Comes With Content Making a Comeback

One year after shutting down its Ovi Music Unlimited streaming service that came bundled with its smartphones, Nokia is trying again. On Tuesday, just ahead of its official unveiling of its first Windows Phone 8-powered Lumia handsets, Nokia announced a new music streaming service that will come bundled with its devices. Unlike Ovi Music, however, the new service will be free — no ads, no subscription fee. While the idea of bundling content with devices is not new, increasingly, content services are integral to device makers’ hardware strategies.

Nowhere is that more true than with Amazon, whose Kindle e-book readers and Kindle Fire tablets are essentially portable front doors to Amazon’s digital content stores. And sure enough, Amazon on Tuesday, just ahead of an expected announcement regarding a new-generation Kindle Fire,  announced a new deal with Epix to bring new-ish Paramount, Lionsgate and MGM films to its Prime Instant Video subscription service that comes bundled with the Amazon tablet.

The trend is becoming so pronounced that some analysts are speculating that content service providers will need to start building their own hardware to remain competitive. Simulmedia CEO Dave Morgan, for instance, makes the case of a Yahoo-branded TV in the current issue of Ad Age. Conversely, Brian Lowry of Variety wonders whether even Apple can remain competitive without its own subscription-based iContent services.

Here’s our prediction: The new Microsoft Surface tablets will come bundled with Xbox Live, giving the tablets their own, closely linked content service and taking the highly popular Xbox Live platform beyond the game console.

 

 

Amazon Adds Streaming Video Content to PlayStation 3

Sony and Amazon just announced the addition of more than 120,000 movies and TV shows on Amazon Prime that are now available for purchase or rent on the PlayStation through the Amazon Instant Video app.

The announcement makes the PS3 the first and only video game console system to offer access to Amazon Instant Video content.

Consumers who want to use Amazon to rent videos will have to link their Amazon and PlayStation accounts and verify it through their computer. Amazon Prime members will have direct access to the free streaming content as part of their $79 per year service.

This deal puts Sony in line with rival Microsoft, who announced last week it had added access to HBO Go, MLB.TV and Xfinity through its Xbox Live marketplace.

To mark the launch of the PS3 app, Amazon is offering Prime and non-Prime customers the first episodes of more than 100 shows free of charge via streaming. To install the app, uers can go directly to the Amazon TV/Video Services category on the Xross MediaBar. It’s also available from the PlayStation Store under the Media & Apps category.

Netflix Adds ‘Arrested Development’ in Original Content Deal

Twentieth Century Fox Television and Imagine Television will produce new episodes of acclaimed comedy series “Arrested Development” in an exclusive deal with Netflix, the companies announced late Friday. The new episodes are slated for exclusive availability to Netflix’s U.S. streaming service customers in 2013.

Other streaming services, such as Hulu (via Vulture), had been competing with Netflix to land new episodes of the series. The deal marks the second high-profile original production that Netflix has nabbed in recent months; it also has secured exclusive rights to Media Rights Capital political drama “House of Cards” for a late 2012 rollout.

Although Fox cancelled “Arrested Development” in 2006 after three seasons, the show subsequently gained a broader audience on DVD. The parties envision the deal spanning roughly 10 new episodes of the show (via The Wall Street Journal), and the entire original cast is expected to return (via the Los Angeles Times).

Disney-ABC Re-ups with Netflix for Streaming; Network Also Licenses to Amazon

While Disney renews its licensing agreement with Netflix for streaming episodes of ABC television series, it also has struck a similar deal with Amazon, Netflix’s aspiring competitor in the video-on-demand space.

Episodes from new seasons of current Disney-ABC series such as such as “Desperate Housewives” and “Grey’s Anatomy” will be made available to Netflix subscribers 30 days after the last episode of each season airs. The agreement also includes shows from The Disney Channel, such as “Phineas & Ferb,” as well as the ABC Family network.

“We are thrilled to broaden the scope and extend the terms or our relationship,” said Ted Sarandos, Netflix’s chief content officer, in a statement.

Meanwhile, Amazon announced a similar licensing agreement with Disney-ABC Domestic Television, under which members of the company’s Prime service can stream shows on some 300 devices, including Amazon’s own Kindle Fire. Brad Beale, Amazon’s director of video content acquisition, said in a statement that the company was “working hard to add even more selection for Kindle Fire customers and Prime members leading up to the holidays.” Amazon expected to have nearly 13,000 titles available through its Prime Instant Video service by early next year, Beale said.

Amazon Adds More PBS Programming to Prime

Members of Amazon’s Prime service will gain streaming access to more than 1,000 episodes of PBS television series including “NOVA,” “Antiques Roadshow,” and the Ken Burns-directed “Prohibition,” under an expanded licensing deal between Amazon and PBS Distribution.

The deal further sweetens Amazon’s offer of a free month of the Prime service to those who purchase the company’s new Kindle Fire tablet. “We are committed to bringing Prime Members and Kindle Fire owners even more compelling content very soon,” said Brad Beale, Amazon’s director of video content acquisition, in a statement.

Hulu Owners Call Off Sale Talks

Hulu will continue as a joint venture between News Corp., Providence Equity Partners, and The Walt Disney Company (as well as non-management stakeholder NBCUniversal), with the site’s owners jointly stating that they have terminated talks to sell the streaming video service.

“Since Hulu holds a unique and compelling strategic value to each of its owners, we have terminated the sale process and look forward to working together to continue mapping out its path to even greater success,” the companies said in a statement on Thursday. “Our focus now rests solely on ensuring that our efforts as owners contribute in a meaningful way to the exciting future that lies ahead for Hulu.”

More on why sales talks with the likes of Amazon, Dish Network, Google, and Yahoo likely broke down at paidContent and The Wall Street Journal.

