Nearly 6 million Netflix subs streamed content in Q4

Wednesday, January 27, 2010
Roughly half of Netflix Inc.’s 12.3 million subscribers streamed video from the Netflix “Watch Instantly” repository of films and TV shows during the final quarter of 2009, making the novel Internet video service one of the most prolific of its kind.

Netflix reported Jan. 27 that 48% of its 12.3 million DVD-by-mail subscribers, or about 5.9 million, watched at least 15 minutes of continuously streamed video in Q4. That’s a sharp rise from a year ago, when 28% of subscribers watched video from the then-nascent service.

Netflix is counting on a rising base of streaming video users to slowly reduce the company’s dependence on mailing physical DVDs and Blu-ray discs. Netflix now spends close to $150 million per quarter mailing discs to customer homes.

To spark broader usage of “Watch Instantly,” Netflix has forged integration agreements with a growing roster of consumer electronics manufacturers. According to our latest survey (see VIDEOTRAK, January 2010), 40 non-computer devices including Blu-ray players and Internet-connected TV sets support streaming of Netflix content to TV screens, with more on the way.

Nielsen Unveils Plan To Add Online Viewing To C3 Ratings

by Joe Mandese, Friday, January 22, 2010, 11:36 AM

Nielsen Friday announced plans to merge online viewing of TV programs into its so-called C3 ratings, which are the official currency for buying and selling advertising in the national TV marketplace. Nielsen described the plan as “extended screen reporting,” and said it would be implemented after it completes the rollout of Internet meters in its national TV ratings panel by the end of August, with initial data being made available to the industry starting with the month of September.
The change will add yet another source of viewing — online — to the time-shifted and “live” viewing that currently comprise Nielsen’s C3 ratings standard.
Nielsen said the timetable for implementing the changes would be as follows:
* Ratings will initially be released as evaluation data, on a delayed basis, and in parallel to standard production data which will remain unchanged.
* The first set of evaluation data (for the month of September) will be released sometime during the fourth quarter and no later than the end of the year. Nielsen said its intent is to provide data as early as possible in the fourth quarter. As the year progresses, and more of the development work is completed, Nielsen said it will be able to refine the delivery date.
* At the start of February 2011, evaluation data will cease to be produced, and the standard Nielsen production data moving forward will include qualifying online viewing.
“In the near term, Nielsen will create a small client committee to work with us on defining, in more precise terms, what online program and national commercial viewing qualifies for combined reporting as well as to work through editing and crediting rules,” stated Nielsen President-Media Client Services, Sara Erichson. “Concurrently, we will continue to talk with all clients — across all client segments — about their measurement needs. As previously noted, Nielsen’s cross-platform measurement solutions — including the rollout of Internet meters in the National sample — are being designed to support different business models and capture the multitude of ways in which video content is presented online.”

Hulu’s Maybe-Could Be Payment Plans

Hulu’s been muling on possible premium services for a while now, and LAT has added some fuel to the very slow-burning fire: it says among the options being considered are charging users about $5 a month to watch older TV episodes, beyond the most recent five that are usually posted on Hulu. The video company thinks it would need at least 20 TV series to agree to be part of this to make it attractive to users to pay up. The plan seems reasonable, considering how big of a current base of users it has, and how they possibly end up on other services, including paid ones like Amazon (NSDQ: AMZN) VOD and Apple (NSDQ: AAPL) iTunes, for older episodes of the posted shows. Of course, nothing firmed up, and Hulu could take better part of this year to come up with something, maybe in the Fall.
With all the activity from Apple and cable cos in the sector, I would be surprised if Hulu would wait that long, though.

