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  • Sell Netflix: The Icahn Thesis Is Flawed [View article]
    MZ, the licensing cost for NFL goes up each year. However, what is the value of a "library" of content? What do you suppose the value of all the back seasons of Green Acres, or Gilligan's island, on a non-exclusive basis is? How about the value of Friends when it first hit syndication 10 years ago versus what it cost to license it now?

    When HBO's Sex in the City first hit the syndication market with first broadcast reruns OTA and on basic cable on TBS and WGN. What do you think the value is now 10 years later?

    So content doesn't "always go up" in value in a library and on-demand context. Fresh and exclusive content that offers differentiable appeal does offer greater value proposition. That's why the eventual migration to original content for all programming networks. However, the success rate (even for HBO) for new originals is less than 1 out of 3-4. Even worse for the broadcast networks who's biz models are dependent upon advertising supported monetization while constrained by linear broadcast appointment viewing since they need to build audience quickly or a show is burning shelf space and ad inventory.

    It is a format where new media (be it Hulu, You-Tube, Netflix or Amazon) can effectively compete with old media in sourcing talent for original content -- just like how the "new television", i.e. HBO, Showtime, USA Networks, etc. competed to take new shows to their networks away from the broadcast networks. What one pays, and the budget per show, is a function of the value that the distribution can afford to realize from that show. You will never find a show on The Learning Channel or HGTV where they can afford scripted drama at $4 million per episode. Nor can frankly a Hulu (despite all its wealthy, but fiscally disciplined parent companies such as Comcast, Disney, and Fox) afford, with only 4MM subs, to pay the same, and therefore its original content strategy is directed towards sit-coms and satirevision (spoof reality) where it's cost is closer to $500K per episode.

    So the thesis that the content spend will go up is correct, but the reason is flawed. It is not because content owners can dictate charging more, but rather it's that the SVOD programming networks that expand their paid subscriber base can afford to have a larger
    budget which lets them license more stuff to further enhance their service. As opposed to broadcast television that is limited to 4 hours of prime-time entertainment per night, an on-demand channel is not similarly constrained.

    So can a Paramount, if it were to abandon its Epix channel as a failed diversion, come to market and auction its output deal and get more than the starter rates that Epix is paying for the content. Absolutely. Lionsgate already jumped ship to take advantage of Starz's need by packaging Lionsgate and Summit titles (the latter taken from Showtime). But the licensing rate that it will get (certainly less since it lost its Marvel distribution agreement as Disney is taking all future Marvel rights in house at Disney) is a function of the bidding that will occur, not dictated by what Paramount can demand at that time and under the circumstances of who can and are willing to bid. And if Starz has already re-allocated its content budget to originals from its budget tha was previously Disney, then the only ones left to bid would be Showtime and maybe new entrants such as Redbox, Amazon, Google, Hulu, or Netflix. I can assure you whoever has the biggest distribution (i.e. the ability to monetize that content) is in the best position to pay the most, but it is the cover bid that will largely govern how much the winner has to pay to win, not what the seller insists.

    A content owner is principally a forced seller as his business is to license his portfolio to pay for current expense (and his P&L and earnings projections is dependent upon that revenue stream -- he can't afford to stop and go on strike). When I used to be running M&A auctions, the competition among prospective buyers sets the price of a deal, not the valuation hopes of the forced seller.
    Jan 22 12:27 PM | 1 Like Like |Link to Comment
  • Netflix Vs. Amazon Prime: Why Netflix Should Still Lead In The Long Term [View article]
    agree. both will be viable and are likely to be more complimentary than competitive. By definition, except for non-exclusives such as Epix hand-me-downs (Paramount-MGM-Lionsgate- for now) on studio output, and back catalog, and other "exclusives" on Amazon, such as Downton Abbey, Covert Affairs, or The Closer, as you cited, and back catalogs the Nickelodeon/TV Land catalog, plus some History Channel and A&E -- all of those that Netflix did not renew, will only be available on Amazon. On the otherhand, the exclusives that are on Netflix, by definition, can't be found on Amazon. It's the same reason, that NBC shows you can't find on the CW, or Showtime shows you cant find on Starz, or Sony Columbia Pictures movies are on Starz but not on HBO -- because they are "EXCLUSIVELY" licensed. Each is not a direct substitute for the other and over time, last I checked, consumers actually want more and more choice (at least they are willing to pay for it). So I think all these "competitors" will eventually do well, each with slightly different content portfolio, and they will rotate content because each catalog will get "tired" with each audience.