Netflix Lines Up DreamWorks Animation Films for Streaming in 2013

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 deal—under which Netflix will pay an estimated $30 million per picture, according to analysts—replaces a licensing agreement between DreamWorks and HBO.

DreamWorks Animation chief executive Jeffrey Katzenberg tells the Times that the deal is “game-changing,” 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 announcement—rumors of which first surfaced in July—as more of a stopgap publicity measure for Netflix, which is still responding to customer outcry over its price increases and further separation of the company’s discs-by-mail and streaming services.

CNET contends that the company needs to land major-studio streaming content sooner rather than later, as Netflix’s distribution pact with Starz (under which the company has offered streaming films from Disney and Sony Pictures) is due to end in February 2012.

Dish Markets Streaming ‘Blockbuster Movie Pass’ as Pay-TV Premium

Stepping up its competition with Netflix, pay-TV provider Dish Network said on Friday that its subscribers will be able to add a premium “Blockbuster Movie Pass” package for streaming access to thousands of films.

Ira Bahr, Dish Network’s chief marketing officer, said that the Blockbuster Movie Pass will be offered as a $10 per month add-on to any Dish Network pay-TV subscription. The new service will launch Oct. 1.

Blockbuster’s discs-by-mail service, which offers rentals of DVDs, Blu-ray discs and video games, will be included as part of the Movie Pass package. Bahr said the service’s $10 monthly price compares favorably with Netflix’s discs-by-mail (Qwikster) and streaming video services, which together cost subscribers nearly $16 a month.

The integration of Blockbuster Movie Pass with Dish’s pay-TV service also would offer customers a single-bill advantage over maintaining separate Netflix and pay-TV subscriptions, Bahr said.

Content distributors participating in the Blockbuster Movie Pass launch include Starz, which recently declined to renew its streaming distribution agreement with Netflix.

Netflix Nets Discovery TV Series for Streaming

With Discovery Communications agreeing to bring seasons of its popular TV series such as “Man vs. Wild” to Netflix’s streaming service, the video renter has gained an opportunity to refocus its marketing message on offering hit content (via Reuters).

Speaking at a Goldman Sachs media conference in New York on Wednesday, Discovery chief executive David Zaslav said the two-year deal with Netflix holds “meaningful economics” for the company, and is purposely short-term so that Discovery can determine the effects of Netflix availability on its other distribution channels (via The Wall Street Journal). Discovery has an option to renew the agreement for a third year; other terms of the deal have not been disclosed.

Dish Network To Announce Streaming Service Details Friday: Reports

While Netflix spends this week marketing the “Qwikster” rebranding of its discs-by-mail service to customers and shareholders, rival Dish Network is planning to announce further details of its anticipated Blockbuster streaming-movie service on Friday, according to reports.

The Friday announcement from Dish—first reported by Bloomberg—will reveal pricing for the new streaming service, which is expected to launch in October. The Blockbuster-branded service could first launch as an add-on package for Dish’s pay-TV customers. More details on the planned press event at CNET.

Meanwhile, Netflix’s Sunday announcement of further changes to both its streaming and DVD services has sparked a new round of analyst speculation and customer commotion. Splat F and The Street offer the analysts’ perspective: both articles address whether the reorganization points to Netflix’s preparation of the DVD business for an eventual spinoff or sale. The New York Times and PC Magazine cover Qwikster’s consumer marketing challenges—evidently among them, distinguishing the service on Twitter.

Why They Buy: A Rationale for Ownership in Digital Music

Approximately nine in 10 online music consumers prefer to “own” the music they like rather than stream it, according to findings of a survey commissioned by subscription service eMusic.

Among the results of the eMusic survey is the conclusion that 86 percent of the digital music audience “feel that ownership gives them security that their files will not disappear.” The stat should also comfort marketers of video downloads, including forthcoming UltraViolet movies.

How do the other 14 percent of online music consumers from the eMusic survey perceive “ownership?” The survey results are silent. Perhaps they download music from iTunes, Amazon MP3, or eMusic itself (which, while a subscription service, sells MP3 downloads) soley for instant gratification; over the years, these paid services may have earned their trust, and there is no need to search for music elsewhere.

Or perhaps these consumers are no longer interested in building digital music libraries of their own; they enjoy the breadth, depth, and immediacy of music access that services such as Spotify Premium offer. Yet even though streaming music has been around for more than a decade, the majority of consumers are only beginning to become aware of such services.

Among the survey’s other data points: 39 percent of online music consumers say they would consider storing music files they own in a cloud-based locker, so that they can listen to them anywhere.

Research firm Insight Research Group conducted the eMusic survey in August and September, obtaining responses from 1,000 online music consumers ages 18-64 nationwide. An unspecified portion of the survey group subscribe to eMusic’s service.

Netflix Lowers Subscriber Expectations for Discs-By-Mail, Streaming Services

When Netflix announced its intention to split its discs-by mail and streaming video services in the U.S. into separate subscription plans, the company estimated that 3 million of its customers would subscribe solely to the discs-by-mail service by the end of the third quarter (Sept. 30). At the time, Netflix also said its newly created discs-by-mail division would help ensure that the company’s DVD business remained “as healthy as possible for as many years as possible.”

Today — two weeks after Netflix’s service changes and concomitant price increases went into effect — the company announced that it was lowering its starting subscriber expectations for its new discs-only service as well as its streaming-only plan in the U.S.

Netflix cut its end-of-quarter projection of discs-only subscribers by 26.7 percent, from 3 million to 2.2 million. The company also trimmed the number of U.S. subscribers projected to opt for its streaming-only service to 9.8 million, from an original expectation of 10 million.

