July, 2011

Rovi drops last-minute lawsuit on Hulu

Patents Very amusing timing to Rovi’s patent infringement suit filed against Hulu today in federal district court in Delaware. The litigation concerns the old Gemstar-TV Guide patents on electronic program guides, which have been the source of countless legal actions by Rovi in the past.

There are two ways to read today’s move. Either Rovi believes Hulu really will be sold, and it wants to get a hook in deep enough so that any deal to acquire the streaming service would likely need to include a provision to settle outstanding litigation. Or, Rovi believes Hulu will not be sold and it wants to get a hook in now while it’s is still a going concern and there’s still someone still there to collect from.

I guess it was now or never.

 

Wireless bandwidth bill on the last train out of Crazytown (Updated)

Bandwidth For those who can bear to look, the debt ceiling bill being humped through the Senate this weekend by majority leader Harry Reid (D-NV) could turn out to be critical to the long-term prospects of the mobile video delivery business.

In an effort to find every possible dollar of deficit reduction without actually cutting federal programs, Reid has wedged a provision into the bill authorizing the FCC to conduct “incentive auctions” of slices of radio spectrum currently controlled by broadcasters for use as wireless broadband capacity.

The idea is that broadcasters would “voluntarily” relinquish frequencies they’re not currently using. Government agencies would also contribute some spectrum currently assigned to them by the FCC. Some of the newly collected spectrum would be allocated Read More »

Fox lifts curtain on sham Hulu sale

Online Video With Fox’s announcement yesterday that it will put new episodes of current-season shows behind an authentication wall I think we can fairly assume the sale of Hulu is now off, assuming it was ever really on. Whatever valuation a prospective buyer might have assigned to Hulu a week ago just went down significantly. Most of Hulu’s revenue comes from the sale of advertising in the shows it streams and the new authentication wall will have an immediate negative impact on viewership. And fewer viewers means fewer ad dollars

The only question now is whether Hulu can continue as a going concern. Given the recent rumblings that Hulu’s other network partners were mulling a move to an authentication window Fox’s announcement is likely just the first. ABC will probably be next to go; NBC is somewhat constrained by the merger conditions of the Comcast deal to following the lead of the other networks in matters related to Hulu. When all three go, and Hulu no longer has next-day access to its most popular content (save for subscribers to Hulu Plus) the jig will be up. Read More »

Walmart tries some e-commerce Vudu

Retail Walmart’s integration of Vudu into Walmart.com could help propel the online movie service the retailer bought 18 months ago into the first ranks of digital VOD providers, alongside Apple’s iTunes, Microsoft’s Xbox Live and Amazon VOD. Walmart’s web site gets over 5 million visits a day from shoppers, giving Vudu a high-profile platform on which to build up its user base. But there’s likely more behind the move than merely ramping up Vudu’s VOD business. Read More »

Netflix Facebook integration gets Borked

Legislation We’ll have more on Netflix’s Q2 earnings report shortly, but one odd item bears flagging because, unless you’ve been around the video business for long time, you might not get the reference.

According to CEO Reed Hastings’ shareholder letter, Netflix plans to introduce its long-planned Facebook integration shortly, probably before its next earnings announcement. But the integration will only be available to users in Canada and Latin America initially:

At this point, we plan to launch this initiative only in Canada and Latin America, as the VPPA (VideoPrivacy Protection Act) discourages us from launching our Facebook integration domestically. Under the VPPA, it is ambiguous when and how a user can give permission for his or her video viewing data to be shared. Read More »

Cord-cutting story gets more complicated

Online Video Get ready for another round of headlines touting cord-cutting. According to Bernstein analyst Craig Moffett, big cable MSOs and sat-casters are about to report some ugly quarterly subscriber numbers.

In a new forecast, Moffett projects that cable MSOs will report an aggregate net loss of  322,000 video subs in the second quarter, including 108,000 at Comcast and 101,000 at Time Warner Cable. While some of those losses will be made up by net adds at Verizion FiOS and AT&T U-Verse, overall, Moffett said, “our conviction in a positive aggregate number [for MVPD subscribers] is near zero.” Read More »

News Corp. getting saucy with Apple?

First Read The Wall Street Journal will no longer sell subscriptions or other content directly through its iPhone and iPad apps, the paper reports this morning. Canadian e-book seller Kobo announced a similar policy change.

At issue would appear to be Apple’s insistence that all in-app purchases on its devices be funneled through the iTunes App Store, where Apple takes a 30 percent cut of all transactions, rather than through a link to the seller’s own web site. Although Apple had appeared to relax enforcement of that rule in June, after stiff push-back from publishers, the moves by Kobo and the Journal suggest that grace period may have ended.