    Look at all the exclusive stuff that Amazon features which are not on Netflix:

    90% of it is from the Viacom and A&E catalogs that Netflix didn't renew.

    Jan 21 09:13 PM | Likes Like |Link to Comment
  • Netflix Vs. Amazon Prime: Why Netflix Should Still Lead In The Long Term [View article]
    AMZN had only 4M active video streamers when it had 9M Prime subs, so at 20 million, maybe it has 8M Prime Instant Video customers, or 10M at best. AMZN also has certain categories of Prime that are not eligible for Prime Instant Video (I know because we had to upgrade our subscription). The evidence is that most people use Prime for the free 2-day shipping and not for it SVOD service.

    See below Sandvine's most recent internet traffic metering report, where Amazon had only 5% of the traffic that Netflix had, so those 20M PRIME subscriber base versus 31M Netflix domestic subs are only spending less than 1/10th of the viewing hours (actually less than 8%) per subscriber as NFLX. In other words, Amazon Prime Instant Video is simply an enhancement feature (like free roadside assistance that you get with your credit card) that helps AMZN promote its free shipping in order for it to sell more physical goods (where it does make some money,... a little) and also to cross promote PPV rentals on digital media.

    At least when you compare Hulu+ and it's 4M subs, you get closer to 32% of the average use as Netflix subs. You will note that HBO Go is non-existent as well (because it is mostly viewed as linear channel or as on-demand via the MVPDs). If HBO were to ever unlock itself from the MVPD carriage constraint (which I think is very difficult), I actually think that it has a very strong product for direct to consumer marketing-- but it is handcuffed to the MVPD.
    Jan 21 04:33 PM | 2 Likes Like |Link to Comment
  • Sell Netflix: The Icahn Thesis Is Flawed [View article]
    Haha, it seems that you like action and volatility. I certainly can't disagree with you on fundamentals with respect to GRPN or ZNGA on their business model resilience, but I may be of a bit different view on NFLX, LNKD, and TWTR (I know limited to zippo on TSLA, which is a concept stock, thinking it was easier to make money on the long side at GM to play the auto rebound). I suspect that you like "valuation" shorts, whereas my leaning is more towards "event" catalysts.

    I wouldn't be too hard on yourself on 2013, as I suspect the 30% rally in the S&P in 2013 versus the flat S&P in 2011 probably has something to do with the difference in your short investment performance delta during those two periods. And if 2014 is more like 2011, you will have more opportunity to be proven right, but you will have to ask yourself whether it is because the market multiples have compressed and you called that timing right, or whether your fundamental thesis was what made the difference. I can suggest each of NFLX, LNKD, and TWTR are much stronger today than they ever were back in 2011, and at least I believe, are not likely to relinquish their strategic advantages during 2014. Where their stocks will be is a different story.

    But I would take my comments with a grain of salt as I am the genius that was short GOOG from the high $500's (single successful business line in search with no "next act", plus demonstrated management stupidity in pissing away $12.5B on MOT (to source standards essential patents that have no value), assured eventual adverse impact from its undisciplined copyright infringement strategy, and now another $3.4B for a thermostat company, and who knows big bets on self-driving cars, mining asteroids, time travel) -- and I finally threw in the towel in the high $600's (when core growth in its search biz seemed to re-establish itself plus improved monetizaiton on mobile). So we are all a product of our mistakes and I have cretainly made many.
    Jan 20 01:45 PM | 1 Like Like |Link to Comment
  • Sell Netflix: The Icahn Thesis Is Flawed [View article]
    Yeah Zynga definitely was challenged -- anytime 90% of your revenues are from 2% of your users, that is not a recipe for sustainable success. Although I looked at it as a short, but couldn't get comfortable with the event risk of what they could do with the IPO cash and whether they could pull a rabbit out of a hat with online gambling. Getting the timing right is so important on a short, especially if you are mark-to-market. I like shorting bonds better as more asymmetrical optionality on a business model.
    Jan 20 12:41 PM | Likes Like |Link to Comment
  • Sell Netflix: The Icahn Thesis Is Flawed [View article]
    Michael "there is no microphone that I don't like" Pachter, is a bag of wind. I agree his area of expertise is much greater in the gaming space than pretty much anything else he seems to like to express a point of view about. Although I remember him being bullish on GameStop (the next Blockbuster/CircuitCit... Shack/BestBuy IMO but that's just me), I haven't really followed enough to know where he actually has insight. Most recently, I think him shooting from the hip with quotes that Nintendo should just be a software company and license its software to the other consoles creates good soundbite but lacks any sound analytical substance -- he is the anti-Henry Blodget, in that he gets his play by pissing on things rather than pounding the table the other way.

