VideoNuze Posts

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.

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At starting prices of $8/month or so, affordable subscription video on demand (SVOD) services like Netflix, Hulu Plus, Amazon, Blockbuster and others would seem to appeal to middle and lower income Americans. But a new report from Nielsen finds the exact opposite is true: wealthier homes, with household income over $100K/year, adopt SVOD services at 185% of their index, while lower income homes, with household income under $50K/year, subscribe at just 47% of their index.

Adding to the picture, "Professional" homes subscribing to an SVOD service are at 150% of their index, while "Blue Collar" homes are just 63% of their index.

The data seems to support a contention that Netflix has repeatedly made, which is that SVOD services are typically adopted in addition to - not in substitution for - pay-TV services. To the extent that pay-TV rates have continue to increase, it makes sense that only upper income homes can afford to then layer on an SVOD service on top of pay-TV.

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I'm pleased to present the 176th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia. In the past 2 weeks, Aereo has touched off an escalating war of words between it, the broadcast TV industry and other interested parties. Today Colin and I review some of the recent back-and-forth in this battle.

News Corp. COO Chase Carey kicked things off in remarks at the NABShow last week, threatening to move Fox to cable if Aereo was deemed legal. CBS and Univision later backed him. This week broadcasters petitioned for the Second Circuit Court of Appeals to hold a full or "en banc" review of their decision, a strategy my colleague Howard Homonoff suggested they could pursue in a contributed piece on Tuesday. In the petition, broadcasters stated that "unless reversed, (the court's prior decision for Aereo) would wreak commercial havoc" on the  industry.

For its part, Aereo took the extraordinary step of taking out a full page ad in the NY Times on Tuesday, in which it said "54 million Americans use some sort of antenna to watch TV." Aereo is appealing directly to consumers, essentially trying to paint the broadcasters as stifling innovation and being anti-consumer. Aereo CEO Chet Kanojia also said this week that broadcasters would face a serious policy fight if they tried switching to cable.

Last but not least, the dispute got personal as well, as Leo Hindery, a former cable executive, and now media industry investor, called Aereo lead investor Barry Diller's involvement "despicable" and "tawdry." That was after he labeled Aereo a "pissant little company" that is stealing copyrighted material because it's not paying retransmission consent fees.

All of this over a company that hasn't yet even demonstrated its value proposition resonates with consumers! Imagine what happens if/when it does.

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(Apologies in advance, Colin's audio isn't very good this week.)

The cloud continues to create more flexibility in both video production and distribution, with the latest example being "Reach Engine Stage," a video/media management system that allows producers at multiple sites to collaborate more efficiently. Reach Engine Stage was developed by Levels Beyond, a privately-held company based in Denver with deep roots in video workflows.

At the NABShow, Levels Beyond's co-found Danny Gold stopped by the VideoNuze booth to explain Reach Engine Stage and give more background on the company. Levels Beyond has been low-key, but recently raised a round of funding and is now used by a number of major media companies for their online video workflows.

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LiveU, which pioneered the bonding of cellular broadband cards to enable flexible live mobile broadcasting, has gained a huge following among TV networks and stations. Now it has introduced a new, even lighter-weight backpack unit that enables any content provider - no matter how small - to affordably become a live mobile broadcaster.  

At the recent NABShow, Ken Zamkow, director of sales and marketing for LiveU, brought one of the new backpacks, the LU40-2 ("LU40 squared") by the VideoNuze booth and showed it off. It weighs less than 10 pounds and is very compact, allowing up to 13 cellular channels and controllable through a smartphone interface.

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Last week at the NABShow I did a short video interview with Kurt Michel, Akamai's director of product marketing - media solutions. Akamai has always been known primarily as a content delivery network, but as Kurt explains, it is broadening its positioning to become an online media platform.

Akamai is responding to what it is hearing from its media customers, that they're experiencing unprecedented challenges given the proliferation of devices, formats, networks and bandwidth variability. As a result, Akamai has expanded beyond delivery to also offer content preparation and workflow solutions under its Sola Vision branding.

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Here's another great reason to sign up for an early bird discounted ticket to the June 4th VideoNuze Online Video Advertising Summit in NYC on June 4th: all early bird registrants will be eligible to win a Samsung 40-inch Smart TV, presented by VideoHub. As has become the custom at VideoNuze events, we'll be doing the drawing right before lunch. The drawing is always one of the highlights of the day, and I'm grateful to VideoHub for their support this year.

This will be the 3rd Video Ad Summit and it's shaping up to be a high-impact day of learning and networking. At last year's event, 350+ executives from around the video ecosystem of content providers, agencies, brands and technology companies attended and I expect similar attendance this year. I have begun posting some of the sessions and will provide more details in the next week or two.

I'm extremely grateful to all of the 16 industry-leading companies that are supporting this year's Video Ad Summit: Premier Partners Adap.TV, Adobe, Akamai, TubeMogul, ValueClick and YuMe; Headline Partners Altitude Digital, BlackArrow, Collective, Innovid, LiveRail, VideoHub and Videology, plus Branding Partners EXPO, Extreme Reach and Mixpo. All of them will have representatives at the event and it will be a great opportunity to engage with them.

(Note: if you've already registered, you're eligible)

I look forward to seeing you on June 4th!

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At the NABShow last week I did a short video interview with Albert Lai, Brightcove's CTO for Media and Broadcast. In the interview, Albert explained Brightcove's expanded TV Everywhere integrations with Adobe Pass and Akamai's Sola Vision Identity Services.

It's well understood that if content providers are to distribute to multiple devices via TV Everywhere, security and authentication are paramount. By integrating with Adobe and Akamai, Brightcove is trying to provide its content customers with multiple authentication choices depending on their preferences, helping reduce friction in TVE rollouts.

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