AP via ABC News: The business model is unraveling at ABC, CBS, NBC and Fox and the local stations that carry the networks' programming. Cable TV and the Web have fractured the audience for free TV and siphoned its ad dollars. The recession has squeezed advertising further, forcing broadcasters to accelerate their push for new revenue to pay for programming.
That will play out in living rooms across the country. The changes could mean higher cable or satellite TV bills, as the networks and local stations squeeze more fees from pay-TV providers such as Comcast and DirecTV for the right to show broadcast TV channels in their lineups. The networks might even ditch free broadcast signals in the next few years. Instead, they could operate as cable channels — a move that could spell the end of free TV as Americans have known it since the 1940s.
"Good programing is expensive," Rupert Murdoch, whose News Corp. owns Fox, told a shareholder meeting this fall. "It can no longer be supported solely by advertising revenues." [Same AP story via Yahoo, Huffington Post]
Bloomberg: [Netflix] Chief Executive Officer Reed Hastings is counting on [Ted] Sarandos [Chief Content Officer] to cut deals with studios giving Netflix rights to show more films over the Web...
“We have to fight against their fear that we’ll destroy the ecosystem,” Sarandos, a former video-store clerk, said at a Dec. 16 panel discussion. “We’re not destroying anything. We’re creating a new opportunity.”
Sarandos’s success is critical to Netflix as viewers move to the Web, endangering the mail-order DVD rental business that helped the company upend brick-and-mortar stores such as Blockbuster Inc. His challenge is to convince studios to provide content as they explore their own digital options, including offering movies online themselves...
The studios, coping with a decline in DVD sales, are trying to avoid the fate of newspapers and music labels, which lost sales when their content went online. Hollywood executives view digital distribution as a threat to the traditional way money is made from movies.
“Everybody views it as a terminal career decision if you get it wrong,” said Frank Biondi, who has led Universal Studios, Time Warner Inc.’s HBO cable network and Viacom Inc., owner of Paramount Pictures.
Fast-forward: January 2010: Given the costs of TV production, how do you make a business out of this new reality? Hopefully the networks will experiment, furiously, and see what works. They should try advertising, sponsorships, subscriptions. They should try cheaper programming that doesn't suck. They need to try anything and everything. [PBS: Jan. 19, 2009]
Fast-forward: February 2010: Walmart announced today a definitive agreement to acquire VUDU, Inc., a leading provider of digital technologies and services that enable the delivery of entertainment content directly to broadband high-definition TVs and Blu-ray players...
Customers with broadband Internet access and an Internet-ready TV or Blu-ray player can rent or purchase movies, typically in high-definition, without needing a connected computer or cable/satellite service. New movies and features will be added continually, enabling customers to enjoy a product that continues to become more robust long after they have left the store.
...said Eduardo Castro-Wright, vice chairman for Walmart. "Combining VUDU's unique digital technology and service with Walmart's retail expertise and scale will provide customers with unprecedented access to home entertainment options as they migrate to a digital environment."
VUDU has licensing agreements with almost every major movie studio and dozens of independent and international distributors to offer approximately 16,000 movies, including the largest 1080p library of video on-demand movies available anywhere. [Walmart: Feb. 22, 2010]
Fast-forward: March 2010: ...you shouldn’t expect a cable-cord cutter to volunteer this information, a monthly bill is not the only thing you must do without. Because they command hefty advertising rates, few sporting events are streamed live. Premium channels like HBO and Showtime also keep their original programming behind a pay wall, since they rely largely on subscriber revenue...
Cable executives say they are not worried. Setting up a cable-free life is still too daunting for most people, since most of the work-arounds involve a lot more than just grabbing the remote.
“We don’t consider it a threat to our business,” said Maureen Huff, a spokeswoman for Time Warner Cable. “Being able to watch TV on the Internet is not new.”
Without question, the cost of watching television is going up: The average household cable bill in the United States hit $64 a month in 2009, up from $47.50 in 2004, according to Leichtman Research Group, which specializes in media research. [NYT: Mar. 10, 2010]
Fast-forward: March 2010: Google and Intel have teamed with Sony to develop a platform called Google TV to bring the Web into the living room through a new generation of televisions and set-top boxes...