Netflix still expects 12 million of its U.S. customers will subscribe to both its discs-by-mail and streaming services by the end of September. The company also left unchanged its financial guidance for the third quarter.

In a Sept. 15 note to shareholders, Netflix intimated that customer pushback on the price hikes prompted the company’s guidance revisions. In defending its splitting of services as “the right long-term strategic choice,” the company reiterated its four key objectives:

“(1) to create a dedicated DVD rental division that takes pride in great execution and maximizes the opportunity for disc rental over the coming decade;

“(2) to enable us to improve our global streaming service even more rapidly, because it is not meshed with a domestic DVD business;

“(3) to enable us, with the growth in revenue, to license more streaming content and thereby improve our streaming service even more;

“(4) to remain very price aggressive, with $7.99 per month for unlimited streaming of a huge library of TV shows and movies, and $7.99 per month for unlimited DVD rentals, 1 out at-a-time.”

Netflix plans to share more on its third-quarter performance in October.

More at All Things Digital and GigaOm.

Dish Sets Blockbuster Streaming Service for October Launch: Report

Dish Network plans to launch a Blockbuster-branded movie streaming service next month, in a move timed to coincide with Netflix’s price increases, Bloomberg reports.

Dish, which acquired nearly all of Blockbuster’s assets in April, could ratchet up dealmaking between streaming video service providers and content distributors for top movies and television series. Netflix, for itself, says that it is looking to spend money that it had previously earmarked for renewal of a streaming agreement with pay-TV channel Starz. That deal, which had brought Disney and Sony films to Netflix subscribers, is now set to expire in February, 2012.

While it implements its price increases in the U.S., Netflix is rolling out its streaming service to countries in Latin America, beginning with Brazil (more at paidContent).

Starz Declines to Renew Netflix Streaming Deal

With Starz deciding not to renew its licensing deal with Netflix next year, the online video company faces more pressure to secure streaming rights to top-shelf movies and television series. Under the current agreement with Starz, which runs through February, 2012, Netflix streaming subscribers receive access to movies from Walt Disney Co., such as “Toy Story 3” (via The Wall Street Journal). Subscribers also enjoyed streams of Sony Corp. films under the deal until the studio pulled its programming from the Starz service in June.

Analysts are divided over how significant the loss of the Starz deal will be to Netflix’s streaming service (more at Reuters). A Netflix spokesman told Bloomberg, “We are confident we can take the money we had earmarked for Starz renewal next year, and spend it with other content providers to maintain or even improve the Netflix experience.”

In related news, the company’s much-talked-about price increases took effect Thursday.

DVD Streaming Service to Appeal Injunction

Zediva has notified a California federal court that it will ask the Ninth Circuit Court of Appeals to overturn a preliminary injunction that prompted a shutdown of the DVD streaming service (via The Hollywood Reporter).

The propriety of the injunction is a separate issue from the legality of Zediva’s DVD “rental” service, which major Hollywood studios have contested. In reviewing the injunction, the appeals court will likely determine whether the studio plaintiffs demonstrated that they were suffering irreparable harm from Zediva continuing to operate.

How Will iTunes Match Stack Up Against Streaming Services?

It’s still unclear whether iTunes Match will offer music streaming, despite a video clip (via Insanely Great Mac) demonstrating what appears to be a streaming function in Apple’s forthcoming service.

An Apple spokesperson tells All Things Digital that iTunes Match users will need to store songs on their iPad, iPhone, or computer after they access them from their cloud-based iTunes Match account. Even though it has released a beta for iTunes Match to developers, Apple is remaining cagey on whether the service requires actual downloads of songs to devices, or whether users will be able to store songs in a temporary cache, as Spotify Premium users can to play songs while in an offline mode.

We may have to wait until Apple’s fall introduction of iTunes Match to ascertain just how it stacks up against a paid streaming service such as Spotify Premium. But one fundamental difference between Apple and its streaming rivals is already evident.

Although Apple will charge an annual $25 fee for iTunes Match, customers will only be able to access music that they have purchased from iTunes (or acquired from elsewhere). This is in keeping with the access-upon-ownership model that Apple, in cooperation with studios, recently effected for television programming on iTunes.

Spotify Premium is more akin to the subscription model of Netflix: users pay $120 a year for unlimited streaming access to most any music in the company’s 15-million-song catalog. Users can supplement their Spotify playlists with music that they have acquired from iTunes or elsewhere (e.g., Beatles tracks); but Spotify does not offer even Premium users the ability to store music in a cloud-based streaming locker.

Ownership Before Access: iTunes Drops TV Show Rentals

No more 99-cent rentals of TV show episodes at iTunes, as Apple and content providers both shift their marketing marketing messages to condition digital access upon “ownership” of content.

Apple—which with its new “iTunes in the Cloud” service offers streaming access to TV programming that customers have purchased—says that the shift is in line with already-established consumer preferences (via All Things Digital). Content provider Fox, which says rentals of TV show episodes were only a “trial,” states that availability of content through “iTunes in the Cloud” will help “enhance the value of ownership.”

More at the Los Angeles Times.

Walmart Offers Vudu Streaming Direct from Store’s Website

In a marketing push for its Internet video-on-demand subsidiary, Walmart has begun to offer Vudu streaming video rentals direct from its Walmart.com site.

New promotions for the Vudu service include offering a “99-cent movie of the day,” along with “$2/2-night” rentals for select titles.

The integration could prove momentous for Vudu, which touts a streaming library of 20,000 movies and TV shows (via Variety). Walmart.com, meanwhile, receives north of 5 million visits per day from online shoppers.

The streaming service is compatible with Macs and PCs, and available via Internet-connected PlayStation 3 consoles. Vudu also is available on most of the Internet-capable HDTVs and Blu-ray disc players that Walmart sells, with several models featuring a Vudu button on their remote controls.

