"However, executives at Starz apparently concluded that they would lose even more money by giving consumers a reason to subscribe to Netflix instead of the cable channel."
I don't think they get it. The landscape has changed and I'm not going back.
I don't have cable. I don't have satelite. I don't have an antenna for broadcast TV. I have the Internet serving content to my TV via my Xbox, and I use it to watch Netflix.
If your content isn't available on Netflix. I'm not consuming your content. Period.
I'm done bending over backwards. I'm done with schedules. I'm done with managing the space on my DVR. I'm done keeping up with new episodes and seasons. I'm done with movie theaters full of loud other people who aren't me, and the litany of other issues that have been discussed to death from overpriced tickets, to concessions, to 3D projector woes and content. I'm done with physical media getting scratched. Hell, I'm even done with sketchy torrent sites, and different scene groups fighting over who gets to release what, and a billion codecs and formats. I'm done with it. I'm done.
So frankly, good bye and good riddance to Starz. Go climb this hill and die upon it. I never liked the fact that their schizophrenic content releases would appear during a timed window, only to disappear from my list later before I actually got a chance to watch it. I grew to avoid movies labeled with the Starz logo, and my heart would sink when a feature would open with one, because I knew the experience was fleeting and I wouldn't be able to enjoy the content later. So I'm done with that too.
I'm in the same boat as you. I cut the cord about 5 months ago and haven't looked back. I have Netflix and Hulu, Amazon Prime, and Apple TV. I know I am missing out on a lot of great content and it pisses me off...until I get my bill, which is a fraction of what I was paying before. Also, the convenience of my current setup is unmatchable.
The thing is, like you said, the technology has changed. I want shows on my current setup. I am willing to pay more for more content. One thing I thought was very interesting is Apple removing TV show rentals. I never purchase movies or TV shows. I like to rent them, watch them once and I usually don't want to watch them again. If I do, I will rent it again.
Why can't content providers understand this? Netflix and Hulu need to start creating their own content, which I know they are both working towards.
One semi-related note: AMC is ending Breaking Bad next season because of Madmen sucking up the budget - Netflix and Hulu: go buy that show! I would gladly pay for a show-specific season pass just to watch Breaking Bad.
> AMC is ending Breaking Bad next season because of Madmen sucking up the budget
Thankfully, that's not going to happen. AMC tried cutting BrBa back to only 6 episodes next season. But Sony owns the rights to the show, so they shopped it around. AMC caved. For all the press Mad Men gets, Breaking Bad has ~2x the viewers per episode, and Walking Dead (which had it's budget cut due to Mad Men's cost) gets about ~2.5x the viewers.
[Edit: Removed my snarky comment about AMC's management.]
To AMC's credit, the CPM AMC receives for Mad Men is much higher: $34 instead of $12-$25. It could be because people pay attention to the commercials, since the show is about advertising. A cynic would say it's a prestige thing for media buyers to get their ads run on Mad Men.
While I agree with the original poster, i.e., those who are already using netflix are unlikely to go back, netflix is supposed to be a growth business (P/E of > 60), ergo, if this leads to less growth, that will be terrible terrible terrible for the company.
They aired Walking Dead season 1 in the UK earlier this year, awesome stuff. It was the first time I turned my TV on for about 3 months & worth every minute :)
MatthewPhillips - To answer your question I purchased an Apple TV (the original one) a while ago so I could rent movies from iTunes and play them on my TV. I also liked streaming my music to my surround sound system on my TV. I never used the Apple TV to store content though, as it was originally purposed to do.
I actually just purchased a Roku the other day and connected it to Netflix, Hulu, and Amazon. Prior to that I was using my Xbox for these services (not Amazon). Roku is pretty cool but very buggy and slow to load. I am not as impressed as I thought I would be.
I use it for the content; the other boxes don't offer as much variety. I think the PS3 probably comes the closest though. I wish they would offer a cheaper streaming only device.
I bought a Roku about two years ago; it's been a wonderful little device; have had very few problems, and most of those were down to the content providers and not the box itself.
I recommend checking out Amazon's instant videos that are not included with Prime. They have something on sale every day. It is usually a rental for $0.99 during the week and a few different rentals for $1.99 over the weekend. Just look at the top left corner on the instant video page for the deal of the day.
I have both. The UI on the Apple TV is better (but not leaps and bounds better), and the Netflix quality seems to be just a little better in HD. Both are connected to HDMI.
Of course, the Roku also does Hulu and Pandora, and I have a second one upstairs on the non-SD tv. From what I've gathered the Apple TV 2 doesn't play nice on SD.
We have Roku 2 and Apple TV, the UI on Apple TV is better, esp. Netflix. Roku 2 is 1080p, Apple TV is 720p, but our LCDTV does such a good job upsampling 720p you can't really tell.
Roku 2 has access to a lot more content, but the experience of surfing channels is kind of fragmented. The included Angry Birds game and motion remote rock tho!
YouTube is available on Roku, and works excellently.
I have all the users that upload old Formula 1, so I can watch old races whenever I want.
Democracy Now also has it's own Roku channel, as do many many other things like Ted that you might not have thought of. It's worth spending some time on Google searching this stuff out.