Nickelodeon’s Mobile Plans Include 20 New Apps In 2010

Nickelodeon said it will double its efforts in mobile this year, bringing the number of applications it has rolled out in the space to 40 since launching its first in February last year.
In that time frame, Nickelodeon fans have downloaded 4.5 million iPhone apps with the bulk of them occurring in the past six to seven months, said Steve Youngwood, EVP of digital for Nickelodeon Kids and Family. “We want our content to be everywhere our audiences are, and when you look at the iPhone and other smartphones, they are becoming portable content devices, and we view them as a great platform.”
So far, Nick’s iPhone apps have been focused on games or personalization tools. Recently, the network launched iCarly: Sam’s Remote and Go, Diego, Go! Musical Missions. The iCarly app spoofs the highly rated TV show among teenage girls. The show stars a girl who has her own web show and the iPhone app, called Sam’s remote, turns your iPod or iPhone into a remote control that features sound effects from the show, like random dancing, applause, boos, and Sam’s insults.
So far, Youngwood said much of what Nick has done in mobile has been experimental as the space continues to evolve. He said a lot of fine-tuning has been spent on figuring out its audience; what’s the right mix of categories for apps; pricing and platforms.
On categories: Youngwood said the applications today are mostly games and personalization, but not video. “I think we are experimenting and looking at a couple different things – like everyone is. But if you look at iTunes, an iCarly episode was the No. 1 downloaded video on iTunes yesterday, so we feel we are on the iPhone and iPod Touch with video already. We will experiment with apps, and what’s working really well is games and personalization.” Down the round, they’ll try more news and information and target content to parents and adults. Nick also has video on phones through FLO TV, MobiTV and a BlackBerry video application.
Smartphone availability: Youngwood said they’ve done a ton of research on whether kids have access to smartphones, like the iPhone, and there’s two trends: One is that parents are handing off their phones to kids to be entertained while in the car or elsewhere, and two, the iPod Touch has been a hit among the 9 to 11 year olds.
Other platforms: Nickelodeon has first focused on the iPhone platform, but is considering developing some of the best-selling apps for BlackBerry, Android, and maybe Palm (NSDQ: PALM) and Microsoft’s Windows Mobile. Of course, Nickelodeon also has a mobile web site, but it’s not where consumers can easily play games or video because Flash is not readily available on phones. “Apps have really opened the door to taking gaming on mobile basis,” Youngwood said. “A kid cannot play a game in the airplane if it’s a wap site.”
Paid or free?:: Nickelodeon charges for all of its apps today, and typically offers a lighter version for free. It has only started recently looking at advertising as an option in apps. “We are focused on getting the product right and making sure we understand the consumer—that’s a place we’ll look and see if it’s appropriate.” As for who are the decision-makers who by the apps, Youngwood said it’s typically the parent with the child being the heavy influencer.” Youngwood declined to say whether the business is profitable.

Thinking Outside the Box: Web TVs Skirt Cable Giants

Content Built Into TVs Is Big Business — but Not for Bypassed Operators

Share on Twitter Share on Facebook Submit to Digg Add to Google Share on StumbleUpon Submit to LinkedIn Add to Newsvine Bookmark on Del.icio.us Submit to Reddit yahooBuzzArticleHeadline = “Thinking Outside the Box: Web TVs Skirt Cable Giants”; yahooBuzzArticleSummary = “NEW YORK (AdAge.com) — Considering cutting your Cablevision subscription? It's not just the cable industry that would rather you didn't; it's also TV networks and studios that make bank off your monthly bill. But device-makers from Samsung to Boxee to Apple TV have no such concerns — and they're continuing to roll out products that bypass the cable box and draw content and services directly from the web, setting up what could be one of the entertainment industry's biggest business battles of the next few years.”; yahooBuzzArticleType = “text”; http://adage.com/digital/article?article_id=141554

NEW YORK (AdAge.com) — Considering cutting your Cablevision subscription? It’s not just the cable industry that would rather you didn’t; it’s also TV networks and studios that make bank off your monthly bill.
But device-makers from Samsung to Boxee to Apple TV have no such concerns — and they’re continuing to roll out products that bypass the cable box and draw content and services directly from the web, setting up what could be one of the entertainment industry’s biggest business battles of the next few years. Think: the current print-media implosion, but with much more money at stake.

