3 PAGE COMPARATIVE PAPER - Is Netflix Taking Over The TV Industry?
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NETFLIXVSTVINDUSTRYARTICLESLINKS.docxReport: Netflix is dominating digital movie consumption
Erik Gruenwedel
Home Media Magazine. 33.12 (Mar. 21, 2011): p1+.
Copyright: COPYRIGHT 2011 Questex, LLC
http://www.homemediamagazine.com/
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Netflix subscribers are streaming more than six out of 10 movies watched online, topping digital sellthrough and transactional video-on-demand according to a new report from The NPD Group.
The Port Washington, N.Y.-based research firm said Netflix accounted for 61% of the movies downloaded or streamed in January and February, followed by Comcast at 8%, and a three-way tie for third at 4% among DirecTV, Time Warner Cable and Apple.
Digital video now accounts for 25% of overall home entertainment consumption, including electronic sellthrough, Internet VOD, cable VOD and subscription streaming, according to NPD.
" 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," said Russ Crupnick, entertainment industry analyst for NPD. "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."
According to NPD's video survey of more than 10,000 respondents, Apple's iTunes platform received higher marks (than Netflix) for availability of new releases, while Netflix received top marks for ease of use and economic value. Meanwhile, Netflix's streaming prowess is costing the service less to maintain. Fees required to stream video into subscribers' homes has dropped 50% since 2009, as bandwidth pricing continues to fall through market competition .
Two years ago Netflix spent about 5 cents to stream two hours of video in standard-definition. Today, that cost is about 2.5 cents, according to Frost & Sullivan analyst Dan Rayburn. By comparison, Netflix spent 78 cents shipping rental discs round trip to subscribers--a postage expense that continues to increase.
Netflix delivers electronic streams via third-party content delivery networks, or CDNs, such as Limelight, Level 3 and Akamai, across broadband connections into homes. A CDN allows for easier distribution of data files (movies and TV shows) to multiple users along a network instead of from one central location.
Rayburn estimates Netflix will spend about $50 million (versus $100 million) this year with CDNs. He added that speculation regarding Netflix being hit with data cap limits now being imposed by telecommunications and select cable operators is overblown.
The analyst said that instead of being charged per gigabyte (size) of data sent, CDNs charge Netflix for megabits-per-second, or the amount of bandwidth required delivering a file. Indeed, Netflix actually is charged when bandwidths exceed maximum capacity more than 5% of the time (typically a month).
With ISP providers such as AT&T, Comcast and Verizon implementing monthly bandwidth caps on consumers, scuttlebutt suggested active Netflix streaming subscribers could be in for a shock on their monthly bills.
Rayburn disagrees, citing Netflix data that says average subscriber streams of 2Mbps haven't changed during the past two years. Delivering Netflix streams the so-called "last mile" to users' TVs and PCs is a different story, as cable operators and others increasingly view the over-the-top service as a threat to competing entertainment businesses.
"[Bandwidth] caps from Comcast or AT&T won't have any material impact on Netflix now or anytime in the near future," Rayburn wrote in a post. "Years from now they could, if the ISPs don't raise their cap levels, but right now caps are not a big deal to Netflix."
Gruenwedel, Erik
Gruenwedel, Erik. "Report: Netflix is dominating digital movie consumption." Home Media Magazine, 21 Mar. 2011, p. 1+. General OneFile, http://link.galegroup.com/apps/doc/A254556783/ITOF?u=cuny_baruch&sid=ITOF&xid=58b9e2a2. Accessed 27 Apr. 2018.
Netflix Streaming dominates North American downstream traffic
The Online Reporter. (Dec. 11, 2015): p20.
Copyright: COPYRIGHT 2015 Rider Research, Inc.
http://www.onlinereporter.com/
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Streaming services such as Netflix and YouTube now account for 70% of downstream bytes during peak times, according to Sandvine's latest "Global Internet Phenomena" report.
Netflix continues to be the leader of primetime traffic. It accounted for 37.1% of downstream fixed access traffic, a slight increase from the last report.
YouTube, Amazon and Hulu have all shown an increase in traffic in North America since the last report. YouTube accounted for 17.8% of downstream traffic, Amazon Video had 3.11% of traffic and Hulu had 2.58% of traffic. The increasing shares of these services highlight the growing role OTT streaming services play in the lives of subscribers.
On the mobile front, real-time entertainment was the dominant traffic category in North America as well, accounting for over 40% of the downstream bytes on the mobile network.
YouTube led the pack increasing its share by 1% to reach 20.8% of the peak downstream traffic in the past year. Facebook led mobile in upstream traffic with just over 19% of upstream traffic and was second in downstream with nearly a 16% share in peak traffic, however it saw its share decline since last year.
