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CES Takeaway #1: Broadcast TV Networks Were Missing In Action
(Note: Each day this week I'll be writing about one key takeaway from CES 2011.)
Broadcast TV networks were conspicuously absent from the buzz of last week's CES 2011, even through one of the main themes of the show was enhanced video viewing through connected devices. Aside from a deal giving boxee the right to sell CBS episodes, and an expected, forward-looking announcement that Hulu Plus would soon be available on Android-powered devices, broadcast TV networks didn't participate in any of the excitement around new connected and mobile devices.
Their absence was both a missed opportunity, and also a clear illustration of how backward-looking their posture toward connected devices is. At a time when the entire CE industry sees the big prize of untethering video viewing from the living room, while creating boundless opportunities for new interactivity and higher engagement, the broadcast TV networks and Hulu have taken exactly the opposite approach, choosing to block access to their programs by connected devices, even though these programs are already available online.
I've previously written about the folly of broadcasters trying to force an artificial distinction between computer and TV screens (here and here with respect to Google TV), noting that their motivation for doing so is the pot of gold they see in retransmission consent payments from pay-TV distributors. But while those payments are a bonanza, they shouldn't come at the price of non-participation with connected devices. Indeed, three key things broadcasters risk by shunning connected devices emerged at CES last week.
Categories: Broadcasters, Devices
Topics: Boxee, CBS, CES, Hulu, Netflix, Orb BR, SnapStick
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VideoNuze Report Podcast #83 - Jan. 7, 2011
Daisy Whitney and I are back this week for the 83rd edition of the VideoNuze Report podcast, for January 7, 2011, the first of this new year.
Today we discuss 3 news items from CES this week: Netflix gaining a dedicated remote control button on 11 different CE companies' connected devices, Comcast launching live and on-demand TV on tablet computers and Cisco's new "Videoscape" TV platform. Enjoy!
Click here to listen to the podcast (13 minutes, 43 seconds)
Click here for previous podcasts
The VideoNuze Report is available in iTunes...subscribe today!
Categories: Aggregators, Cable TV Operators, Podcasts, Technology
Topics: CES, Cisco, Comcast, Netflix
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With New Netflix Button, Mutual Love Affair With CE Industry Continues
The mutual love affair between the consumer electronics industry and Netflix continues on, with today's announcement that 11 different CE companies will create a dedicated Netflix button on their remote controls for certain
connected TVs, Blu-ray players and set-top boxes. The unusual move is the latest sign of how interdependent the success of CE companies' connected devices and Netflix's burgeoning popularity have become.
The love affair was born out of CE companies' recognition of the old adage that compelling content and applications are critical to inducing consumers to buy the next snazzy gadget. Case in point: Blu-ray disc player sales were stagnating until connectivity was added, enabling access to Netflix and other streaming content. As a result, in the first 9 months of 2010, around 2.4 million players were sold in the U.S., up 96% from the prior year's period, according to NPD Group.
Categories: Aggregators, Devices
Topics: and Toshiba. Sharp, Dynex, Haier, Memorex, Netflix, Panasonic, Samsung, Sharp, Sony, Sony, Toshiba
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Online/Mobile Video's Top 10 of 2010
2010 was another spectacular year of growth and innovation in online and mobile video, so it's no easy feat to choose the 10 most significant things that happened during the year. However, I've taken my best shot below, and offered explanations. No doubt I've forgotten a few things, but I think it's a pretty solid list. As much as happened in 2010 though, I expect even more next year, with plenty of surprises.
My top 10 are as follows:
Categories: Advertising, Aggregators, Broadband ISPs, Broadcasters, Cable Networks, Cable TV Operators, Deals & Financings, Devices, Mobile Video, Regulation, Satellite, Technology, Telcos
Topics: 4G, Android, Apple, Google TV, iPad, Net Neutrality, Netflix, YouTube
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Starz's 2-Year Results Defy Warnings of "Cord-Shaving"
If you're looking for evidence that the pay-TV industry is imperiled by the rise of over-the-top services that are going to cause subscribers to cut the cord, a good early indicator of such behavior would be whether "cord-shaving," i.e. the reduction of services like premium channels, additional outlets and DVR services, is happening already. But a look at the premium channels Starz and Encore - whose content is fully available for streaming on Netflix - suggests no evidence of cord-shaving is yet occurring.
