Bewkes: Subscription VOD Undermines Hollywood - High-Def Digest Forums
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Old 03-08-2011, 11:47 AM
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Arrow Bewkes: Subscription VOD Undermines Hollywood

Bewkes: Subscription VOD Undermines Hollywood

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7 Mar, 2011
By: Erik Gruenwedel

Time Warner CEO Jeffrey Bewkes March 7 continued his assault on subscription-based video-on demand (VOD) services such as Netflix and Amazon (and separately kiosks), which he said could challenge Hollywood’s ability to make movies and TV shows.

Speaking at the Deutsche Bank Media and Telecom Conference in Palm Beach, Fla., Bewkes reiterated support for the Time Warner-coined “TV Everywhere” concept, which he said allows monthly pay-TV subscribers to access unlimited new and repurposed content on demand in the home and on portable devices no additional charge.

While Bekwes characterized “TV Everywhere” as the ultimate VOD business model, he said he considers Netflix and Amazon streaming (with $6.50 to $8 monthly fees) and $1 rental kiosks as distribution channels better suited toward economically less attractive content.

“If you look at what that [sub fee] can pay for, it is probably content that does not have a higher use in an earlier higher-value window,” Bewkes said. “I think the place for that much exposure of the product is in another time period.”

Indeed, only when Warner couldn't find a buyer for seasons of discontinued "Nip/Tuck" did it agree to license the series to Netflix for streaming.

With Warner Television and Warner Studios among the largest producers of original TV programming and movies, Bewkes said licensing content directly to subscription VOD on street date presents direct competition to current more lucrative revenue channels.

“If you are selling movies for $14 a DVD and renting them for $3 or $4 a night, you don’t do the same thing for a buck a night, or all you can eat in the same window,” he said. “You move that window back. I think that is the place for subscription VOD.”

Bewkes said cable, satellite and telecommunication operators maintain Hollywood’s status quo, which includes pay-TV, ad-revenue and multiple payer (subscriber) revenue streams.

Online distributors, by comparison, don’t offer multiple revenue streams, the CEO said. Media companies are increasing facing challenges trying to figure out how much of their programming they want to sell directly to third parties and how much they want to give it to third-party subscription aggregators that essentially devalue the product.

“You have to remember that [the streaming] model does not pay to support the infrastructure [to make content],” Bewkes said.

He said that as the market fills with start-up digital services clamoring for content, license deals would reflect the difference between a start-up versus a service (such as Amazon) with embedded subs that “frankly came from another business, which is mail order. “
http://www.homemediamagazine.com/vod...ollywood-23274
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Old 03-08-2011, 11:58 AM
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Funny how they rarely mention Blu-ray. Not Bewkes, not Iger.
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Old 03-08-2011, 11:59 AM
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Well, since Bluray isn't doing it's job to continue the OR gravy train for the studios they are going to have to get whatever they can get. Be it VOD, rentals, Streaming, DVD or Bluray sales. But they all knew this because Bluray wasn't created to replace DVD. It was only created to compliment it. So they all knew this was coming.
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Old 03-08-2011, 12:05 PM
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The funny part about all of this is that Bewkes and Netflix are not really that far apart.

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“If you are selling movies for $14 a DVD and renting them for $3 or $4 a night, you don’t do the same thing for a buck a night, or all you can eat in the same window,” he said. “You move that window back. I think that is the place for subscription VOD.”
The only question is the actual window. Netflix already has deals in place with Epix and Starz that provides a window after the day/date time, but not so far off that it loses all customer value.

I still believe most of Bewkes comments are about trying to slow down Netflix's growth until WB is ready to decouple HBO Go from cable/satt.
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Old 03-08-2011, 07:47 PM
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Bewkes is attempting to put the genie back in the bottle. And it is his genie. It arrived on his watch.

He arrived with an agenda that derided Parsons.

Parsons was a fool but Bewkes will probably be recorded in history as the greater fool.
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Old 03-14-2011, 03:25 PM
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Personally, I think we're gonna end up with subscription services that cover massive swaths of catalog content with the studio blessing. Ultimately, it will create a new window -- the subscription catalog cloud. But it is a tough transition with many years to go. I believe, it will happen because they will find consumers will pay a small monthly fee to have something to watch at night.

I think the larger media companies like Warner, Fox, and Universal will be some of the last to hop onto this concept. Mainly because they are so wrapped up in channels, ad sales, and wholesaling content to keep the individual broadcasters happy and are protecting the revenue from broadcast rights, cable windows, etc.

Meanwhile, you see how easy it is for non-mega-media-conglomerates to make this happen. EPIX has tons of Paramount, MGM, and Lionsgate content out there. EPIX is the thinnest veneer of direct reselling of content by studios.