Netflix Out To ‘Keep DVD As Healthy as Possible for As Many Years as Possible’

Announcing its quarterly earnings on Monday, Netflix said that it would resume marketing of its DVDs-by-mail service in the fourth quarter of this year — even as disc shipments for the company “have likely peaked” amidst subscribers’ increasing preference for streaming video.

Netflix offered shareholders more details on the dedicated DVD division that the company is establishing in San Jose, Calif., stating that the division already is planning improvements to the discs-by-mail service. “Because we believe we can best generate profits and satisfaction by keeping DVD by mail as a division, we have no intention of selling it,” the company states in the letter.

“Our goal,” Netflix says, “is to keep DVD as healthy as possible for as many years as possible.”

Netflix estimates that its total U.S. subscriber base will reach 25 million by the end of the third quarter. Of that number, Netflix expects 12 million will subscribe to both DVD and streaming services, notwithstanding the company’s recently-announced price increase. Some 10 million subscribers are expected to choose the company’s streaming-only plan, while an estimated 3 million will opt exclusively for discs by mail.

Still, DVD shipments during Netflix’s second quarter were lower than the company expected, in part due to the popularity of the company’s streaming-only plan. Some 75 percent of new Netflix subscribers signed up for the $7.99/month streaming service during the quarter.

More on Netflix’s streaming plans at All Things Digital and TechCrunch.

Netflix To Nab DreamWorks Animation Streams?

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 Warner’s HBO, Bloomberg reports.

A new agreement certainly would be high-profile for Netflix; the studio’s films include the “Shrek” and “Kung Fu Panda” franchises. But one analyst notes that with the DWA-HBO agreement running through 2014, “Any earlier deal would clearly need HBO’s consent, which it would obviously not provide unless there was a financial benefit” (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 “beg the question of whether Netflix won a DWA deal or was the buyer of last resort.”

Speaking at a conference last week, DreamWorks Animation chief Jeffrey Katzenberg didn’t hint at changes to the studio’s streaming distribution. But the executive did sound off on everything from the quality of theatrical films to 3D television and studios’ forthcoming UltraViolet digital rights initiative. See BTIG Research (registration required) for a link to Katzenberg’s comments.

On Netflix’s Price Hikes

A little more than a month ago, Netflix content chief Ted Sarandos conceded at an investor’s conference that there were “a lot of markets that are terribly underserved for DVD rental, and [that] don’t have the kind of broadband speeds yet to backfill with streaming.” Accordingly, Sarandos said, Netflix would be “putting a little bit more of a focus” on disc rentals in the near future.

Who could have guessed from Sarandos’s comments that Netflix would soon split disc rentals and streaming access into separate subscription plans, in a move to contain the costs of maintaining physical distribution operations?

The bifurcated subscription services have irked customers, none of whom want to hear how streaming rights to hit movies and TV shows are only getting more expensive for the company. Those who currently subscribe to Netflix’s $9.99 streaming-plus-DVD plan admit that disc rentals are a rarely-used, but nice-to-have option — especially given what some characterize as a spotty streaming library (via CNET). Faced with a 60 percent price hike for both services, more than a few DVD-plus-streaming subscribers have threatened to cancel their memberships entirely. That could bring new customers to Redbox kiosks, argues one analyst (via the New York Post). Rival streaming services, such as those from Amazon and Hulu, could see upside as well.

Consumer outcry to higher prices is hardly a surprise. But at the time of this writing, “Dear Netflix” was trending so high on Twitter that HBO had piggybacked on the publicity with a promoted tweet for its own streaming offer, HBO Go. More on the social network backlash and its ramifications at Seeking Alpha.

In any event, Netflix’s “graceful degradation” strategy for DVD is now apparent. The “gracefully degrading” term comes from the company’s announcement in mid-June that it would no longer support third-party apps that enabled subscribers to manage their DVD rental queues. (Netflix’s own app allows subscribers to manage their streaming queues only.)

Investors, for their part, seem to have applauded Netflix for the price changes, as well as for the company’s renewal of a TV-show streaming deal with NBCUniversal. Netflix’s stock price topped $304 per share on Wednesday (via MarketWatch).

Netflix Splits DVD, Streaming Plans

Under Netflix’s modified pricing plans, customers who want both DVDs and streaming videos will pay $15.98 a month. But unlimited DVD rentals, like streaming-only service, will be available as a $7.99-a-month subscription — in what the company says is a renewed focus on the DVDs-by-mail market.

Previously, Netflix offered a combination plan for $9.99 a month, as it touted the growth of its streaming service. “Given the long life we think DVDs by mail will have, treating DVDs as a $2 add on to our unlimited streaming plan neither makes great financial sense nor satisfies people who just want DVDs,” says Jessie Becker, Netflix’s vice president of marketing, in a corporate blog post. “Creating an unlimited DVDs by mail plan (no streaming) at our lowest price ever, $7.99, does make sense and will ensure a long life for our DVDs by mail offering.”

Becker adds that Netflix also is establishing a separate management team for its DVDs-by-mail business, led by Andy Rendich, the company’s chief service and operations officer.

The price changes take effect on Sept. 1 for existing subscribers. More on Netflix’s move at the Los Angeles Times.

Zediva Responds to Studio Lawsuit

A California federal court is due to rule on the legality of Zediva, the movie rental company that serves streams of top titles from customer-controlled DVD players.

Studios filed a complaint against the company in April, alleging that Zediva’s novel business model amounts to unauthorized public performances of studio DVDs. Unauthorized public performances are unprotected by the first-sale provision of U.S. copyright law, which grants the purchaser of a DVD the right to rent, sell, or otherwise “dispose of” the disc itself.

