Disney Reveals Fresh Details of Netflix Killer

Disney’s chairman and CEO Bob Iger has revealed fresh details around the media giant’s upcoming streaming service, touted to be a competitor to the likes of Netflix and Amazon Prime. Iger, speaking on a conference call after Disney’s Q3 financial results, spoke of the “tremendous potential” he sees in Disney’s direct-to-consumer services, particularly following the company’s acquisition of 21st Century Fox.

Disney’s earnings themselves were slightly disappointing, with quarterly revenue of $15.2 billion falling short of analysts’ $15.4 billion expectations. Investors on the subsequent earnings call however were much more interested to hear further information about the company’s in-development streaming service, which Iger said is “on track for a late 2019 launch”, and described as the company’s “biggest priority of the 2019 calendar year”.

Iger said he believes the addition of Fox’s portfolio of content will help make Disney’s streaming service “even more compelling for consumers”. The company already had quite a formidable content catalogue before the acquisition, bolstered by the takeover of studios including Pixar, Marvel and Lucasfilm. The Fox purchase will bring brands such as Searchlight, FX, National Geographic and 20th Century Fox Film under Disney’s roof, adding more variety to content that could be available in Disney’s streaming service.

Iger emphasised that integration of Fox properties into Disney’s direct-to-consumer strategy won’t come at the expense of the movie theatre experience. “We’re obviously very excited to leverage the Fox assets to enhance and accelerate our DTC strategy, but I want to be clear that we remain incredibly supportive and enthusiastic about the movie theatre experience,” he said.

In the Q&A section of the call, investors and analysts were hungry for more specific detail about what Disney’s strategy for its streaming service will be, with Iger giving fresh insight into the company’s plans for the service..

When asked about Disney’s decision to split content over multiple streaming platforms, Iger said the company prefers to offer narrower packages of content at a cheaper price, as opposed to a more Netflix-like model which offers a very wide library of films and TV shows. Disney’s acquisition of Fox will grant it a 60 percent stake in Hulu, and the launch of ‘Disneyflix’ alongside the existing ESPN app will mean content is spread across three different services, but Iger believes this reflects consumers’ desire to pick and choose which content they have access to.

“Rather than one, let’s call it, gigantic aggregated play, we’re going to bring to the market what we’ve already brought to market, sports play,” said Iger. “I’ll call it Disney Play, which is more family-oriented. And then, of course, there’s Hulu. And they will basically be designed to attract different tastes and different segment or audience demographics.”

Iger also shed light on how the company plans to handle issues around existing licensing deals for some of its content. As Sanford Bernstein analyst Todd Juenger pointed out, popular film franchises like Star Wars and the Marvel Cinematic Universe are already tied into distribution deals with other streaming services.

Iger confirmed that some content produced by Disney-owned studios won’t be available on Disney’s streaming service, at least initially, with Star Wars: The Force Awakens for example being unavailable due to an existing distribution deal. He said however that in some of these deals, there will be opportunities down the road to put those films on Disney’s service, and that any content produced from 2019 and beyond will be unencumbered by any such deals. “What we have been doing is making sure that since the time that we made the decision to bring the service out, we’ve not done anything that further encumbers any of our product,” he said.

read more here: videoadnews.com

‘Netflix has killed Canalplay’

Appearing before the French Senate’s commission of Culture and Communication, Maxime Saada, chair of the Canal+ board, has announced that SVoD service Canalplay will cease operating in the coming weeks.

“It’s over for Canalplay. In the last two years, we have been taken off the map in this market which is surplanting television. We had a French Netflix, it was killed,” said Saada.

The platform has seen subscriber numbers plummet from 800,000 to just 200,000 today.

“We were deprived the possibility of exclusives for Canalplay when Netflix stepped into the market,” Saada added.

Giving the example of the upcoming launch of a Studiocanal channel in the US without local hits Versailles or The Bureau, Saada urged the French State to re-examine the production decrees in order to allow French TV groups to own the rights to the drama series they’re investing in.

“We [are bound by] a ball and chain when competing with hegemonic US players such as Netflix, which is recruiting 100,000 subscribers each month in France, and investing billion of dollars into content.”

