From The Online Reporter
- Threat to Pay-TV Companies & their Premium Channels
Netflix confirmed that it has made a deal with Media Rights Capital for a political thriller starring Oscar winner Kevin Spacey that Netflix will offer on its Internet service. The executive producer is David Fincher, who directed “The Social Network” and was nominated for an Oscar for Best Director this year.
It’s a 26-part series called “House of Cards” that is based on a book with the same name. It will start airing in late 2012. In 1990, the BBC produced a well-regarded 4-part miniseries based on the same book. It’s available on DVD from Netflix but not for streaming.
Netflix can also release the series on DVD for its mail-order subscribers.
Netflix won’t be the only online service going after original content. There are reports that companies such as Hulu, Yahoo, Amazon, YouTube and AOL are increasing their efforts to secure original content.
Making Web-based shows easily available are smart TVs and Blue-ray players with Internet connections, tablets like the iPad and smart TV adapters like Apple TV. Netflix comes on almost all of those devices and has 20 million subscribers.
Hulu, which so far has distributed TV shows from the major networks on the Net, is producing “The Confession,” a “24” lookalike starring former “24” star Kiefer Sutherland. Its short, five- to seven-minute episodes will start appearing March 28. Hulu offers free access on PCs and the subscription Hulu Plus on some devices.
Netflix is said to be in negotiations with other production houses such as Relativity.
At 20 million, Netflix has more subscribers than any pay-TV company except Comcast. It has to have must-see content to keep them renewing each month. Comcast acquired majority ownership in NBC Universal to ensure it has lots of content coming.
As a group, the cable-TV companies have lost pay-TV subscribers in the last two years. Some blame that on the economy and aggressive marketing by Verizon and AT&T. Others attribute it to the increasing availability of OTT content. There is a limit to how many hours of TV a person can watch and when someone is watching Netflix or other OTT content, they are not watching pay-TV.
Netflix basically put Blockbuster out of business. The threat now is that Netflix could do the same to Time Warner’s HBO and other pay-TV networks, which would be handicapped against a Netflix that has significant original programming. HBO lost about 1.5 million of its 28 million US subscribers in 2010 while Netflix was getting to 20 million by adding 7.74 million, including 3.08 million in the fourth quarter.
Netflix, unlike HBO, is ubiquitous.
The Netflix widget is on every smart TV, Blu-ray player and smart TV adapter in the US. Consumers who buy one of them want to try out the new capabilities and a free 30-day trial of Netflix is an easy way to start. No smart TV adapter or PC is needed for watching Netflix on those devices. HBO is on none of them.
HBO does have the advantage of offering much more original content than Netflix — it will air 12 original shows in 2011 this year, up from 10 last year. The Netflix drama “House of Cards” doesn’t even go into production until early 2012, and the first airing won’t be until the end of 2012.
Time Warner Q4 2010 v Q4 2009
-Revenue up to $7.8 billion
-Net income up to $769 million from $631 million
-Revenue from HBO and Turner Broadcasting up 14% to $3.3 billion including a 21% increase in advertising
-Warner Bros revenue up to $3.6 billion, mainly due to higher TV licensing fees; operating income fell 5% because of lower DVD sales
-Time publishing revenue down 4% to $1.1 billion
HBO is also available in more countries with about half its subscribers outside the States. Fees paid by pay-TV companies make up about 85% of HBO’s $2 billion revenue. If subscribers decline, they will pay less. The other 15% of HBO’s business comes from DVD sales and international distribution.
The other two premium networks primarily rely on movies for content. CBS’s Showtime had 18.2 million subscribers in the second quarter of 2010, and Starz had 17.3 million. Netflix is a distributor of Starz content.
Netflix is available in the US on every PC and tablet for instantly viewing TV shows and movies. HBO does not yet have an iPad app. It offers the HBO Go online service, but it’s only available to HBO’s pay-TV subscribers who pay upwards of $60 a month. It’s estimated to be in about 40% of pay-TV homes. Anyone who has a broadband connection can subscribe to Netflix. We have predicted for years that eventually there will be as many broadband subscribers as there are pay-TV subscribers and many more than HBO’s . They are all prospects for a Netflix subscription.