In the Middle East, real-time entertainment is the leading source of traffic among mobile networks, accounting for 35% of peak downstream traffic, followed by social networking. As expected, YouTube is the leading app with over a 23% share of downstream traffic during the peak evening hours.
In Africa, mobile networks are the primary way to access the Internet and Web browsing is the dominant category with a 35.6% share of downstream traffic. Real-time entertainment is growing during the peak period with a 2% increase in one year to an 8.6% share in downstream traffic, indicating the beginning of significant growth in the category.
On fixed access networks in Africa, real-time entertainment was the leading traffic source accounting for nearly 30% of peak downstream traffic. YouTube only held the second spot for downstream traffic with a 16.34% share behind HTTP but it has made significant share gains in Africa in the past year.
The reason video is likely still behind in the region is because of slower fixed access speeds in the region and fewer streaming content options, so to see growth in the category in a region that is still behind in access and network support proves the real-time entertainment category and video services such as Netflix and YouTube still have growing to do and still have plenty of potential viewers and subscribers throughout the world.
"Netflix Streaming dominates North American downstream traffic." The Online Reporter, 11 Dec. 2015, p. 20. General OneFile, http://link.galegroup.com/apps/doc/A442085756/ITOF?u=cuny_baruch&sid=ITOF&xid=cfac9436. Accessed 27 Apr. 2018.
Netflix preferred over any and all TV networks
The Online Reporter. (July 24, 2015): p22+.
Copyright: COPYRIGHT 2015 Rider Research, Inc.
http://www.onlinereporter.com/
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Netflix is the favorite "channel" among viewers aged 13-49, according to a survey from Ipsos Media CT. Viewers across age brackets are now watching Netflix for over five hours each week, the survey found.
The survey asked viewers what they watched for the week of June 15. Among viewers aged 13-17, 25.5% reported watching Netflix; the second most popular network among this age group was Nickelodeon, capturing just 5.7% of respondents.
Among viewers aged 18-34, 21% watch Netflix; next in line is Hulu, which 5.3% said they watch, followed by ABC, capturing 4.9% of respondents.
For viewers aged 35-49, 12% said they watch Netflix; in second place is NBC with 6.7%. And for viewers 50+ years old, CBS was the favorite, with 12% reporting watching the network; CBS is followed by ABC with 10.5% and NBC with 9.6%. Netflix came in fourth place among this demo, with 4.9% saying they watch the SVoD service.
YouTube is notably missing from the survey parameters.
"Netflix preferred over any and all TV networks." The Online Reporter, 24 July 2015, p. 22+. General OneFile, http://link.galegroup.com/apps/doc/A427260410/ITOF?u=cuny_baruch&sid=ITOF&xid=30a1615a. Accessed 27 Apr. 2018.
Is Netflix killing TV?
Erik Gruenwedel
Home Media Magazine. 37.8 (Apr. 27, 2015): p1.
Copyright: COPYRIGHT 2015 Questex, LLC
http://www.homemediamagazine.com/
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[ILLUSTRATION OMITTED]
As Netflix reported another quarter of stellar results, sending the stock soaring for the first time above $550 a share, industry observers weighed in on its effect on the TV landscape.
Netflix ended the quarter with a record 4.9 million new subscribers for a global base of
more than 60 million, including 40 million domestically.
To London-based satellite TV operator BSkyB, which owns Sky Italia and Sky Deutschland, Netflix is as yet an unrealized threat. Sky ended the period with 20.8 million video subs across Europe, compared with 19.9 million during the prior-year period.
Netflix launched service in six European countries in 2014 following bows in the United Kingdom and Ireland in 2012. Since its launch in international markets 2010, Netflix's percentage of subscribers outside of the U.S. has grown from 1.9% of overall subs to nearly 48%.
Speaking April 21 on Sky's Q1 fiscal call, CEO Jeremy Darroch said that despite Netflix's reported 3.5 million U.K. subscribers --second-largest internationally after Canada--Sky continues to compete in subscriber growth and original content.
"Netflix is directly having really little impact on us," he said.
Bold talk considering Netflix disclosed that a record 10 billion hours of content were streamed by subs in the quarter--a stat research firm MoffettNathanson attributed to a 43% drop in domestic linear TV viewership.
Accounting firm Deloitte, in its Digital Democracy Survey, found that 53% of respondents prefer to stream TV content than watch a live broadcast (45%).
In an April 23 note, analyst Michael Nathanson said Netflix's streaming hours relative to traditional TV will steadily rise.
