The Facebook-ification Of TV; Netflix’ Quixotic Moves

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September 19, 2011 – 12:03 am

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The Facebook-ification Of TV

Social TV viewing – the act of commenting about a show on Facebook, Twitter, "checking-in" to programs from the living room couch on the iPhone or iPad – is starting to gain more acceptance from media companies as a promotional tool. Initially, the idea of creating a Foursquare-like experience was met with a lot of doubt: do viewers really want a special app to let everyone know what they're watching? Do people really want to take their exhibitionism to a more formal level?

Given the number of social viewing apps and features that have come out over the past year, the answer would appear to be "quite possibly." For example, GetGlue was the first to plant a flag as the Foursquare of TV viewing, followed by Yahoo's IntoNow purchase, along with co-viewing features within the iPad apps from ABC and Bravo. It's impossible to say if social viewing is a fad or not, but given how much time is spent on Facebook and the understanding that more and more people are multi-tasking.

The latest extension of social viewing is coming today from Time Inc. pub Entertainment Weekly's website. The site is debuting an interactive channel that will encourage users to discuss TV shows with editors and friends while they watch. The section, called Viewer, will encompass a wide range of series including The X-Factor, Glee and Sunday Night Football, among others, AdAge's Nat Ives reports. The magazine's editors hope that the Viewer platform will drive co-viewing crowds by letting consumers filter whose comments they see, invite friends to the conversation and time-shift the dialog if they're time-shifting a show.

Expect the Facebook-ification to be a big part of this TV season. San Francisco-based Miso has released its social-TV app for iPhone and Android, which synchronizes social sites with television viewing, and its now is available to DirecTV subscribers, notes Communications Technology's Linda Hardesty. And Last week, CBS and Foursquare unveiled a brand page for The Amazing Race, that will let users check-in with their smartphones to receive travel tips and series-related news.

The idea could be good for shows in terms of driving more viewers and eventually, ad revenue on top of it. Riding the wave of Facebook's popularity through related social media services like Foursquare probably won't be much of a determining factor in driving waves of new viewers.

The value is really about tapping into shows' fans and extending their devotion to advertisers. In the past, when viewers banded together to save shows by demonstrating cult status, there wasn't much TV networks could do with those viewers. The reason was that there was no such thing a "long tail" for TV. But now there is. The notion of what constitutes a "hit show" in primetime is changing, as Bloomberg BusinessWeek's Andy Fixmer reports that U.S. TV households have fallen this year by 1 percent, to 114.7 million -- the first drop since 1990 – and that should mean fewer viewers for this year's new season.

Google's Cable Threat

Last spring, Google's pretense that it wasn't a "media company" because it didn't create content began falling away when it said it would be spending $100 million on original productions for its YouTube property. Business Insider's Nicholas Carlson now tells us that Google is spending as much a $500 million on the effort, according to an unnamed source who claims to have found himself bidding against the search giant for video rights. Another unidentified source, who says he's part of the competition with Google to buy Hulu, estimates that Google may ultimately spend $600 million to get the programming off the ground.

Google's YouTube has long served as a video-distribution source for major TV networks like NBC, one of the owners along with ABC and Fox, as Hulu's backer, as well as Hulu-holdout CBS (though that network just signed a deal with Hulu Japan). Up to now, YouTube's "original content" has generally been associated with skateboarding dogs and other user-generated content. That has given TV networks comfort that they're professional content stands in contrast to that.

So far, no one has ever been able to provide sustained popularity for original web series. But Google is patient and ultimately, if it does win the race to own Hulu, it could present itself as a direct threat to cable, since the rights to original entertainment is the reason why people pay upwards of $75 a month to subscribe to cable. True, Google TV, the company's over-the-top service, has hardly set the world on fire. But MSOs and networks would be foolish to count the search giant out. As online video migrates from the web to the TV in the form of "widgets" on wifi-enabled TVs, there is no reason to think that Google with its deep pockets and determination could present a true alternative to the existing TV distribution landscape.

Netflix' Quixotic Moves

Forget talk of cord-cutting this past week: no, the sound heard at Netflix was more akin to plastic discs being thrown from a window, as the video rental disclosed in an investor’s note (PDF) that it had lost a million subscribers since instituting its separate pricing plan for DVDs and video streams.

But the big thud came when Netflix CEO Reed Hastings appeared to dig a deeper hole for the company when he announced separate brands for the DVD business and the streaming video offering. Subscribers to the legacy DVD business that put Netflix on the map will now be a customer of Qwikster, a name completely devoid of clear branding.