    His 15 minutes of fame dissing Zuckerberg during the FB IPO was also amusing: see Kara Swisher's calling him "doofus" and the quote from some other investors:

    Pachter is that loud uncle that everyone has to suffer through -- thankful that it's only once a year at Thanksgiving.

    I don't begrudge a guy for having opinions, but he is just so clueless about the media and entertainment industry that I don't know how he can have such strongly felt views when he has so much ignorance. He does not, and has not, covered one single other media company in his career: any of the studios, any of the media conglomerates, any of the MVPD's, any of the television broadcasters, any of the networks,...NONE. Or know of any of the economic models, the strategies of the different participants, the checks and balances that mutual dependencies that govern the players. But yet he can have such strongly-held views that are simply wrong -- "Often Wrong, Never in Doubt". And he is such a media-wh**e, that he craves the limelight to promote his ill-conceived views.
    Jan 20 12:10 PM | 1 Like Like |Link to Comment
  • Sell Netflix: The Icahn Thesis Is Flawed [View article]
    Mintz: "All it takes is 1 or 2 motivated competitors to 2x-3x the cost of content overnight."

    Given that all the "6 majors" studio output are locked-up on long-term exclusives wth each of HBO, Starz, and Netflix, and most of the back-seasons of serialized drama from the television catalogs are similalry locked-up (although more medium term), where do you see exactly the point of entry?

    Paramount output deal may be up in the air given that Lionsgate (one of the 3 core equity founders of Epix) already has given up on Epix an decided to take its output deal to Starz. Similarly, Hulu has largely locked-up same season for all the major broadcast networks (but not back season) in partnership with its major broadcast network equity owners. Beside those prospective opportunities (although highly speculative), and maybe such undermonetized niches such as Bollywood films, and Hong Kong kung fu films, there really are not much else that offers a point of entry for those "motivated competitors" that you describe to make their mark.

    Of course maybe live-action sports is entirely new category that has not been fully exploited in the on-demand streaming universe other than unauthorized tube sites that are trying to by-pass licensing regimes. Live-action sports has very short shelf-life and such content principally lend themselves to an advertising-supported model rather than SVOD (DirecTV's NFL Sunday Ticket probably one of few exceptions but that is used to drive overall MVPD subscriptions as a differentiation vehicle).

    So Mintz, which specific content do you suppose would somebody (by the way, do they have existing subscriber distribution to justify paying for it or do they simply take it on the chin in operating losses while they spend the hundreds of millions to build the audience) with unlimited check book have the opportunity to play that is not already locked up that you believe offers the opportunity for a new entrant to use as the "tip of their spear" to attack HBO, Starz, Hulu, and Netflix? Not happening because there are no virgins left in California....

    You will see Redbox Instant shut within 18 months or simply evolve to PPV VOD model as there will be no content for it to license -- your middleman thesis actually fits Redbox Instant, because as opposed to Netflix, HBO, or Hulu, there is not one piece of content on Redbox Instant that is not non-exclusive.
    Jan 20 11:15 AM | Likes Like |Link to Comment
  • Sell Netflix: The Icahn Thesis Is Flawed [View article]
    Mintz, I have not disagreed with you on your valuation POV. I think the NFLX is quite rich, with probably more downside than upside in the 2014 time-frame, albeit defensible IMO based upon where other programming networks are valued (3x-5x revenues, or 15x-18x normalized EBIT). Personally, I am hedged on more than 2/3 of my aggregate long and this was after taking down 1/3 of the long on last quarter's earnings ($390/shr in after-market -- sweet!). I went long at about 1.3x revenues, and hedged out (too early it seems) via price ladder after stock hit 3x revenues. Over the long term, this programming network can easily approach 25%-30% EBIT margins, so 4x-5x revenues would be in line with other media properties.

