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Warner Bros. (TWX) launches a $10/month streaming service for old movies and TV shows. Called...

Warner Bros. (TWX) launches a $10/month streaming service for old movies and TV shows. Called Warner Archive Instant, the service features titles such as Gilligan's Island, the original Superman show, and (as VentureBeat puts it) "loads of other stuff you’re likely only to find in the $1 bin of DVDs at Walmart." At first glance, the service doesn't appear competitive either on a pricing or content basis with Netflix (NFLX -1.5%), whose shares are underperforming today.
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Comments (9)
  • James Sands
    , contributor
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    Consumers will pay $10-15 per month for the best content easily. Imagine if a company can reach hundreds of millions of people globally. Comcast was wise to buyout GE's NBCUniversal. Just think, Comcast can now have subscribers in South America, Asia, etc. through a direct subscription streaming service. This reach is much greater than U.S. households and offers more revenue potential.

     

    I bought Discovery and Scripps Networks for two reasons:

     

    1) Discovery has great global subscriber reach potential and
    2) Scripps will get bought out and added to a major media company as added value

     

    Netflix, Hulu, and the platform-based services days are numbered. Once major media companies begin to test these waters and shift over to subscriber streaming models, why will we need Netflix, Hulu????
    2 Apr 2013, 01:53 PM Reply Like
  • Tvaddic
    , contributor
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    Which is why NFLX is aggressively getting original content, and exclusive deals.
    2 Apr 2013, 02:04 PM Reply Like
  • James Sands
    , contributor
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    I'm not sure if you mean Netflix developed content by original content. This point is valid in that programming and movies have become so saturated that this provides an opportunity for Internet-based programs to develop. I always thought YouTube would dominate this area, but they haven't seemed to grasp the potential and instead focused on developing Google Play.

     

    I still think however, that Twentieth Century Fox, CBS, Time Warner, Comcast, etc. would all kill Netflix and such pretty quickly if they begin to stream directly to subscribers. They would be taking streaming platform customers and revenues with no content acquisition costs to boot.

     

    This is potentially great for consumers. I could for instance subscribe to ESPN, NBA.com, NFL.com, and CBS and Twentieth Century Fox or Disney when I have kids, etc.

     

    It is just a matter of time when ESPN realizes they will make more money by focusing on a global subscriber base versus milking cable/satellite bundled packages. They are watching the streaming versus cable/satellite trends like a hawk. Baby-boom generation is the only justification for the milking to continue.

     

    NBA.com is the first major sporting content owner to offer complete game packages directly to Internet/mobile subscribers, live and in HD. NFL.com is close and it will be a matter of time for the dominoes to begin falling.

     

    The exclusivity piece doesn't mean much other than the contract term which is somewhere between 6 months to 5 years. Starz, Encore, etc. are examples regarding exclusivity.

     

    Smaller media companies are good to check into as they will get acquired in this transition to beef up global product competitiveness.
    2 Apr 2013, 02:17 PM Reply Like
  • Tvaddic
    , contributor
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    That works for the sports you mentioned because they aren't owned by big conglomerates. If popular channels are released on an ala carte model, people wouldn't subscribe to the second tier channels. For example, ESPN, Nickelodeon, and HBO are popular channels, but they also have some sister channels under their brand names, ESPN2, TeenNick, HBO Comedy etc. The companies could lose ad revenue under an ala carte deal, or bundle the channels together, which would be more expensive, and basically the current cable model. I feel this will happen, but they have to get their ducks in a row.
    2 Apr 2013, 03:24 PM Reply Like
  • James Sands
    , contributor
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    Good points. I think one of the catalysts is definitely advertising's continued transition towards digital and mobile.

     

    The interesting thing is advertising is focused on connecting with consumers. And if Discovery for instance is in 99 million U.S. households there is an assumption that there are major advertising dollars to be made, as well as consumers to be reached.

     

    However, digital and mobile advertising can be measured more effectively and actually provide opportunities for a spontaneous interactive component to engage consumers directly. I would contend that digital/mobile advertising can become more personal and engaging than traditional advertising ever could. And thus, will serve as a much more valuable medium over time.

     

    You hit it right on though, advertising is a big part of how this unfolds. And large conglomerates will not be willing to let go of their family of products easily.

     

    Discovery as an example did just under $4.5 billion in revenues and advertising revenue represented 45%. Scripps Networks did a little over $2.2 billion in revenues and advertising revenue represented 69%.

     

    A good example of advertising spending is to consider online travel agencies. Priceline, Expedia, and Orbitz are spending significantly more money on digital/mobile advertising than on traditional advertising. Priceline spent roughly $1.3 billion last year on online advertising and only $35 million on offline. This trend's tipping point occurred in 2008/2009 and is dramatic.