Even worse was Hastings’ apologia in the form of a blog post: “It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming, and the price changes. That was certainly not our intent, and I offer my sincere apology.” It won’t mean a damn thing to customers, and it will mean even less to investors, who have sent the stock downward over the past few weeks.

What is Hastings thinking? Granted, the cost structures of managing the DVD business and the streaming business are becoming enormous, especially as licensing agreements are expected to rise sharply. But this move smacks of desperation. Instead of patiently moving its DVD subscribers along to streaming, as it builds up its fairly weak library on both ends, the company has effectively blown up the bridge between the two.

Surely, Netflix had been girding itself for subscriber losses since July, when it said it would no longer offer a single subscription starting at $7.99 for unlimited streaming and two DVDs per month. Under the new plan, unlimited online streaming stays at $7.99, while the DVD-only monthly fees range from $7.99 (1 at a time) to $11.99 (2 at a time). For those who want DVD and streaming, the cost is $15.98 -- a 60 percent hike.

Not too many seemed to want that option. The company now anticipates that 2.2 million customers, of its total 25 million, will opt for DVDs by mail only. Despite the shocking number of cancellations, Netflix has given no indication that it may retreat and try a more gradual approach to weaning customers off DVDs, which have seen declining sales for many years, due in part, to the rise of video rentals by mail and the growth of streaming video.

Netflix insists that the move is right for the long term and that the change in pricing structure will give it greater financial ability to make necessary investments in its streaming business.

As the NYT’s Brian Stelter noted, as Netflix looks to expand beyond the U.S. to Latin America and Asia, it faces the same hurdle in every country it opens up shop: a need for compelling content. The company was met with another obstacle in that area last month when premium cable channel Starz, which supplies Sony and Disney films to Netflix, said it would stop doing so in February when its contract expires.

Starz was key kicking off Netflix’s streaming service several years ago, and there’s worry that Netflix, which had done so much to worry MSOs about its over-the-top service, could be a paper tiger, as program providers want to lock in ever-higher fees for licensing their content through video streaming. Meanwhile, Netflix can expect challenges from all quarters, particular Google (see above) which is desperate to acquire more video rights and build its own content creation system for interactive video.

But don’t count Netflix out yet. It has dealt with subscriber losses before and it is still by far the leading video rental service. It has long been preparing for the day when DVDs would fade. And the rise of challenges from Google and others actually will allow it to portray itself as a trusted ally to programmers and MSOs worried about Google’s and Apple’s aggressive moves into video. Still, with this latest missteps, the expectation that Netflix – or whatever it’s calling itself – will win the video war for the connected home has dimmed quite a bit.

Beck Is Back

When conservative talker Glenn Beck left his Fox News perch at the end of June to pursue an online media venture, many observers considered it a lateral move out of the limelight. After all, TV is the big time, where the big money is. But Beck, despite what one may think of his political views, may have the last laugh after all.

This past week, he officially launched his GBTV online video network with 230,000 users. At first glance, it's not exactly a gangbusters for someone who was known to draw 2.2 million viewers at the height of his Fox News reign. But let's face it, as the WSJ's Lauren A. E. Schuker writes, that's way more than 156,000 people who were watching Discovery's Oprah Winfrey Network in June.

But it's important to consider that GBTV employs a tiered paywall: Subscribers can pay $4.95 a month for access to Beck's two-hour daily show only, or $9.95 a month for GBTV Plus, providing access to the full slate of programming. The network will also be supported by advertising.

One person who was particularly impressed with the debut was BTIG analyst Rich Greenfield (sub. req.), who breathlessly called it a "watershed day for the media/television industry," by launching a direct-to-consumer entertainment model. The promise of Beck's gambit here – or the threat, if you're a network or MSO – is that personalities may be able to build their brands outside the traditional content gatekeeper system with greater creative freedom. On top of that, they also stand to generate more wealth for themselves over time. In any case, if Beck's model proves successful, MSOs and networks may have to pay personalities even more astronomical amounts in order to lock up contracts.

Beck also stands to empower those over-the-top companies that already are starting to upend the traditional model. GBTV can be viewed on any PC/Mac, or iPad/iPhone through a free app. It's also via a free downloadable app on a Roku box. Greenfield also expects GBTV to be made available on Apple TV, PS3, Xbox360 and other connected devices over time.

The video network may carry Beck's initials, but make no mistake, this is not some vanity project. He ultimately plans a full programming slate.

Even before that point, GBTV's numbers are likely to rise quickly. Aside from opening up cable's traditional system to more outside challenges, the success of Beck's network will also raise the issue of a la carte pricing for cable, as many will say that it's possible to be successful by directly selling programming to viewers, instead of agreeing to be part of a wider package of channels.

But Wait. There's More!

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September 19, 2011 – 12:03 am

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