"Beginning with last summer's massive decline in [TV] ratings and usage, media executives and Wall Street have begun to rethink the implications of the rise in SVOD services," Nathanson wrote.
Content Spending Spree
Netflix upped content spending $300 million in the quarter--the majority on original fare. It's a fiscal trend the company plans to double down on over the next three years as it targets a content portfolio stocked with 50% originals--with access to 200 countries.
Global revenue reached $1.4 billion, compared with $1 billion during the prior-year period. Domestic revenue topped $985 million, compared with $799 million a year ago. Total content license obligations topped $9.8 billion, up $2.7 billion year-over-year. Free cash declined $163 million in the quarter due to costs associated with original content.
"We will continue to invest aggressively in original content, which is cash intensive," CEO Reed Hastings and CFO David Wells wrote in the investor newsletter.
In the earnings webcast, chief content officer Ted Sarandos said money spent locking up exclusive rights across multiple territories on originals helps broaden the brand.
Indeed, AMC Network's "Breaking Bad" prequel "Better Call Saul," which wrapped its first season April 6 as the No. 1 new series on cable, streamed concurrently as a Netflix Original series outside the United States.
"The dollars invested in our original programming are more efficient, in that for every dollar spent, we get more bang for the buck in terms of hours viewed," Sarandos said, adding that hours viewed leads to higher retention, more word-of-mouth and more brand halo with consumers.
Indeed, Netflix this month began using its brand to back Internet-connected TVs from LG, Sony and Roku. First announced at the Consumer Electronics Show in Janu ary, the "Netflix Recommended TV" logo is designed to provide consumer insight into connected TVs, which, of course, facilitate over-the-top video services.
Flipside to SVOD Ubiquity
Over the years media executives and content holders have seen Netflix (and SVOD) as incremental sources of easy revenue to their TV ecosystem. Studio accountants appreciated the SVOD window for enabling content to be amortized over a longer time frame, which helped reduce costs in the short term.
But at the same time, Netflix and SVOD have fundamentally altered consumer appetites for types of entertainment and how they consume it. Ongoing use of the DVR and binge viewing continues to erode broadcast viewership, which in turn undermines ratings and ad revenue.
Through last year, Netflix had 36% market share among domestic SVOD households, followed by Amazon Prime Instant Video (13%) and Hulu Plus at 7%. SVOD was present in 40% of all TV households, according to MoffettNathanson.
SVOD achieved 74% penetration among head of households under 35 years of age, 68% under 44 and 57% under 54.
That stranglehold on viewers is why, according to Nathanson, multichannel video program distributors such as cable, satellite and telecom have shifted away from licensing procedural dramas such as "CSI" and "Law & Order" in favor of episodic series such as "Breaking Bad," "Mad Men" and "Empire."
Nathanson said that in the beginning Wall Street appeared indifferent to the risks associated with selling catalog content to Netflix. He said media companies saw little harm to content holders licensing reruns of shows to SVOD services with minimal subscriber bases.
SVOD isn't minimal anymore. Netflix, Amazon Prime Instant Video and Hulu Plus ended 2014 with nearly 63 million combined subs.
Blue Sky
While the traditional channel bundle remains at the core of Sky's pay-TV distribution strategy, original content, streaming devices and OTT video underscore its strategy going forward. Last year Sky spent nearly 5 billion [pounds sterling] ($7.5 billion) acquiring subsidiaries Sky Italia and Sky Deutschland.
With the rapid evolution of OTT video CEO Darroch sees opportunities to launch proprietary OTT initiatives in Europe.
"Yes, potentially the opportunity's there, particularly in the U.K. That's one of the things we'll start to look at," Darroch said.
Darroch said competing against SVOD requires original content across Sky's European footprint. In the period, Sky Atlantic launched original drama "Fortitude," starring Stanley Tucci; "1992" in Italy; and "100 Code" in Germany.
Gruenwedel, Erik
Gruenwedel, Erik. "Is Netflix killing TV?" Home Media Magazine, 27 Apr. 2015, p. 1. General OneFile, http://link.galegroup.com/apps/doc/A411752836/ITOF?u=cuny_baruch&sid=ITOF&xid=6dc824a6. Accessed 27 Apr. 2018.
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https://www.statista.com/topics/842/netflix/ (Can only view ONE daily) https://ir.netflix.com/static-files/3697a921-61aa-4d95-8f1a-da9b4ea05fde https://www.marketwatch.com/investing/stock/nflx/financials https://ycharts.com/companies/NFLX/revenues https://finance.yahoo.com/chart/NFLX/ |
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