As theÂ UltraViolet academyÂ in London approaches to wake us out of our summer slumber and send us on to IBC, I sat discussing the onward march of digital video in today’s Top 20 ratings-driven world with some neighbors around the end of summer BBQs. Â There was a general view that most TV shows were available (in the US) on either HuluPlus or Netflix. Â While there was some discussion about network specific sites like ABC.com, HBO-GO and TV.com (CBS’ site) and some general understanding that there was content missing from HuluPlus and Netflix, most people felt like anything they were missing was probably available to purchase as a catch-up one-off show from iTunes or Vudu.
As I pondered this seemingly simple challenge, I though back to the end of May when I wrote aÂ blog about the current state of digital title availabilityÂ in the various service offerings (rental, sell-thru, subscription) and retailers (iTunes, Vudu, Netflix) and compared them to each other and to their physical counterparts. Â So, with the help of some colleagues, I set out to get to the bottom of the details.
We started with the current TV Guide Top 20 (as of August, 2012). Â I realize that the Top 20 would have been different in May and will be different in October once the season is underway, but this is a unique time of the year where even the most protected of shows has finally exited their Spring window and have been pushed out on DVD or at least a digital purchase service (if not a streaming one–rental by the episode is no longer supported by any site).
What were the results? Â Surprising to say the least. Â First, let me give you an idea of the list (since it is relatively short):
Now with this list, you would have thought there would be a high probability to have nearly all but the HBO and AMC series available already. Â The results?
- iTunes carries 75% of the content (in SD) for purchase (most recent season)–Vudu and Amazon were just a step behind them. Â The missing items were all some sort of reality show.
- Netflix has a (not surprising) poor showing for current seasons (strong for past seasons) with only 15% available, but to my surprise, HuluPlus only came in at 40% (disappointing in a big way). Â Combining the two options only yielded 45% availability.
- Physical still trumped all of the options with 80% of them available for purchase from Amazon and 75% for physical rental from Netflix.
- Combining digital purchase and streaming (across all services) yielded a 90% availability (with only X Factor and So You Think You Can Dance absent)–yielding a problem discussed inÂ my blog last week of finding content across multiple sources.
Microsoft seeks to further establish the Xbox 360 as an access point for all forms of home entertainment, announcing plans to integrate content and services from the likes of cable operator Comcast and networks such as HBO into the Xbox Live dashboard. The integration does not represent a consolidation of consumersâ cable bills, however (via the Seattle Times); access to cable programming, for example, will require subscriptions to both cable (and Internet) service and Microsoftâs $60-per-year Xbox Live Gold package.
Netflix and DreamWorks Animation announced their completion of an agreement for the streaming video service to begin offering DreamWorks films and television specials in 2013 (via The New York Times). For the studio, the dealâunder which Netflix will pay an estimated $30 million per picture, according to analystsâreplaces a licensing agreement between DreamWorks and HBO.
DreamWorks Animation chief executive Jeffrey Katzenberg tells the Times that the deal is âgame-changing,â in that it represented the first time a major Hollywood studio chose a video streaming service over a pay-TV network for distribution of its films. But others see the announcementârumors of which first surfaced in Julyâas more of a stopgap publicity measure for Netflix, which is still responding to customer outcry over its price increases and further separation of the companyâs discs-by-mail and streaming services.
CNET contends that the company needs to land major-studio streaming content sooner rather than later, as Netflixâs distribution pact with Starz (under which the company has offered streaming films from Disney and Sony Pictures) is due to end in February 2012.
Netflix is close to securing exclusive streaming rights to films from DreamWorks Animation SKG, in a deal that would spell the early termination of a pay-TV pact between the studio and Time Warnerâs HBO, Bloomberg reports.
