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Report: 'No Reason for Netflix to Exist in the Future'

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Old 08-06-2012, 07:56 PM   #1
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Default Report: 'No Reason for Netflix to Exist in the Future'

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Despite being slow out of the gates, TV Everywhere platforms offered by cable, satellite and telecommunications operators portend a death knell for subscription video-on-demand services such as Netflix, according to a new report.

Media companies such as CBS Corp., Time Warner and Viacom have recently boasted license agreements with Netflix that generate significant incremental revenue and fatten the bottom line. The huge increase in TV content price inflation has caused Netflix’s content amortization costs to increase from 12% of revenues to 50% of revenues, according to the “TV Everywhere Stock Report,” release by the National Inflation Association.

It should be noted that while the NIA characterizes itself as an organization aimed at educating consumers about hyperinflation, it also offers profiles on public companies (including technology companies) it believes can prosper in an inflationary environment.

Netlix is spending billions this year licensing premium content — excluding monies spent creating original fare — from third parties. The SVOD pioneer spends about 17 cents per hour in content streaming costs, compared with 54 cents per hour on content spent by cable and satellite TV operators.

By comparison, it spends about $300 million annually on disc rights and $225 million on content delivery network fees. As the number of people streaming content via Netflix increases, license fees will climb accordingly.

“We think content owners ultimately value their content based upon the number of views, and as Netflix grows its subscriber base and overall viewing hours, it is inevitable content costs will continue to rise,” Pachter wrote in a recent note.

But Netflix is currently limited to charging subscribers $7.99 a month for unlimited streaming — a price ceiling it isn’t about break following the blowback it received last year after instituting a 60% price increase for its popular hybrid disc-streaming rental plan.

With TV Everywhere designed to offer authenticated subscribers access to repurposed and original programming away from the cable set-top box, Netflix’s ubiquitous access on hundreds of CE devices loses its competitive advantage, according to the report.

Indeed, 38% of former premium TV subscribers who recently cancelled their services say they would once again subscribe to premium TV if the provider offered a TV Everywhere feature or service.

NIA said cable companies have begun to present subscribers online usage based meters allowing them to track their broadband data usage — which often is a result of video streaming. Time Warner Cable customers in select markets now have the option of saving $5 per month by signing up for a plan that allows them to consume no more than 5 gigabytes of broadband data per month. If they go over, they are charged an additional $1 for each gigabyte over the limit.

TWC has to offer rebates since it believes most of its customers who cancel TV service and keep broadband services, are likely signing up with OTT video companies like Netflix, according to recent statements by CEO Glenn Britt.

Regardless, the NIA report said if Netflix isn’t able to up its content offerings on par with premium TV channels due to revenue limitations, its future could be in jeopardy.

“If Netflix is going to keep their monthly subscription fees near their current low levels without implementing the same price increases that cable TV companies have been forced to pass onto their customers, Netflix in the near-future will only be able to offer older movies and TV shows that are no longer in high demand,” the report reads. “There will be no reason for Netflix to exist in the future.”
http://www.homemediamagazine.com/net...t-future-28002
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Old 08-06-2012, 09:31 PM   #2
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HDTV Expert - Is Cord-cutting Hurting the Pay TV Market? — by Ken Werner

http://www.hdtvmagazine.com/columns/...ken-werner.php
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Old 08-07-2012, 10:16 AM   #3
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I had netflix when I got my 1st device. After discovering my favorite shows were edited, I cancelled. There was a specific reason I went with it, to get old SNL shows. They are all chopped up! WHY!!
I wrote to them after trying to comm. and never did hear back.
Plus the fact they are selective about what companies get the ability to do HD. Even movies are edited. You may not notice, but it's as if it was on a commercial tv channel. They deserve to go under!
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Old 08-07-2012, 11:15 AM   #4
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Wonder if we will see more of this in the future with cable companies creating apps for consumer electronics. The are invading the space that was once only for the Netflix and Pandoras of the world:

Samsung TVs, Blu-ray Players Get FiOS App
http://www.homemediamagazine.com/dig...fios-app-28006
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Old 08-07-2012, 12:07 PM   #5
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Originally Posted by TowerGrove View Post
Wonder if we will see more of this in the future with cable companies creating apps for consumer electronics. The are invading the space that was once only for the Netflix and Pandoras of the world:

Samsung TVs, Blu-ray Players Get FiOS App
http://www.homemediamagazine.com/dig...fios-app-28006
That is probably a precursor to the new FiOS/Redbox SVOD service which will be out later this year. A direct competitior to Netflix.
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Old 08-07-2012, 03:32 PM   #6
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So, has anyone other than me done a background check on the "National Inflation Association"?