I'd say I spend more time watching YouTube, NetFlix and HULU+ on the Roku than any other consumption mechanism.
Local news on OTA HD follows behind.
One slightly sad note, I only have the base Roku, and it's quite slow (maybe buffering), so my 2 year old is now utterly tolerant of loading bars, and will watch the loading bar, since she knows that content will follow. Her absolutely favorite thing on TV, though she doesn't watch much (seriously), is the mime segment on Nihongo Quick Lesson, NHK's little Japanese-lessons show that runs about 2:15pm, right after her lunch. I guess really, it's not much different to me as a kid waiting for the TV to warm up and show a picture...
As a side note to this, the Apple TV works very, very well for streaming from your iTunes movie library. I'm in the slow-ish process of converting my entire DVD library over to video files that iTunes likes for this purpose.
I have thought about doing this many times but my family is bilingual. If I want the movie in original (usually English) and German am I going to have to rip the movie twice? That would be a deal breaker then.
You can have multiple soundtracks in the iTunes mp4 container. Just use the "Apple TV2" profile of Handbrake. The interface to select the right audio track on the Apple TV is a bit difficult to find (see Google for details).
> Hell, I'm even done with sketchy torrent sites, and different scene groups fighting over who gets to release what, and a billion codecs and formats.
I'm not sure what sites you're using, but if you use a scene-only torrent tracker, the only releases you'll see are XviD for SD and x264 for HD, which never give me any problems. And one of the fundamental purposes of the scene is to eliminate duplicates - one valid release per movie/TV show episode.
If you want to spend your time reading scene notices and follow along with the endless pissing contests between the different release groups, that's fine. But if you just want to consume the content, like I do, it's pretty hard to find a better all-encompassing, no-bullshit source than the scene. With my 20 mbit connection, I can have an HD TV show ready to go in <10 mins and a movie in <30.
I haven't torrented anything in probably two or three years (only used it for non-US releases and before I had significant income), but I've never needed to fuss with codecs/formats after using the Combined Community Codec Pack.
I had no idea there was any drama about who provided what content in that scene, but I suppose that's one more reason to welcome legitimate online video sources.
Starz isn't turning it's back on the internet, Starz realizes the internet is where it's financial future lies and so it wants more money from the internet. And it's betting that it can take Netflix for more then Netflix wants to pony up today.
And maybe Netflix will pay a higher price to keep that content or maybe they can get by without it (see my link to Reed Hastings' comments). But even so this pattern is going to repeat over and over with every other media deal Netflix has as internet tv mainstreams and cash rich Amazon, Apple and friends bid up the price of net based content deals.
If this is their plan I think they're smart to simply want more money from Netflix now that viewership has increased. However, this wasn't the impression I got from the Starz executive's quote. What I got was that they felt their internet streaming deal with Netflix was cannibalizing their cable business model. I agree with the original comment's guess that most of the people who cut the chord are not going back, defeating their plan to get these customers to subscribe to their cable channel.
I'm sure they have actual data that strongly points to Netflix cutting into their margins. They could have asked for more money, but that would probably mean longer agreements, pushing them out to 2015 or 2016, by which time I'm sure they'll want to have a more direct customer relationship.
Only a small fraction of Netflix subscribers are cord cutters. They will undoubtedly see a benefit (short term) of this move. Long term internet TV is going to be a lot like cable TV is today. There won't be aggregator services. Starz will have it's own "app" on all of these boxes that you subscribe to outside of Netflix. NBC will probably have their own as well. CBS will be one of the last holdouts, their audience is old enough that the internet is having a softer affect.
Us early adopters have had it really good for the last few years, surely you didn't think it was going to continue? Surely you didn't think you'd be getting a large and continually growing catalog of movies (many of which are fairly recent) for only $8 a month forever? Like it or not but businesses like Starz hold all of the cards.
They don't hold shit. If it isn't more convenient to use their service than it is to get the content for free, they lose. Netflix is there, but just barely.
It didn't sound like this was a negotiating tactic, they made a firm announcement without apparently talking to Netflix about it.
What they might be thinking is to start an online VoD service themselves, they could offer it as a bonus to cable subscribers as a way of enticing subscribers.
They probably saw what HBOGO was doing and got greedy. Only HBO has their own great content and IP in addition to movies. The smart companies like AMC are actually starting to make their own as well so they become a destination. I'd love to just subscribe to HBOGO for my $15 rather than cox so HBO has cable companies firmly in check.
Netflix, and even companies like STARZ, may have issue when internet TVs take over completely and all studios/channels can easily setup their own 'channel' to stream content rather than having to join services that have a foothold on consoles, devices and TVs currently. The middle man is getting worked out of many markets. Why wouldn't the movie companies that license to STARZ want to collect from all that content? STARZ may just have killed themselves off.
Time Warner and Time Warner Cable are now two independent companies. So, HBO isn't owned by a cable company, but they owe a major share of their revenues to the cable companies. HBO doesn't offer a stand alone internet service probably because they don't want to upset existing relationships with cable providers.
