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Pay-TV Industry Ekes Out Q1 Gain. Netflix Softens Its Tone. What's It All Mean?
Trying to get one's head around the true competitive dynamic between pay-TV operators and new "over-the-top" entrants is surely one of the most vexing exercises video industry executives face these days. The media's coverage only exacerbates things: when the pay-TV industry contracts for a quarter, the headlines imply cord-cutting is sweeping the nation, then when the pay-TV industry reverses and makes a small gain, the headlines suggest all is fine again in pay-TV land, and that Netflix is just a nice little complimentary service.
So it was again this week, as industry analysts released their Q1 pay-TV subscriber estimates showing that pay-TV operators as a whole eked out an increase of around 450K-500K subscribers. While that was a better showing than the past 2-3 quarters when the industry shed subscribers, it was also slightly worse than Q1 '10. Regardless, the first quarter is a seasonally-strong quarter for pay-TV, and so the gains must be tempered by what follows in subsequent quarters. The good news is that the economy is improving which can only help budget-minded households better afford expensive pay-TV services.
Categories: Aggregators, Cable TV Operators, Satellite, Telcos
Topics: Netflix
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1. Time Warner CEO Jeff Bewkes Flip-Flops, Now Admires Netflix
Certainly top on this week's unexpected list was Time Warner CEO Jeff Bewkes' newfound affection for Netflix, expressed in an interview with Charlie Rose at the Tribeca Film Festival (see below video, starting at the 4:40 point). Until now Bewkes has been withering in his derision for Netflix, famously comparing them to the Albanian army, and all but saying HBO would only offer its programs for streaming on Netflix when hell froze over.
But this week Bewkes totally flip-flopped, saying things like he looks at Netflix with a certain sense of "fondness," "Welcome brother" to the subscription business, "You've gotta admire them," "They've done a bold thing, a good thing in many ways," "They're offering a subscription service that is very valid and effective" and "They've got a lot of interesting stuff on there mostly that's available in other places but that's no criticism."
Categories: Aggregators, Cable Networks
Topics: HBO, Netflix, Time Warner
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2. Netflix Tamps Down Cord-Cutting Fears
Another unexpected item this week was Netflix dedicating a section of their Q1 '11 report to tamping down fears of cord-cutting that have been aroused due to Netflix's own staggering growth. To my knowledge, Netflix has never suggested in the past that it would prompt cord-cutting, but it has periodically positioned itself as a competitor to pay-TV services. Now however, Netflix is firmly embracing a "we're supplemental to pay-TV" positioning.
Categories: Aggregators
Topics: Netflix
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3. YouTube Getting Back Into the Hollywood Movie Rental Game
This week also brought unexpected news that YouTube is seeking to license movies from top studios for online rental. Hmm, somebody please explain to me how YouTube thinks it can create a differentiated offering relative to what's already available from iTunes, Amazon, Vudu, etc. because I don't get it. Plus, just a few weeks ago it seemed like YouTube was placing its bets on original web-only content, which felt like a viable strategy. Now YouTube wants back into Hollywood. It's hard to see how this will have a happy ending with so many options already available.
Categories: Aggregators, FIlms
Topics: YouTube
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VideoNuze Report Podcast #97 - Apr. 29, 2011
I'm pleased to present the 97th edition of the VideoNuze Report podcast, for April 29, 2011.
In this week's podcast, Daisy Whitney and I discuss Netflix's robust Q1 '11 results announced earlier this week. Netflix added 3.6 million subscribers in Q1, which is almost double the 1.7 million subscribers it added a year earlier in Q1 '10. Of the total, 3.3 million were in the U.S. bringing Netflix to a virtual tie with Comcast at 22.8 million subscribers (though as I always note, Comcast generates at least 5-6 times as much revenue per video subscriber as does Netflix). Still, with the Q1 growth, Netflix has grown by over 12 million subscribers in the past 6 quarters, an amazing stretch by any measure.