Saada pleaded for French production players to be helped and protected by new, fairer rules. He suggested that tackling piracy could represent 500,000 new subscribers and an additional €40 million to invest into the country’s movie industry and sports rights.

On the fact that Canal+ lost the rights to the French Football Ligue 1 (to Spanish group Mediapro), Saada also put forward the question of rights sovereignty.

Cordless TV streamers prefer Amazon Prime Video to Netflix

New comScore data shows one-third of TV streamers are cordless. It also shows that cordless Amazon Video users watch 13% more than Netflix users. The difference is all in their content strategies.

Cord-cutter and cord-never differences

According to comScore, one-third of households streaming to the television are cordless. The other two-thirds have either cable, satellite, or telco pay TV services. The cordless group is broken into two broad categories: those that had pay TV and got rid of it (18%) and those that have never had pay TV (14%.)

The cord-cutter group primarily skews older than the cord-never group. The largest group of cord-cutters comes from the 35-44-year-olds, with 23%. 21% of cord-cutters are millennials (18-34-year-olds). Millennials dominate the cord-nevers. 24% of 18-34-year-old TV streamers have never had pay TV, versus 15% of 35-44-year-olds.

Cordless favor Hulu, YouTube

Hulu has the highest percentage of cordless subscribers of the top four online video services. Hulu subscribers make up almost half of those without pay TV. 41% of YouTube users are cordless, and 37% of Netflix and Amazon Prime Video are cordless.

Cordless Hulu users also watch a lot more online video on their televisions. They watch, on average, 86 hours per month and stream to the TV 21.6 days per month. Cordless YouTube users watch 78 hours per month and stream to the TV 19.8 days a month. Surprisingly, Amazon Prime Video users best Netflix in engagement among the cordless users. Amazon users watch 70 hours and 19.8 days per month, Netflix users watch 62 hours and 18.6 days per month.

The comScore data could suggest that, though the cordless group rejects pay TV, they are not rejecting traditional television. They will continue to hear about great TV shows through the social and traditional media and around the water cooler. Moreover, when they hear about a great show, the place they are most likely to find it online is Hulu.

Why cordless Amazon users watch more than Netflix
Another interesting question is why those cordless TV streamers using Amazon watch significantly more (12%) than those using Netflix. This fact is particularly interesting given there is a large overlap between the two groups.

The viewing difference stems from the different content business models used by both companies. Amazon provides a far greater variety of content than Netflix because it resells other SVOD services through its Channels program. It also rents and sells movies through the Prime Video app. According to Ampere Analysis, consumers could access 26,000 distinct movie and TV show titles through Amazon Prime Video as of February 2017.*

read more here: nscreenmedia.com

Netflix Uses Data to Drive Creativity, and It Terrifies Hollywood

“There’s a whole thing going on in Netflix right now and in Silicon Valley saying, ‘We’re going to use algorithms to make creative decisions.’ I say ‘posh.’ You can’t. It’s not like making a computer program that can work in the fixed and formal rules of chess.” —John Landgraf, CEO, FX Networks

Is big data a help or a hindrance to creativity? I had the chance to explore the topic with Michael D. Smith, a professor of information technology and marketing at Carnegie Mellon’s Heinz College and Tepper School of Business and the author of Streaming, Sharing, Stealing: Big Data and the Future of Entertainment, cowritten with Heinz College professor Rahul Telang.

Netflix has a lot of data about what we like to watch. It began collecting data years ago, when it was in the business of sending DVDs through the mail. It turned to that data when it began commissioning original movies and series. It was able to make smart decisions about what genres, directors, and actors we wanted to see, and how to fund each project based on expected viewership.

That approach has led to some critics, like FX’s Landgraf, accusing Netflix of programming by algorithm, of replacing intuition, experience, and Hollywood know-how with a computer routine. To critics, the Netflix formula produces hollow results and ignores the value of the creative process.

What Smith and Telang show in their work is that Netflix doesn’t use data for creative decisions; it uses data to match content with viewers. Netflix is excellent at getting out of creative peoples’ way, Smith says. Unlike studios, it lets its talent do its work without a lot of notes or advice. When projects are completed, it uses its data to match them with viewers who will mostly likely enjoy them.