Google NATIONAL INFLATION ASSOCIATION PUMP AND DUMP.

It is possible that Eric G has outdone himself?

(Edit. Fixed for Android phone posting difficulties).
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Old 08-07-2012, 03:52 PM   #7
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Sbo, has anyone other than me done a background check on the "National Inflation Organization"?

Google NATIONAL INFLATION ASSOCIATION PUMP AND DUMP.

It is possible that Eric G has outdone himself?
(At the risk of going off topic).

Individuals and organizations like this were hilarious back in the 1980's and 1990's. Such individuals/groups were repeatedly making "predictions" of hyperinflation and another great depression, which never happened according their timetable.

(More generally). Essentially most stock market + economic prognosticators aren't much different than a "dead clock" with the mouth of a parrot. They just keep making the same forecast + predictions all the time over and over again, hoping one day it will become true. Sorta like how a "dead clock" is always "right" two times every day.
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Old 08-07-2012, 06:05 PM   #8
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Counterpoint, from the LA Times...

Pay-TV industry not united on TV Everywhere

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By Joe Flint, Los Angeles Times

July 16, 2012, 9:41 p.m.
Want to watch an episode of TNT's"The Closer" online?

You have to fill out a form on TNT's website, proving you have a cable or satellite television subscription. And your cable or satellite provider also needs to have a deal with TNT to carry its content online.

But if you want to check out A&E's new drama "Longmire," just visit the cable channel's website and your mouse gets you in. No forms or proof of a pay-TV subscription are necessary.

The differing approaches by Time Warner's TNT and A&E, which is majority owned by Walt Disney Co. and Hearst Corp., illustrates a divide in the media industry over how best to put content on the Web while also keeping customers hooked to their TVs.

In 2009, cable giant Comcast Corp.and Time Warner — parent of TNT, TBS, HBO and other popular channels — unveiled TV Everywhere, an initiative that was to be a blueprint for the pay-TV industry to develop a platform to let subscribers watch content on their computers, phones or tablets. The proposition was simple enough: Take all that is good about television — lots of channels at the click of a button — and transfer it online.

The hope was that by offering subscribers more content online, people would be less likely to cut the cord to their cable or satellite TV service in favor of so-called over the top services such as Netflix, Hulu and Roku. TV Everywhere was also meant to discourage programmers from giving away their shows for free online.

But in the three years since it was conceived, TV Everywhere has struggled to gain traction.

"It's simply a mess," BTIG media analyst Rich Greenfield said. "A complete and utter failure."

Andy Heller, vice chairman and TV Everywhere point person for Time Warner's Turner Broadcasting, believes "the real stumbling block has been deals." Some programmers and distributors, Heller said, are using TV Everywhere contract talks as an excuse to try to "change terms and conditions" of other contracts.

Another problem is that neither the programmers nor the pay-TV providers can decide who should be the gatekeeper for content online. Some consumers have to register at multiple networks to watch content, while others can do one-stop shopping through their distributor.

"We're trying to figure out, can you have a single access point?" said Mike Hopkins, president of distribution for Fox Networks. "It's technically complicated but not impossible."

The consumer experience "has to improve," said Denise Denson, executive vice president of content distribution for Viacom. "It is going to have to be more seamless and almost invisible to the consumer."

Until recently, Viacom put a lot of its shows online without requiring proof of a cable subscription. It temporarily suspended the practice last week when DirecTV cited it as one reason it had not signed a new deal to carry the cable programmer's channels.

For these reasons many programmers don't yet see a need to embrace TV Everywhere.

"There is no reason for us to be pushed or rushed into putting something out there subpar," said Rebecca Glashow, senior vice president of digital distribution for Discovery Communications Inc., the parent company of cable channels Discovery, TLC and Oprah Winfrey's OWN.

Distributors also have differing attitudes toward TV Everywhere. Comcast has signed deals with several programmers and its Xfinity service is a gateway to online programming. But Time Warner Cable, which is a separate company from Time Warner Inc., has hardly any deals with programmers and does not promote TV Everywhere to its customers.

"There is not a consistency of experiences by distributors," acknowledged Matt Strauss, Comcast's senior vice president of digital and emerging platforms.

