December, 2011

Don’t bet on a Netflix sale

Video Streaming Another Netflix bubble burst: On Monday, its shares soared more than 6 percent on reports that Verizon was in talks to acquire the video streaming and DVD-by-mail company. By the closing bell Tuesday, the shares had given back nearly all of those gains after several analysts shot down the initial reports.

Still, hope springs eternal, and the shares were up again in the after hours market, perhaps on speculation that even if Verizon isn’t a buyer for the currently beleaguered service, someone else might be.  Maybe, but I wouldn’t bet on it.

The Verizon rumors gained traction initially because Verizon CEO Lowell McAdam acknowledged publicly last week that the telco was interested in the online video streaming business, going so far as to admit to kicking the tires at Hulu when it was being shopped. But of all the potential suitors for Netflix, Verizon is among the least likely.

Most of Netflix’s growth over the next several years is likely to come from outside the U.S., which is not a good fit for Verizon strategically. It also certainly doesn’t want any part of Netflix’s DVD Read More »

Box office vs. Xbox

Consumer Spending Hollywood is not having a very jolly holiday season so far. Last weekend not only was the worst weekend of the year in terms of total box-office grosses, it was the worst since September 2008. Dividing the weekend’s grosses by the average ticket price, in fact, suggests the number of Americans actually going to a movie theater over the weekend was the lowest since right after the terrorist attacks of September 11.

It isn’t just a one-week phenomenon, either. Data from the MPAA show that total theatrical admissions — butts in seats — have fallen fairly steadily since 2002, with a brief spike in 2009 due to the release Avatar, the highest grossing movie of all time.

Ticket-price inflation and the introduction of 3D, for which theaters have been able to charge a premium, have largely masked the effect, allowing gross receipts to hold steady or even grow over that period. But the overall erosion of the audience really ought to be a bigger concern for the studios than their public comments would suggest.  Read More »

Oregon senator may get rated X by Hollywood

Legislation Senator Ron Wyden probably isn’t invited to the MPAA Christmas party here in Washington this year. The Oregon Democrat single-handedly held up passage of the PROTECT-IP Act by placing a hold on bill, preventing it from coming to the floor for a vote, and is co-author, with Rep. Darrell Issa, a California Republican, of the Online Protection and Enforcement of Digital Trade (OPEN) Act, a bi-cameral bill aimed at preempting both PROTECT-IP and the House’s Stop Online Piracy Act (SOPA), the MPAA’s two highest legislative priorities.

That alone would be enough to make Wyden unpopular around the Jack Valenti Building on Eye Street. But he’s also no going after one of the MPAA’s favorite anti-piracy enforcement programs: the Department of Homeland Security’s domain-name seizure program, Operation in Our Sites. Read More »

Cable networks no longer thick as thieves

Programming Lots of grumbling out of the UBS Media & Communications conference yesterday over the soaring costs of cable TV programming. As usual whenever the subject of programming costs comes up, much of the ire was directed at ESPN, which squeezes an estimated $4.69 per subscriber from cable and satellite operators — orders of magnitude higher than what any other pay-TV network commands.

What was not usual was the source of the grumbling. It came not from cable and satellite operators, who have long griped about the cost of ESPN, but from other cable network owners, who presumably would love to be in ESPN’s position. Under the growing strain of falling video subscriber numbers industrywide, other networks are growing concerned that ESPN’s position is coming at the expense of their own.

On Monday, Liberty Media CEO Greg Maffei called the rising cost of ESPN a “tax on every American household,” that threatened the long-term economics of the pay-TV business, to say nothing of the long-term comity of the pay-TV industry. “What happens to the bundle of cable if you keep pushing [the price] higher and higher?” he wondered, as reported by the Wall Street JournalRead More »

Microsoft’s non-disruptive disruption

Digital Living Room Microsoft will roll out a major makeover of Xbox Live Tuesday, adding a raft of new OTT video and music services. The update will also deliver a new user interface and enhanced voice-recognition capability for the Xbox Kinect platform, enabling Kinect owners to control their Xbox Live experience through a combination of voice and gesture control.

While Microsoft is hardly the only technology giant looking to plant its flag in the living room its approach is notably different from that of Apple or Google, to name two of the other leading contenders.

The first iteration of Google TV represented a bald attempt to establish browser-based search as primary means of finding and accessing video content. The reason for the emphasis on search was obvious: Google dominates the search business and has a proven and highly efficient engine for monetizing search results through advertising. Read More »