It's pretty amazing how fast large amounts of content is piling onto the internet in legit ways. In just the last 3 years it has exploded. Still many years to go, though.
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Old 03-14-2011, 04:52 PM
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Quote:
Originally Posted by GizmoDVD View Post
Funny how they rarely mention Blu-ray. Not Bewkes, not Iger.
Since Blu-Ray is putting money directly in their pocket with each and every sale and Netflix streaming is not they have nothing to complain about in the article in question regarding the format.
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Old 03-14-2011, 05:14 PM
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Quote:
Originally Posted by comixguru View Post
Personally, I think we're gonna end up with subscription services that cover massive swaths of catalog content with the studio blessing. Ultimately, it will create a new window -- the subscription catalog cloud. But it is a tough transition with many years to go. I believe, it will happen because they will find consumers will pay a small monthly fee to have something to watch at night.

I think the larger media companies like Warner, Fox, and Universal will be some of the last to hop onto this concept. Mainly because they are so wrapped up in channels, ad sales, and wholesaling content to keep the individual broadcasters happy and are protecting the revenue from broadcast rights, cable windows, etc.

Meanwhile, you see how easy it is for non-mega-media-conglomerates to make this happen. EPIX has tons of Paramount, MGM, and Lionsgate content out there. EPIX is the thinnest veneer of direct reselling of content by studios.

It's pretty amazing how fast large amounts of content is piling onto the internet in legit ways. In just the last 3 years it has exploded. Still many years to go, though.
It is certainly very likely.

The various streaming deals (Epix, Disney/ABC, CBS) are likely to contribute ~ $1 billion to the content owners in 2011, with that number likely passing the $1 billion dollar mark in 2012 potentially by quite a bit based on the Starz renewal.

And this is basically cost free revenue for the studios and networks. No discs to print. No advertising costs. Just 10 figure revenue on the top line that flow to the bottom line with very little associated expense.

At Netflix's revenue growth, I could see the studios and networks making $2 billion in DIRECT revenue from subscription VOD via Netflix in 2012. Netflix will almost definitely be > $3 billion in customer revenue for 2012.
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Old 03-14-2011, 06:43 PM
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Quote:
Originally Posted by PSound View Post
It is certainly very likely.

The various streaming deals (Epix, Disney/ABC, CBS) are likely to contribute ~ $1 billion to the content owners in 2011, with that number likely passing the $1 billion dollar mark in 2012 potentially by quite a bit based on the Starz renewal.

And this is basically cost free revenue for the studios and networks. No discs to print. No advertising costs. Just 10 figure revenue on the top line that flow to the bottom line with very little associated expense.
Wrong.

The cost is in the potential loss of revenue caused by a drop in physical media sales (both to rental companies as well as consumers) due to more people choosing to view the movie in question for "free" on their subscription plan rather than pay for either a purchase or rental for each individual film.

Each sale of a physical copy adds $$$ directly to the studio's bottom line; the potential loss of which must be weighed against the one time license fee paid to them by companies like Netflix, Hulu and Amazon.
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Old 03-14-2011, 08:24 PM
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Quote:
Originally Posted by PSound View Post
It is certainly very likely.

The various streaming deals (Epix, Disney/ABC, CBS) are likely to contribute ~ $1 billion to the content owners in 2011, with that number likely passing the $1 billion dollar mark in 2012 potentially by quite a bit based on the Starz renewal.

And this is basically cost free revenue for the studios and networks. No discs to print. No advertising costs. Just 10 figure revenue on the top line that flow to the bottom line with very little associated expense.

At Netflix's revenue growth, I could see the studios and networks making $2 billion in DIRECT revenue from subscription VOD via Netflix in 2012. Netflix will almost definitely be > $3 billion in customer revenue for 2012.
The one thing about Netflix which will keep them in the game is that they collect their money directly from consumers. The $8.95 a month they get from those basic subs is all for them, less a sliver for credit card processors. Also, subscription bases don't turn on a dime. This combination of direct sale, regular monthly revenue, leads to a very high cash flow.

It makes for wonders in terms of Wall Street reporting, too. This is why I think a subscription model is only a matter of time. Turning one-off movie solo sales into a steady stream of regular recurring revenue will be too big a of a lure.

That said, this isn't cost free revenue for the studios. Either catalog films have a value or they don't. If they do have a value, diluting it with free exposure is a cost. At the same time, Netflix or any streaming service doesn't live in a vacuum. DVDs have been out for a decade plus. The fans of a particular film likely own it if they wanted it.

We'll see.
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