The Future of Netflix, Donuts Rule, TelcoVision, and, last but not least, why Thursday night NFL games are a bad idea
Last week I wrote about the possibility that Netflix might become an “app” on cable TV providers’ set-top boxes. I also noted rumors that the company may bid on the rights to a package of Thursday night NFL games. I was researching this a bit more and came across the Netflix talk discussed below. (On a side note, I should mention that I hate the Thursday night NFL games. Teams only have three days to prepare for a Thursday game after a Sunday game and it shows; the games are sloppy).
Anyway, Netflix recently announced that it planned to double its spending next year on creating original programming. This comes on the heels of the success of Orange is the New Black and House of Cards, two original shows created solely for Netflix subscribers. I haven’t watched either series yet, so don’t take this paragraph as some type of endorsement. I do plan to “binge watch” them on a weekend soon. Why not binge on Netflix, I binge on plenty of other things (donuts and other hearty and wholesome food choices, mostly).
On that subject (binge-watching), a USA Today article stated that “[n]early 80% of U.S. adults with Internet access watch TV through subscription services like Netflix or Hulu or other on-demand sources, and 62% watch multiple episodes back-to-back.” So, when I read this, I thought, if Netflix and Hulu and other like services are so successful at changing the viewing habits of Americans, why get cozy with cable? Read more
The Wall Street Journal recently reported that Netflix is in negotiations with a number of cable operators for a deal under which it would function as an “app” on cable television set-top boxes. Under this scenario, Netflix would no longer be an over-the-top service that subscribers must search for using connected devices such as smart TVs, Blu-ray players or non-cable set-top boxes. In other words, cable subscribers would be able to switch over to watch something on Netflix as seamlessly as they switch from HBO to EPSN, for example.
The article states that negotiations are further along with some of the smaller and regional cable providers that use TiVo set-top boxes, but that some of larger cable companies are also involved. An announcement of a deal could come in the next few weeks or months.
Netflix and cable providers don’t exactly have the best relationship, as cable rightfully sees Netflix as a competitive threat. But, maybe cable companies are starting to the think “if you can’t beat ‘em, join ‘em.” A Netflix app on a cable provider’s set-top box could stem the tide of cord-cutters that opt for streaming online video. Read more
Netflix recently made headlines with an impressive 14 Emmy nominations, including nine for “House of Cards,” three for “Arrested Development,” and two additional nods for “Hemlock Grove.”
Netflix has used this success to expand their original content initiative with the goal of offering a greater variety of original programming. In a recent letter to shareholders, CEO Reed Hastings and CFO David Wells stated “Beyond series, we will be expanding our Originals initiative to include broadly appealing feature documentaries and stand-up comedy specials.”
The shareholder letter further stated that over the last six months, Netflix’s move into original programming has begun to redefine the company in the eyes of consumers. According to Netflix, “Arrested Development” alone helped to add over 600,000 new subscribers in the last three months. Read more
According to a recent survey, nearly a quarter (23%) of Netflix subscribers end up cancelling their premium-TV service.
The survey, by financial services firm Cowen & Co., was conducted in mid-February. Of the just over 1,200 consumers surveyed, 46% (569) are non-subscribers who had access to Netflix streaming, while 28% (346) are paying Netflix subscribers.
Low-income subscribers were more likely to cut the cord to premium-TV service. While those with an annual income of $25,000 or less comprised 18% of the survey respondents, they accounted for 32% of those who cancelled pay-TV service after subscribing to Netflix. Read more
Netflix recently has been adding 3-D and Super HD titles to its inventory – but with the catch that consumers will only be able to access such content if their ISP participates in the Netflix “Open Connect” program.
Under the Open Connect program, rather than Netflix streaming videos to consumers using third-party Content Distribution Networks (CDNs) like Akamai or Level 3, an ISP would effectively interconnect directly with Netflix’s own CDN at specified peering locations. (It’s not entirely clear, but it appears that there could be some cost to the ISP in doing so – certainly in reaching the peering locations, if not interconnecting at them.) Netflix asserts that this arrangement will enable optimized streaming, but it’s also readily apparent that the move will save Netflix money by avoiding the costs of having third-party CDNs carry the massive amounts of data associated with 3-D and Super HD video. Read more
A disruption in Amazon’s cloud computing services on Christmas Eve rendered numerous Netflix customers unable to download movies at a critical time.
Amazon apologized for the outage in an online statement posted December 29. “We want to apologize,” the statement read. “We know how critical our services are to our customers’ businesses, and we know this disruption came at an inopportune time for some of our customers.”
According to Amazon, the trouble began with the accidental deletion of data during a routine maintenance process, which led to high latency and error rates for the technology that manages Amazon’s load balancers. The load balancers distribute demand for computing power among servers that are best suited to handle the work loads. At the peak of the disruption, nearly 7% of Amazon’s load balancers were impacted. Read more
In an August 1 article, Home Media Magazine detailed recent remarks by Time Warner Cable (TWC) CEO Jeff Bewkes. Speaking to investment analysts in a meeting to discuss the TWC’s second quarter financial report, Bewkes discussed his views concerning over-the-top (OTT) subscription on-demand platforms.
Bewkes described TWC’s strategy of using YouTube as a promotional device to entice viewers to its content on TNT and HBO. He indicated that the company did not use YouTube to distribute network-length original content, as both networks already provide content by subscription through their own on-demand broadband portals. “We think it’s great the extent to which those channels can have a presence on YouTube to drive viewership on our networks,” Bewkes said.
Bewkes said in his remarks that it was HBO that pioneered distribution of on-demand original programming, focusing on the overall value of subscription video on demand (SVOD). Read more