Zediva asserts that it is not engaged in the public performance of DVDs, but rather, a series of private (and noninfringing) performances: each stream, it says, “is a transmission to the single person who has rented a particular copy of the movie being transmitted” (via GigaOm).

Prior case law favors the studios’ interpretation, according to James Grimmelmann, an associate professor at New York Law School, who analyzed Zediva’s business model in a blog post prior to the lawsuit (via Wired). In Grimmelmann’s opinion, Zediva is less like Blockbuster or Netflix, and more like a Pennsylvania business that offered private exhibitions of videocassettes in the early 1980s. Studios prevailed in a copyright infringement suit against that company.

Zediva says that a more recent case that upheld Cablevision’s cloud-based digital video recorder should apply; Jason Schultz, an associate professor at Berkeley Law School, told Wired in March that a court reviewing Zediva might agree.

Amazon Offers More Streaming Videos to Prime Customers

Amazon is adding more value its Prime service in the form of free streaming access to 1,000 more movies and television shows. Among the programs that Prime customers can now rent are films “The Right Stuff“ and “Y Tu Mamá También,” along with the seven most recent TV seasons of “Sesame Street.”

Prime customers pay $79 for a year’s worth of unlimited two-day shipping on physical goods sold by the site. Amazon began offering Prime customers free streaming access to 5,000 videos in February; last month, company CEO Jeff Bezos said Amazon would be adding more programming to the service.

Netflix to Drop Disc Support for Third-Party Apps

Pressing ahead with plans to allocate more resources to its streaming services, Netflix announced late last week that it would begin to phase out support for third-party apps that let subscribers sort their disc rental queues from mobile devices.

The company’s application programming interface (API) “will be focused exclusively on offering content and functionality from the streaming catalog” by mid-October, according to a June 17 post on the Netflix developer blog.

Netflix’s own mobile apps only allow subscribers to modify their “instant” streaming queues. Subscribers who want to manage DVD or Blu-ray rentals from a mobile device have had to either install a third-party app, or deal with accessing the Netflix website from a mobile browser.

Disc queue management features have helped third-party apps grow in popularity. For example, the Queue Manager app for Android devices had garnered nearly 50,000 downloads by December 2010, according to its developer; the app now claims more than 100,000 installs on Google’s Android Market.

But for Netflix, continuing to support such features would cramp the company’s plans to expand its streaming services, both in the U.S. and Canada as well as new markets abroad.

Daniel Jacobson, Netflix’s director of engineering, stated that the change “clears the path for us to add new features to the API to support international catalogs and languages.”

Some nevertheless urged Netflix to reconsider its decision. “I wrote an app specifically to manage my DVD queue,” griped one developer in response to the announcement.

Netflix, HBO Talk DVD Opportunities Amidst Digital Growth

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 “has been running calmly on its own.”

Still, Sarandos noted, “there are a lot of markets that are terribly underserved for DVD rental, and [that] don’t have the kind of broadband speeds yet to backfill with streaming.” Accordingly, “over the next couple of months, couple of years, you’ll see us putting a little bit more of a focus” 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.

“What we need to do as an industry, Sarandos said, “is figure out how to monetize the new [consumer] behavior, which is monetizing access to media, instead of ownership.”

Nevertheless, as Netflix CEO Reed Hastings himself has long held, Sarandos maintained that “the value proposition of the DVD business is going to be good for a very long time.

“Most of our subscribers will take a disc here and there,” Sarandos said, noting that customer tastes remain immensely broad. On an average day, customers are renting some 45,000 of Netflix’s 100,000-plus DVD titles.

While streaming services continue to be main source of growth for Netflix — as the company eyes expansion both in the U.S. and abroad — Sarandos acknowledged that physical media has a role to play in that market transition.

“I think Blu-ray probably becomes the default [physical medium], and will replace DVDs over time — because the [Blu-ray] machine is so much better for streaming,” he said. “Oddly, that’s the thing that’s going to attract people to Blu-ray.”

Even the DVD rental business’s “first-sale doctrine” — which Netflix leveraged as a bargaining chip in its 28-day window agreements with several studios — 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.

“I honestly think the ‘absolutely exclusive forever’ strategy will evolve over time,” Sarandos said, adding that HBO shows like “Entourage” are “on DVD, so [they are] really not that exclusive anyway.”

HBO Sees DVD ‘Uptick’

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 “HBO Go” streaming services to its pay-TV subscribers, DVD sales of original programs are still contributing to the company’s global expansion.

On a global basis, Nelson said, “our DVD business is on an uptick, bucking the industry trend. It’s the result of our continued investment in original programming — not only have we upped the quantity but we’re upping the quality.”

Nelson predicted that as long as HBO keeps producing hit original series, its global DVD growth should continue. “Worst case,” he said, “it flattens.”

In Tennessee, Sharing of ‘Entertainment Services’ Now Against the Law

Those in Tennessee who access Netflix accounts or Amazon Cloud Drives through shared passwords could face thousands of dollars in fines, as well as possible jail time, under a new state law that criminalizes theft of “entertainment services.”

The purpose of the law, reports the Associated Press, is to combat hackers who sell account passwords in bulk. But causal sharing of account information among friends or family members could constitute a criminal offense as well. “What becomes not legal is if you send your user name and password to all your friends so they can get free subscriptions,” says state Representative Gerald McCormick, one of the sponsors of the legislation.

A summary of the law is here. The law amends Tennessee’s existing “theft of services” legislation, which already covered theft of cable and other pay-television access. Content owners are lobbying for more state legislatures to enact similar measures.

