A study from IDC predicts that Microsoft may consider purchasing Netflix and LinkedIn next year in an effort to cash in on “the convergence of mobile computing, social networking, cloud services, and big data analytics.”
“Look for Microsoft to buy a content/media cloud, like Netflix, to provide a marketplace for its apps and content,” says Frank Gens, senior VP and chief analyst at IDC.
Gens refers to the platform built on mobile computing, cloud services, social networking, and big data analytics as the “3rd Platform.”
“The industry’s shift to the 3rd Platform will accelerate in 2012, forcing the industry’s leaders to make bold investments and fateful decisions,” predicts Gens. He suggests companies including Apple, Microsoft, HP, SAP, RIM and others will face “crossroads moments” next year.
Is Computerworld blogger Preston Gralla convinced? Not really. “Building an app store directly into Windows can serve the same purpose. If the price is right, buying Netflix might make sense. But I don’t expect the price to be right.”
Netflix subscriptions could end up costing consumers $28 a month instead of $8 if cable companies decide to add charges for Web streaming.
“U.S. providers like Time Warner Cable have weighed usage-based plans for years as a way to squeeze more profit from Web access, and to counter slowing growth and rising program costs in the TV business,” reports Bloomberg. “While customer complaints hampered earlier attempts, pay TV companies are testing usage caps and price structures that point to the advent of permanent fees.”
As online video streaming increases in popularity, Web data usage soars. Some companies have penalties in place for customers that exceed their monthly gigabyte allowance, while others do not.
Adding charges will not only help cable companies’ Internet revenue, but also possibly boost pay TV service by disincentivizing online services like Netflix and Hulu.
A Netflix spokesman told Bloomberg, “[The practice] is not in the consumer’s best interest as consumers deserve unfettered access to a robust Internet at reasonable rates.”
Despite analyst speculation that video game consoles may be in jeopardy due to the increased capabilities and growing popularity of smartphones and tablets, “Microsoft’s Xbox and Nintendo’s Wii sold in record numbers last week as Americans kicked off their holiday shopping,” reports AllThingsD.
Some 960,000 Xbox 360s were sold last week and 500,000 Wiis were sold the day after Thanksgiving. Game consoles are still experiencing strong sales five and six years after they were introduced.
“It’s difficult to imagine any other consumer hardware that could attract that kind of demand after such a long period of time,” suggests the article.
Blockbuster game titles like Activision’s “Call of Duty” game, which grossed $775 million in its first five days, continue to juice the market.
Motion-controls such as Wii and Microsoft’s Kinect open up the market beyond gamers to a family market.
And, as previously reported on ETCentric, game consoles are becoming entertainment centers for streaming video, music and other media content through partnerships with providers such as Netflix, Hulu, ESPN, HBO GO and others.
Wedbush analyst Michael Pachter believes Netflix cannot repair itself from the damage inflicted earlier this year after the streaming company raised prices on subscribers.
CNET reports that, “according to Pachter, by year’s end, Netflix will show a loss of 11 million ‘hybrid’ customers that previously rented DVDs and streamed video content. He said he believes that 7 million of those customers will have traded down to the streaming-only option, while another 4 million will have ‘quit the Netflix service altogether.’”
Shareholders also seem uncertain if Netflix can bounce back. “Over the past six months, the company’s stock is down 75 percent,” indicates the article.
Netflix has not given up, and believes things can be turned around. However, the company offered this honest evaluation: “If we are unable to repair the damage to our brand and reverse negative subscriber growth, our business, results of operations, including cash flows, and financial condition will continue to be adversely affected.”
In the wake of a devastating couple of months, the company is looking to rebound “brick by brick” with a strong rebranding, suggests a related Home Media Magazine article.
In addition to ongoing damage control, Netflix is working to increase its content selection, update its interface and improve user algorithms. These changes, the company hopes, will restore credibility after its recent 60 percent price increase led 800,000 people to unsubscribe.
After phasing out console games relating to the “Mission: Impossible” series, Paramount Pictures has created a social game on Facebook to promote the franchise.
The game, which introduces an entirely new storyline, awards players with real prizes and new content. Paramount is using the game to give out premiere tickets in addition to other promotional material.
The studio is working with Funtactix, a social game developer, on the project.
According to a related article from TheNextWeb, Paramount is also hoping to generate buzz by making it possible to rent all previous iterations of the franchise directly from the movie’s Facebook Fan Page. Each movie costs 30 Facebook credits ($2.99) to rent for 48 hours.