Jeff Bewkes, CEO of Time Warner, which owns HBO, has led the TV Everywhere efforts that would offer access for pay-TV subscribers to programming on the Web at no additional charge. HBO could offer HBO Go to every broadband subscriber, but that would impact the revenue of the pay-TV companies that offer it.
Bewkes and other cable TV company executives have repeatedly said they see no evidence of cord-cutting caused by OTT services. We have said that many young people never connect the cord because they are accustomed to getting content via the Web.
Netflix has more than 20,000 titles in its streaming library, but few of them are recent vintage. They are older movies and TV series. Wall Street Pit says Netflix spent about $400 million in 2010 for streaming rights; this is the more profitable part of its business because there are no postage and handling charges for DVDs.
Netflix and other OTT services are also a threat to pay-TV companies, particularly their premium subscribers. In January JP Morgan’s Internet analyst Imran Khan said a consumer survey showed that Netflix Watch Instantly subscribers are more likely to consider dropping their pay-TV subscription. It said of those surveyed who stream one to two movies and TV shows per month from Netflix, 47% would consider dropping pay-TV, compared to only 33% of non-Netflix subscribers. The 33% is itself a worrisome percentage.
Netflix will soon be the only online service that offers shows from all four major TV networks, unlike Hulu, which has the lead over Netflix in offering TV shows. In February, it signed a deal with CBS to begin offering in April shows like “Medium” and “Flashpoint” plus full seasons of “Cheers,” “Frasier,” “Twin Peaks,” “Family Ties” and “The Andy Griffith Show.” It’ll also offer the original versions of “Star Trek,” “Twilight Zone” and “Hawaii Five-O.”
Feeding the beast is a never-ending job, and Netflix is looking outside the box for must-see original content.
To see 4 free editions of The Online Reporter, the weekly source for competitive intelligence about digital content, online entertainment services, mobile media and wireless networks, visit www.onlinereporter.com/trial_copies.php
Netflix confirmed that it has made a deal with Media Rights Capital for a political thriller starring Oscar winner Kevin Spacey that Netflix will offer on its Internet service. The executive producer is David Fincher, who directed “The Social Network” and was nominated for an Oscar for Best Director this year.
It’s a 26-part series called “House of Cards” that is based on a book with the same name. It will start airing in late 2012. In 1990, the BBC produced a well-regarded 4-part miniseries based on the same book. It’s available on DVD from Netflix but not for streaming.
Netflix can also release the series on DVD for its mail-order subscribers.
Netflix won’t be the only online service going after original content. There are reports that companies such as Hulu, Yahoo, Amazon, YouTube and AOL are increasing their efforts to secure original content.
Making Web-based shows easily available are smart TVs and Blue-ray players with Internet connections, tablets like the iPad and smart TV adapters like Apple TV. Netflix comes on almost all of those devices and has 20 million subscribers.
Hulu, which so far has distributed TV shows from the major networks on the Net, is producing “The Confession,” a “24” lookalike starring former “24” star Kiefer Sutherland. Its short, five- to seven-minute episodes will start appearing March 28. Hulu offers free access on PCs and the subscription Hulu Plus on some devices.
Netflix is said to be in negotiations with other production houses such as Relativity.
At 20 million, Netflix has more subscribers than any pay-TV company except Comcast. It has to have must-see content to keep them renewing each month. Comcast acquired majority ownership in NBC Universal to ensure it has lots of content coming.
As a group, the cable-TV companies have lost pay-TV subscribers in the last two years. Some blame that on the economy and aggressive marketing by Verizon and AT&T. Others attribute it to the increasing availability of OTT content. There is a limit to how many hours of TV a person can watch and when someone is watching Netflix or other OTT content, they are not watching pay-TV.
Netflix basically put Blockbuster out of business. The threat now is that Netflix could do the same to Time Warner’s HBO and other pay-TV networks, which would be handicapped against a Netflix that has significant original programming. HBO lost about 1.5 million of its 28 million US subscribers in 2010 while Netflix was getting to 20 million by adding 7.74 million, including 3.08 million in the fourth quarter.
