VideoNuze 2016 Online Video Advertising Summit EB - leaderboard - 4-22-16

Analysis for 'Netflix'

  • Domestic SVOD Spending Growth Forecast to Slow, But Many Variables in Play

    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.

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  • How SVOD Has Changed the Business of Making TV Shows

    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.

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  • VideoNuze Podcast #319: Amazon Eyes SVOD Distribution Dominance; NABShow Takeaways

    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!

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  • Amazon is Likely to Have a Majority of All U.S. SVOD Services in Its Partners Program This Year

    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).

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  • Amazon Raises SVOD Stakes With New Standalone Monthly Plan

    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.

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  • Research: Subscriptions to OTT Services Aside From Netflix, Amazon and Hulu Remain Minimal

    Here’s a measure of how dominant the big three SVOD services (Netflix, Amazon and Hulu) are in the US: according to new OTT data from Parks Associates, just 5% of all broadband homes subscribe to one or more of the 98 SVOD services available in the US aside from the big three. Among the 98 services Parks counted are high-profile offerings like HBO Now, CBS All Access and Sling TV.

    At the end of 2015, there were approximately 96.3 million broadband homes in the US, according to Leichtman Research. So that would mean that about 4.8 million broadband homes were subscribing to one or more of the 98 SVOD services outside of the big three. Parks did not specify the actual subscriber levels of any of the 98 SVOD services.

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  • Research: SVOD Penetration in U.S. Passes 50%

    New research from Pivotal Research Group, based on Nielsen data, reveals that at the end of February, 2016, SVOD services were in over 50% of U.S. TV households, up from 43% in February 2015. The SVOD services included are Netflix, Amazon Prime and Hulu.

    No surprise, Netflix is by far the most popular SVOD service, in 45% of U.S. homes (up from 38% a year ago), followed by Amazon Prime in 21% of homes (up from 15% a year ago) and then Hulu in 10% of homes (up from 7% a year ago).

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  • VideoNuze Podcast #308: Week in Review - Facebook, Nielsen Data, Sundance, Netflix Censorship

    I'm pleased to present the 308th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

    In today’s podcast we discuss a number of different items that hit our radar this week. We start with Facebook’s growing impact in video, which was detailed on the company’s earning call earlier this week.

    We then transition recent research from Nielsen which Colin analyzed, showing the level of viewership by device.

    Next up, Colin and I were watching reports from the Sundance Film Festival noting the aggressive bidding by Amazon and Netflix, underscoring another industry segment being disrupted by SVOD. Last, we touch on the problems Netflix is already running into with its international expansion. Indonesia was the latest country to raise red flags on Netflix’s content this week.
     
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  • VideoNuze Podcast #307: Reviewing Netflix’s Q4 ’15 Results

    I'm pleased to present the 307th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

    Netflix reported its Q4 ’15 results this week, beating its forecast for international subscriber growth while falling short on domestic subscribers, for the second quarter in a row. We have our differences in how we interpret the results, with Colin focusing much more on the international story, while I’m paying more attention to the domestic shortfall.

    Still, Colin and I agree that Netflix will be defined more as an international company going forward and will face a slew of new challenges addressing disparate countries around the world. How they navigate these challenges will greatly impact their future performance.

    Listen now to learn more!

    Click here to listen to the podcast (24 minutes, 8 seconds)



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  • Netflix’s U.S. Subscriber Slowdown Continues As International Accelerates

    Netflix reported its Q4 ’15 and full year results yesterday, showing a second quarterly slowdown in U.S. subscriber growth, offset by accelerating international subscriber growth.

    In Q4 ’15 Netflix added just 1.56 million subscribers in the U.S., down from 1.9 million in Q4 ’14 and below the company’s forecast of 1.65 million. It was also the lowest number of additions in 4 years. In Netflix’s letter to shareholders, it cited “high penetration in the U.S. seems to be making net additions harder than in the past” and new credit/debit card rollovers continuing to be a “background issue” (the latter was cited by the company as the main issue for the big shortfall in Q3 ’15). Both of these points were reinforced on the video earnings review call.

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  • VideoNuze Podcast #305: Digging Into Netflix’s Global Content Plans

    I'm pleased to present the 305th edition of the VideoNuze podcast  and the first of 2016, with my weekly partner Colin Dixon of nScreenMedia.