Doing so not only drives views, it also helps with discovery. Netflix churns out a lot of original content, and subscribers could easily feel overwhelmed if they had to wade through it all. But they don’t—they only see the titles Netflix is pretty certain they’ll like.

It’s something the big broadcasters can’t do, Smith notes. Broadcasters can only show one program at a time, so they go with whatever they expect to get the biggest return in each slot. Netflix doesn’t have to turn every show into a blockbuster, so it’s free to create niche hits that appeal to specific groups. The power of Netflix’s data is in microtargeting.

With that in mind, Netflix’s four-picture deal with Adam Sandler starts to make more sense.

Hollywood creatives have been surprisingly vocal about their dislike of Netflix. Consider that Steven Spielberg joined the Netflix hate squad in March, saying Netflix output should be considered TV movies and not be eligible for Oscars.

Some of this comes from wanting to protect the traditional theater model or the glamour of a theater opening. Some people look at Netflix’s data and think it has an unfair advantage.

“Netflix can do things that would be very difficult for Hollywood to copy,” Smith says. “There’s a quote that we use in the book where [Netflix chief content officer] Ted Sarandos is sitting around a table of TV execs and he says, ‘The difference between my business model and everybody else here is that we can hit singles and doubles and the business is just fine.’ I think what he’s saying is the traditional business of Hollywood is, blockbusters are everything. You’ve got to have the blockbusters. It’s hard to sell a piece of niche content in any of the existing channels. What Ted Sarandos is saying is that we can sell niche content. If I can find an audience who likes this and is going to subscribe next month, it doesn’t have to be a big audience. I just have to be able to find them.”

In the 2018 Oscars, Netflix had two big winners, Mudbound, which was nominated for four awards, and Icarus, which won best documentary feature. Both were movies Netflix acquired rather than commissioned, but the company still used its data to find each an audience (after brief theatrical runs). Some Academy members were vocal about not wanting to vote for a Netflix movie.

While studios condemn Netflix’s business model, they’re doing their best to reproduce it. The mergers and acquisitions we’re seeing these days are all about major media companies trying to own customers’ data so they can serve targeted content the same way Netflix does. Models are changing, and studios see they’re at risk if they don’t own the data, so there’s a race to best serve the viewers.

read more here: www.streamingmedia.com

2018 Will Be Netflix’s Best Year (yet)

Netflix’s growth, especially outside the United States, has been so robust that some analysts had to change their outlooks. “These forecasts are a lot higher than the last edition of this report,” says Simon Murray, principle analyst at Digital TV Research, of his Netflix Forecasts report. “Similar to many other analysts, we underestimated the fast take-up in international markets.”

That fast take-up suggests Netflix will have its strongest year ever in 2018 as it adds 28 million subscribers. Its growth should slow after that, Digital TV Research believes.

By the end of 2023, look for the SVOD leader to count 201 million subscribers around the world. That’s up from 111 million at the end of 2017. By the end of 2023, North America and Western Europe will make up 62 percent of Netflix’s customer base. That’s down from the 76 percent they made up in 2017 thanks to surging demand in other countries. For example, look for the Asia Pacific region to make up 14 percent of Netflix’s base by the end of 2023.

“Netflix expanded to 130 more countries (notably excluding China) in January 2016 to bring its total to 190 countries.” says Simon Murray, principle analyst at Digital TV Research. “The 130 new countries will have 40 million subs combined by 2023, quintuple the 8 million at end-2017. The 2023 figure corresponds to 20 percent of Netflix’s global total; up from only 7 percent in 2017.”

As for revenue, look for it to grow from $11.3 billion in 2017 to $28.8 billion by the end of 2023. Of that, $11.2 billion will come from the U.S.

Netflix Q1 exceeds expectations

Netflix’s Q1 numbers show that the OTT operator is growing as fast as ever. It added a net 7.4 million global subs during the quarter, only slightly down on the previous quarter’s record-breaking 8.33 million.

US new additions were also healthy at 1.96 million. Overall, this latest quarter year were the second-biggest ever, and the quarter-year exceeded all consensus expectations, and to a total of 125 million subs. International operations now generate 50 per cent of revenues, and 55 per cent of its subscribers.