Apple Said To Sign Sony Music For Cloud Service

Following a CNET report that Apple had completed deals with EMI Music and Warner Music Group for a soon-to-be-launched music storage and streaming service, Bloomberg reports today that the computer maker has signed a licensing agreement for the service with Sony Music as well. That would leave Universal Music Group as the last among major record companies to reach an agreement with Apple for the anticipated service, which could be previewed at Apple’s developers conference in early June.

Meanwhile, GigaOm reports on the speculation that Apple may incorporate “scan and match” technology into the service, eliminating the need for users to spend time uploading their music collections to a virtual locker (as the cloud services of Amazon and Google require). Apple acquired the technology — which scans a user’s hard drive and matches song files to those already stored on company servers — when it purchased the Lala streaming music service in 2009.

Netflix Inks Streaming Deal with Miramax

Beginning in June, Netflix subscribers in the U.S. will be able to access streams of several hundred Miramax movies, with Netflix planning to add “dozens of titles” on a rotating basis. The companies did not disclose terms of the deal; a knowledgeable source tells the Los Angeles Times that the agreement is non-exclusive and guarantees the studio at least $100 million in payments.

The Netflix deal marks the studio’s first with a digital subscription service. In February, Miramax signed an agreement with Lionsgate and Studiocanal to distribute more than 550 titles from its film library via DVD, Blu-ray, electronic sell-through and Internet video-on-demand, in addition to cable VOD internationally.

Major Studios to Back YouTube’s Movies-On-Demand Service

YouTube plans to add films from Sony Pictures Entertainment, Universal, Warner Bros., and other studios to its movie rental site, as the online video giant works to develop a transactional VOD business.

A studio source tells The Wrap, which first reported the YouTube deals, that the company is “pretty excited because we are happy to see new entrants come in transactionally rather than [with] a subscription model.” The deals follow Facebook’s recent rollout of a pilot movie-rental program with Warner Bros.

YouTube tells The Wrap it already offers “thousands” of titles for rent; the company has been quiet on the amount of VOD business the site has seen since the store’s launch in 2010.

Studios Sue Zediva Streaming Service

Major movie studios allege the recently-launched Zediva movie streaming service is a “sham” that infringes their public-performance rights under copyright law, in a suit filed with a California federal court Monday.

Zediva offers Internet streaming rentals of new-release movies such as “Black Swan” and “Tangled” for $1.99 each. But a physical media backbone purportedly drives the streaming video interface. “When you rent a movie on Zediva, you are renting both a DVD and DVD Player in our data center,” the site reads on its FAQ. “During the period of the rental, the DVD and the DVD Player can only be used by you.”

In a statement, the Motion Picture Association of America (MPAA) calls Zediva’s DVD rental model an unlicensed “sham.” “Zediva is a video-on-demand service that transmits movies over the Internet using streaming technologies in violation of the studios’ copyrights,” the trade group says.

Zediva has yet to respond to the suit. But studios seem to have several previous rulings of other courts on their side, a copyright scholar tells The Hollywood Reporter.

It’s unclear how many users Zediva has attracted since its launch in March. Registration for the service is “temporarily closed” while the company expands its streaming capacity, according to the Zediva site, but site visitors may add their email addresses to a waiting list.

Netflix Announces Exclusive TV Series for 2012

As rumored last week, Netflix has acquired exclusive distribution rights to “House of Cards,” a high-profile television series now in development. The company has committed to a minimum of 26 episodes of the Media Rights Capital political drama, which is executive-produced by David Fincher and stars Kevin Spacey. The series will debut via Netflix’s streaming service in late 2012.

Netflix’s chief content officer, Ted Sarandos, writes on the company’s blog that Netflix remains committed to its goal of “expand[ing] our selection of previous seasons of popular TV shows” on its “watch instantly” streaming service. “We may bring more exclusive series to Netflix in the future,” Sarandos says, “if an opportunity arises that has the key elements a show needs to be successful: great storytelling and great storytellers.”

Consumers Report Digital Video Surge: NPD

Judging from the self-reporting of some 10,000 online consumers, research firm NPD estimates that streaming subscriptions, Internet video-on-demand services, and other digital video products have grown to account for “one quarter of all home video volume.”

Netflix’s share of all digital movie units (downloaded or streamed) reached 61% between January 2011 and February 2011, according to the NPD survey. Comcast’s VOD service places a distant second at 8%. DirecTV, Time Warner Cable, and Apple each claim a 4% share.

“Sales of DVDs and Blu-ray Discs still drive most home-video revenue, but VOD and other digital options are now beginning to make inroads with consumers,” says Russ Crupnick, NPD entertainment industry analyst. “Overwhelmingly digital movie buyers do not believe physical discs are out of fashion, but their digital transactions were motivated by the immediate access and ease of acquisition provided by streaming and downloading digital video files.”

NPD also reported consumer perceptions of four modes of digital video acquisition, including electronic sell-through (EST), Internet VOD (iVOD), cable VOD, and subscription streaming. While Netflix’s streaming service is rated as providing the best “overall shopping experience” and “value for price paid,” consumers rate iTunes as having the most “current releases available.”

Amazon Testing Video Streaming As Value Add?

Amazon.com apparently has been testing free unlimited streaming of some 5,000 movies and TV shows as a value-add to its $79-a-year Prime subscription service, according to a screenshot obtained by Engadget. Neither the news site nor story commenters who subscribe to Amazon Prime could corroborate the story this weekend, however.

Prime currently exists as a premium shipping service for frequent Amazon.com customers. Subscribers receive unlimited two-day shipping on orders for entertainment media and a range of other products.

At $79 a year, Engadget points out, a Prime subscription with a free-streaming bonus would cost less than Netflix’s $7.99-a-month Watch Instantly service.