The partners will face a crowded field. In addition to the makers of traditional cable and satellite set-top boxes, Cisco Systems and Motorola, many others have entered the game, including Microsoft, Apple, TiVo and start-up companies like Roku and Boxee, which already stream video from Netflix, MLB.com and other Web sites directly to television sets. Yahoo is also promoting a TV platform that uses small software programs called widgets to use certain Web services. [NYT: Mar. 17, 2010]
Fast-forward: March 2010: While it would be foolish to cheer Blockbuster's decline, its descent speaks to the importance of allowing companies no longer fulfilling market needs to go bankrupt...
...as often happens as companies grow, Blockbuster concentrated on perfecting its existing service while beating competitors offering the same instead of looking into ways that outsiders might destroy its business model altogether. Schumpeter long ago noted that entrepreneurs disrupt: For Blockbuster, the "disrupter" in question was Netflix...
...with video-on-demand increasingly prevalent, what's unknown is whether Netflix will be out-innovated on the way to oblivion as the market for movies perhaps shifts again. [Forbes: Mar. 22, 2010]
Fast-forward (and rewind): April 2010: YouTube turns five... The first YouTube video was uploaded on April 23, 2005. It's called Me at the zoo, and shows founder Jawed Karim at the San Diego Zoo. [WNYC: Apr. 23, 2010]
Fast-forward: May 2010: Hollywood Video chain owner Movie Gallery Inc. plans to shutter its remaining U.S. stores.
The movie-rental chain, which filed for bankruptcy in February for the second time in just over two years, had already commenced plans to close more than half its 2,415 U.S. outlets. The closure of the company's remaining stores will likely take place over the next couple of months or so...
The Wilsonville, Ore., chain had hoped to restructure in bankruptcy court and continue operating around a smaller set of viable stores. The company employed more than 19,000 people when it filed for bankruptcy. Reorganizing around smaller core stores was "honestly debated," said a person familiar with the situation. "It just never got any traction." [WSJ: May 3, 2010]
Fast-forward: May 2010: On the TV side, networks and cablers are still struggling to adjust to consumers' shift to online viewing and changing value of content in syndication.
"It's total and complete chaos. I say that because we're still in a sorting out period." [Variety: May 4, 2010]
Rewind: March 2009: Shake Shack
Fast-forward: May 2010: During a cable industry convention last week, executives from Time Warner Cable Inc. made the first formal pitch to the Hollywood studios for what is known as "home theater on demand." The cable company presented a variety of scenarios. But the main one, which has received early support from some studio executives, would allow consumers to watch a movie at home just 30 days after its theatrical release—far earlier than the usual four months—for roughly $20 to $30 a pop.
That proposal is still being debated and talks are fluid. People close to the matter say that several studios could sign on to a version of it as soon as the fall, making the first movies available on such a system by the end of the year or early 2011...
While the plan could be a boon for consumers, it stands to be highly disruptive for the movie business, particularly theater owners. Hollywood would essentially be overhauling the "windowing" system which has sustained the industry for years.
Studios now maximize revenue by staggering a movie's theatrical release date and the window, or time period, when it is released later on DVD or cable TV...
But maintaining windows has grown more difficult as consumers have grown accustomed to an array of devices that make it easier watch movies whenever and wherever they want.
For years, theater owners have closely guarded the theatrical window to preserve revenues. But as Hollywood's own fortunes have declined recently, studios have become more willing to challenge that system. [WSJ: May 22, 2010]
Fast-forward: May 2010: "We're offering media companies another place to monetize their content with an attractive audience that is growing fast, and it all fits within their existing business mode," said Sony PlayStation chief executive Jack Tretton.
"This medium is here to stay," Mr. Tretton said. "[Media companies] can either find a way to monetize it or bang their heads against a wall and hope it goes away. The smarter companies are going with the former option." [WSJ: May 25, 2010]
Fast-forward: August 2010: Hulu LLC, the video website owned by three of the biggest U.S. broadcast networks, is preparing an initial public offering that may value the company at more than $2 billion, according to a person with knowledge of the plan...
Hulu Chief Executive Officer Jason Kilar has said that Hulu garnered more than $100 million in revenue last year. In an Aug. 2 interview with Bloomberg Television, he said Hulu is “net income positive” and had already drawn more than $100 million in revenue in 2010...