As the graph below shows, since October, 2008, when Starz announced that Netflix had signed a distribution deal for "Starz Play," total U.S. subscribers to the Starz and Encore channels have actually increased slightly from 49 million to 49.4 million. During this time period there's been relatively little fluctuation, with only a temporary dip in the 2nd half of last year that was probably more related to the channels being temporarily out of their Comcast deal, and therefore losing some of their promotional backing. Further, for the first 9 months of 2010, Starz's revenue was $929 million and cash flow was $305 million, up from the same period in 2008, when revenue was $826 million and cash flow was $220 million.
Categories: Aggregators, Cable Networks
Topics: Disney, Encore, HBO, Netflix, Sony, Starz
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Netflix CEO Hastings Defends Company's Lofty Stock Price in 2,000 Word Post
Netflix CEO Reed Hastings isn't being shy about his company's soaring valuation, posting a 2,000 word defense on the Seeking Alpha blog. The relatively unusual move comes in response to an earlier post by investorWhitney Tilson explaining why the stock is due for a decline in 2011. The two men are friends and joint backers of charter schools. Hastings says somewhat tongue in cheek up front that his "desire is to increase (Tilson's) odds of making money next year so he can donate even more to the charter public schools that we both think are important to our country's future."
Categories: Aggregators
Topics: Netflix
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Hulu Pulls IPO Due to Lack of Long-Term Content Rights
The WSJ is reporting that Hulu has pulled its widely-rumored plan for an initial public offering next year due to lack of long-term rights to distribute its three broadcast TV network owners' content. The WSJ says the company may
look at other options to raise capital. Hulu's exclusive short-term distribution deals with owners ABC, FOX and NBC are the company's primary asset, and no doubt banks and other would-be investors closely scrutinized whether the rights would be extended.
As I wrote last April, from a content rights perspective, Hulu is getting squeezed from all sides. Pay-TV providers are ramping up their TV Everywhere rollouts and are trying to lock down online distribution rights themselves, sometimes as part of retransmission consent deals. The NBC rights in particular are subject to extra uncertainty longer-term as Comcast takes over the network. As the biggest subscription TV provider, which is rolling out its own online capabilities, Comcast has little incentive to support an online competitor.
Categories: Aggregators, Broadcasters, Deals & Financings
Topics: ABC, Comcast, FOX, Hulu, NBC, Netflix
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5 Items of Interest for the Week of Dec. 12th
Happy Friday. Once again I'm pleased to offer VideoNuze's end-of-week feature analyzing 5-6 interesting online/mobile video industry news items from the week that we didn't have a chance to cover previously. This week I'm changing the format a little bit, creating an individual post for each item. I'm doing this in response to reader interest in being able to share individual items (not the whole group) more easily. Let me know what you think of the new format. Here they are:
1. Potential YouTube-Next New Networks deal is a bit of a head-scratcher
2. Here's a great example of why TV Everywhere matters so much to the pay-TV industry
3. Hulu's Kilar: "Hulu Plus now a material portion" of revenues
4. Google not ready to announce fiber winning communities
5. Tiffany shows online video works for luxury retailers
Read them now or check them out this weekend!Categories: Aggregators, Broadband ISPs, Cable Networks, Cable TV Operators, Commerce, Deals & Financings, Indie Video, Satellite, Telcos
Topics: Google, Hulu Plus, Netflix, Next New Networks, Tiffany, YouTube
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Hulu's Kilar: "Hulu Plus now a material portion" of Revenues
I was surprised to hear Hulu CEO Jason Kilar say in this short CNBC interview that while advertising accounts for the bulk of its revenues, Hulu Plus is "already accounting for a material portion" of its revenues. In the interview, Kilar had previously mentioned that in 2010 Hulu would generate $260 million in revenues, compared to $108 million in 2009, an impressive jump that beat its internal target of $190 million.