Netflix has more subscribers than the largest cable company and the content that Starz provides is available from multiple sources (other than the two or three shows that they make).
Yes, but they probably get a pittance per Netflix subscriber compared to cable. In their minds they're probably asking themselves why would anyone pay $15/mo for the Starz cable broadcast when they could pay $8 for Starz on demand via Netflix? The fact is Netflix needs Starz more than Starz needs Netflix. The Starz content dramatically improved the streaming library, and Starz obviously feels like it's at the expense of their cable market.
Maybe they are right. Maybe they are wrong. My opinion is that they have the stronger position. I think Starz content will be back on Netflix when either the timing is better for them or the get better terms from Netflix.
I have stated several times in the past that by the time Netflix has the selection that cable does it will cost about the same price. If people were upset by the recent price increases they should prepare themselves for the future.
Netflix without their ingenious DVD distribution mechanism is just a Starlight movie player on top of S3. Yes, that is a gross oversimplification, I don't see what's stopping somebody with deep pockets like Starz from coming along and building essentially the same thing. Why not cut out the middle-man?
I'm the engineering lead on the Silverlight player at Netflix. Honestly, I love it when people underestimate the complexity of the player. To me, it means we're doing a good job. 3+ years of releasing every 2 weeks and still no settings dialog. It always just does the right thing.
Regarding S3, S3 is not a CDN.
To your point about disintermediation, it's a good question. A direct to consumer play by the content owners would cut out Starz as well as Netflix. The last time the studios did that, it didn't end so well: http://en.wikipedia.org/wiki/Paramount_Pictures#1941.E2.80.9....
I can think of a couple good reasons it wouldn't work out today, either. I'd predict that the business model of a content silo would be less profitable than the current system. Studios make more money when they have multiple distribution channels; distributing their own goods would give rise to conflicting incentives. Also, you need the DNA of a software company to compete in the streaming space. Studios are built to make movies; Netflix (and Amazon) are built to make software, and it's software that powers streaming. Even if that software is almost invisible.
How come all of your objections (as well as US v Paramount) haven't applied to online game developers as well? Making movies is one hell of a lot easier than developing modern PC/console games, and the game studios are having no qualms with the direct-to-consumer model. Companies like Valve and EA were game developers and publishers long before they started offering services like Steam and Origin.
Ultimately, the same Internet that will kill the cable companies will also kill Netflix. (I have more confidence in Netflix to reinvent itself when the time comes, of course, since you've already done it once.)
My comment about software DNA is not central to my point, so I take that back.
Regarding the game business, it's not a good comparison. Selling games is like the DVD business: games are produced at a fixed cost and sold at nearly zero marginal cost. This is true of games sold on disc as well as games sold online through Steam.
But this is not how the movie streaming business works. Content is licensed, not sold. It's licensed to a single buyer for a fixed window of time. After that, it's licensed to someone else. This is why HBO, AMC, and Netflix will never be showing the same movie at the same time.
This is a profit maximization strategy by the studios. I doubt that major studios would make more profit with a direct to consumer model, at least not with one that would replace the windows in which Netflix typically buys content. It could potentially work for new releases, though. I'll leave the exact reasons why as an exercise to the reader.
Valve and EA were software companies with experience delivering content over the internet before they started offering direct download services, though.
Sure, but the point is, his "DNA" argument is a complete non-starter. Game studios have to do a ridiculous number of things that have nothing to do with the core business of game design, like rendering, physics, networking, tool development, and so on. The same's true of a few movie studios who've led the way for the rest. Are we supposed to believe that a Pixar or a LucasArts or a James Cameron is somehow incapable of developing and deploying a simple networked Silverlight player?
I hope that Netflix's long term business model doesn't depend on the answer to that question being "No, that's not in their DNA."
I agree that each content provider developing their own digital distribution system would be inefficient and confusing to the consumer, who desires a simple, centralized menu and search function to locate and view content.
It's nice that so many websites offer some kind of streaming video, but the friction of moving from site to site, each with their own navigation and search functions of varying quality, seems like as much trouble to most consumers as getting up and walking across the room to change channels on their TV.
Netflix has done a good job in aggregating content, although I don't believe they have a format and business model that is sustainable into the next decade.
Because unless those deep pockets actually release functioning players on Wii, PS3, XBox, iPad, OSX, Win 7, Samsung Blu-Ray players, then I wont be using their service. That's quite a barrier to entry. Not insurmountable, sure. Then they have to make sure I hear about it. Then get my credit card number. And you have to do all this in a recession when consumer sentiment is at an all time low. I'd love someone to do it, I just don't think its gonna happen.
In contrast there's itunes, where in theory I can watch movies that aren't on Netflix. But I don't. I'm not buying an apple TV when my TV is already overloaded with input. And because I can't watch it on my TV, I've never bothered to figure out how to do it on my Mac or my iPad. I have watched plenty of Netflix on my Mac though. Unfortunately, a new release movie for $9.99 is just not that much better than an old movie included in my monthly fee. $9.99 to rent a movie? Fuck. No.