     

    This is actually why I like Hulu's model better than Netflix from an investing perspective. I still think that smaller content-owning companies are the way to invest though, with exceptions such as Discovery, CBS, News Corp. spin-off possibly. I think it also speaks to many companies separating their media entertainment from news print, or traditional platforms.
    2 Apr 2013, 03:54 PM Reply Like
  • resevil239
    , contributor
    Comments (18) | Send Message
     
    I agree with you that the big companies would likely kill netflix if they all entered. However thus far, most of them seem to be resisting the changes and trying to stick to traditional cable (not unlike the record companies when Itunes first started to sell music). I also think it would be best for consumers if that didn't happen. IDK about you, but I figure the less media companies that enter the streaming market, the less subscriptions I'll end up having to pay for to get the content I want (I'm 21 now, and already know I will pay for more expensive, faster internet and stay far away from cable subscriptions)
    Unfortunately what I hope happens, or what is best for consumers has relatively little relevance on what actually happens. Its an interesting market to look at. Its pretty obvious that whether its add based (like Hulu plus) or not, the future of rentals/home entertainment is streaming, but whats not clear is what company will be king, or if they will all end up just sharing the market. Netflix is so far the only well established company. Sure theres hulu, but they only have TV and even then are somewhat lacking, depending on your taste (plus adds. Who wants to pay and still get adds?). Amazon has decent content, but their internet UI is terrible and they don't seem to be pushing the streaming side of prime quite so much, nor do they have the brand recognition of netflix. Redbox is just getting started. And thats it. Everything else is on-demand. And this Warner thing Is dumb at this point. Do they really thing streaming content will hurt dvd/bluray sales that much that they won't put more than older shows on? If they were smart they'd start putting out all of their content up till, say 5-10 years ago, then just cycle everything in and out of availability, adding recent releases every so often.

     

    but many of these media companies have this stupid idea stuck in there heads that a movie on streaming means the loss of a DVD sale. Idiots, anyone who really likes a film will buy it, esp if you are smart and cycle content so that it isn't always available. That way consumers wanting to use streaming services to replace more expensive rentals can still see it, but you don't have people using it as though its their own movie library.

     

    of course this is the same industry that tends to analyze why a film did poorly based on what they think consumers want, what time of the year it was released, or other rather arbitrary factors, rather than the actual quality of the content (or maybe thats just analysis articles, idk. but figuring out why, say, John Carter or Battleship or a similar ridiculous looking film did poorly is about as easy as looking at the trailer, or hell probably reading the script: they are usually ludicrous and/or poorly made. How battleship ever got greenlit is beyond me).

     

    Either way, I'd say at the moment, this WB thing is hardly a threat for Netflix. If I was reed hastings, I'd be watching what they add cautiously, keeping an eye on them and their content library, but I would pay far more attention to redbox. Film buffs like myself are likely to stick with netflix for the advantage of older or lesser known films, but for more casual audiences the redbox deal sounds like a better buy, even with a poor streaming catalog.
    3 Apr 2013, 11:39 PM Reply Like
  • resevil239
    , contributor
    Comments (18) | Send Message
     
    Also HBO is already realizing that streaming to customers is a better idea than sticking with the current cable bundled deal. Rumor has it that they are going to start (or at least consider) offering HBOgo subscriptions to anyone with a broadband connection (so as to avoid angering current Cable partners, since most of them also own the cable companies).
    3 Apr 2013, 11:42 PM Reply Like
  • resevil239
    , contributor
    Comments (18) | Send Message
     
    Also, netflix has already produced several shows and is the US distributor for one Norwegian one. House of Cards is the first they made that they released, they have another one coming up in april, a 4th season of Arrested Development, and a long list of other shows they have produced/are producing coming. They have also recently announced a Bluray/DVD release of HoC in the summer, thus additionally monetizing these even more than adding value to their streaming library. Just search for netflix in wikipedia, then look in the table of contents for original programming (or similar) and follow the link. There is a relatively long list of shows coming from now till next year. In fact another was recently announced. Not bad for a small cali company started just over 15yrs ago selling dvds and non-subscription rentals originally is it? Hastings has done one hell of an impressive job taking this company from mail rentals/dvd sales all the way to a global streaming company and content producer. And good content at that!
    3 Apr 2013, 11:48 PM Reply Like
  • The Aristos
    , contributor
    Comments (58) | Send Message
     
    This service looks like a big whig just discovered what Netflix was and ordered a new product to be rushed out in two weeks. Terrible design, selection and pricing. The library will be swallowed by whatever Time Warner has up it's sleeve.
    2 Apr 2013, 05:12 PM Reply Like
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