    What I disagree with is the "reasons" that you cite for your short thesis which principally 1) challenge the size of the potential opportunity, 2) assume the assured commoditization of media distribution, or the so-called "just the middleman" thesis, and 3) over-estimate the impact of competition or other programming networks as if we lived in a 1 channel (i.e. winner-take-all) world.

    It is because I agree that the perception of the above (and other similarly feeble-minded thinking from idiots like Pachter) will be assured to guarantee stock price volatility, that I believe there will be an eventual downdraft in the stock (otherwise I would have simply sold rather than holding a hedge). In fact I am counting on it (or hoping at least) so that I can flex up my long eventually (by unwinding my hedges). In that respect CNGuy who is also short the stock (for a trade) but also disagree with your fundamental assessment of Netflix is more aligned with my thinking. I am less confident than he is to take an outright short position but I have in effect reduced my net long to remain more neutral. The outright long portions of my PA position are held by UGMA accounts for my kids that have a 10-15 year investment horizon which I see 15%-20% compounded even at these "lofty valuations" and is not worth the tax hit (given their cost is in the 70's) to trade their positions.

    With respect to the commentary by someone posting here that attributes the stock price to dumb retail investors such as their ex-girl friend, 92% of NFLX's float is held by institutional investors, 89% in the case of AMZN, according to Bloomberg...and do you know what that number is for IBM and MSFT, 78% and 67%, respectively. By the way, "institutional holdings" is compiled by Bloomberg based upon 13-F regulatory filings, which are required by those who are QIB's (manage more than $100 million of discretionary assets). So it's not really the dumb ex-girlfriends or retail investors who love the service that are holding up the stock price, it is actually major institutions that are supposedly managed by professional investors -- of course one's dumb ex-girlfriend may now have become accomplished portfolio managers based upon their demonstrated investment acumen. :-)
    Jan 20 10:32 AM | Likes Like |Link to Comment
  • Sell Netflix: The Icahn Thesis Is Flawed [View article]
    Can you get rid of CBS, since you have NBC, Fox, and NBC. Time-Warner found out,... not for long. And you certainly cant get rid of CBS today if Cox blacked out CBS, or you would be pretty pissed if you wanted to see AFC championship this weekend,...and you couldn't. So CBS is valued based upon the content that it has. you can argue that well all the major broadcast network are the same with non-sensical sit-coms, cloned singing/dancing contestant shows, other bad reality television of fat people or working stiff, along with a smattering of sports. However, if you are a fan of the latest episodes of CSI (not CSI:Miami) or the NFL AFC conference, you can only get it on CBS. Of course, if CBS didn't exist, that content would have found its way elsewhere, but CBS does exist, and it represents a portfolio of content franchises that it has RENTED (i.e. licensed) where you see it on CBS. And because it exists, and people are used to going to its channels to seek out the content that exists there, and thus this "middleman" has established both a portfolio of contractual licenses (all "rented") as well as an audience, which combined creates the earnings power and the associated "goodwill" of this asset if you were going to capitalize that earnings stream (if you were to sell it, what somebody would pay for it in excess of the embedded investment). The cost of entry are significant and formidable. For example, it took Starz 8 years of significant losses and negative cash flow before reaching the level of carriage and subscription to reach operating breakeven. Despite the challenges to create these programming networks (that's what Netflix is, a subscription-based on-demand IP delivered entertainment channel) and generate sufficient distribution and audience to establish a franchise, media conglomerates seemingly aspire to establish these new entrant core franchises called CNN, ESPN, HBO, CW, Fox, Epix,....because these "middleman" offer attractive economic returns. If the "middleman" business (what the media industry call "networks" or "channels") is so pedestrian as you describe, why do you suppose that presumably everyone wants to get into given all the presumed competition that aspires to duplicate or complement what Netflix has accomplished.

