Netflix and ‘House of Cards’: The Numbers Don’t Lie

There’s a reason why the ice storm that struck the D.C. area this past weekend—Mother Nature’s latest insult in this seemingly interminable winter of 2015—didn’t sting quite as much as it might have: on Friday, Netflix made the entirety of the third season of its political thriller “House of Cards” available for viewing. Let the binge watching commence!

The series, which debuted in 2013, marked a significant gamble for Netflix. The company was in the process of morphing from a mail-based DVD distributor to a provider of streaming video content. Yet without a way to differentiate themselves from other online content providers, Netflix’s market share would never be truly secure. The key to the service’s ongoing viability would be coming up with something that nobody else could provide consumers. It rolled the dice with Frank Underwood and “House of Cards.” Read more

I’ll Have Two Large Videos, Hold the Ads, Please

In a widely anticipated move, Google announced plans to launch a YouTube subscription service that would spare viewers from the advertising that appears both before and during selected videos.

(Google purchased YouTube in 2006 in a transaction valued at $1.65 billion.)

Dubbed “YouTube Music Key,” the service is designed to compete with companies such as NetFlix.

Pricing for YouTube Music Key will start at $7.99 per month, and, in addition to removing advertising, will also allow viewers to watch videos offline and listen to music while using other applications. Read more

The Snowball Keeps Rolling Downhill: IPTV Market Up 14% Worldwide in 2014

The worldwide pay-TV market is estimated to have grown by 5% in 2014, encompassing more than 924 million subscribers, according to technology market intelligence company ABI Research.

“IPTV is expected to grow a market-leading 14% in 2014, followed by satellite TV platform at 7%,” said ABI Research vice president and practice director of core forecasting Jake Saunders. “The growth rates of cable and terrestrial TV platforms are expected to slow to around 3%.”

Much of the worldwide growth is driven by countries in the Asian-Pacific and Latin American regions, combining to add 13 million subscribers in 2014. By contrast, the North American cable TV market is expected to shrink by 1% in 2014. Cable TV operators in North America lost 400,000 customers in the third quarter of 2014 alone, ABI Research reports.

In the increasingly competitive marketplace, providers are trying to grow revenues by offering high definition (HD) channels, advance services and premium content. “The worldwide HD subscriber base is growing on all pay-TV platforms,” said Khin Sandi Lynn, ABI Research industry analyst. “Approximately 57% of total pay-TV subscribers will be HD subscribers by 2019. ABI Research forecasts the global pay-TV market will generate US$324 billion in service revenues by 2019.”

Whooo…Lives in a Pineapple, Over-the-Top?

Viacom, Inc. announced last week that toddler and tween favorite Nickelodeon will soon join the growing list of cable channels to be made available as a stand-alone Internet offering. For those of you without pre-teens in your household, Nickleodeon is home to the much beloved Spongebob Squarepants, a slightly hyperactive rectangular sponge who “lives in a pineapple under the sea.”

It is expected that Viacom will formally announce details—including the name of the service and its cost—in the coming weeks. It is a matter of speculation whether the online offering will be identical to the channel currently available to consumers, and whether subscribers will be able to access older Nickelodeon content on demand.

According to Viacom CEO Philippe Dauman, the stand-alone Nickelodeon service “will target the fast-growing mobile market [and] will be very attractive for parents and children.”

A number of other channels have preceded Nickelodeon into the over-the-top world. HBO and Showtime will soon launch their own online offerings. Sony Corporation and Dish Network plan to make available online programming packages that had previously only been available by subscribing to a cable or satellite system. And Sony also plans to offer a special programming package—dubbed “PlayStation Vue”—solely to owners of the company’s PlayStation game consoles.

While purchasing over-the-top programming on an a la carte basis does allow consumers a means of customizing programming to match their specific tastes, the reality is that the cost of multiple individual subscriptions quickly surpasses the price of a traditional bundled package.

Sony Unveils PlayStation-Based TV Service

Sony last week announced its long-anticipated online TV service, which the company hopes will pose a formidable challenge to cable and satellite providers.

Dubbed PlayStation Vue, the service initially will offer approximately 75 channels. These will reportedly include CBS, NBC and FOX, as well as USA, FX, Discovery, MTV, the Food Network, Bravo and Comedy Central. Conspicuously absent are ABC’s networks (including the Disney Channel and ESPN) and Time Warner’s channels (which include HBO).

The service initially will be delivered through Sony’s PlayStation 3 and PlayStation 4 game consoles.

While a specific price point has not been publicly announced, it is speculated that PlayStation Vue will cost approximately $60 per month, with no long-term commitment. This price point would make it extremely competitive with cable and satellite service.

“Everyday TV is about to become extraordinary,” Sony Computer Entertainment Group CEO Andrew House said in a statement. “PlayStation Vue reinvents the traditional viewing experience so your programming effortlessly finds you, enabling you to watch much more of what you want and search a lot less.”

Sony plans to offer the service to selected beta testers in the New York area, before expanding to testers in other major markets. PlayStation Vue is expected to be widely available in early 2015.

Consumer Cord Cutting Continues

Nearly one in seven broadband adopters does not subscribe to a pay-TV service, a new study finds. This marks a dramatic increase from one in 11 in 2011.

The study, “Pay TV Refugees, 2014,” was prepared by The Diffusion Group (TDG). In it, TDG estimates that 14% of broadband households do not subscribe to a pay-TV service, up from 12% a year ago and 9% in 2010.

“Today, residential broadband services are used in 75% of U.S. households, meaning 13 million broadband households are currently doing without a traditional pay-TV service,” said TDG president and author of the report Michael Greeson. While bad news for many pay-TV providers, the report’s findings illustrate “an excellent opportunity for new video purveyors, whether pure-play online ventures like Netflix or the growing list of television networks going direct-to-consumer,” he said. “Minimizing damage and maximizing opportunity presupposes an understanding of who these consumers are, what drives their decisions and what they expect from a pay-TV service, be it legacy or online.”

TDG further predicts that in the coming months the number of home broadband subscriptions will surpass the number of home pay-TV subscriptions for the first time ever.

TDG separates the non-subscribers into two distinct categories: cord cutters and cord nevers. The two groups exhibit completely different demand patterns and demographics. TDG warns that reaching these consumers will require distinctly different and sharply focused marketing techniques on the part of video service providers.

CBS Climbs Aboard the Standalone Bandwagon

If you can’t beat ‘em, adapt—CBS announced plans last week to go after the cord-cutting market through CBS All Access, a stand-alone streaming service that will offer subscribers access to both current and archived CBS content.

“With video consumption habits changing all the time, it is very important that we continue to provide the best local news, entertainment and sports via a service like CBS All Access,” said CBS Television Stations’ president Peter Dunn. “Television stations have been the fabric of local broadcasting for 75 years, and today’s announcement is part of paving the way for the next 75.”

CBS’ announcement follows on the heels of HBO going public with plans for HBO Go, which will allow viewers the ability to access HBO programming without an HBO subscription. “We will use all measures to go after” the estimated 80 million homes that do not have HBO, said HBO chairman and CEO Richard Plepler in announcing HBO Go.

The actions by CBS and HBO are a response to studies showing that more and more Americans are streaming content. Research firm emarketer, for example, estimates that 45% of Americans stream television shows at least once a month.

Not coincidentally, it has also been reported that HBO’s “Game of Thrones” series is the most pirated program in television history

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