Hulu Plus is currently accepting new customers by invitation only and will become widely available in time for the start of the new broadcast TV season in September. Hulu’s subscription offering puts it in more direct competition with Netflix Inc., which supplies online and mail-order access to movies and past-season TV shows starting at $8.99 a month.
“They haven’t proven people will pay,” Dagres [Spark Capital general partner; Boxee Inc. investor] said, adding that an IPO would allow Hulu’s owners to cash out. “This is not about making money for public investors. I wouldn’t touch it.”
Hulu drew 28.5 million unique visitors in July, ranking 10th among U.S. online video sites, according to ComScore Inc... [B: August 16, 2010]
Fast-forward: August 2010: “There is value in exclusivity,” Kessler [HBO co-president] said in an interview. Consumers “are willing to pay a premium for high quality, exclusive content,” he said...
“We would love to do a deal as well with HBO,” said Steve Swasey, a spokesman for Netflix. “Compete with us or collaborate with us, but we would much rather work with them.”
HBO intends to stick with its own plan to make shows and movies available online through HBO Go, Kessler said. The cable channel, which has more than 29 million subscribers, generated operating profit of $1.2 billion on $3.9 billion in revenue last year, according to a presentation by Time Warner on May 27. The sister channel Cinemax has about 12 million.
The combination of a DVD mail-order and online service makes Netflix both a customer and “potential competitor,” Jeff Bewkes, CEO of New York-based Time Warner, said on an Aug. 4 conference call with analysts before the Netflix-Epix deal. “Although so far it’s been more of a complementary service to HBO than a competitor.”
In six months, HBO Go will be available to the channel’s paying subscribers at no additional cost through all major cable systems, on Apple Inc.’s iPad, on mobile devices and elsewhere, Kessler said. [B: August 17, 2010]
Crunch and Shake: ...e-books have now reached that tedious cliché, the tipping point. Amazon.com Inc.'s latest Kindle e-book reader has sold out -- weeks before it even started shipping. The new device is smaller, cheaper, and has a better screen.
Amazon says it's now selling more e-books than paper-based books...
We already know how this story is going to end. We saw it with the cell phone and with the iPod. The devices and services get better and better until suddenly they go mainstream...
As recently as 2001 there were music stores everywhere. As many as 80,000 people worked in them, according to the Labor Department. And that was a number that had been steady for years.
In 2002 the iPod took off. Today the number working in music stores is 20,000 -- a 75% collapse. [Meanhwile, according to Forbes, Jay-Z grossed $63 million in 2009-10, almost double his 2008-09 gross of $35 million.]
As for the book industry: About 125,000 people still work in book stores and news dealers, according to Labor. How many of them will still have jobs in two years? Another 75,000 work in book publishing. When writers self-publish in electronic format, how many publishers will still be left? [MW: August 17, 2010]
Fast-forward: August 2010: Apple Inc. is in advanced talks with News Corp. to let iTunes users rent TV shows [for 48 hours] for 99 cents and is in discussions with [CBS Corp., NBC Universal and Walt Disney Co.] about similar deals, said three people familiar with the plan...
Adding programming also would build on iTunes’ role as the biggest retailer of music and mobile applications, and help Apple ward off companies like Netflix Inc., Amazon.com Inc. and Hulu LLC, which offer their own online video services...
Episodes will be available to Apple’s rental service within 24 hours of their air dates and will be commercial-free, one of the people said. Apple plans to hold a San Francisco event Sept. 7, two weeks ahead of the start of the new prime-time TV season, to unveil the service and an updated line of entertainment products, two people said...