    The reality, which is something that is lost on Pachter and Pendola, is that networks in theory compete for eye-balls or entertainment time or dollars, but in reality mostly are complementary. They are not a zero-sum game. A Fox or CW creating a new network, does that mean that a CBS or NBC must disappear or go broke. A Movie Channel or Showtime, and Starz/Encore, or Epix now, Netflix and Hulu+ in the future, doesn't mean that HBO disappears or that its business is destroyed. By definition, the various channels themselves either counter-program or otherwise seek paths to differentiation. Hulu+ for example positions itself in "same season" television content supplemented by independent and foreign films, and now a scattered shot strategy (given the budget it has) of sitcoms, reality, and satirevision to frame its "original content" strategy -- one of those, maybe it's "Burning Love" (a spoof on The Bachelor) may develop an audience. Who knew what was a spoof called the The Kardashians, or low brow reality such as Housewives of [blank] would turn out to have mass audience appeal. However, the point of entry for the next few years will be difficult, at least in new release films, which are all largely locked up with long-term exclusives where all the Big 6 studios except maybe Warner (and not sure anybody would bid against HBO to be a stalking horse - although if I were Netflix, I would, just to increase teh internal transfer price at TWX so that it will dilute HBO's internal P&L and maybe sap some of HBO's budget for originals). There's a larger universe of non-exclusive catalog fare (that's the same as the $1 DVD bin at WalMart) but the major back seaon franchise for serialized television drama (which historically have been licensed shorter) and certain niche libraries such as childrens programming (Disney and Viacom) are also locked up for at least medium term (3yrs).

    Anyway, I am getting bored with this discussion, which was originally simply to comment on why "just a middlemen", when as you say most of the media business (and other industries) are just "middlemen". I think what you were trying (or others) to say is that it is a "commodity" business as a media distributor. I think every single media CEO would disagree with that statement as distributor s in the media business are often "gatekeepers" and that the toughest challenge for a content developer is to find distribution.
    Jan 18 09:55 AM | Likes Like |Link to Comment
  • Sell Netflix: The Icahn Thesis Is Flawed [View article]

    I respect the thought process that you went through even though I don't agree with it. that Rocco Pendola "middle man" thesis is really a bunch of crap. while at least it's a good soundbite, but just not analytically sound in that "just a middleman" thesis.

    Apple iTunes is "just" a middleman. Walmart is "just" a middleman. The theatrical distribution business is "just" a middleman, but Sony (and Fox before it) tried to change the economic allocation of who pays for 3-D and got it stuffed back in Sony's face. All the television broadcast networks are "just" middlemen because they bid for scripts, talent, production to develop content, including sourcing some from their own affiliates but also from many independent AND the television studios of their competing networks -- but they are "just" a middleman. Oh, and they are dependent upon the MVPD's for 96% of their audience.

    HBO is "just" a middle man, sourcing, exclusively, its pay cable 1 studio output content from the studios of Fox, Universal (each of whom competes against Time-warner on multiple fronts), as well as from Warner, and its "originals" by buying from all the television studios, including its own captive and its sister TWX affiliates --- don't get confused just because it brands the content as "HBO" that HBO is anything but "just" a middleman.

    AMC Networks (AMCX) is "just" a middleman as it sources its content from various studios including all of its iconic brand franchises (Breaking Bad is from Sony, Mad Men is from Lionsgate, Walking Dead is from Valhalla) as well recently taking over CBS Television studio owned and produced retread CSI: Miami after 10 seasons on CBS broadcast network (sloppy seconds works not only for Netflix). On the other side, AMC is entirely dependent upon the MVPD's for distribution, don't even have over the air -- talk about being "just" a middleman. AMCX by the way is valued at 4.4X EV/rev, which is about what NFLX is valued at currently except that NFLX growing much faster but obviously AMCX at more mature network margins.

    If you study the media business, the value of distribution, what you call "just" the so-called "middlemen" has a history of enjoying healthy profit streams. And programming networks are historically the fattest margin "middlemen" that exist.

    What's so funny is that the content owners -- who actually by the way are also middlemen who are mainly the financiers in bidding for "talent" that is constantly being sold via auction such as authors, scriptwriters, producers, directors, actors, and so on. Even when Spielberg went vertically integrated with pals Katzenberg and Geffen to underwrite DreamWorks, Spielberg ended up doing multiple projects with other movie and television studios, and different distributors/networks, because that was the only way to get the "content" that he loved most produced and distributed. no one has a monopoly on content, but the distribution or "media middlemen" is a scale business and often ends up in an oligopoly structure.