Yes, that is a gross oversimplification, I don't see what's stopping somebody with deep pockets like Starz from coming along and building essentially the same thing
Because people like us would go work for Netflix as developers because we know we'd be treated like first-class citizens. Starz? Who's leaving a job at Google to go work for Starz?
That deck isn't just aspirational, it's how the company actually runs.
So the answer is that Netflix is not for everyone. High performers and those who can take smart risks tend to like it. Those who prefer lots of process or are more risk averse tend not to.
Oh, I think they do get it. This will start happening soon with all the content providers. They saw how Apple monopolized the music business, and now they want to avoid the same fate with Netflix. This is basically a bunch of posturing in order to bend Netflix over a table during contract negotiations with the major networks and channels.
Having worked in Hollywood before, I would not be surprised whatsoever if the heads of all the networks got together one week in a boardroom, hashed out their Netflix bargaining strategy, and agreed on a tactical plan. Hell, the industry is so consolidated that the same two or three people basically run every network out there.
They might be annoying. They might not give a good goddamn what's best for the consumer. But they're not stupid. (Or at least not as stupid as the music industry execs were).
That said, I wish they'd invest more money, time, and effort into building or supporting Netflix competitors, rather than stifling the Netflix business model altogether. I could live with a world in which I had to pick between Netflix and a handful of others like it. But I would probably tear my hair out in a world with just a content-crippled Netflix and no viable substitutes.
"I don't think they get it. The landscape has changed and I'm not going back."
You think? I do wonder about the economics though. $300M vs what? People with content aren't married to a distribution partner, and they certainly aren't married to one who can't deliver eyeballs. So come the next NAB show in Vegas it will be an interesting discussion Netflix has with its potential partners.
The next HUGE disruption will be the first team to put together a streaming 24hr news channel. Think about it, something like Google+ for news, where you get notified when there is actually new information about a news story you are following, and you can go back and see that story. Or you open the 'portal' and it shows you the top 5 news stories being covered in each segment, then as you watch them they drop off to be replaced by stories lower in the list, only to re-appear if they have new data. I can't wait, but nobody has done a Ted Turner yet. Hard to kick off since it violates a lot of current practices in the news business, but it will come.
It is really a historic time, this realignment which allows 'pure' information businesses. As folks who know me are aware I find economics of information to be pretty cool.
Currently, news in video format suck big time. I prefer text format (including web sites) a million times over, and the reasons are many: I can absorb the news at my own speed (which might be faster, or slower, or on repeat, etc), I don't get hypnotized by messages addressed to my reptilian brain (such as bright colors, the newsperson's gestures and tone and facial expression, glitzy sounds, etc), and so on.
But maybe this will change in the future. For now, text mode is much less biased.
That's a fair point, one wonders if all the flash and crawls and such give folks seizures. The concept would work well for audio as well though, and then listening to it as a sort of dynamic podcast while driving might be more useful than waiting for an hour of half hour point to arrive. If they could do that and give me traffic updates for the road on which my phone was telling them I was on? That would totally rock for me too. While I feel for the guy who's stalled on the Bay Bridge if that means they don't have time to mention that 101S is about to become a parking lot, then I'm screwed.
If I could have someone who I could say "what's new?" and have them tell me, knowing what they have already told me, so that I could actually just get what was new. I'd really really appreciate that and leave my car radio in aux-in mode 24/7 :-)
With a streaming news channel and notifications of upcoming stories you really can call someone, have them turn on the TV (or streamer) and catch the entire story from the beginning like they do in television/movies.
I've been internet-only for over 3 years now. No cable. I have an antenna for live sports.
There is still so much room in this space, and Netflix is more vulnerable than they look. No matter what set-top box you buy (e.g, Roku, Apple TV) or software you use (e.g., Boxee, Clicker), something important is left out. Please, somebody, make something solid.
Can't happen legally until copyright law is modified. The media companies are deeply involved in shenanigans like this, used as mechanisms to attempt to restrain consumers within the bonds of "traditional" formats like CDs and cable.
If you want to set up Boxee to plug in to your favorite trackers, you can have this right now, but no one can offer it out of the box because the content owners don't want them to do it, and our law allows the content owner to dictate that.
> Can't happen legally until copyright law is modified.
Then someone had better make an illegal application that does all this in a very attractive & easy-to-use way, because that seems to be the only way to get the companies off their asses and in action.
As I noted, there are plugins that make this very smooth from XBMC/Boxee. The chilling effects of copyright litigation prevent any real polish going into an out-of-the-box product, at least in America. Maybe another group of Swedes with the fortitude of The Pirate Bay's founders will crop up some time and take this on.
As soon as I can get any NFL game via the internet, I'm done with any sat/cable service. I have directv for NFL sunday ticket which comes with the rest of their service so I have everything else.
When the NFL gets their act together and I can get nfl.tv the way I can get mlb.tv, I'm gone from directv and just getting everything via the net.
Hmm, I'm not sure. The press release[1] can certainly be read that way "do not currently have access", but I haven't seen any of the blogs talk about that aspect.
agreed, why waste my time and money waiting on their schedules to watch movies. Im not necessarily a netflix loyalist, but Im definitely not going back to cable.
I'm even done with sketchy torrent sites, and different scene groups fighting over who gets to release what, and a billion codecs and formats.