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“The consumer electronics makers are really the only ones who don’t have anything to lose if consumers switch,” said Forrester Research analyst James McQuivey. “Everyone else is conflicted.” Netflix in particular is in the midst of a push to be a native application on TVs and gaming consoles. Last week it announced a deal with Nintendo’s Wii gaming console for its on-demand movie-streaming service; Netflix is already on Sony’s PS3 and Microsoft’s Xbox, not to mention TVs and Blu-ray players from Samsung, LG Electronics, Sony, Best Buy’s Insignia and Vizio.
At the annual Consumer Electronics Show in Las Vegas, cable operators got a look at a device that could start to eat into another core business: TVs with built-in Skype access. LG and Panasonic announced partnerships to start shipping the sets later this year.
Selling point
The consumer-electronics industry has a long history of over-promising; years of chatter have yet to yield a line of affordable mass-market 3-D TVs you can buy in stores, for example. “A lot of manufacturers have come out and made announcements, but I don’t think they really are in a position to erode the pay-TV subscriptions that the cable industry has today,” said Park Associates research analyst Jayant Dafari.
Yet content and features built directly into the TV have become the selling point for the next generation of high-definition sets, gaming consoles and boxes. And none of it is coming from your cable operator.
“Still no evidence of cord-cutting, but as prices spiral higher, the stresses on the system are unquestionably growing,” said Craig Moffett, senior analyst at Sanford C. Bernstein.
But customers are cutting back on cable bills: while rates go up every year, the average amount consumers are paying for digital cable dropped from $79 a month in the third quarter of 2008 to $70 in the third quarter of 2009 as they drop additional channels and services, according to research from Centris.
Cable still has the most complete reserves of TV programming, films and video-on-demand, as well as a near-lock on live sports and news. But web-based devices are getting closer to offering the full deal. Avner Ronen, CEO of startup Boxee, estimates 60% of broadcast TV is available online free in some form, and 10% of cable TV.
Waiting for clampdown
The question is: When will cable put a stop to it? So far, the industry has been relatively laissez-faire about the situation, but one tech exec, who asked not to be named, predicted that the minute cable operators start to feel the disruption, they will clamp down and use their market power to keep TV and films from seeping into next-generation devices. They’re already putting the squeeze on networks; any free distribution is an argument for lower cable distribution fees.
In the meantime, they insist that cable-cutting is more urban myth than reality. “We see some interesting stuff out there, but right now people are watching more TV than ever; cable-cutting is largely on the fringe,” said Alex Dudley, spokesman for Time Warner Cable, the nation’s No. 2 operator.
The audiences for these web-connected devices are starting to scale to the point at which marketers become interested. Parks Associates estimates that the consumer electronics industry will sell 80 million net-connected TVs by 2013, and there are already 20 million net-connected Xbox consoles in circulation. Recently, Microsoft said it had 2.2 million Xbox users online at the same time — about the audience of an episode of “Gossip Girl.” Within that experience, Xbox is selling traditional spots, branded entertainment and display advertising to brands like Sprint.
Boxee, which unveiled a set-top box at CES, first released its software on the web in 2007 and now has 850,000 registered users. It pulls video and other content from the web and displays it with an interface optimized for 10-foot viewing on TV.

By the numbers
Number of Xbox consoles connected to the web:
20 million (Microsoft)

Peak number of Xbox users simultaneously online:
2.2 million (Microsoft)

Percentage of U.S. households with gaming console that can stream movies:
39% (InStat)

Average price consumers paid for digital cable Q3 2008:
$79 a month (Centris)

Average price Q3 2009:
$70 a month (Centris)

Number of Boxee users:
850,000 (Boxee)

U.S. digital-cable subscribers:
42.1 million (NCTA)

U.S. basic-cable subscribers:
62.6 million (NCTA)

Number of Netflix subscribers:
approximately 10 million (Netflix)