However, it's hard to see how, just a month after its formal launch, Hulu Plus could already be material to Hulu's performance. Even if it had 500,000 subscribers (which feels optimistic), that would be $4 million/mo (at its $8/mo rate) in subscription revenue, whereas Hulu may well be generating $25-30 million/mo in ad revenue to get to the $260M figure. Maybe it's just a definition of what's "material." As I've said before though, the bigger question is how Hulu Plus competes on the content acquisition front. With the recent Disney-ABC and NBCU content deals, Netflix is undermining Hulu Plus' core broadcast TV value proposition and people who subscribe to both Netflix and Hulu Plus will quickly see this.Categories: Aggregators
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VideoNuze Report Podcast #82 - Dec. 17, 2010
Daisy Whitney and I are back this week for the 82nd edition of the VideoNuze Report podcast, for December 17, 2010. This will be the final podcast of 2010 and we both want to wish our listeners happy holidays. Daisy and I have have had lots of fun cranking out 32 podcasts this year on all the most important industry topics. We're looking forward to continuing on in 2011.
And speaking of 2011, in this final podcast of the year we turn our sights ahead and discuss the 6 key online/mobile video trends that The Diffusion Group's Colin Dixon and I outlined during Wednesday's webinar (replay and slides available here). Daisy and I focus the bulk of the podcast on two of these predictions: how Netflix will strain under its spectacular growth, and how pay-TV subscriber losses will mount and cord-cutting perceptions could become reality.
Click here to listen to the podcast (13 minutes, 16 seconds)
Click here for previous podcasts
The VideoNuze Report is available in iTunes...subscribe today!Categories: Aggregators, Podcasts, Predictions
Topics: Netflix, Podcast, Predictions
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6 Key 2011 Trends in Online and Mobile Video
Yesterday Colin Dixon from The Diffusion Group and I presented a webinar describing our 6 key trends for 2011 in online and mobile video. Colin is one of the sharpest analysts of the pay-TV and online/mobile video industries and we had no shortage of ideas to sort through. Our list is a joint effort, and during the webinar we each presented the 3 trends we felt the strongest about. In today's post I share and explain each one. At the end of the webinar we conducted a poll asking attendees whether they agreed or disagreed with our predictions. I've noted those results in bold font. If you want to download the slides and/or hear more of our detailed discussion, just register for the on-demand version of the webinar and you'll be emailed a link.
Categories: Aggregators, Broadband ISPs, Cable TV Operators, Mobile Video, Predictions, Regulation, Satellite, Technology, Telcos
Topics: FCC, Google, Net Neutrality, Netflix, TV Everywhere
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Comcast Testing Connected Set-top Box; Would Netflix Be Included?
The WSJ is reporting that Comcast is testing a new connected set-top box that offers a selection of online video alongside traditional linear, VOD and DVR programming. The project is part of Comcast's "Xcalibur" initiative
headed up by Sam Schwartz and would follow other connected set-tops already in the market from competitors like Verizon, AT&T, DirecTV and others. It's a smart move by Comcast; many of its subscribers have been buying inexpensive broadband set-top boxes so why shouldn't Comcast just offer the online services itself and simplify its subscribers' lives?
While it's not clear what online video would be offered, if it's a "closed" model, where only certain apps/sites are available, then it would be akin to boxes like Roku, Apple TV and the connected Blu-ray players, among others. This approach would contrast with "open" boxes that allow full Internet browsing such as Google TV and boxee's new box from D-Link. My hunch is that Comcast would focus on a closed box to start. That would also reduce the complexity of delivering online video in a consistent, high-quality manner, especially given the numerous formats, encoding levels, etc. It's also not clear that consumers yet want a full Internet experience on their TVs and Comcast more than likely would look to be a fast follower rather than a pioneer.