As if the internal debates about how TV Everywhere should proceed weren't enough, red flags are being raised by some media watchdogs. A Justice Department investigation of the pay-TV business is said to be focusing on whether TV Everywhere is anti-competitive and an attempt to stifle the emergence of new platforms that could rival the legacy companies.

"The big cable, satellite and phone companies, which benefit from the status quo, are trying to put down this revolution in online video," Marvin Ammori, a legal fellow at the New America Foundation Open Technology Institute, wrote in a paper submitted to the Justice Department called "TV Competition Nowhere: How the Cable Industry Is Colluding to Kill Online TV."

The industry disagrees that there is anything anti-competitive about TV Everywhere.

"The concept of TV Everywhere is to provide more choice and flexibility for people who pay the bills.... This is a reward for the consumer," Turner's Heller said.

Some networks appear to have gotten it right. HBO's online service HBO Go has been a hit. Since it was launched in 2010, some 5 million subscribers have signed up for the service, which the premium cable channel has been aggressive about promoting.

"We're following consumer behavior," HBO co-President Eric Kessler said. "This is about setting us up for the future and the next generation of HBO subscribers that is learning to watch on other devices."

Other cable networks and operators have failed to match HBO Go's success, in part because they have not spent any money marketing their services.

That would explain why many consumers appear to be almost entirely unaware that TV Everywhere exists.

While the pay-TV industry does not disclose numbers on how many of its 100 million subscribers have signed on to a TV Everywhere-type service, a survey by marketing firm Parks Associates revealed that fewer than 20% even know about it.

"If this is designed to be cable's tool to fight over-the-top services, the lack of awareness really negates its effectiveness in defending their subscriber base," said Brett Sappington, a research director at Parks Associates.

And some of those that are aware of it have a blase attitude about signing up.

"Every time I look into it, it looks like it will be a bit of a headache," said Joe Mulder of Tarzana, a DirecTV subscriber who still opts for Hulu or Netflix when looking for content online.
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Old 08-12-2012, 04:32 AM   #9
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The part that got me is the poor suckers stuck with 5 gigs a month usage. Between our Roku's, Xbox and PS3 and general internet use, we can easily do 60 to 80 gigs a day. More if I try hard enough.

I just checked my laptop that I'm typing on and the current uptime for the connection is 2 hours and 37 minutes and I'm at 625 megs data transferred down and 192 megs up. All I have been doing is browsing and reading my forums like right now. 5 gigs, wow!

Last edited by straybeat; 08-12-2012 at 04:35 AM..
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Old 08-12-2012, 09:48 AM   #10
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The part that got me is the poor suckers stuck with 5 gigs a month usage. Between our Roku's, Xbox and PS3 and general internet use, we can easily do 60 to 80 gigs a day. More if I try hard enough.

I just checked my laptop that I'm typing on and the current uptime for the connection is 2 hours and 37 minutes and I'm at 625 megs data transferred down and 192 megs up. All I have been doing is browsing and reading my forums like right now. 5 gigs, wow!
That all seems very far fetched. If you were doing that much a day, at 30 days a week, your ISP would have easily cut you off.
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Old 08-12-2012, 05:00 PM   #11
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The part that got me is the poor suckers stuck with 5 gigs a month usage. Between our Roku's, Xbox and PS3 and general internet use, we can easily do 60 to 80 gigs a day. More if I try hard enough.

I just checked my laptop that I'm typing on and the current uptime for the connection is 2 hours and 37 minutes and I'm at 625 megs data transferred down and 192 megs up. All I have been doing is browsing and reading my forums like right now. 5 gigs, wow!
60-80 gigs? A day? Did you mean Megs? with 4 family members streaming, 3 gaming and buying digital copies of our games that would be our monthly usage. Somethings not right here.
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Old 08-12-2012, 05:36 PM   #12
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That all seems very far fetched. If you were doing that much a day, at 30 days a week, your ISP would have easily cut you off.
Been at it about 7 years now. On Cox in Phoenix. And actually since 1994 when @Home first brought the cable modems to our neighborhood, but they weren't 20 meg signals then. I had a complete lapse at one point and went to DSL for awhile because Cox torqued me.