In June, Jobs reiterated a statement that television is a “hobby” for Apple. The market for set-top boxes is heavily subsidized, diminishing its appeal to new entrants because people aren’t willing to pay a premium for more innovative devices, he said at the time. [B: August 25, 2010]
Fast-forward: August 2010: Google's YouTube site is negotiating with the Hollywood studios to participate in a pay-per-view site that will be online by year's end. That puts it in competition with Apple, Hulu and Netflix in trying to corner the market on streaming film and TV... Google plans to charge about $5 for top titles. [D/FT: August 30, 2010]
Fast-forward: August 2010: Summer movie attendance fell to [expected 2.6% drop to 552M] the lowest level since 1997, while soaring ticket prices produced record revenue...“The movies just didn’t excite people the way they needed to...When you raise prices and perceive that quality [Toy Story 3 = RT 99%, Inception = RT 87%] goes down [Iron Man 2 = RT 74%, Robin Hood = RT 43%, Shrek Forever After = RT 58%, Prince of Persia = RT 37%, A-Team = RT 47%, Twilight: Eclipse = RT 52%], you have a major problem.”...The average ticket price will increase 5.1% to $7.88 from last year’s $7.50, the biggest gain since a 6.3% jump in 2000. [B/H: August 31, 2010]
Fast-forward: September 2010: The salient question is this: Will any of the movies surfacing this fall provoke the kind of conversation that television series routinely do, breaking beyond niches into something larger? This bad summer movie season, in what seems to be one of the best television years ever, reinforces a suspicion that has been brewing for some time. Television, a business with its own troubles, is nonetheless able to inspire...
This may represent not an aesthetic fault line, but rather a corporate division of labor, since the television networks and the movie studios belong to the same conglomerates...the distinction between movies and television grows more tenuous every day. The most interesting, provocative and surprising movies of the coming season may well reach you through video on demand or Internet streaming, playing in only a handful of theaters so that critics can have a chance to spread the word about them. [NYT: September 8, 2010]
Fast-forward: September 2010: Analysts there found that 37% of Netflix subscribers aged 25 to 34 substitute Netflix for pay television. Almost 30% of users between 18 and 24 are using Netflix’s streaming service instead of cable or satellite. The Credit Suisse survey was of about 250 Netflix subscribers...
Credit Suisse maintained that the content and cable kings are not necessarily overthrown yet. Their survey found that just 17 percent of Netflix subscribers of all ages and incomes are substituting that service for cable.
“In the near term, we submit that Big Media has a small window of opportunity to control its own destiny,” said Credit Suisse in the note. “The major U.S. entertainment conglomerates control approximately 70% of all TV viewing through its various broadcast, basic cable and premium TV networks and channels. And, content remains the lifeblood for distribution systems.” [CNBC: September 16, 2010]
Fast-forward: October 2010:
Fast-forward: December 2010:
Fast-forward: March 2011: Amazon has spoken with some of the major record companies and Hollywood film studios about creating a digital locker service for their film and music libraries...a cloud locker service that would enable users to store their existing music, film, and book collections, even content not purchased at Amazon, on the company's servers...Amazon is in a hurry to win the race to the cloud, according to the sources. It has been widely reported that both Apple and Google are busy preparing their own media locker services. [CNet: March 25, 2011]
Google is deepening its ties with Hollywood by enlisting top stars to supply original content for YouTube in a bid to boost profits and user engagement at the company’s online video site...
YouTube made revenues of $825m in 2010 and is forecast to generate $1.3bn in 2011, according to research by Mark Mahaney, an analyst with Citi...
“Despite the growth in viewership, YouTube is still struggling to monetise in a meaningful way. They are trying to professionalise their content to get the attention of Madison Avenue.”
Google recently acquired Next New Networks, which has relationships with many independent online video producers.
Google has also hired a new team of executives with Hollywood experience to lead its push into original content. The company last year hired Robert Kyncl, a former Netflix executive, who negotiated a $900m, five-year deal to stream movies...
“YouTube is more focused and they have a better plan than they have had in the last five years,” said one film executive pitched to by Google.
Google’s push into original content comes as Netflix recently struck a $100m deal to stream a new US version of House of Cards, starring Kevin Spacey – before it airs on television.
Facebook, meanwhile, is also eyeing the online video space and recently agreed a deal with Warner Brothers to make The Dark Knight available to rent online. [FT: March 28, 2011]
- - -
Entire movies compressed into single barcodes
- - -
June 2011: Fox Lays Off 22 Staffers In Home Entertainment...Fox has become the fourth studio this week to lop staff...Earlier this week, Paramount shuttered its worldwide acquisitions group...Disney next week will lay off about 5% largely in the distribution area and a few other spots, while Lionsgate laid off less than 20 people as part of a reorganization affecting home entertainment and service areas.
April 2012: "Your live TV. Anyway you want it." [nimbleTV] Aereo, provides access via the web to over the air content...pay a set amount each month and then can get access to over the air television from any device...Of course, it’s being sued.