The Spread of Netflix Widgets
The Netflix widget is on every smart TV, Blu-ray player and smart TV adapter in the US. Consumers who buy one of them want to try out the new capabilities and a free 30-day trial of Netflix is an easy way to start. No smart TV adapter or PC is needed for watching Netflix on those devices. HBO is on none of them.
HBO does have the advantage of offering much more original content than Netflix — it will air 12 original shows in 2011 this year, up from 10 last year. The Netflix drama “House of Cards” doesn’t even go into production until early 2012, and the first airing won’t be until the end of 2012.
Time Warner Q4 2010 v Q4 2009
-Revenue up to $7.8 billion
-Net income up to $769 million from $631 million
-Revenue from HBO and Turner Broadcasting up 14% to $3.3 billion including a 21% increase in advertising
-Warner Bros revenue up to $3.6 billion, mainly due to higher TV licensing fees; operating income fell 5% because of lower DVD sales
-Time publishing revenue down 4% to $1.1 billion
HBO is also available in more countries with about half its subscribers outside the States. Fees paid by pay-TV companies make up about 85% of HBO’s $2 billion revenue. If subscribers decline, they will pay less. The other 15% of HBO’s business comes from DVD sales and international distribution.
The other two premium networks primarily rely on movies for content. CBS’s Showtime had 18.2 million subscribers in the second quarter of 2010, and Starz had 17.3 million. Netflix is a distributor of Starz content.
Netflix is available in the US on every PC and tablet for instantly viewing TV shows and movies. HBO does not yet have an iPad app. It offers the HBO Go online service, but it’s only available to HBO’s pay-TV subscribers who pay upwards of $60 a month. It’s estimated to be in about 40% of pay-TV homes. Anyone who has a broadband connection can subscribe to Netflix. We have predicted for years that eventually there will be as many broadband subscribers as there are pay-TV subscribers and many more than HBO’s . They are all prospects for a Netflix subscription.
Jeff Bewkes, CEO of Time Warner, which owns HBO, has led the TV Everywhere efforts that would offer access for pay-TV subscribers to programming on the Web at no additional charge. HBO could offer HBO Go to every broadband subscriber, but that would impact the revenue of the pay-TV companies that offer it.
Bewkes and other cable TV company executives have repeatedly said they see no evidence of cord-cutting caused by OTT services. We have said that many young people never connect the cord because they are accustomed to getting content via the Web.
Netflix has more than 20,000 titles in its streaming library, but few of them are recent vintage. They are older movies and TV series. Wall Street Pit says Netflix spent about $400 million in 2010 for streaming rights; this is the more profitable part of its business because there are no postage and handling charges for DVDs.
Netflix and other OTT services are also a threat to pay-TV companies, particularly their premium subscribers. In January JP Morgan’s Internet analyst Imran Khan said a consumer survey showed that Netflix Watch Instantly subscribers are more likely to consider dropping their pay-TV subscription. It said of those surveyed who stream one to two movies and TV shows per month from Netflix, 47% would consider dropping pay-TV, compared to only 33% of non-Netflix subscribers. The 33% is itself a worrisome percentage.
Netflix will soon be the only online service that offers shows from all four major TV networks, unlike Hulu, which has the lead over Netflix in offering TV shows. In February, it signed a deal with CBS to begin offering in April shows like “Medium” and “Flashpoint” plus full seasons of “Cheers,” “Frasier,” “Twin Peaks,” “Family Ties” and “The Andy Griffith Show.” It’ll also offer the original versions of “Star Trek,” “Twilight Zone” and “Hawaii Five-O.”
Feeding the beast is a never-ending job, and Netflix is looking outside the box for must-see original content.
To see 4 free editions of The Online Reporter, the weekly source for competitive intelligence about digital content, online entertainment services, mobile media and wireless networks, visit www.onlinereporter.com/trial_copies.php
No comments:
Post a Comment