    This week we dig further into Netflix’s rollout to 130 additional countries and more specifically, the implications of its “content globalization” experiment that I wrote about yesterday. We discuss the pros and cons of the company’s “produce locally, distribute globally” approach. With Netflix’s viewer data, I continue to believe the company has a big opportunity to leverage its international reach in ways we’ve never seen before. It also has a potentially powerful competitive differentiator.

    However, Colin points out a few gotchas, including that Netflix is only deploying in 20 languages, the single price of the Netflix global player means it will be very expensive in lower-wage countries and the risk that government censors in some countries may intervene given some of Netflix’s racier programming. These are all great points, and will make it even more interesting to see how the international expansion goes.

    Listen now to learn more!
     


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  • Netflix is Pursuing the Biggest-Ever Experiment in Content Globalization

    In watching the press conference with Netflix’s CEO Reed Hastings and Chief Content Officer Ted Sarandos that followed the company’s CES announcement yesterday that it was expanding to 130 additional countries, the most significant thing that struck me is that Netflix is pursuing the biggest-ever experiment in content globalization. Depending on the results, there will be profound implications for all players in the video value chain.

    First, it’s important to clearly understand Netflix’s content globalization initiative. In the press conference, Hastings and Sarandos emphasized that the company’s focus is on investing in original content and retaining global distribution rights (this is a big departure from the “House of Cards” strategy where co-investors got the global rights in order for Netflix to mitigate its financial exposure).

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  • VideoNuze Podcast #302: Amazon Could Disrupt SVOD, But First It Needs to Step Up Its Execution

    I'm pleased to present the 302nd edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

    Earlier this week I wrote bullishly about Amazon’s new “Streaming Partners Program,” (SPP), which could disrupt the SVOD industry. I emphasized the word “could” because, as with everything in life, execution is everything.

    In that post, I noted that SPP on Amazon’s web site was already implemented well, but that the iPhone app experience didn’t work. In today’s podcast, Colin shares his experiences on both Android and Fire TV, which are shockingly incomplete.

    It’s very surprising to see Amazon, which is typically an execution machine, come up so short here, and it suggests they rushed SPP to market before being 100% ready.

    Implementation issues aside, we discuss the overall merits of SPP and Colin’s view that Netflix is actually better positioned for an SPP-like role in SVOD. I still like Amazon’s SPP strategy a lot and will keep an eye on how things unfold.

    Listen now to learn more!



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  • Amazon Could Disrupt the Entire SVOD Industry With Its New “Streaming Partners Program”

    Amazon made a very significant announcement this morning, unveiling its “Streaming Partners Program,” which I believe could disrupt the entire SVOD industry if executed well. There are many ramifications of the Streaming Partners Program (which has been rumored, and I’ll call “SPP” for short) that I’ll explain below, albeit based on still limited information.

    First, what is SPP? From an SVOD provider’s perspective, it’s an opportunity to have Amazon promote the SVOD service to tens of millions of Prime subscribers, with special pricing and promotions. Amazon handles subscriber acquisition, customer service, billing, credit card management, video streaming and device compatibility. Basically it frees up SVOD providers to focus on what they do best - create great content. Amazon announced that Showtime, Starz and 18 other SVOD providers are initial SPP partners.

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  • Sandvine: 70% of North American Peak Period Downstream Internet Traffic is Video and Audio

    Sandvine has released its December, 2015 Global Internet Phenomena report, revealing that video and audio traffic now accounts for 70.4% of North American downstream traffic on wired networks in peak period. Sandvine said that 5 years ago, video and audio accounted for less than 35% of peak period traffic.

    Netflix has become even more dominant in the past year, now with 37.1% of downstream traffic, up from 34.9% that Sandvine reported in November, 2014. Among other popular services, YouTube was in second place with 17.9% share (up from 14% share in Nov. ’14), Amazon Video was fourth (3.1% share, up from 2.6% in Nov. ’14), iTunes was fifth (2.8% share, flat from Nov. ’14), Hulu was sixth (2.6%, up from 1.4% in Nov. ’14) and Facebook seventh (2.5%, down from 3% in Nov. 14).

