to its unlimited family plan subscribers. It’s the latest “video as bait” play by a wireless carrier, and we both see this trend accelerating. Another interesting bundle play this week was the $5/mo promotion from Hulu and Spotify. We discuss its potential to extend beyond the initial college student target.

    Finally, Colin and I were both intrigued by a plan unveiled by Newsy, a popular millennial-focused news app, to create a linear TV channel by taking over Retirement Living TV’s pay-TV subscribers. It’s a relatively unusual move given most TV networks are launching OTT apps these days.

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