Netflix generated $290 million (€234m) net income on revenue of more than $3.7 billion. That compared to net income of $178 million and revenue of $2.63 billion during the previous-year Q1 period.

Netflix’s CEO Reed Hastings and Chief Content Officer Ted Sarandos took the analyst call with Benjamin Swinburne of investment bank Morgan Stanley, and confirmed that they would be spending “upwards” of $8 billion this year on content.

As to the recent bundling of Netflix into the pay-TV operations of Comcast and Sky, Gregory Peters, Chief Product Officer, said: “We love the fact that we can work with these partners to access whole new groups of consumers, make it easy for them to find out about Netflix, to sign up and have a great way to access the service and watch more and more. So you’ll see us leverage that sort of evolving strategy not only in the markets that we’ve been in for many years, but also in these new markets.”

Netflix confirmed that it will be launching a dedicated service to mobile phones. Peters said: “We definitely want to have a mobile experience which allows us to access more of that market and access a group of consumers who basically only want to have their relationship with Netflix on a mobile device. And so whether that is making sure that our apps are lightweight enough so they load really quickly and have a great experience there, to making sure that our encoding is very, very efficient, so that even if you have a less-than-great network connection, you can still get a really incredible video experience on that mobile phone.”

read more here: advanced-television.com

Netflix’s real advantage is that it’s a tech company first

Netflix hasn’t been coy about its plans to take over Hollywood. The company has already said it could spend up to $8 billion on content this year alone. But, for all the awards House of Cards and Icarus rack up, one of the reasons Netflix has tasted success so rapidly is its streaming technology. That’s an area it has been perfecting in-house since 2010, when it became more than a simple mail-order DVD rental shop.

For Netflix, the tech is just as important as the storytelling. Regardless of how many shows or movies Netflix produces, it needs to ensure that its 118 million subscribers can watch them without issue — no matter where they are in the world, which smartphone they own or how fast their internet is. Netflix even recently re-encoded its entire catalog (said to be around 6,000 titles) to produce the best possible picture using the smallest amount of bandwidth, which was made possible by an AI technology it developed called Dynamic Optimizer.

During a tour of its Hollywood and Los Gatos headquarters, Netflix said that a typical episode of a show like Jessica Jones, which is roughly an hour long and is captured in 6K resolution, weighs in at 293GB of raw, unedited footage. That amounts to about 750 Mbps of data, which would basically kill your internet plan if you streamed it before it was compressed. The company says it used to be able to deliver content with “an enjoyable quality” at 750 Kbps, but last year it started using a new encoding framework that shrunk that to a mere 270 Kbps. In the real world, that means that if you have a 4GB data plan, you can watch 26 hours of Netflix per month, up from just 10 hours before. These improvements are especially important for developing regions where Netflix is trying to grow its business — particularly in Africa, Southeast Asia and South America.

Of course, Netflix isn’t the only one trying to develop the best streaming tech possible. BAMTech, the startup created by Major League Baseball’s Advanced Media and now owned by Disney, takes credit for being the first to stream in 60fps and in 4K. And its technology has such a solid reputation that it powers many of the most popular streaming services, including HBO Go, WWE Network and MLB.tv. Disney will join that list when it launches its own offering in 2019, which is setting up to be a major challenger to Netflix, with cheaper monthly fees, a library full of popular titles and BAMTech’s engine under the hood.

The quality of streams counts for only so much, however, and Netflix is well aware of this. As such, the company says its other main focus is to provide the filmmakers it works with the necessary tools “to create content at a high level, then distribute that around the world.” Netflix says that most of its original shows and movies are being shot in 6K — though it’s only delivering that picture in 4K right now. Still, not only does this allow it to be ahead of the curve (others, like HBO, stream only in 1080p), but it gives Netflix the ability to future-proof its content.

Netflix has also been a big proponent of high dynamic range, which delivers richer colors and deeper blacks. The company now has more than 300 hours of HDR programming, but it says the challenge is to not make content only look good on high-end TVs. Everything Netflix makes and streams needs to be just as perfect whether you’re watching on an iPhone X, a Galaxy S9 or an older, entry-level smartphone.

read more here: www.engadget.com

Three Strategies to fight Netflix

In just a few years’ time, the way we consume entertainment has changed drastically. Netflix and other video streaming services have taken the industry by storm, encouraging consumers to cut the cord and enjoy their content on demand. In fact, last year Netflix users collectively watched 1 billion hours of content each week, and more than 22 million U.S. adults were expected to drop cable services, up 33% from the previous year — a major blow to cable companies.