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60-80 gigs? A day? Did you mean Megs? with 4 family members streaming, 3 gaming and buying digital copies of our games that would be our monthly usage. Somethings not right here.
After sleeping 8 hours I just looked at my connection. Been up 15 hours, 20 minutes now. It's at 1 gig, 816 megs at this point (after me sleeping 8 hours of it). The status says exactly: 1,819,293,117 and counting. Combine this with my daughter being on her laptop the last 7 hours, my wife on her iPad the last 7 hours, we are watching Apocalypse Now on Roku, so that's what? Around 5 gigs there, not sure of Roku streaming size? And this is movie after movie all day long. Or 3 Roku's going all day because no one wants to watch what the other is watching. With 3 devices surfing the whole time.

The wife and daughter have the Roku's going all day then the daughter will bounce back and forth between Xbox and Roku. They both go to bed at 9 or 10, then I'm up on it all night doing the same until the wife gets up at 5am for work. Then I play some more until the kid gets up for school. Then I play some more until I finally collapse and snooze until the wife gets home from work. Then the cycle repeats.

I'm partially disabled and housebound, so my laptop and TV/PS3 (which always has COD going) are all I have. My TV is generally on 24/7, unless I know I'm going to fall asleep and hit the timer.

The traffic meter on my router was turned off, but I just turned it on and will be glad to report back when it has some data logged. Although I'll probably be accused of photoshopping it?

Last edited by straybeat; 08-12-2012 at 06:04 PM..
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Old 08-12-2012, 07:44 PM   #13
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I still don't know how you are going to hit 60-80 gigs a day. Anyway you are way outside the norm.

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Been at it about 7 years now. On Cox in Phoenix. And actually since 1994 when @Home first brought the cable modems to our neighborhood, but they weren't 20 meg signals then. I had a complete lapse at one point and went to DSL for awhile because Cox torqued me.



After sleeping 8 hours I just looked at my connection. Been up 15 hours, 20 minutes now. It's at 1 gig, 816 megs at this point (after me sleeping 8 hours of it). The status says exactly: 1,819,293,117 and counting. Combine this with my daughter being on her laptop the last 7 hours, my wife on her iPad the last 7 hours, we are watching Apocalypse Now on Roku, so that's what? Around 5 gigs there, not sure of Roku streaming size? And this is movie after movie all day long. Or 3 Roku's going all day because no one wants to watch what the other is watching. With 3 devices surfing the whole time.

The wife and daughter have the Roku's going all day then the daughter will bounce back and forth between Xbox and Roku. They both go to bed at 9 or 10, then I'm up on it all night doing the same until the wife gets up at 5am for work. Then I play some more until the kid gets up for school. Then I play some more until I finally collapse and snooze until the wife gets home from work. Then the cycle repeats.

I'm partially disabled and housebound, so my laptop and TV/PS3 (which always has COD going) are all I have. My TV is generally on 24/7, unless I know I'm going to fall asleep and hit the timer.

The traffic meter on my router was turned off, but I just turned it on and will be glad to report back when it has some data logged. Although I'll probably be accused of photoshopping it?
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Old 08-12-2012, 08:25 PM   #14
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I still don't know how you are going to hit 60-80 gigs a day. Anyway you are way outside the norm.
Yeah, I usually sleep maybe 4 hours a day, the TV is going the whole time with my laptop up the whole time too. It always bugged me too because when you aren't even doing anything, why is the network logging traffic up and down? I tried to learn about network sniffing at one time, but my eyes glazed over.

Looking at the first numbers off my router it says I'm actually doing 36.85 gigs a day. 60 gigs a day is probably when I'm downloading the latest copy of LibreOffice or game demos or something? I'll wait a week or so until I get actual numbers and post a screenshot.

Just for the sake of the argument my connection now says;

Duration: 18:45:18

Received: 2,010,141,086

That's because we just got done watching Young Guns DVD, well mostly DVD's all day, so I haven't done anything for the last couple hours.

Last edited by straybeat; 08-12-2012 at 09:07 PM..
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Old 08-28-2012, 01:32 AM   #15
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Well, I said I'd report back on my Internet usage, but I haven't had much luck. I thought my router would keep a running total of all usage, but it doesn't, only while the computer is up. As far as I can tell, my actual usage is about 33 to 40-some gigs a day. That's as close as I could calculate by keeping track of various groups of numbers. I was hoping to put up a screen shot of the router page, but as stated above, it's only good for the current connection. It doesn't prove anything. I'll have to catch one of those days when we have all 3 Roku's going and see what the total is?
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