In the podcast we also discuss the more conciliatory tone Netflix struck toward the pay-TV industry, with CEO Reed Hastings going out of his way to tamp down concerns about imminent cord-cutting. We also comment on how Netflix appears to be adopting Apple's approach to under-promising and over-delivering quarterly results.
Click here to listen to the podcast (12 minutes, 53 seconds)
Click here for previous podcasts
The VideoNuze Report is available in iTunes...subscribe today!Categories: Aggregators, Podcasts
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Netflix Now In Virtual Tie With Comcast as Largest U.S. Video Subscription Service
Netflix just reported its Q1 '11 results, gaining 3.3 million subscribers in the U.S. to end the quarter with 22.8 million U.S. subscribers, in a virtual tie with Comcast as the largest U.S. video subscription service as measured by total subscribers. The 22.8 million total met the top end of its guidance range.
As I previously noted, Netflix ended 2010 with just over 20 million subscribers, but that amount included just over 500K international
subscribers (in Canada) which Netflix has now broken out for the first time. In the quarter Netflix also added 290K international subscribers to end the quarter at 800K subscribers. In total, Netflix now has 23.6 million subscribers. On another encouraging note, trial subscribers in Q1 '11 fell to 1.392 million, vs. 1.566 million at the end of 2010, accounting for 6.1% of ending subscribers, down from 8%.
Categories: Aggregators
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Netflix is Likely to Become the Largest U.S. Video Subscription Service When It Reports Q1 '11 Today
Netflix is likely to become the largest U.S. video subscription service - as measured by total subscribers - when it reports its Q1 '11 results at 4:05pm ET today. The milestone would be the latest evidence of Netflix's rapid accent as a major force in online distribution of Hollywood films and TV programs, as well as a central player in the unfolding battle for the digital living room.
Netflix ended 2010 with just over 20 million subscribers, and provided Q1 domestic ending subscriber guidance of between 21.9 million and 22.8 million subscribers. If Netflix slightly beats the high end of its guidance range it will eclipse Comcast, currently the largest video service provider, which ended 2010 with 22.802 million video subscribers.
Categories: Aggregators, Cable TV Operators
Topics: Amazon, Comcast, Netflix
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New Netflix Deals Show How Little "Dexter" and "Californication" Really Matter
A couple of weeks ago, in "Showtime Circles Its Wagons, But to What End?" I questioned Showtime's decision to withdraw from Netflix streaming rights toearly seasons of 2 of its hit shows, "Dexter" and "Californication." One of the points I made was that Netflix would survive this loss just fine because they have enough streaming content already, and more coming all the time.
Sure enough, Netflix has more than proved my point, announcing a deal last Friday with 20th Century Fox that gives it streaming rights to the first season of the Fox hit "Glee," the first 2 seasons of the FX favorite, "Sons of Anarchy" and the library of "Ally McBeal" and "The Wonder Years." Then this past Wednesday, Netflix announced a deal with Lionsgate for streaming rights to the first 4 seasons of AMC's signature series "Mad Men," with 3 more seasons to follow after their on-air run (Netflix already had the Canadian streaming rights to the show).
Categories: Aggregators, Cable Networks, Studios
Topics: 20th Century Fox, Lionsgate, Netflix
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YouTube Pursuing "Strategic Catalyst" Role for Industry
An article in the WSJ yesterday reported that YouTube may be planning to spend up to $100 million to commission low-cost web-only content as part of
a reorganization of the site into 20 "channels." While the article was short on details and YouTube wouldn't confirm anything, the initiative feels consistent with the "strategic catalyst" role I characterized YouTube as playing in the online video industry last month, following its acquisition of Next New Networks.
Categories: Aggregators, Indie Video
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YouTube Dominating Online Video Ad Business; $1.3 Billion Forecast in 2011
A new report this week from Citi analyst Mark Mahaney forecasted that YouTube revenue could exceed $1.3 billion in 2011 and rise to almost $1.7 billion in 2012 (see below). Mahaney's conclusion is based on YouTube driving higher video views and an improved ability to monetize these views with advertising. Google has of course been famously tight-lipped about YouTube's financial condition, other than to issue increasingly optimistic statements in its quarterly earnings calls.