“Utilizing the sharing capabilities and Facebook ticker, which will alert your friends to the fact that you’re watching one of the movies, could help build excitement for an opening weekend that will destroy the last,” suggests TNW.
Miramax launched a similar Facebook rental model a few months ago. TNW wonders if Facebook rental services will take off in the face of customer comfort and loyalty to Netflix and other streaming services.
Panasonic’s line of Viera TVs now ships with 12 embedded applications, including Hulu Plus and Netflix. About 120 third-party apps are also available for Viera TVs.
Just as PC users add apps to their computers, Viera owners are free to add content apps to their TVs once those apps go through quality-assurance testing by Panasonic.
The company says that more than 40 million connected TVs were sold by 2010, and 2013 projections suggest sales of connected TVs will outpace those of PCs.
“Panasonic also recently announced a new gaming app, PlayJam; a Bollywood movie/video channel, BigFlix; and the Viera Connect Market, whereby users can upload credit card information once and use it across a variety of apps, such as a demonstrated app in which users could buy 3D eyewear, among other consumer electronics devices,” reports Home Media Magazine.
Leichtman Research Group reports 44 percent of U.S. households with TVs have a DVR, up from 8 percent in 2005.
LRG also found that one-third of DVR households have more than one DVR, and 73 percent of digital cable subscribers have used VOD.
“On-demand TV viewing in the forms of DVR and VOD, as well as Netflix streaming, have significantly increased in terms of usage and popularity over the past few years,” said Bruce Leichtman. “Yet these on-demand TV platforms remain largely complementary to traditional TV services and viewing, with about 90 percent of all TV viewing in the U.S. still being via live TV.”
Additional LRG findings (on a scale of 1 to 10, with 10 being excellent): 80 percent of DVR owners rate the service 8 to 10, 62 percent of cable VOD users rate the service 8 to 10, 63 percent of Netflix subscribers rate the Watch Instantly feature 8 to 10, 20 percent of Netflix subscribers use Watch Instantly daily.
An increasing number of consumers are switching to digital content for movies, music and books. The approach has benefits, including convenience and cost, but may also be leading to a loss of rights and abilities we’re accustomed to as consumers.
Fortune writer J.P. Mangalindan expressed concerns that systems such as Amazon’s new lending library would change the meaning of ownership since users would be relinquishing actual ownership of content in favor of a rental model.
The ability to stream digital content online has led to the same kind of transformation. Services such as Spotify and Netflix have allowed users the freedom of streaming content anywhere, and have made subscribing to such a model affordable and convenient.
GigaOM raises an interesting concern: “Apart from our simple human need to own and collect physical objects, however, there’s also the way that renting changes our legal relationship to the content we are consuming. Amazon has shown the downsides of this in the past by actually deleting copies of e-books from people’s Kindles remotely after a complaint by the rightsholder — and those were copies that people had actually bought, not rented.”
If we move closer to a streaming, rental-style model for all content then perhaps consumers would eventually prefer a short-term license to use content over actually owning it. But what if Netflix or Amazon decide to change their terms of service? “What if companies decide you no longer have the right to watch certain TV shows or read certain books?”
Television’s future remains murky as content providers and cable companies get ready for battle, and streaming services continue to gain momentum.
“But change is going to come, and amid news that Google is interested in entering the cable TV business and continued rumors that Apple will be releasing its own branded television set, we also have to wonder what’s going to happen with streaming services like Hulu and Netflix,” reports Digital Trends.
The article suggests it is the cable companies that have the most to worry about (those that control the last model). “Forget applications having a say in all this: The real war is going to be fought between cable networks and the content providers that want to move on to a new format.”
“Farther off, I think [YouTube] will challenge Hulu first. Netflix is more like a library. Google is a beast and you have to keep an eye on those guys,” TalkPoint CEO Nick Balletta says. “They have the muscle and cash to weather the storm.”
Balletta believes adoption of connected TVs will take root by late 2012, and before then we’ll see significant fragmentation before we can truly cut the cord.
The Pew Internet Research Center found that about one-third of adults (18+ with tablets and/or app-enabled phones) use 3 to 5 apps at least once a week.
The new study examines the percentage of consumers who use their downloaded apps on a regular basis and suggests there is a significant range of adoption varying amongst different age groups.
Pew discovered that only 17 percent of phone users and 7 percent of tablet owners indicate they choose not to use apps at all.