What torrent sites have you ben using? I use tvtorrents, demonoid and thepiratebay, and they are great. "Billion codecs"?! my media player (totem on linux) can play them all, I don't know what codecs they are in. I never notice anything about groups fighting, there's always a file there, sometimes more than one. Doesn't matter to me if there's > 1 file. "Sketchy sites" might apply if you're using windows, which is insecure, but I use Linux and it's fine.
IME torrent sites are some of the best (and often only) ways to get lots of music, tv and film.
GStreamer is definitely the lower rung in Linux media playback. If you haven't tried them yet, consider using mplayer2 or at least VLC instead of totem.
I wish I could be like you but there is not enough good content even though I may only be interested 10-15 shows and most are on pay channels. I still enjoy the theater as it's still the best way to watch a movie.
My childish dream: Apple, Google, and MS combine efforts to create their own production companies with content available on all platforms. Hire away all the talent and we return to 70's style filmmaking and TV shows where the studios had less control. The big three have always treated this part of this business as break-even so the prices will be cheaper.
I don't see the current tv/film ecosystem getting broken until there's a widely available toolset that enables rapid creation of high quality animation by casual users. At that point YouTube will swamp Hollywood.
1. Take any crappy MMO going down the tubes.
2. Hack in a frontend for Kinect and a higher quality text to speech ala Xtranormal
3. Release it as Blizzard Fantasy Studio and Profit.
I came here to basically say this. I'm not going back to cable. Between Hulu, Netflix, Amazon, etc there's no reason for me to revert to overpriced cable packages.
Same here, haven't had any type of 'cable/tv/sattelite' experience for about 8 years, and I'm not surprised a lot of people are also in these same boat.
"Because we’ve licensed so much other great content, Starz content is now down to about 8% of domestic Netflix subscribers’ viewing. As we add a huge more content in Q4, we expect Starz content to naturally drift down to 5-6% of domestic viewing in Q1. We are confident we can take the money we had earmarked for Starz renewal next year, and spend it with other content providers to maintain or even improve the Netflix experience."
This sounds like spin. I remember seeing the Starz logo on almost everything I watched, when I had Watch Instantly on Netflix. I canceled when they raised the price to $16 for DVD+streaming.
Unless they've got a better deal with Hulu or someone else, they've just cut off their nose to spite their face. Old media are amazingly good at being blind to the paradigm shift that will kill them, even when they have the opportunity to make money from that paradigm shift.
The options Starz (and every other premium cable provider) have right now are these:
1. Get that content online, now, in a convenient form that is cost competitive with Netflix and Hulu or at least Amazon Video on Demand.
Or:
2. Stagnate and eventually die, because the subscriber base for pay cable is going to do just that. Only old people are going to have cable in two or three years.
There are no other options. Without Netflix or Hulu, if Starz doesn't have the ability to launch their own effective pay service online, they will never see any of my money (they probably wouldn't anyway; as others have mentioned, Starz videos tended to be ones I avoided due to quality problems). I have never had cable in my life...but I pay to consume premium content online. I have both Netflix and Hulu+ accounts, and I spend an average of $10 a month on movie rentals and purchases at Amazon. I'm a new customer; an entirely new revenue stream. I didn't cancel cable to use Netflix. I used Netflix because it was the only way I was going to watch TV and movies at home. I'm where their growth could come from, and they don't want it.
1. Get that content online, now, in a convenient form that is cost competitive with Netflix and Hulu or at least Amazon Video on Demand.
I think this is the way you're going to see most of these networks going. Particularly subscription supported services like Starz/HBO/Showtime. These services are actually already the least tied to the traditional cable model since they're pure subscription without ad revenues. They, frankly, would likely really prefer to stream you content via IP and not have to pay a distributor (cable operator or Netflix) their cut. They have to go about it slowly and carefully however. Right now while us internet masses may be clamoring for streamed content they aren't going to risk their primary revenue methods (cable) until they can rely on their secondary revenue streams.
HBO-Go is the start of this, right now its very closely tied to the cable operators. But its a step in the right direction.
False dichotomy. The smart move is what they're probably going to do; ride cable as long as they can, while profiting wildly, then transitioning towards the internet when the margins on cable become too tight. Since they own the rights to the content they'll have no problems opening their own internet channels.
I don't think it is. By the time they're finished riding the cable profit train into the ground, they'll find a market with all new players to compete against, in exactly the same way the music industry is playing out. There are more indies now than ever, and they're selling more records now than ever. The pie keeps getting bigger, but the old players are claiming a smaller and smaller percentage of the total pie. I believe the same will be true of video. There aren't a ton of indie movies and series being produced, but some are, and that number will increase over time.
In two years or three, when HBO, Showtime, and Starz finally decide that they want my money, I'll be hooked on shows from other providers. I won't go the extra mile to sign up for their puny little service that offers me a few series and a few movies, when Netflix and Hulu are offering me hundreds of shows and movies for less than 10 bucks a month.
I just bought a new point and shoot camera for about two hundred bucks. It can shoot 1080p video. The same revolution that happened in music is about to happen in movies and TV, and for the same reasons...it'll go faster, though, because of YouTube and the more advanced Internet culture.