The Journal had been offering subscriptions to Apple device owners via a link in its app. But the paper’s publisher said Sunday it would disable all purchasing options in its iPhone and iPad apps. Users who download the app and wish to subscribe will have to visit WSJ.com separately or call customer service.  Read More »

First read: Apple joins Hulu hoop; Google’s got game

Top of the Morning The Hulu-sale rumor du jour has Apple coming in to kick the tires. According to Bloomberg, Jobs and Co. are thinking of making a bid for the video streaming service, although no price was mentioned.

With $76 billion in cash and equivalents on its balance sheet, even a deal at the high-end of the reported Hulu price range would be walking-around money for Apple. But it would certainly be out of character. Apple has generally eschewed big-money acquisitions, although it did recently put up $2.6 billion to be part of the consortium that now controls the Nortel patents. Read More »

Waiting for wood on Google TV

Innovation Google said yesterday that it will begin winding down Google Labs, the in-house incubator and beta-testing web site that birthed Google Maps, Google Reader and other popular services. In a blog post announcing the move, SVP of research Bill Coughran linked the decision to a broader strategy unveiled by CEO Larry Page in Google’s Q2 earnings call last week to streamline the company’s operations and bring more focus to fewer product categories.

“Greater focus has also been another big feature for me this quarter–more wood behind fewer arrows,” Page said. “Last month, for example, we announced that we will be closing Google Health and Google PowerMeter. We’ve also done substantial internal work simplifying and streamlining our product lines.” Read More »

The value of exclusivity

Deals How much is Hulu worth? The question hangs over the auction currently being conducted by J.P. Morgan for the video streaming service. It’s a question not just for potential buyers but for the sellers as well. And its a different question — or at least could lead to a different answer — from what someone might be willing to pay for it.

Yahoo is reportedly prepared to pay as much as $2 billion for Hulu, but only if its current network owners guarantee four to five years of exclusive access to their content. The networks are reportedly prepared to offer guaranteed access to their content for four to five years but exclusivity for only two years.

Whether anyone else would be willing to pay as much as Yahoo’s purported offer, even Read More »

First read: Valuing Hulu; Roku bets on games; deadline in Google books case

Top of the Morning Bloomberg reports this morning that Microsoft has dropped out of the auction for Hulu, which jibes with what we hear. According to Bloomberg, Microsoft told Hulu execs last week that it would not proceed to the second round of the bidding process.

As noted in previous posts, we believe Hulu will be a tough sell. Our issues are strategic fit and regulatory concerns, but valuation is also likely to be a sticking point. According to Business Insider, Yahoo set a high bar by offering to pay $2 billion for Hulu provided the current owners guarantee four to five years exclusive access to their content. At those prices, even potential suitors that are interested in Hulu’s business could decide simply to wait out Hulu’s current licensing deals and put in their own bids for the rights when they become available.  Read More »

The Facebook OS

Social Networks The addendum to Zynga’s S-1 filed with the SEC yesterday is raising eyebrows for what it reveals about the extent of Zynga’s dependence on the continued goodwill of the social network.  But content creators and publishers should also take note of what it reveals of Facebook’s own ambitions.

Exhibit G to the addendum sets out (partially redacted) terms of the agreement between the two companies for something called the Zynga Platform. Zynga’s precise plans for the platform are not revealed in the document (they may be discussed in redacted portions). But it would appear to be a quasi proprietary game-development platform built by Zynga that would sit on top of the Facebook platform and allow third-party developers to create games that leverage Zynga’s deep integration with Facebook.

At the heart of the Zynga platform will be a “Facebook Zynga SDK: Read More »

First read: Zinging Zynga; Apple earnings; Hulu takes five

Top of the Morning Liz Gannes of AllThingsD has the goods this morning on Zynga’s extensive, albeit heavily redacted addendum to its S-1 filing. Bottom line: Facebook basically owns the social gaming company.  Among other items: Any Zynga game that relies on Facebook integration or Facebook data must be exclusive to Facebook for the duration of the companies’ agreement; Zynga is prohibited from launching games on certain other social network platforms and Zynga must tell Facebook about any new games at least a week before they launch. In exchange, Facebook has committed to helping Zynga meet certain specified monthly unique user targets for its games.

The addendum also confirms that Google is an investor in Zynga.  Read More »

First read: Noodling Netflix; striking out in France

Top of the Morning Netflix’s sudden and dramatic price hike last week continues to fuel outrage among some users and speculation as to Netflix’s motives among pundits. Adam Knight at I Eat Ewoks has the best take I’ve seen so far (h/t Felix Salmon of Reuters):

The Internet’s memory is short so let’s go back a week ago to when Netflix lost the Sony movies and almost lost Starz. Why did that happen? Netflix WI subscribers passed a certain number specified in the contract with Starz and Sony and so they lost the right to stream that content. After some talks they came back online and now, one week later, Netflix is breaking apart their WI subscribers from their DVD subscribers. I find it hard to consider this a coincidence. Read More »