A new agreement certainly would be high-profile for Netflix; the studioâs films include the âShrekâ and âKung Fu Pandaâ franchises. But one analyst notes that with the DWA-HBO agreement running through 2014, âAny earlier deal would clearly need HBOâs consent, which it would obviously not provide unless there was a financial benefitâ (via The Hollywood Reporter).
If the Netflix deal was the result of HBO offering the studio an early-exit option, says Janney Montgomery Scott analyst Tony Wible, it would âbeg the question of whether Netflix won a DWA deal or was the buyer of last resort.â
Speaking at a conference last week, DreamWorks Animation chief Jeffrey Katzenberg didnât hint at changes to the studioâs streaming distribution. But the executive did sound off on everything from the quality of theatrical films to 3D television and studiosâ forthcoming UltraViolet digital rights initiative. See BTIG Research (registration required) for a link to Katzenbergâs comments.
Executives from HBO and Netflix observe continuing opportunities in the physical disc business, even as home entertainment markets around the world move to digital models.
Speaking at the Nomura U.S. Media Summit June 2, Netflix chief content officer Ted Sarandos acknowledged that his company has been primarily focused on building its streaming services, while its U.S. DVD rental business âhas been running calmly on its own.â
Still, Sarandos noted, âthere are a lot of markets that are terribly underserved for DVD rental, and [that] donât have the kind of broadband speeds yet to backfill with streaming.â Accordingly, âover the next couple of months, couple of years, youâll see us putting a little bit more of a focusâ back on physical media rentals.
The ramifications for disc manufacturers are difficult to ascertain, given that DVD sales remain in overall decline. Sarandos attributes waning DVD sales to persistent economic conditions, as well as consumer desire for greater digital access to a broad array of content.
âWhat we need to do as an industry, Sarandos said, âis figure out how to monetize the new [consumer] behavior, which is monetizing access to media, instead of ownership.â
Nevertheless, as Netflix CEO Reed Hastings himself has long held, Sarandos maintained that âthe value proposition of the DVD business is going to be good for a very long time.
âMost of our subscribers will take a disc here and there,â Sarandos said, noting that customer tastes remain immensely broad. On an average day, customers are renting some 45,000 of Netflixâs 100,000-plus DVD titles.
While streaming services continue to be main source of growth for Netflix â as the company eyes expansion both in the U.S. and abroad â Sarandos acknowledged that physical media has a role to play in that market transition.
âI think Blu-ray probably becomes the default [physical medium], and will replace DVDs over time â because the [Blu-ray] machine is so much better for streaming,â he said. âOddly, thatâs the thing thatâs going to attract people to Blu-ray.â
Even the DVD rental businessâs âfirst-sale doctrineâ â which Netflix leveraged as a bargaining chip in its 28-day window agreements with several studios â is providing the company with a counterweight against content owners such as HBO, which is withholding digital licenses of original programs to build up its own catalog of exclusive streaming content.
âI honestly think the âabsolutely exclusive foreverâ strategy will evolve over time,â Sarandos said, adding that HBO shows like âEntourageâ are âon DVD, so [they are] really not that exclusive anyway.â
HBO Sees DVD âUptickâ
Naturally, HBO expresses a somewhat different viewpoint than Netflix. But the content owner is also continuing to pursue opportunities for packaged media in a digital world.
Speaking at the same Nomura conference, HBO chief executive Bill Nelson said that even as the company markets its exclusive âHBO Goâ streaming services to its pay-TV subscribers, DVD sales of original programs are still contributing to the companyâs global expansion.
On a global basis, Nelson said, âour DVD business is on an uptick, bucking the industry trend. Itâs the result of our continued investment in original programming â not only have we upped the quantity but weâre upping the quality.â
Nelson predicted that as long as HBO keeps producing hit original series, its global DVD growth should continue. âWorst case,â he said, âit flattens.â
Time Warner will encourage home entertainment consumers to purchasing more digital media goods over physical discs because digital transactions represent âbetterâ earnings prospects for the company âon a like-for-like basis,â according to John Martin, the media conglomerateâs chief financial officer.