“The share of adult cell phone owners who have downloaded an app nearly doubled in the past two years,” reports Lost Remote, “rising from 22 percent in September 2009 to 38 percent in August 2011.”
The most popularly downloaded apps were those that provided updates on news, weather, sports or stocks; helped communication with friends/family; and enabled learning about something users found personally interesting.
“And 43 percent say they’re using apps to watch TV and movies, which is likely dominated by Netflix and Hulu,” indicates the article.
Hollywood studios are starting to use Facebook as a direct-to-consumer platform for streaming films, possibly cutting out services such as Hulu, Netflix and Amazon in the process.
Universal, Lionsgate and Warner Bros. have distributed some 45 films via the Social Cinema app from Milyoni (pronounced million-eye). “What Zynga is to social gaming, Milyoni is to social entertainment,” reads the company’s website.
Miramax and Paramount have used similar apps to offer movies for Facebook credits on fan pages.
Rentals based on credits are running the equivalent of $3-$5. Facebook draws a 30 percent cut of transaction revenues.
Ad Age Digital suggests the studios’ willingness to offer rentals via social network sites “may reflect their desire to foster competition among online distribution platforms,” adding, “Miramax CEO Mike Lang said that digital monopolies were a greater threat to the film industry than piracy and that his studio had been aware of the importance of a competitive marketplace when doing deals with Netflix and Hulu.”
According to the new “Global Internet Phenomena Report” from broadband solutions provider Sandvine, North Americans have officially embraced the “post-PC” era.
The report suggests that for the first time, U.S. consumers are using their gaming consoles, smartphones and tablets more than PCs for entertainment.
“[We have] entered a post-PC era, in which the majority of real-time entertainment traffic on North America’s fixed access networks is destined for devices other than a laptop or desktop computer,” Sandvine reports. “Game consoles, settop boxes, smart TVs, tablets, and mobile devices being used within the home combine to receive 55 percent of all real-time entertainment traffic.”
Interesting stats from the “Beyond Bytes” infographic: 96 percent of broadband subscribers use real-time entertainment each month, 83 percent of broadband users access YouTube videos each month (compared to 20 percent for Netflix), and real-time entertainment as a percentage of peak period downstream traffic has doubled since 2009.
Peter Kafka interviews Peter Chernin in this interesting 11-minute video from the AsiaD conference.
“As News Corp.’s longtime chief operating officer, Chernin was instrumental in developing Hulu,” reports All Things D. “He explained why he wanted to build the video site — in part to compete with Google and YouTube — and why he thinks its studio owners should help it thrive today — in part to compete with Netflix.” Chernin also expresses his thoughts on purchasing Yahoo.
Chernin knew IPTV would be big, but didn’t want one dominant video distributor like YouTube. Thus, the studios got together to create Hulu, which today competes with Netflix.
Chernin believes online viewers will pay $2 per month for premium content. He talks about the future of video and creating something like a digital HBO.
Janus Friis, co-founder of KaZaA, Skype, Joost and Rdio (with partner Niklas Zennstrom) is working on a new online video subscription service that will be available soon in the UK.
According to GigaOM, Friis has been “assembling an A-team of media and Web technology experts to launch a site that seems destined to replicate the model behind their music subscription site Rdio in the video space.” Offices have been set up in Santa Monica and Europe.
From the follow-up Q&A: Vdio (Vee-dee-o) is in closed beta for the UK and is privately funded, while the assembled team’s experience comes from companies such as Netflix, Microsoft, TV Guide and Napster.
A spokesperson for Zennstrom’s VC company Atomico confirmed that Zennstrom is not involved in the project.
Geek.com writer Will Shanklin believes Siri’s capabilities would be enormously expanded with access to third party apps. Currently, “Yelp and Wolfram Alpha appear to be the only ones in that elite group.”
Third party apps could enable users to play music among different streaming services, quickly use music ID, combine data from multiple services (“How about a combination of Netflix and IMDb data?”), get real-time navigation and a range of other convenient possibilities.
Siri access to Facebook could expedite posts, messages and notifications and quickly get information from friends’ profiles.
“As much as you might be blown away by Siri’s capabilities now, we will likely look back at this as ‘Siri 1.0’ five years from now,” writes Shanklin. “In much the same way that the first iPhone’s single-paged homescreen – with no third-party apps – looks primitive now, this introductory version of Siri will pale in comparison to where ‘she’ will be then.”