With streaming on the rise, how can cable outlets keep their current customer base coming back?

Stay Transparent

Open communication is key to maintaining a healthy customer relationship. When it comes to set-up fees, service upgrades or any extra charges, cable providers should be up front about a customer’s tab.

Unexplained price increases are a common cable customer gripe, and with monthly charges up an average of 53% in just a decade, according to S&P Global Intelligence figures cited by the Associated Press, customers are turning to alternate options. Nobody likes seeing an unexpected uptick in their monthly bill — be prepared to explain why things may be changing, and it’ll go a long way toward maintaining customers’ trust.

Tap New Revenue Streams

Who doesn’t like a healthy bottom line? By offering a valuable benefit like customized consumer electronics warranty products for TVs, gaming systems, laptops and more, cable companies can give current customers another reason to stay on board. Include this protection in a customer’s overall package, and you become much more than just a cable provider — you’re a one-stop shop for devices, service and coverage. Plus, you’ll be adding another line of revenue.

Don’t Be a Robot

While consistency in messaging is important when communicating with your customers, train your service reps to avoid being robotic in delivery. Sure, everyone has a script to read, but a simple gesture like asking the customer how their day is going can make a tremendous difference in the tone of a service call.

That interaction can have effects beyond one call as well. Angry customers aren’t hesitant to post bad reviews or recorded conversations online, potentially affecting your reputation. Take Comcast for example, where $300 million was pledged toward an updated customer service strategy. After multiple complaints, the cable giant promised customers incentives like $20 if a representative is late to an appointment, and a redesigned monthly bill to better answer customer questions.

read more here: www.multichannel.com

Netflix Will Have Ads, – Predictions From Top TV Ad Chiefs

Netflix will inevitably need ads, predicted Jo Ann Ross, CBS’ president and chief advertising revenue officer, during a fireside chat at AdExchanger’s Industry Preview on Thursday.
“Maybe they’ll offer a lower-cost version of their service [or a different model],” she said, “but if they’re spending that much money [on content], they will look for ways to monetize it other than through subscription.”

That proclamation was one of the many that Ross made during the two-day digital marketing conference in New York.

Another prediction: More networks will reduce their ad loads, which echoed a promise NBC ad sales chief Linda Yaccarino made a few months ago.

CBS has already experimented with lighter ad loads in its streaming video-on-demand service, CBS All Access, which offers 20% fewer ads than in its linear programming.

Yet, more consumers opt for CBS’ ad-supported tier than pay more for the ad-free edition, Ross said, leading to the conclusion that consumers don’t mind ads – as long as they’re attached to quality content and a good user experience.

NBC’s Yaccarino also appeared at Industry Preview during a separate fireside chat. Following are three takeaways from CBS’ and NBC’s top ad sales execs.

Subscription video and linear TV can coexist.

With the rise of subscription video on demand (SVOD), more consumers are bingeing on time-shifted content than ever before.

Bingeing is both good and bad for broadcasters.

On the down side, it’s harder to capture viewers in a live, linear setting when they’re playing catch-up on their favorite series after its original air date. That said, many brand advertisers still view linear TV as the most effective reach play.

“Where do marketers go when they want scale and immediacy? They come back to broadcast,” Ross said. “So it’s a negative and positive for us.”

The upfront isn’t going away. It’s getting data-driven.

Ross noted that the annual broadcast upfronts are increasingly about the data.

“Clients are taking huge, multimillion-dollar budgets and might carve out a portion to transact on data,” Ross said. “Clients and marketers want to be more targeted. They want to understand the attribution points that do lead to return on investment.”

And the brand safety issues plaguing digital video portals make the upfront process more attractive.

“You can proactively pick and choose the content you want your messages to run across in advance,” Yaccarino said. “In television, time exists … it’s perishable, and you’re talking about specific spots in a pod at a certain day and time. That time goes away if you don’t schedule ahead. It’s why upfronts are important.”