"I just bought a new point and shoot camera for about two hundred bucks. It can shoot 1080p video. The same revolution that happened in music is about to happen in movies and TV."
But the music revolution - low-cost converters and mics, powerful laptops and inexpensive software - lets me record a good-quality pop track in my living room, minus live drums. Can you do set construction, lighting and shooting cheaply in yours? Or does the movie revolution require way more CGI than the music revolution required reverbs?
I'm just going to bookmark this comment, and someday I'll come back to it and have a chuckle about how short-sighted it is.
A good music recording studio costs more than many movie sets...and yet, people manage to make records that sell hundreds of thousands of copies with a few thousand bucks worth of gear. I've worked on records and movies and in television. I have complete confidence that great films and great television shows will be made by independent artists in the coming years.
http://www.drhorrible.com - Cost $200k to make, and included seriously high end talent, like NPH and Captain Mal. Netflix and Hulu could easily fund shows like this. Or, an independent production company could start turning out series along these lines. It takes far fewer viewers to pay back $200k than it takes to pay back a million an episode...and every eyeball that is watching Dr. Horrible is not watching Weeds or whatever content Starz has exclusive rights to.
A huge amount of money is not required to make something fun to watch, and the number of people who realize it will only increase with time.
I'm surprised someone on HN could be so short-sighted as to think that just because the old way of doing things can never be replicated on a tiny budget, it doesn't mean entertainment will not be produced in new ways on much smaller budgets. Doesn't matter how it's produced, or if it is up to the standards of high end movies. All that matters is that some people (even small numbers for any given film) tune into the new media rather than the old, and I'm certain some people will. I don't know anyone under the age of 30 that hasn't watched both the Guild and Dr. Horrible. That's what the future looks like, at least one aspect of it.
"They'll have no problems opening their own internet channels."
I think that Netflix (and Hulu) show that part of the appeal of online content consumption is that the content and the curation/presentation don't have to be intrinsically tied. Having to pay for a Starz account to watch Starz content through the Starz Player is about the most '90s thing they could do.
Having their content on Netflix or Hulu makes media companies feel like second class citizens because -- from their current worldview -- they are. They're no longer the tastemakers, the editors, the curators. They're now just the guys with the content, and in their eyes the content guys are the red on the balance sheet, they're the means to an end.
If advertising is the mousetrap, the content is the cheese, and its a big goddamn blow to traditional media outlets to discover that on the internet, they're cheesemakers or they're nothing, because there are waaay better mousetraps out there.
---
* Stratifying your content curation by creative entity feels counter to what people seem to be expressing they like.
I think people like Netflix because it has a disparate collection of content which it recommends, filters, and curates, and lets users choose and collect within that content. You don't need to go to Netflix' "BBC" section to watch Doctor Who -- it's just there, filtered by Netflix' employees and algorithms to sit next to other like-minded content. Content made elsewhere, curated with care, and paid for.
I've seen this before in the digital photography realm. Didn't work.
Kodak thought the smart move was to ride drugstores etc. as long as they could, while profiting wildly. The stores needed film as a product lead, bringing customers into the stores multiple times to get at the film content and picking up additional purchases along the way just 'cuz they were in there. When Kodak started thinking about transitioning to digital photography, the stores threatened to sever their relationships with Kodak because the 3-visit "buy the film, drop off the film, pick up the prints" model was working so well. Kodak confused who was the customer, and focused on the stores instead of the camera users. When customers went digital en masse, Kodak was in the dust having focused on old distribution models too long.
Same here.
Starz thinks the smart move is to ride cable as long as they can, while profiting wildly. Due to pressures from cable companies, they have to back away from their internet model; viewers coming "in" to watch Starz content on cable will hang around and pay for other content as well. When margins on cable become too tight, they'll find the hard way that Netflix et al have moved on to other content owners and there's no more room in the game. Viewers will move en masse to internet distribution sources, find there is more than enough non-Starz content to keep them occupied for a long time, and will lose interest in those "old" movies. With the "internet-linked set-top box" market heating up, only those who buy in to that model will get the distribution; Starz is walking out right at the short-lived prime entry window.
This is the right move for Starz. They should focus on moving onto the iPad and the app/channel stores for Apple TV and the next-gen Google TV.
Re-upping would only antagonize their existing content partners who they also have to renegotiate contracts with. Plus it is probably killing their subscriptions on traditional outlets ("Starz? Oh, no thanks, that's the one I get on Netflix"). At least this way they can turn off the spigot and entice people to subscribe before Netflix is primarily cord-cutters anyway.
As for the way forward, licensing to Netflix is not exactly a forward-looking move -- Starz just a licensing middleman in this arrangement and they know it. They need to control a branded and coherent channel, not be a movie broker.
Starz was valuable because of their mainstream movie content. Despite comments about bittorrent, the major value of Starz on Netflix is about 8-year-old girls being able to watch Tangled on an Xbox 360 (again and again...). It has been huge for rounding out Netflix's pitch as an alternative to rental.