Number of web-connected TVs sold by 2013:
80 million (Park Associates)

Last year Boxee added Hulu content, but was later blocked by the participating broadcasters. Boxee displays video with ads intact, but since Hulu shows TV with a fraction of the ads, putting the web version on TV is intrinsically destructive to NBC, Fox and ABC’s business model. Snubbing the box
So what did Boxee do? It added a web browser to its box, so users can simply surf over to Hulu.com and watch as if they were on their computer, an inelegant bridge, to be sure, but another incremental snub of the cable box.
In the coming weeks, Boxee will add the ability to sell subscriptions on a pay-per-view or channel basis, much like iTunes, Netflix or Microsoft’s Zune service.
For the vast majority, devices like connected TVs, Boxee, Xbox, Roku, Netflix, etc., are additive to cable. “Personally, I think there is a style of TV viewing that is a more passive activity rather than the more active decision to use Apple TV or Xbox,” said Mike Vorhaus, president of Magid Advisors.
But more and more, people don’t care how their content is delivered, which is a scary thought for the cable industry and a key reason Comcast is acquiring its own content mill in NBC Universal, as well as pushing Comcast’s own, proprietary web-TV plans. One thing the cable operators have on their side is they are cash-rich and can make acquisitions of media or technology companies that start to disrupt their models.
“For many people, cable works just fine; the quality is great; the DVR functionality is great; the only gripe they have is that they’re paying for it,” said Boxee’s Mr. Ronen. But “there is a growing generation out there where the whole definition of entertainment is changing, and their main source of entertainment is the internet.”

Total Audience for Online Video Continues to Climb

Despite having achieved mainstream status a few years ago, the total audience for online video continues to balloon. And YouTube’s dominance in the category seems boundless, as the site delivered more than 10 times as many video streams as any other site in the U.S. last month.

According to the latest report issued by Nielsen Online, 137.4 million Americans watched Web video in December, a healthy increase of 10.3 percent versus the same month in 2008. Those viewers streamed over 10.7 billion videos during the month, representing an increase of 11.8 percent versus the same time period a year earlier.

While the number of streams per visitor showed only marginal growth, Web video viewers are watching longer clips on average; time spent (per viewer watching online video) jumped 13.2 percent to 193.2 minutes in December.

And while Hulu, the joint venture between News Corp., NBC Universal and Disney, continues to demonstrate tremendous growth—making it the No. 2 video site on the Web—YouTube continues to account for a disproportionate amount of the video consumed on the Internet. The Google-owned property streamed over 6.4 billion clips in December, per Nielsen, while Hulu streamed almost 635 million videos. YouTube also reached nearly 106 million unique viewers versus Hulu’s 13.6 billion.

Curiously, Nielsen and rival comScore continue to report audience numbers for Hulu that are miles apart in scope. While comScore’s data places YouTube far ahead of other players in the segment, it estimates Hulu’s audience to be over 43 million users—roughly 30 million users more than Nielsen’s estimates. Similarly, according to Hulu, comScore’s data indicates that the site’s average monthly streams recently topped 920 million—almost 300 million more than Nielsen tracked.

New TV Apps Borrow a Page From iPhone

LAS VEGAS—A longtime quest to bring the Internet to the living room has entered a new phase, borrowing a page from Apple Inc. and its iPhone.
Companies are now racing to build marketplaces for TV programs that act much like iPhone apps, able to interact with social-networking services, play games, call up movies and other Web content—all using a remote control, rather than a computer equipped with browsers.
The TV applications are designed to exploit new consumer electronics devices with Internet connections that are beginning to appear in homes in significant numbers.

CES 2010: Samsung’s New Offerings

Samsung Senior Vice President of Marketing David Steel unveils the company’s 3D home-entertainment system, an app store and a super-thin LED TV at the Consumer Electronics Show in Las Vegas.

