“Stream and Binge” Is Here To Stay

Much to Netflix and audiences’ delight, it looks like binge-watching is here to stay. And, Netflix will continue to create original shows and let them stream all at once as a powerful way to attract new customers and keep existing ones. 

That’s my take, based on an article in The WSJ by John Jurgensen about some data released by Netflix earlier this month:

Netflix only examined users who finished a season within the space of a month. For one serialized drama, 25% of the viewers finished the entire 13-episode season in two days, while it took 48% of them one week to do so. The pace was pretty much the same for a very different kind of show—a sitcom with a 22-episode season: 16% of viewers finished the season in the equivalent of a weekend, while 48% completed it within one week.

That pattern—especially the apparent sweet spot of polishing off one season in a week—was similar across various styles of shows in the sample, including those with audiences that skew male or female, younger or older.

Another finding: The majority of those viewers only immersed themselves in one show at a time, rather than juggle several at once. And whether they’re plowing through three episodes in a stretch or 13, TV watchers identify themselves as bingers.

Want further proof that Netflix-associated and Netflix-driven (created too?) “binge”-watching is the future? Consider what, HBO, Netflix’s bete noire, recently tweeted:

Earlier this week, HBO beckoned students to its streaming video platform with a tweet: “After you survive #FinalsWeek, treat yourself to a week of @HBOGO binge watching. You deserve it.”

Sony’s “Gamechanging” Viacom Deal

All hail Sony. 

It’s just announced Viacom-channels-to-Sony-devices-over-the-web deal could be a game-changer not just for itself, but also for the industry and consumers (based on the final pricing). 

Sony comes out ahead because of 3 reasons. The deal (a) lets it leapfrog over the competition that includes Google and Intel, for now; (b) makes its PlayStation console so much more valuable to those demographics that are the likeliest cord-cutters; and © likely makes it easier for other content providers to “defect” to Internet TV providers going forward:

While Sony would need to strike other programming deals to create a compelling alternative to conventional pay-TV services, even a single deal represents a big shift within the entertainment industry. Big channel owners have been reluctant to license their programs to Internet-TV services for fear of undercutting the lucrative arrangements they have with cable, satellite and phone companies.

For TV channel owners such as Viacom, based on continuing cord-cutting, deals such as this one make perfect sense. Without them, their future might be threatened, especially with the profusion of online entertainment. (Since everyone from Netflix to Hulu to YouTube is creating in-house, exclusive content, Viacom wouldn’t want to wait for the day its shows are no longer relevant or compelling enough because it sat out the online-TV coalition games.) 

What I’m very curious about is the response from Cable and Satellite TV providers. That they will, is a foregone conclusion given the revenues and profits at stake here. But what shape will that response take? 

That’s the multi-billion dollar question. 

More Evidence Of Cord Cutting: Dish (sorry Hopper) Is Not Immune Either

Peter Kafka of AllThingsD cites data from Moffett Research to highlight the inexorable trend of subscriber flight (not just eroding or slowing growth) for all major Cable companies. 

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Meanwhile, this piece from AdAge highlights Dish’s problems 

Dish has tried to attract customers with its Hopper DVR, which among other things makes it easy to automatically skip many commercials. Broadcast networks have sued to halt the service.

But the company lost about 78,000 customers in the quarter, more than the 37,000 average decline estimated by 11 analysts surveyed by Bloomberg. It’s also well above the 10,000 customers lost in the second quarter of 2012.

The AdAge piece goes on to say that we may see additional consolidation in the Pay TV space (Dish and DirecTV trying to combine once again and Charter looking for a suitor) – which is probably good for a while. And then what?

Crowdsourced TV Ads – The Future?

 

TV Advertising is a business that is very well suited for crowd-sourcing. 

That’s because traditional Ads take time and money to shoot. And then when that is done and you start putting it up on TV, you don’t know how the crowds will react.

So by  tapping into the masses directly, companies and brands gain speed, save money by shifting the costs to fans and maximize the chances that what the crowd makes, the crowd loves. 

Brian Hall, writing in Read Write (!) notes that the benefits spill over into branding as well

Big brands use the crowd not just for ideas, talent and inspiration, but to help generate brand awareness – even at the ad concept stage.

Pizza Hut, for example, encouraged football fans to submit videos incorporating the idea of quarterbacks shouting “hut” to hike the ball. Along with many great entries received, the campaign itself was a clever means of increasing brand awareness long before any finished advertisement even made it onto the television screen.