But to hear Reed talk about it, he probably was negotiating with the expectation that they'd be parting ways (how could they fix the Sony thing?) and so Netflix may not have been offering as much as last time anyway. I don't think the negotiations failing caught either side flat-footed.
I think these companies can focus better on their revenue when they're separated. Netflix will have to overpay to get their first big chunk of studio newish-releases, but that's okay. They'll have some different stuff and get creative and I bet we'll like the result.
Starz can figure out how to sell themselves to consumers without chopping themselves up. How? Well, every current Apple TV has 8GB of flash memory and Apple has put an App Store on every other platform they own, so you can see where that's going. And Google has gone double-or-nothing on Google TV for that reason. It sure seems like the Apple TV is the cable box of the future. Is Starz well-positioned to become a subscription service on the Apple TV? Sure. But maybe not if people can go next door to the Netflix app and get Starz movies there too.
Seems like the right thing is happening here. I like where this is going.
Unlike HBO, Starz does not really make any content worth watching. They really are just a middleman between the content owners and distributors. They don't carry the kind of weight HBO does.
Good post. I disagree about Apple TV. I think they don't want to have an app store. I think they're fine with adding sports channels, but for movies they want you to buy them through iTunes. They'd love a deal with Starz, through iTunes. I don't think they want competing middlemen on their platform though.
I think they're fine with sharing their platform with as many other services as want to be on there -- and that play by their rules. I think there are two clues to Apple's approach:
1. They're clearly evolving their offering towards purchasing -- notably, they just killed TV show rentals. Why stop offering rentals of TV shows, as unpopular as they may be? This was a major selling point of the ATV last year. It seems like they're laying the foundation for their fall announcement, but they had to do this a little early because the fall season starts soon. I presume that the announcement will be that they're leaving everything but purchases and movie rentals to the world of ATV apps. Movie rental I think they are still trying to evolve against the studio's feet-dragging. But TV shows are essential to an app store, so the new deal will be: You want to watch a TV show? Buy it or get the app. No confusing in-between option. Apple hates in-between options.
2. Their subscription policy. I think they definitely wanted to pick something that worked for the Apple TV as well. The brouhaha over those rules has subsided for now. But it's a lot harder to tell people to go buy or subscribe to something over the web when they're just sitting in front of an Apple TV. That's way more friction. You might as well tell them to call an 800 number. I think that's something that makes an Apple TV app store viable -- you almost have to have that rule, whereas it seemed kind of excessive on traditional iOS devices.
And yes, they want you to buy movies and music only from Apple, but on iOS they have no problem with people using Pandora or Netflix or HBO apps which they get no money for. Because they're services, just like Netflix and the sports channels you mention. But on AppleTV, there will probably be more takers for the 30% split and Apple may go with a subscription-only model (i.e. no one-time-purchase apps at all). This is presuming they only allow video-based apps (wot, no Angry Birds?!?) that you could just call "channels". That is, very similar to the existing ATV apps.
In fact, I think a secondary reason that Apple even created the new Netflix app, new YouTube app and sports apps is to work out and test the AppleTV's API and design. I presume they'll still be around in a new-look ATV in the same way that the YouTube app is still on every iOS device -- Apple doesn't like to lose control. They're just going to be the founding members of a club of thousands.
We're not that far off; I think that is something Apple would do. But that's Apple going directly to content producers and making deals with them. That's not something Amazon, Hulu, Veoh, or Crackle could ever be part of (Netflix probably would get grandfathered in). Those are other middle men. Apple wants to be the middle man.
It's a really tough sell though. Right now Starz or ABC or whoever can create a subscription channel on Roku, X-Box, Playstation, and I highly doubt they would have to pay anywhere near 30% (My guess is that those platforms are happy to have the content, and allow the apps for free).
I think a lot of companies would stick with subscribe-outside apps. Again, same rules as the iPad, so that's okay. Netflix and Hulu would for sure. But:
There are 200,000,000 iTunes accounts with credit cards.
I really can't fault the established video subscription services for keeping at it, but wow. Can they really resist the power of the App Store?
Now, the interesting thing happens outside of the mainstream. If you're Major League Lacrosse, or a yet-to-launch uncensored rap video channel, or SOAPnet (ABC's soap opera channel that a month ago curiously backtracked on their February 2012 announced end date), CurlTV (an online live curling video site that folded earlier this year) or one of many other special interest channels (actual or potential), you're really interested in becoming a subscription channel on Apple TV. Just imagine hundreds and hundreds of those channels and you have a platform that appeals to people on a very personal level that cable can't touch.
To be honest, I'm in LA and this almost seems like I'm talking myself into starting up a consultancy specializing in Apple TV apps. Combine hard-to-find assets (iOS developers) and a presumed gold rush with an industry starting to decline (but still flush with cash) and you have a pretty nice business.
Those channels are already popping up on Roku (Wealth TV is one example). I think Apple TV can do it too, I just don't think they can play the "we're Apple" card and have everyone pay them that way when there are competing platforms with just as large user bases (X-Box and Playstation for example) offering a better deal. I'm sure Apple wants in to the market, but only if it's wildly profitable.