âOur strategy,â Martin said at a Morgan Stanley investor conference March 2, âis to try to push usage, through pricing and windowing, to the highest-margin channels.â
Those channels could include so-called premium VOD, which Warner Bros. and other studios plan to launch in partnership with cable, satellite and Internet service providers later this year; and digital services marketed directly by Warner units, such as HBOâs Internet VOD service, HBO Go. Martinâs remarks followed HBO Go unveiling online access to a library of some 1,400 movies and original series for its pay-TV subscribers.
Martin added that Warner Bros.â windowing strategy with DVD rental services such as Netflix and Redbox has brought an approximate 15% sales lift âfor comparable films once the window was instituted versus before the window was instituted.
âWeâre convinced,â he said, that the studioâs institution of a window âwas helpfulâ and âthe right thing to do.â Warner executives noted during the companyâs earnings call in February that the studio would be evaluating the terms of its window agreements. âBut [we] would certainly rather have the window than not have the window,â Martin said.
For Time Warner, whose business units span television production and videogame development, the home entertainment industryâs digital transition is a long-term growth prospect. In 2011, Martin offered, increases in cable network affiliate fees, among other sectors, pose more immediate and assured revenue growth opportunities.
âItâs going to take some time [for home entertainment markets] to shake out,â he said, âbut I think if we successfully execute and can transition from physical to digital, as an industry, it [will present] a nice opportunity for us.â
Fox joins ABC, CBS, NBC, and broadcaster-backed Hulu in blocking Google TV devices from accessing programs streamed on its websites, according to paidContent. Google continues to count among its partners cable networks such as HBO and Turnerâs TBS and TNT, along with electronics makers Logitech and Sony Electronics, and online video sites such as Sony-owned Crackle (which announced an optimized site for Google TV this week, via GtvHub).
Speaking at yesterdayâs NewTeeVee Live conference in San Francisco, Google TV executive Rishi Chandra tried to characterize broadcastersâ ambivalence as a matter of course. âItâs not unheard of when thereâs a new technology,â he said, âthat a lot of incumbents in the space are trying to find out what that technology means for them.â
But Chandra also tried to qualify Google TV as a complementary service, as opposed to a disruptor, to the traditional pay-TV business. âCord-cutting is not happening anytime soon,â he said (via TechCrunch). âWeâre not trying to replace cable.â
The Google TV service will launch with apps including Netflix, Pandora, and Amazonâs Video on Demand, with the company planning to open the platform up for independent app development in 2011. So says Google on its newly unveiled promotional site for the service, which electronics makers such as Sony and Logitech are integrating into âsmartâ TVs, Blu-ray players, and set-top boxes for introduction this fall.
Google also announced content partnerships with several television networks, including HBO and Turner Broadcasting; but its general focus differs from the rental model put forth by the rival Apple TV service. More at TechCrunch and the New York Times.
Time Warner took a key step Wednesday in its ambitious plan to migrate its subscription-based cable-TV model onto the Internet, with HBO announcing that its Go broadband programming service will soon be available to Verizon FiOS subscribers. The HBOGO.com will contain 600 hours of the pay cable networkâs programming and be available to subscribers of both FiOS Internet service and HBO. By The Wrap
Exclusive output deals between HBO and three major Hollywood studios stand as major obstacles to a robust movie-dowload business, holding back a potentially lucrative distribution channel and creating conflict between the powerhouse divisions of TimeWarner — HBO and Warner Bros. — who for once find their interests at odds. By TheWrap
HBO has launched its first TV campaign dedicated entirely to Blu-ray Disc, covering such new release and catalog titles as âTrue Blood,â âBand of Brothers,â and âJohn Adams.â The spots, which run through Christmas, are running on male-centric shows and networks, including during NFL games on Fox and NBC, and on channels ESPN, Spike, G4, FX, and others. By Video Business