Amazon’s video-on-demand service currently offers a-la-carte streaming rentals and download purchases.

Data Reveals Disparity Between Movie Streaming and Box Office

While Netflix, iTunes, and others continue to position streaming as the future of home entertainment, catalog titles still comprise the bulk of the movies on offer, according to recently compiled market research.

Out of the 100 top-grossing movies of 2010, Netflix’s unlimited streaming service carries only nine, reports technology journalist Tristan Louis (via Home Media Magazine). Amazon’s a-la-carte VOD service, in comparison, offers 48 of last year’s top 100 box office hits, while 74 of the movies have seen DVD release.

Louis’s findings will come as no surprise to any Netflix subscriber who has ever browsed the site’s watch-instantly section. Yet slim pickings among true “new release” films has yet to impact the company’s growth.

Vudu Adds 3D Movies to Streaming Offer

In efforts to raise its profile in the burgeoning video-on-demand market, Walmart subsidiary Vudu plans to begin offering instant streaming of 3D movies next week to select 3D-capable HDTVs and Blu-ray disc players.

The company made its announcement at the Consumer Electronics Show in Las Vegas today (release via Engadget). Among the products supporting the 3D streaming service are Sony’s PlayStation 3 system and Boxee’s media software. Other supporting manufacturers include Funai (marketer of the Magnavox and Sylvania brands), LG Electronics, Mitsubishi Digital Electronics America, Philips, Samsung Electronics America, Toshiba, and Vizio.

Tech Companies Offer More Economical Blu-ray Streaming

A new digital preparation and delivery solution from Panvidea and Related Content Database (RCDb) enables studios to take greater advantage of the streaming capabilities of Internet-connected Blu-ray players.

Using Panvidea’s cloud-based media processing tools and RCDb’s Blu-ray content preparation software, studios can quickly and economically process large libraries of content into the streaming BD-Live format, the companies say. Panvidea powers the digital video processing workflows of media companies such as A&E Television Network and Fox Broadcasting, while RCDb software powers Blu-ray disc products from Hollywood studios and network operators.

Studios to date have employed BD-Live chiefly to stream of trailers or bonus material for discs. But the technology is capable of streaming feature-length programming, as RCDb demonstrated with Netflix in 2009 with the renter’s “instant streaming” disc for subscribers using PlayStation 3 consoles.

The Panvidea-RCDb offering is available immediately.

U.S. Royalty Board Issues New Webcasting Rates

The U.S. Copyright Royalty Board released last week royalty rates and terms for webcasters that stream digital music, but that have not yet participated in various settlement agreements with royalty collectors.

The judges struck a middle ground between the desired rates of royalty collectors and those of websites, with rates per performance rising from $0.0019 in 2011 (the same rate as in 2010) to $0.0023 in 2015. Billboard compares the scheme to terms already accepted by streaming radio sites such as Pandora. Litigation by Web radio network Live365 led to the new rates.

Online Video: Bieber Streams Top 1 Billion in 2010

Teen singer Justin Bieber garnered 1.07 billion streams in 2010 (through Dec. 7), according to tracking data released by TubeMogul (via Billboard). Bieber’s total was 18% more than streams collected by Lady Gaga, the No. 2 artist on TubeMogul’s chart (879 million), and an 83% more than  videos by David Guetta, the No. 10 artist (179 million).

Bieber alone represented roughly 7% of the total 14.8 billion videos streamed by the music industry’s top five publishers this year. TubeMogul’s figures include video streams on YouTube and MySpace from the industry’s five leading publishers (EMI, Hollywood Records, Sony Music, Universal Music Group, and Warner Music Group).

Mobile Video Viewing on the Rise in U.S.: Research

On a year-to-year basis, the number of people watching mobile video has increased more than 43%, while the amount of time spent doing so was up almost 7%, according to Nielsen.

The mobile viewership is still relatively small: of the 229 million people who used a mobile phone in the second quarter of 2010, an estimated 22 million, or 10%, watched a video on their device. Yet among mobile video viewers, the average time spent with such videos is not insignificant: 3 hours and 37 minutes on a monthly basis.

Mobile video viewing is most popular among the 25-34 age group (comprising 30% of the total audience), followed by adults aged 35-49 (25%) and teens aged 13-17 (18%).

Netflix Nets ABC, Disney Television for Streaming Service

Netflix and Disney-ABC Television Group have a new licensing agreement in place that will allow Netflix to stream episodes of shows from the ABC Television Network, Disney Channel, and for the first time, ABC Family.

New episodes will debut on the streaming service “no earlier than 15 days after initial telecast,” the companies said in a statement. Netflix’s streaming subscriptions start at $7.99 a month.

New shows to Netflix include “Ugly Betty,” “Phineas and Ferb,” and “Greek.” Disney Channel and ABC Family movies such as “High School Musical” also are part of the deal.

Terms of the licensing agreement were not disclosed.

Netflix Starts Streaming-Only Option in U.S., Raises Subscription Prices

Stating that its subscribers are now watching more content via Internet streams than discs delivered by mail, Netflix has begun marketing a streaming-only subscription plan for U.S. customers for $7.99 a month. The anticipated move follows Netflix’s introduction of a streaming-only service in Canada in September.

Netflix also announced price hikes for its subscription plans that include DVDs by mail. Subscriptions allowing one DVD out at a time with unlimited streaming, for example, will increase by one dollar a month to $9.99. Price changes take effect now for new sign-ups and in January for existing subscribers.