Categories: Aggregators, Cable TV Operators
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The World According to Time Warner's Jeff Bewkes, Pay-TV's Staunchest Defender
I finally got an hour over the weekend to listen to the replay of last week's UBS media conference keynote discussion with Time Warner's CEO Jeff Bewkes. His comments strongly reinforced my perception of him as the pay-TV (cable/satellite/telco) industry's staunchest defender as well as the leading Netflix
skeptic. Bewkes is worth paying attention to not just because Time Warner owns the Warner Bros. studio and several leading cable networks, but because his approach is a barometer for many other content providers as well.
In Bewkes' world view, the majority of consumers are willing to pay a premium price to get the best, most comprehensive experience of the highest-quality, current content, and distributors are willing/able to pay content creators top dollar for it - in short, a snapshot of the way the pay-TV world has worked for a long while. To Bewkes, digital distribution represents "more opportunity than challenge" in its ability to drive new business models and windows, enhance existing distributor relationships and deliver more value to consumers. To be clear, Bewkes isn't a Luddite, he doesn't oppose digital innovation, he just wants to see the benefits of it accrue to incumbents, not upstarts.
Categories: Aggregators, Cable Networks
Topics: Netflix, Time Warner
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5 Items of Interest for the Week of Dec. 5th
Once again I'm pleased to offer VideoNuze's end-of-week feature highlighting and discussing 5-6 interesting online/mobile video industry news items that we weren't able to cover this week. Read them now or take them with you this weekend!
Categories: Advertising, Aggregators, Broadcasters, Cable TV Operators, Mobile Video, Telcos
Topics: ABC, Disney, eMarketer, Hulu Plus, Netflix, Nielsen, TV Everywhere, Verizon Wireless
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Will China's Successful Youku IPO Spark US Online Video Offerings in '11?
Yesterday, China's Youku, which started as a YouTube-style user-uploaded video site, but has evolved to a Hulu-style distributor of professional video, went public on the New York Stock Exchange. It offered 15.85 million American Depositary Receipts, or "ADRs," which represent ownership shares
in non-U.S. companies, at $12.80 apiece, raising over $200 million. When the market closed, the ADRs stood at $33.44, up 161%, the best one-day performance for a U.S. IPO in the last 5 years (they're up another $5 today as well). Youku, which recorded $35 million in revenue for the first nine months of this year (and a $25 million loss), had an end of day valuation of $3 billion+.
Yes, I know what you're thinking - this is crazy, the bubble days have returned and there's a huge "China factor" multiplier at work for Youku. All of that is no doubt true. But here's something else that's true - while the global economy and stock markets have undergone wrenching change and volatility over the last 2+ years, the online video market has boomed. For certain kinds of investors (both professional and non-professional) who value growth over everything else, there are few sectors which have more appealing characteristics. As tens of millions of people have adopted online and mobile video, devices for viewing online video on TVs have proliferated, premium content has become available and business models have firmed, investors have taken notice.
Categories: Aggregators, Deals & Financings, International
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Level 3 Tries to Wrap Itself in the Cloak of Net Neutrality in Comcast Dispute
The phrase, "there's no such thing as a free lunch" is getting a new application this morning, as Netflix's massively popular streaming service and over-the-top online video delivery in general face their first big reality check in the form of the Level 3-Comcast traffic fee dispute.
In case you aren't fully up to speed yet, yesterday Level 3 issued a press release asserting that Comcast was forcing Level 3 to pay it higher rates in order for its traffic to be passed through to Comcast's network, and by extension its subscribers. On this basis alone, this would be a snoozer dispute; few of us are aware of or care about the behind the scenes Internet plumbing that enables the delivery of online content. And as long as it doesn't affect what we pay, we also generally don't care which provider gets paid what or how much.
That's why Level 3 cleverly decided not to depict this as a commercial dispute, but rather as a violation by Comcast of "net neutrality" regulations. To drive its point home further, it chose to use highly-charged language, accusing Comcast of "putting up a toll booth," "enabling it to unilaterally decide," "threatens the open Internet" and "preventing competing content" among other things. These are exactly the kinds of terms that net neutrality advocates have been using for years to justify new, stricter net neutrality regulations and Level 3's choice of words is a blatant play to transform this into a net neutrality spark. Trying to set the record straight, Comcast replied that in fact this is a commercial dispute, centered around an imbalance of traffic being exchanged (5:1 by its estimate), and that by convention a separate payment from Level 3 is warranted.