Exhibitors at this week’s Consumer Electronics Show are promoting rival technologies for creating such software and helping users manage their many options on TV screens.
The latest entrants include Vudu Inc., a startup that offers a streaming movie service; DivX Inc., known for a popular format for storing digital movies; Boxee Inc., which offers software that lets users view Internet content on TVs; Roku Inc., which sells a set-top box for receiving Internet content; and Syabas Technology, which announced a set-top box at CES.
Big players from the computer industry also are playing a role. Yahoo Inc., for example, was an early contender with a technology for TV applications it calls widgets.
Vizio Inc., a U.S. TV maker that has been pushing Internet-connected sets, was among the first to use the term apps for TV software. Besides using Yahoo’s widgets, the company worked with Adobe Systems Inc. to adapt the popular Flash format to offer a second ways for developers to write TV apps.
Matthew McRae, vice president of Vizio’s product group, says buyers of its TVs currently can choose from among 25 to 30 applications. “We will exit the year in the hundreds of applications,” he says.
Such efforts have been evolving for more than a decade. Microsoft Corp., for example, in 1997 purchased WebTV Networks Inc., which sold a set-top box with a browser that allowed users to call up Web sites.

Vudu

Vudu’s marketplace, one of several available, allows TV viewers to select Web services, including a film site

That model didn’t catch on. TVs at the time weren’t good at handling text-heavy sites, which were also designed to be called up using keyboards—an option in few living rooms. Web browsers also were seen to be too much like computer software and not enough like TV-style entertainment.
Things changed, gradually. Internet video services began drawing large audiences of PC users. Home users signed up for broadband data services and snapped up high-definition TVs that handle digital content well. Most recently, a new generation of TVs, gaming machines and devices that play Blu-ray disks began appearing that have Internet connections.
What is still missing is the equivalent of Microsoft Windows for the living room, a widely accepted way to write programs that appear and act the same on most TVs. But many companies are trying.
Yahoo in August 2008 announced its plans for widgets—a format for simple programs that appear on a strip at the bottom of a TV screen while traditional programming plays above. It lined up four initial TV makers and tested the widgets to make sure they don’t cause technical problems with TVs.
“There is no such thing as beta software in the TV space,” says Arlo Rose, senior director of product management and design for Yahoo’s TV efforts.
Certifying programs has tended to take longer than expected. Mr. Rose estimates that 25 to 30 widget are available as of CES, with 50 to 70 “in the queue” for certification. Yahoo, which initially has used an invitation-only process for courting developers, intends to open it to all comers, he adds.
Meanwhile, competition is increasing. One new rival is Vudu, which started by offering a set-top box to offer its Internet delivered movies but shifted to offering that service through other hardware partners.

CES: Hands-On Look at Panasonic’s 3-D TV

1:07

Panasonic shows off its new 3-D TV and Blu-Ray technology at the Consumer Electronics Show in Las Vegas.

The company this week announced Vudu Apps, which it describes as a platform to deliver Internet software to TVs, Blu-ray players and other products.
Vudu says it already has attracted 100 apps, which appear in a menu that users can call up on the TV screen using a remote. They include versions of Web services like the photo-sharing site Flickr, the music-discovery site Pandora, the microblogging site Twitter and a news feed from the Associated Press. Initial TV makers expected to incorporate the technology are units of Mitsubishi Electric Corp., Sanyo Electronic Co., Sharp Corp. and Toshiba Corp.
DivX, meanwhile, says it has lined LG Electronics as an initial user of its new software platform in LG Blu-ray players. The San Diego-based company also says it has attracted content apps from sites that include Twitter, Daily Motion, Rhapsody and CNET, and says its DivX TV platform can help users find and call up movies and photos stored on computers in the home.
Kevin Hell, DivX’s chief executive, predicts that such technology will start giving consumers hundreds of choices for their TVs that weren’t selected by pay-TV companies—a goal discussed in high-tech circles since the 1990s. “It’s happening,” he says. “This is the year.”
Write to Don Clark at don.clark@wsj.com