Categories: Advertising, Aggregators
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Former Blockbuster CEO and Investor Square Off Over Company's Failure
Coincidentally, as I was writing "Could HBO be the Next Blockbuster?" an essay appeared in Harvard Business Review this week by former Blockbuster CEO John Antioco describing his experience at the company and interactions with activist investor Carl Icahn. After the essay Icahn responds, to which Antioco then responds. It's a fascinating exchange.
Categories: Aggregators
Topics: Blockbuster, Netflix
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Ohio University Clamps Down on Students' Netflix Use
How popular is Netflix among college students? Apparently so much that Ohio University, a 32,000 student campus, this week imposed a bandwidth cap on its students of a puny 5 MB when it found that 60% of its bandwidth was beingused for entertainment purposes, 28% of which was for Netflix (I think that means that 17% of bandwidth was being used for Netflx). The situation had gotten so bad that students and faculty weren't able to access the web-based curriculum management system. Much as I'm a fan of Netflix streaming, it's good to see OU trying to get its students back to hitting the books. Categories: Aggregators, Broadband ISPs
Topics: Netflix, Ohio University
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Showtime Circles Its Wagons, But to What End?
Showtime's new decision to re-negotiate its deal with Netflix, excluding streaming rights to early seasons of current hit shows "Dexter" and "Californication," is a clear attempt by the company to circle its wagons against Netflix's newfound strength. The move effectively short-circuits Showtime's existing efforts to work with Netflix as a key promotional partner. By giving Netflix streaming rights to older episodes, the goal has been to expose a portion of its subscribers to Showtime programs, which would in turn help drive new Showtime subscriptions. (Note: Coincidentally, I happened to have just watched the entire first season of Dexter on Netflix, though I haven't chosen to subscribe to Showtime. More on that in a subsequent post).
With its decision, Showtime has doubled down on its relationship with its pay-TV partners. Maybe I'm missing something important, but from my perspective, the new decision seems grossly out of step with current market realities and it will only lead Showtime toward an even more uncertain future.
Categories: Aggregators, Cable Networks
Topics: HBO, Netflix, Showtime
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Could HBO be the Next BLOCKBUSTER?
Last week, amid rumors that Netflix was planning to bid for the new "House of Cards" TV series, directed by David Fincher (a deal finally confirmed late Friday afternoon), there was no shortage of media coverage asking, "Could
Netflix be the next HBO?" As interesting a question as that one is, here's one that's even more intriguing, and provocative: "Could HBO be the next BLOCKBUSTER?" At first blush, the comparison might seem ridiculous, and admittedly there are numerous differences between the two. But there are some troubling similarities which should be causing the HBO executive team to now be on high alert.
Categories: Aggregators, Cable Networks, Technology
Topics: HBO, Netflix, Time Warner
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Netflix Lays Down Its Bets on "House of Cards"
Netflix served notice of its official arrival on the Hollywood scene this afternoon, announcing a bold deal for first-run rights to the new David Fincher directed TV series, "House of Cards," starring Kevin Spacey. Whereas the company has built a base of 20 million plus subscribers and a streaming franchise largely on catalog movies and TV series, the first-run deal signals that the company will not rest on its successful content acquisition strategy.
In my analysis of the rumored deal (as it stood just a couple days ago), I pointed to three ways that a first-run deal for "House of Cards" contrasted with Netflix's traditional approach. Having discussed the deal with a Netflix spokesman this afternoon, and having read other interviews and analysis, this afternoon, following are updates on those three items:
Categories: Aggregators
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Hulu Also Making Move Into Original Video Production
While Netflix got a lot of attention this week for possibly moving to distribute an original TV series, "House of Cards," an interesting scoop in Adweek notes
that Hulu may also be looking to ramp up its original production efforts. According to the article, Hulu has been building two content groups, one focused on branded entertainment and the other on niche comedy and documentaries.