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  • VideoNuze Podcast #294: Puzzling Over Netflix’s Q3 U.S. Subscriber Shortfall

    I'm pleased to present the 294th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

    Netflix reported its Q3 2015 earnings this week with overall subscriber growth pretty much in line with the company’s forecast. However, net U.S subscriber additions came in at 880K, which was 270K short of the 1.15 million forecast for Q3 this past July in the company’s Q2 earnings report.

    It was the weakest Q3 U.S. subscriber growth since 2011, and continued a downward trend over the past 3 years (1.29 million in Q3 ’13, 980K in Q3 ’14). Netflix said gross subscriber additions in the U.S. were actually up year-over-year in Q3 ’15, and that the shortfall was due to “involuntary churn” caused by credit card companies issuing new chip-enabled cards with new account numbers which in turn caused a disruption in recurring billing.

    While we have no reason to doubt the veracity of Netflix’s explanation, many analysts, including Colin and me, find it very murky. Credit card companies have pushed back on the rationale, and other recurring merchants have said they haven’t seen any similar problems. We share our concerns and raise the possibility that Netflix may be reaching the saturation point in the U.S. with slower growth ahead (Q4 results will go a long way to addressing this).

    Listen now to learn more!

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  • VideoNuze Podcast #289: The New Apple TV: Solid, Not Spectacular; Netflix Anti-Downloading

    I’m posting this week’s VideoNuze podcast a day early as the first segment focuses on the new Apple TV, which was introduced yesterday.

    Colin and I both see the new Apple TV as solid, but not spectacular. In many ways, it’s just catching up to what other devices have been offering: voice search, search across apps and gaming capabilities. The latter could ultimately be Apple TV’s big differentiator if Apple’s legion of developers take advantage of the new “tvOS” operating system SDK to create breakthrough new gaming experiences. We were both intrigued by the new remote with swipe capability, as well.

    We then turn our attention to Netflix’s anti-downloading stance, which I dug into yesterday. I find it both perplexing and frustrating, with the company’s explanation not adding up. Colin isn’t initially as convinced as I am that downloading is a killer app, though with a 10-hour flight to Amsterdam today, he’s beginning to realize how much value it would have.
     
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  • Netflix’s Anti-Downloading Stance is Perplexing and Frustrating

    It’s been 4 years since Netflix’s “Qwikster” fiasco, in which the company infamously tried to separate its DVD business, eliciting emphatic objections from its subscribers. Netflix offered implausible explanations for its move and ultimately reversed itself. Since then the company has executed flawlessly, expanding its content, extending its international footprint, watching its stock price soar and most importantly, winning back the love of its subscribers.

    Thus it is perplexing and frustrating to see Netflix oppose the idea of enabling its content to be downloaded for offline viewing, as an augment to streaming it. Reminiscent of Qwikster, Netflix is offering up bizarre and non-sensical explanations for opposing the download feature that it readily admits its subscribers are hungry for. Further, with Amazon’s expansion of Prime Video downloading to iOS and Android devices last week, it also appears to be a new competitive lever among SVOD providers.

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  • In Wild West of SVOD Launches, EPIX Stays Disciplined and Signs On With Hulu

    Yesterday pay-TV network EPIX announced a multi-year distribution deal with Hulu that will kick in on October 1st, as EPIX’s current deal with Netflix phases out.

    Perhaps most noteworthy here is that in the current Wild West environment where everyone and their brother are launching standalone SVOD services, EPIX has remained disciplined in choosing to instead team up with a large SVOD player (EPIX has a separate SVOD deal with Amazon dating to 2012 as well).

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  • Sesame - HBO Deal Also Underscores Difficulty of Niche SVOD Model

    When Sesame Workshop announced its deal with HBO last week, everyone seemed to have an opinion about whether another “poor door” had been created, this time for Elmo and his iconic friends.

    It’s an interesting societal debate, but what was more intriguing to me was that Sesame’s deal with HBO signaled that its own SVOD efforts had not delivered material results (and with the new HBO deal, I’d guess will likely be phased out at some point). That in turn reinforced my belief that the niche SVOD model is extremely difficult given the rise of “super” SVOD services like Netflix, Amazon and Hulu.

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