The broadcast community was a natural beneficiary of the tension last year between advertisers and online video portals, as big spenders like P&G and Unilever scaled back or reconsidered their online ad investments due to brand safety issues.
Since TV is transacted in a futures market and supply is finite, the chances of an ad showing up next to unsavory content are slim to none.

Measurement needs a makeover.

The lack of comprehensive industry standards across the fragmented worlds of linear TV and digital makes it difficult for TV networks to give marketers “the best possible opportunities,” said NBC’s Yaccarino.

Yaccarino has been bullish on finding alternative currencies to Nielsen as her network doubles down on outcomes-based selling and audience guarantees based on new data sets.

CBS’ Ross also called out the need for clearer visibility in measurement and a common metric that accounts for linear, live viewing, as well as over-the-top and on-demand viewing.

“Nielsen promised us a total audience rating,” Ross said. “They’re working on it, but we are not there yet. There’s so many different devices that you can’t measure accurately across them yet, which has been the challenge for Nielsen.”

read more here: adexchanger.com

OTT video takes center stage for TV networks at CES

After spending years treating over-the-top video streaming as something to address in the far-off future, TV networks are actively shopping their streaming apps to marketers and technology companies at CES.

CBS, for one, gave a 20-minute presentation to marketers touting its OTT products, which include the ad-supported subscription service CBS All Access, ad-supported news network CBSN and forthcoming services for CBS Sports and “Entertainment Tonight.” Turner, which has two ad-free subscription services and plans to launch a still-unnamed sports streaming service in the spring, has been meeting with distribution partners to discuss its growing OTT ambitions. Hulu, meanwhile, used CES to announce that it has 17 million subscribers across its subscription and live TV products, up 40 percent since May 2016.

“Years ago, there was Netflix envy; [these products] are our answer to that,” said Jennifer Mirgorod, evp of content distribution and strategic partnerships at Turner. “We’re able to say that we’re now playing in that space.”

Turner has two existing ad-free subscription services: FilmStruck, for classic movie buffs; and Boomerang, which offers episodes of “Looney Tunes” and other classic cartoons. These services complement Turner’s existing linear TV businesses such as Turner Classic Movies and Cartoon Network and Adult Swim, said Mirgorod, who declined to reveal how many subscribers each service has.

We’ve always had strong brands, but they have always run through distributors — we’ve never had that one-to-one relationship with the customer,” said Mirgorod. “The idea was to launch products that could be complementary to the regular linear business but also allow us to go direct to consumers.”

For FilmStruck and Boomerang — as well as the forthcoming sports streaming service, which will offer both live sports and other original sports programming and likely include advertising — Turner is meeting with OTT distributors such as Roku, Amazon and Apple. The conversations are centered on using data to grow subscribers across the different platforms, Mirgorod said.

Turner has also been meeting with streaming skinny-bundle providers such as DirecTV Now, Hulu live TV and YouTube TV, Mirgorod said.

“They’re all significant players now because they have real [subscribers],” said Mirgorod. “At one point, we were afraid that the providers would take away market share [from linear], but it ended up expanding the market.”

CBS, meanwhile, has been pitching marketers on the national-level scale that its existing OTT products already have. CBS All Access has more than 2 million subscribers, the company said. CBSN streams, meanwhile, were up 17 percent in 2017 over the previous year. (CBS wouldn’t say to what, though.)

“In years past, we’ve spent time talking about the specific consumers that were diving in early to the OTT market. This year is really has grown; we’re no longer just talking about the OTT consumer. There is so much internet video being delivered on devices to so many people of all age groups, we’re really now talking about ‘consumers’ in general,” said Marc DeBevoise, president and COO of CBS Interactive. “We were fortunate to have been early in OTT through our CBS All Access and CBSN services, both of which have experienced tremendous growth since launch, and we are continuing to invest in this space, in these services, their content and new services we will bring to market.”

Overall, CBS did “hundreds of millions” in OTT-related revenue last year, according to a source. Hulu’s ad revenue, meanwhile, surpassed $1 billion for the first time last year, the company said.

read more here: digiday.com