Vudu Streaming on Panasonic Blu-ray Players

Viacom Blocks Full-Episode Access on Google TV

Viacom has joined ABC, CBS, Fox, and NBC in blocking Google TV devices from accessing streams of full-length TV show episodes from its network websites (such as ComedyCentral.com and Nick.com). “We continue to evaluate Google TV to identify opportunities where it may make sense to optimize our Web content for the platform,” a company spokesperson tells paidContent. (The site questions whether a Web browser, which is essentially what Google TV is, truly represents a bona fide distribution “platform” just because it pulls content for television screens instead of PC monitors or smartphones.)

Google still has some TV network support, but it is currently touting websites such as CBS-owned CNET and PBS Kids as the “Best of Google TV” in a new promotion for the service.

More on how the major networks are thought to be blocking Google TV devices at The Washington Post.

Hulu Drops Plus Price; Vudu Coming to PlayStation Network Next Week

First launched in a “preview” version in July, the Hulu Plus subscription service is now generally available, with the online video site dropping its monthly price to $7.99 to step up its competition with Netflix.

In a blog post Hulu says that current subscribers who joined during the preview period would receive a credit for the difference from original $9.99/month price.

As of today, the Internet TV service is available on devices including Roku boxes and PlayStation 3 consoles; Hulu said Plus would come to a range of other devices, including Blu-ray players from Panasonic and LG Electronics and the Xbox 360 system, in the months to come.

In other Internet TV news, the Vudu movies-on-demand service is set for debut on Sony’s PlayStation Network next week (via ZDNet). The Walmart-owned company will begin offering its 4,000-film catalog to PlayStation 3 users on Nov. 23, with two-night rentals starting at $2.

Vudu also unveiled plans to upgrade its user interface by the end of the year, sharing snapshots of Vudu 2.0 on its corporate blog.

iTunes Finally ‘Compleat’

As it turns out, Apple didn’t have much of a surprise in store for those who closely watch the digital space — but it’s good news nevertheless.

At long last, the Beatles have arrived at iTunes. Shoppers can purchase individual tracks ($1.29 each), albums ($12.99 each), or the band’s entire collected output ($149.99). The latter set contains the same material as record label EMI marketed last year in mono and stereo CD editions, both of which are still widely available.

The digital albums are exclusive to iTunes through some time in 2011, an EMI spokesman tells All Things D.

Without the Beatles (and a handful of other legacy acts), the iTunes store was incomplete. Sure, the notion of “completism” has evolved from 2004, when Apple introduced the digital-boxed-set concept as part of its pivotal iPod marketing partnership with U2. As any fan of the Netflix or Pandora Radio apps for iPhone/iPad would agree, today’s entertainment services want to be more complete in the breadth and depth of content they offer.

But consumer takeup of such access-oriented services is not mutually exclusive with their continuing desire to own copies of their favorite movies or music.

Today’s Apple announcement, then, is essentially in furtherance of increasing availability. And you know that can’t be bad.

Netflix: TV Shows Account for Half of Streaming Use

TV programming accounts for half of all of the streaming content that Netflix subscribers watch in terms of viewing hours, according to Ted Sarandos, the company’s chief content officer (via paidContent).

The executive — speaking at the Battle for the Digital Home conference in West Hollywood, Calif. yesterday — said the rate outstrips the highest proportion that TV content ever claimed of Netflix’s DVD-by-mail service (20%).

The shift corresponds with an increasing number of streaming agreements between Netflix and television studios, Sarandos points out. But he also noted that short-form episodic television “fit’s people’s lifestyles” today better than a 90-minute movie (via Home Media Magazine).

Two More Cable Cos Report Subscriber Losses

Time Warner Cable reported a third-quarter decline of 155,000 video subscribers, while New York-area provider Cablevision reported a loss of 24,500 subscribers during the same period (via Home Media Magazine). But even as the subscriber losses exceeded analyst expectations, the cable operators echoed Comcast’s reckoning from last month (via the Wall Street Journal) that subscriber declines are due to general economic conditions — as opposed to the advent of Internet-based entertainment options.

Other industry observers maintain that such “cord-cutting” is beginning to impact cable companies’ business. AP quotes Verizon Communications CEO Ivan Seidenberg as likening anecdotes of cord-cutting to the early days of cell phone subscribers giving up their landlines. “The first thing when that happens is you deny it,” Ivan Seidenberg says. “I know the drill. I have been there.”

The volatility continues to be at the low-end of the pay-TV market. In contrast, satellite TV provider DirecTV added 174,000 new U.S. subscribers in its third quarter — while profit at the company rose 31% as customers flocked to its exclusive programming and premium DVR service (via Bloomberg). DirecTV also said that a tightening of its customer credit requirements helped the bottom line.

Hulu Expands Premium Streaming Service

Those interested in Hulu’s paid “Plus” option no longer need an invitation to subscribe to the service, as the major-broadcaster-backed streaming company adds more TV shows and hardware compatibility to its offering. Hulu said in a blog post yesterday that it has recently added new fall TV series such as Fox’s “Raising Hope,” ABC’s “No Ordinary Family,” and NBC’s “The Event” to the Plus service’s catalog.

The company also announced the availability of Hulu Plus on Sony Bravia 2010 TVs, with the service expanding to other Bravia devices “in the near future.” In addition, PlayStation 3 owners with a PlayStation Network account will be able to subscribe to Hulu Plus with the release of an updated application for the console next week.

Amazon Expands ‘Disc+ On Demand’ Offering

Amazon.com is expanding a value-added program under which purchasers of certain DVDs and Blu-ray discs can stream the titles for free via Amazon’s video on demand service.

The retailer now offers some 10,000 movies and TV series under its “Disc+ On Demand” program, from new releases such as “Sex and the City 2” to classics like “Forbidden Planet.”

Nearly 200 Internet TVs, Blu-ray players, and set-top boxes are compatible with the Amazon Video on Demand service, which currently offers more than 75,000 titles for streaming rental or download purchase.

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