Categories: Aggregators, Branded Entertainment, Indie Video
Topics: ABC, FOX, Hulu, NBC, Netflix
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VideoNuze Report Podcast #92 - Mar. 18, 2011
I'm pleased to present the 92nd edition of the VideoNuze Report podcast, for March 18, 2011.
In this week's podcast, Daisy Whitney and I discuss Netflix's rumored $100 million deal for first-run rights to "House of Cards," a new TV series directed by David Fincher and starring Kevin Spacey. As I wrote earlier this week, the deal would be a very significant shift in strategy for Netflix, and Daisy and I get into some of the details.
On a related note, yesterday I posted the audio recording of an interview I did with Netflix's chief content officer Ted Sarandos at the NATPE conference in January. Ted didn't allude to any first-run deals in that interview, but he did talk about his interest in bidding against HBO for the rights to Warner Bros. films when their deal was up for renewal among other topics.
Click here to listen to the podcast (13 minutes, 12 seconds)
Click here for previous podcasts
The VideoNuze Report is available in iTunes...subscribe today!Categories: Aggregators, Podcasts
Topics: HBO, Netflix, Podcast, Warner Bros.
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Audio Interview With Netflix's Chief Content Officer Ted Sarandos
I'm pleased to provide an audio recording of an on-stage one-on-one interview I did with Netflix's chief content officer Ted Sarandos, at the NATPE Market conference on January 25th. I've been meaning to post this for a while, but experienced a few technical issues in getting it done. The interview is particularly timely given news this week that Netflix may be looking to distribute its first original TV series, "House of Cards," directed by David Fincher and starring Kevin Spacey.
In this wide-ranging interview, Ted and I discuss topics such as Netflix's content acquisition strategy, how it decides how much to spend on licensing, the critical role that data plays in informing Netflix's decision-making, the future of the DVD business and lots more. Of note, this is the interview in which Ted said that Netflix would bid against HBO for Warner Bros. films when those parties' distribution deal comes up for renewal in a couple of years and that Netflix had the resources to fully compete. That declaration was a departure from Netflix's traditional public posture about working closely with premium cable networks rather than disrupting them, and set off a raft of media coverage.
Categories: Aggregators, People
Topics: HBO, Netflix, Warner Bros.
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A Netflix Deal For "House of Cards" Would Be a Big Shift In Its Strategy
A report late yesterday by Deadline.com, that Netflix is potentially going to bid $100 million to stream/broadcast the new David Fincher/Kevin Spacey TV series "House of Cards" has been ricocheting around the Internet like a pinball since. Deadline also reported that Netflix is bidding against HBO and AMC and could take the unusual step of not even piloting the series before making this huge financial commitment. As a close observer of Netflix's rise over the past several years, the move would break with several key tenets of the company's success formula. Though I've learned to never say never, following are a few Netflix strategies that would be changed with a deal for "House of Cards":
Categories: Aggregators
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Movie Windows Back in the Spotlight
Movie windows were back in the spotlight this week as Hollywood executives continue to air out their anxiety over digital distribution's impact. In a pair of articles (here and here), Home Media Magazine covered remarks by Disney CFO Jay Rasulo and Time Warner CEO Jeff Bewkes at the Deutsche Bank conference in Palm Beach, FL. Rasulo put his finger on Hollywood's challenge of how to "re-work release windows to generate incremental revenue, without cannibalizing existing revenue streams and upsetting distribution partners."
However, as Disney knows from its experiment last year of accelerating the DVD release of "Alice in Wonderland," which raised the ire of British theater owners, balancing these objectives is no easy feat. Meanwhile, as "Premium Video-on-Demand," an early window release plan for $30-$40 per movie approaches, theater owners' unhappiness will become even more apparent.
Categories: Aggregators, FIlms, Studios
Topics: Disney, Netflix, Time Warner
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