    Right now (could change), Netflix has the largest audience for broadband delivery with an engaged audience. Why do you think that Netflix 30 million subs represents 32% of peak US web traffic while Amazon's 20 million Prime customers represent only 1.6% of peak traffic? Ding, ding, ding, ding - because the Prime customer is really only purchasing the free shipping and not using the streaming service. That's why Disney locked up its studio content and children's library with a long-term exclusive deal with Netflix (beyond 2020 as reported) -- because Netflix gives Disney the largest audience (and therefore it gets paid a lot) but even though Starz was willing to pay same, Disney valued Netflix's much larger audience (and prospect to grow even larger) because that larger scaled audience lets Disney cross promote its content brands to reap the greatest monetization returns. Why do you think that Disney didn't choose to keep its childrens' content on its own Disney Channel streaming app --- because it can find a larger audience with that "middlemen" called Netflix and therefor earn boatloads more money, more eyeballs, and more 3-8 year old Disney addicts by leveraging Netflix's distribution. Netflix is simply a better digital drug delivery system than Disney's own streaming "channels".

    Same way that AMC knows that by giving Netflix exclusive on prior seasons of Breaking Bad and Mad Men and other serialized dramatic series, because Netflix could more effectively promote and multiply the audience of current season for those series for AMC to sell more eyeballs.

    I just see all these somewhat ignorant analysts (Pachter is the best clown) who have no clue how the media business actually works. in the media business, distribution (i.e. the "middleman") has always been the higher multiple business while the content side was the lower multiple due to its volatility of returns. Remember even the vaulted brains and masterminds at Disney blew $200M - light a match to it -- on John Carter, and this is after it got toasted with Mars Needs Moms - the largest loss in studio history. In the mean time, the "middlemen" called Regal Theaters, HBO, CBS, Showtime, Discovery, Time-Warner Cable, Apple iTunes, and all those other "middlemen" just keep on cashing the cash register.

    So no, I am not "missing the point", I just don't happen to agree with the somewhat trite statement about "just" a middlemen in the media business.
    Jan 16 10:14 PM | 2 Likes Like |Link to Comment
  • Sell Netflix: The Icahn Thesis Is Flawed [View article]
    you know telephone companies used to define penetration opportunity based upon households. after-all, it had always been shared "party" lines in the very beginning of the industry, so getting a separate phone line for each home was a luxury that seemed to be the ceiling of demand. somehow 50 yrs later the industry discovered that using the spare copper in twisted pair gave them the opportunity to tap fax machines and teenager demand for their own phone lines. Lo and behold the penetration ceiling now exceeded more than one line per household when the shared-use value proposition was overcome by consumer demand for a new user utility.

    Similarly, AMPS, the original AT&T's mobile phone subsidiary, defined its market potential for the cellular industry based upon the number of vehicles on the road, because after-all, it was a "car phone" and something to use outside the home. Who would have known that 10 years later Michael Douglas's character Gordon Gecko in Wall Street would make everyone want to go and get a brick-sized Motorola DynaTac "portable" cellphone. Today, there is not a developed country in the world where cell phone penetration does not exceed 100% population penetration. That is absurd when you consider the two tail ends of under 8 year olds and over 85 year olds, so effective mobile device penetration per available consumer is well past 1.2x.

    Therefore when you look at historical television viewing, which was a shared viewing experience for a family to enjoy together, to become eventually more individualized consumption, or different purposes (kitchen TV vs home theater, vs kids' bedroom TV's), that the nature of television viewing consumption when it evolved from 3 major broadcast networks to a 300 channel offerings today, increasingly migrated towards a fragmented audience that catered to individual and differentiated viewing tastes. Throw in now the new paradigm of mobility with tablets and smartphones, and the availability of broadband connectivity almost everywhere, plus the advent of cloud to facilitate large remote storage capacity either for offering choice on demand or otherwise to time shift entertainment consumption, the nature of television media consumption will continue to evolve to increasingly personalized television.

    That's a new world in which your definition of "penetration" as defined by comparison to "households" in looking at the analogue of the cable MVPD industry seems quaint and archaic.