While Pizza Hut selected the finalists in its crowdsourced challenge, a popular vote was used to decide which ad made it to the Super Bowl.

IMO, what’s going to happen (if it doesn’t already happen) is that these (mass produced?) ads will probably first find a home on the Web…and then based on “viral”-ness and views, migrate to TV.

That way, big brands can use the crowds once again – this time, to minimize risk.

Dora And Her Viacom Friends Jump From Netflix to Amazon

So it turns out that Dora and her Viacom friends (Blue’s Clues, The Backyardigans, etc.) have all jumped from Netflix to Amazon. 

Subscribers may have been surprised (don’t remember seeing an email or pop-up message from Netflix ever about any kind of content disappearing soon, and for good. For good reason?).  But Netflix investors were not:

In April, Netflix told investors that it would allow its deal with Viacom to expire, saying it has been moving away from broad, multi-year deals with networks and cable channels in favor of more selective licensing arrangements.

As that LA Times article says, Netflix is instead getting Disney’s stable of characters – but only in 2016.

Obviously, this is a good deal for Amazon (it did shell out hundreds of millions of dollars for the deal; neither Amazon nor its shareholders care, of course) and Amazon Prime viewers. And this is a lucrative deal for Viacom, though it comes with a caveat (from the LA Times article also):

According to Bernstein Research, Viacom has become increasingly dependent on streaming service revenue to help boost profits. Subscription video-on-demand (SVOD) made up nearly 5% of the company’s operating income in fiscal 2012 — and 200% of its growth in operating income. 

“But SVOD hurts ratings for kids’ networks,” Bernstein media analyst.

“Now the debate is whether SVOD licensing fees offset the ad revenue decline,” he said. “In the short run, we agree ‘yes’ but going forward, we think ‘no.’  Cannibalization increases, and licensing fees decrease as the balance of power shifts in favor of the SVOD providers.”

Anyway. I am sure Netflix has its reasons for letting the deal lapse. And I am sure it fully expected someone like Amazon to snap it up. Two things though:

1. Given the importance of kids videos (not a very long-tail market, and they don’t mind seeing the same damn thing a few hundred times) to streaming video providers, does this deal help Amazon take off and firmly establish Prime as a very viable alternative to Netflix?

2. As long as Netflix is in the business of competing for content that others produce, expensive deals and bidding wars every couple of years will be the norm. So will we see Netflix attempt to start its own kids franchise at some point? Animated series only…which are presumably easier and cheaper to produce, compared to $100m grown-up dramas that most people only watch once or at best, twice.

Since You Can’t Lobby Congress To Ban DVRs…

What do you do when you want to prevent viewers from DVR-ing your shows?

You lobby Congress to ban DVRs. Or, you unsuccessfully try to sue Dish to block the Ad Hopper. Just kidding – about the first one. And because of that, Amol Sharma writes on The WSJ, you do three things:

1. You offer viewers content for their 2nd screens (SmartPhones and Tablets)…that is available only during live broadcasts.

2. And you make the content compelling by synchronizing it to what is happening on their 1st screens.

3. Finally, you walk the tightrope and hope that while this extra content enriches the experience, it doesn’t totally distract from the actual show itself.

An excerpt from his article (paywayll) on how AMC is doing it:

Last weekend, members of the cast and crew of AMC Networks Inc.’s crime drama “The Killing” were on location in Vancouver, British Columbia, shooting material for Sunday’s season premiere. What they produced won’t be shown on television, though. It is meant for smartphones, tablets and laptops.

The video vignettes are for an online application AMC channel is launching this weekend to promote “The Killing,” one of a number of increasingly ambitious such efforts being produced by TV networks. Designed to be watched on mobile devices and computers, the services show videos, photos, games, trivia and other content when the affiliated TV show is on the air.

PS1: A couple of years ago, Nielsen changed its ratings system and introduced the “Live Plus” system to take DVR-watching into account. But…I am not sure if Nielsen’s set-top boxes capture Ads watched vs fast-forwarded in recorded shows, and other metrics . Hence, these efforts on the part of AMC and others, I think. 

PS2: Recently, some have suggested that Twitter is actually TV’s 2nd screen. A proposition that has serious legs IMO because real-time social conversations enhance the TV watching experience more than anything else. I, for one, would want to know what my friends, followers and pundits think about what we are watching “together” more than I would want to know the backstory for a certain character. And I suspect I’m not the only one…

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