Categories: Broadband ISPs
Topics: Comcast, Level 3, Netflix
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Is Microsoft Planning to Join the Pay-TV Party?
Reuters is reporting this morning that Microsoft is exploring a range of options to get into the pay-TV business through a new over-the-top service. The article points to a potential "virtual cable provider" model whereby Microsoft would license multiple networks, which would be delivered to Xbox gaming consoles and other devices. Also under consideration are creating "content silos" to sell specific premium channels.
If Microsoft were to join the pay-TV business aggressively it would further alter industry dynamics. The number one issue in play right now is whether consumers are forsaking traditionally packaged pay-TV services and instead opting for some mix of free and paid online-delivered alternatives. Yet while Internet options are gaining in popularity (with Netflix's explosive growth to nearly 17 million subscribers at the end of Q3 the primary beneficiary), hard data supporting cord-cutting is still scarce.
Categories: Broadcasters, Cable Networks, Cable TV Operators, Devices
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6 Thoughts on Netflix's New Streaming-Only Plan and DVD Plan Price Hikes
In rolling out a streaming-only service tier this morning, priced at $7.99/mo, Netflix made good on what it has said it would do for months. It's also a logical step given the streaming-only service it introduced 2 months ago in Canada. What was more surprising in today's announcement was the price hikes Netflix is implementing on all of its DVD rental plans, which of course include unlimited streaming. Here are 6 thoughts on today's news:
Categories: Aggregators
Topics: Netflix
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Broadcast TV Networks Are Wrong to Block Google TV - Part 2
When Fox decided last week to block access to its programs by Google TV, it was no big surprise since its broadcast brethren ABC, CBS, NBC and Hulu had already done so. By speaking in a unanimous voice, the broadcasters have sent a clear signal that viewing their programs on TV, for free, via online delivery, is not to be. While they're happy to make Hulu Plus subscriptions available via connected devices, if you want to watch for free, you'll be restricted to computer, or limited mobile device-based, viewing.
A few weeks ago in the first part of "Broadcast Networks Are Wrong to Block Google TV," I speculated on what was motivating the broadcasters to block Google TV, boxee and other browser-based connected devices. In the case of Google TV, it's tempting to believe they are looking to extract payments from Google to distribute their programs. Another possible explanation is that programs aren't monetized as well in online as they are on-air (the "swapping analog dollars for digital pennies" argument). Yet another explanation is that measurement of online viewing is not yet fully mature, so they're worried that if their audience shifts to connected device-based viewing, it would hurt their ratings points, and consequently their ad revenues. But none of these are broadcasters' main motivation.
Categories: Broadcasters, Devices
Topics: ABC, CBS, FOX, Google TV, Hulu, NBC, Netflix
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Report: 4% of Hulu Users Subscribe to Hulu Plus; Of Them 88% Also Subscribe to Netflix
A new report being released today by One Touch Intelligence has found that 4% of surveyed Hulu.com users are subscribing to Hulu Plus and that of them, 88% of them are also Netflix subscribers. The survey included 970
individuals who subscribe to both a pay-TV service and a broadband Internet service, and have streamed or downloaded at least one TV show or movie in the past month. Of the 970 individuals, 612 of them said they use the free Hulu.com service at least weekly, with 25 of them subscribing to Hulu Plus. Of the 25, 22 of them also subscribe to Netflix.
On the one hand, the 4% penetration is noteworthy, since Hulu has yet to advertise the Hulu Plus service beyond its own site. That was reflected in the relatively narrow awareness of the service, with 68% of Hulu.com users who are not subscribing to Hulu Plus saying they are either "barely" familiar with Hulu Plus or not familiar with it at all.
Categories: Aggregators
Topics: Hulu Plus, Netflix, One Touch Intelligence
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