    30 million "subscribers", on nearly 100 million households, or 250 million adult population, or 800 million broadband enabled access devices,.... who knows what this new future will look like.
    Jan 15 09:06 PM | Likes Like |Link to Comment
  • Burning down the TV pilot season [View news story]
    no need to "go back" to the prime time view, you just watch next season on demand either on Hulu+ or Netflix. Appointment viewing is a dinosaur content consumption model.
    Jan 14 09:07 PM | Likes Like |Link to Comment
  • Appeals court strikes down net neutrality rules [View news story]
    it's not really on Netflix but it is on HBO GO (called "Late Night Features") and on CinemaxGo -- same formula that worked on pay cable television the last 30 years to educate multiple generations of 15 year olds -- "I know that, we have cable".
    Jan 14 03:10 PM | Likes Like |Link to Comment
  • Ambac's complexity and uncertainty creating opportunity [View news story]
    The RMBS exposure and putback claims are part of "walled off" structured products portfolio in Segregated Account per Wisconsin insurance proceeding, although new Ambac has junior surplus note claim at the Segregated account. AMBC is mainly a ride on the recovery of the muni finance business (especially as interest rates go higher and more muni defaults, so there is value in muni bond insurance) and the monetization of signficant tax attributes at AMBC.
    Jan 9 04:34 PM | Likes Like |Link to Comment
  • Online movie sales keep getting stronger [View news story]
    By the way, "SVOD" is "Subscription Video On Demand" is how the industry describes Hulu+, HBOGo, WatchESPN, and Netflix. In other words, you get access to content via a subscription.

    Please note that the major studios have generally colluded together to establish industry "norms" in terms of exhibition "windows". Typically broad, and non-exclusive, theatrical distribution first; then after a seasoning period and I believe they protect the theatrical outlets with 120 day delay (maybe it is 180 days, I forget) before the studios release both EST and physical DVDs for an ownership model. It then becomes available, again still non-exclusive, in the PPV/VOD window, 60 days after DVD/EST initial release, for the broad distribution outlets both streaming AND via MVPD PPV. After 60-90 days during the PPV/VOD window, it then gets released, this time typically on only an EXCLUSIVE basis, to the "Pay cable 1" window, which is the window that Starz, HBO, and Netflix own the exclusive broadcast rights for shwoing to their subscribers. When it is in Pay Cable 1 exclusive window, it goes DARK in the PPV/VOD outlets; i.e. iTunes, Amazon, the MVPD operators can no longer show it on a rental PPV basis. However, these streaming outlets STILL CAN pursue an ownership model in selling EST digital copies (just like DVD's continue to sell) while it is in the SVOD exclusive window.

    Now you can understand why the studios, in offering discounts on DVD and rev share model to ala carte DVD renters like Movie Gallery / Blockbuster, if they would accept a 60 day delay from 1st Sale DVD before offering rental of studio new release content. This was to "protect" both the physical DVD sale and EST window. Redbox, which is much more dependent upon having available hot new releases (given its limited shelf space in a kiosk), decided to forego the discounts and instead rely on First Sale Doctrine and simply buy its DVD's in the initial release via wholesale. Netflix, which is much more of a catalog business in its DVD rental business (offering depth and breadth) instead took the discounts by accepting the 60-day delay and worked with the studios and their windowing.

    Similarly, both Amazon Prime and Redbox Instant offer a hybrid service combining subscription access (i.e. free streaming included) to certain content while offering ala carte PPV of a broader catalog. This contrasts with Apple iTunes, Google Play, and WalMart's Vudu who stick with the EST and PPV models and offer no subscription. I would argue that Amazon and Redbox are mainly using their subscription content offering in what I would characterize almost as a "teaser" menu in order to stimulate purchases of PPV (i..e. ala carte rentals) content of a broader scope (and non-exclusive, i.e. available at multiple venues) -- and where they make their money.

    As a consumer, i like to rent my content (on PPV) from either iTunes or Vudu, as I find their user interfaces and streaming quality superior to Amazon Prime. For SVOD, I happen to subscribe to pretty much all of them (except Redbox Instant which I find of no incremental value) such as HBOGo, Disney, Starz Online, Epix, Netflix,Hulu+, Amazon Prime, and many add supported such as Crackle, Viki, DramaFever. These "streaming" services are really "programming channels" analagous to either "basic channles"(i.e. free and ad-supported) or "premium pay channels" (paid subscription that offer differentiated content).
    Jan 8 11:07 AM | Likes Like |Link to Comment