[opendtv] Re: Coming to the Internet: Shows From CBS That You Won’t See on CBS | Re/code
- From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
- To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
- Date: Wed, 13 Aug 2014 08:39:31 -0400
> On Aug 12, 2014, at 5:45 PM, "Manfredi, Albert E"
> <albert.e.manfredi@xxxxxxxxxx> wrote:
>
> There you go, moving beyond old business models. Content owners in search for
> authenticated Internet distribution, not limiting themselves to walled
> gardens.
The only limit discussed in this story is that these programs will not air on
CBS broadcast channels. The article clearly states that these programs are
being developed for sale to subscription video services. This could be for a
network that is part of the MVPD bundle or a streaming service like Netflix or
Amazon Prime.
The key here is authentication will be required to see this content.
>
> For that matter, much as you saw food stores and the like, in the past,
> renting out DVDs, no reason why the TV content owners can't do the same thing
> for Internet distribution. Amazon added streaming media to their original
> arsenal of offerings, so why can't Giant Food, or Macy's?
Starting a streaming TV service is quite easy. The story I posted yesterday
about the technologies behind the industry illustrate that there are vendors
who can handle every aspect of a service if you do not want to build the
infrastructure yourself.
The problem is not access to the Internet, it is access to capital, and
consumer awareness about the service. The article I am appending about Netflix
does a good job explaining this.
Key take away:
> Netflix has been able to build its business by snapping up relatively cheap
> streaming rights, the potential value of which had been largely unrecognised
> by rivals and rights owners.
>
> However, as Netflix has prospered and expanded its operational
> internationally and faced more competition from video-on-demand rivals, the
> value of securing these rights has mounted.
>
Clearly CBS Studios sees an opportunity here. Unlike the CBS TV network, the
studio division is in the business of creating and selling original content.
It is more likely that you would see companies like Giant Food or Macy's cut
deals with established streaming services as some form of rewards program...
Regards
Craig
http://www.theguardian.com/media/2014/feb/05/netflix-spend-3-billion-tv-film-content-2014
Netflix to spend $3bn on TV and film content in 2014
Netflix is committed to spending almost $3bn on TV and film content in 2014 and
more than $6bn over the next three years, as the cost of securing international
rights and commissioning new shows continues to mount on the streaming giant's
balance sheet.
The US company also announced this week that it is to raise $400m to help fund
this investment in original programming and a major European expansion later
this year.
Its annual report, published this week, shows that at the end of 2013, Netflix
had run up $7.3bn in "streaming content obligations", which are incurred when
the company signs a licence agreement for programming, up 30% from the $5.6bn
owed at the end of 2012.
The company said it has to pay $2.97bn of that by the end of 2014, with a total
of $6.2bn due within three years.
Netflix made $4.3bn in total revenues last year, a healthy 19% year-on-year
rise, growth which has made it a darling of US stock market investors, with its
share price surging from $92 to $367 across 2013.
However, total "cost of revenues", of which licensing costs are the major
factor, also rose 17% from $2.6bn to $3.1bn.
With another $500m ploughed into marketing, $378m into technology development
and $180m in "general and administrative expenses", the US company ended the
year with net profits of $112m.
The US movie and TV streaming giant, which is expected to expand into Germany
and France later this year, said that it expects to "substantially increase"
investment in shows that it makes itself, such as House Of Cards and Orange is
the New Black.
"We expect to significantly increase our investments in international
expansion, including substantial expansion in Europe in 2014, and in original
content," the company said in a Securities & Exchange Commission filing. "As a
result, and to take advantage of the current favourable interest rate
environment, we plan to obtain approximately $400m in long-term debt in the
first quarter."
Netflix has been able to build its business by snapping up relatively cheap
streaming rights, the potential value of which had been largely unrecognised by
rivals and rights owners.
However, as Netflix has prospered and expanded its operational internationally
and faced more competition from video-on-demand rivals, the value of securing
these rights has mounted.
Netflix pointed out that despite planning a major increase in its original
content budget, it would still represent less than 10% of the company's overall
global content expenditure on rights to stream TV and films.
In a press statement, the company added that some of the $400m could also be
earmarked for "potential acquisitions and strategic transactions".
Netflix's international expansion is becoming increasingly important to the
company's growth plans.
The company's international subscriber base grew by 1.7 million to 10.93
million in the final quarter last year. Across 2013, Netflix put on 4.8 million
new international subscribers in total, an 80% year-on-year increase.
Its international operations made $712m in revenue last year, up 148% year on
year.
The international operation continues to make a loss, $274m in 2013, although
this was a 30% year-on-year reduction.
Netflix launched its first streaming operation outside the US in 2010, when it
expanded to Canada.
Latin America followed in 2011, the UK and Ireland in early 2012, and
Scandinavia later the same year. The Netherlands is Netflix's latest market,
launched in September last year.
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