So far it doesn't look like being a box provider is going to be wildly profitable. The prices have been driven down to $100 - $200 tops so you're not making money on the hardware and there are too many competitors who want content to really make money through subscriptions.
If Apple doesn't want middlemen... what about Netflix? Without strong third party services (you might call them "apps" already), I relegate the Apple TV to "HDMI Input 2". I think Apple realizes this and will open up the functionality to more providers. After relying too heavily on Google services in the early days of iOS and getting burned, I think they'll open up soon.
In any case, with an iPad or iPhone and AirPlay functionality, Apple TV can already serve as a competent music/video distribution channel. Since AirPlay will be enabled by default on all websites in iOS 5, this kind functionality will only be more prominent.
I have to say that I'd end my Netflix subscription the second HBO offered a sub $25 a month plan through iOS/Apple TV.
My son turned a year old a few weeks ago. He's going to grow up choosing content on demand from our Roku. Maybe some WonderPets from Netflix. Or a current TV show from Hulu. Or the latest viral video of some kid a year older than him rocking out the Beatles on the drums on YouTube.
He won't be familiar with linear television schedules, or the idea of running home in time for a show. To him, our TV will be the place where he chooses what to watch, when he wants to watch it.
What these stupid studio executives don't understand is their grandchildren will be doing the same thing. Whether they like it or not.
I don't have cable TV. Hell, I don't have a TV. I watch about 3 hours of TV... per week. And you think I'm going to pay for cable to get your movies? Heh.
Fact is, $8/month for Netflix is all I can justify and I justify that largely based on TV reruns than movies. Add in Hulu (not Plus) and that's my limit.
Given all that if I could just get HBO Go without subscribing to cable, I'd gladly fork over maybe even $20/month. As it stands, I can't justify spending >$100/month for the "privilege" so I guess I have to continue relying on, well, other sources.
I do have a big TV, but it's mostly for games and Netflix, via a PS3. Oh, and there's also a PC next to it, browsing the Internet on a large screen is awesome. :)
The TV we watch most often is a Panasonic 42" commercial plasma display. Just a big monitor. No tuner, no speakers, just a screen and some inputs.
One of those inputs is a Tivo, and 1/2 of the time we're watching Netflix through it. 1/4 of the time we're watching torrented shows off of a WD media player box. The other 1/4 of the time we're watching the local news, or listening to it in the background (for what purpose I'm not sure, it's mostly garbage).
I had digital cable for about 3 months earlier this year. Decided to finally try it. And, after 3 months, decided it wasn't worth it.
The US is moving away from the old "broadcast" models quickly. People almost don't even care about the actual content, to the extent that there are many viable options to fill a block of time with various programs.
Well, guess I have no choice but to subscribe to starz.
Oh wait, their network is pretty much irrelevant to me, I have watched a few of their movies on netflix and I like Torchwood (although parts of this season have sucked) and Spartacus. Other that I honestly couldn't care less and I won't be spending a dime on their second rate premium channel.
When does their deal with Disney and Sony expire? Can't imagine they would go with starz over netflix.
Torchwood? I tried, I really did to purchase Miracle Day on iTunes, Amazon, Netflix - wasn't able to. I was _happy_ to give them my money - but they didn't provide me a mechanism (and "Cable" or "Satellite" was last considered a reasonable channel by me about 8 years ago. )
I think everyone here realizes where all the up-to-date Torchwood episodes could be found after I finally gave up looking for someone to take my money.
Ideally the marketplace will resolve these issues, and companies that fail to understand that their business model now has to be centered around providing content that people want, rather than forcing their "packages", will disappear while those that understand how to serve their customers will rise to the top. (And get my money while they're at it)
Torchwood can be found on iPlayer, since it's BBC. My BluRay player/PVR has an iPlayer 'app', and will even do streaming HD. It's great.
Netflix in the UK have a hard time competing with iPlayer, and the BBC's content generally. The main reason people pay for TV content of any kind here is sports.
Sony movies are already off of Netflix, and Disney owns a decent amount of Hulu, so I'm pretty sure you won't be seeing either of them back on Netflix outside of a Starz-like deal.
I'm sure that Starz gets it: the future of content is streaming. Everybody gets it. And it's frustrating that we don't have everything streaming today b/c the technology is there and has been there for some time. But the bottom line is that cable is still alive and well today, and the margins are much better there than what Netflix is offering.
Pirating is not the burning platform here like it was for music. Netflix is not iTunes. Content providers still have the option to make plenty of money through cable and they're going to do just that until that medium becomes completely disrupted and they no longer have that as a lucrative channel. Starz sees Netflix streaming as cannibalizing their cable business, and to a reasonably large extent they're probably right b/c Netflix streaming has gone mainstream. The day will come when cable will no longer support Starz (and others') content and they know it's coming. Until then, sad to say but this is just smart business.
Starz I can see, but HBO? Content trumps all and HBO is one of the best content producers there is. No matter what happens, they will continue to find ways to make money so long as they keep delivering.
Personally I would expect Netflix to be gone in 10 years unless they start producing their own content.
I don't think it does. Even if Go sucks and goes down in flame, they'll be able to find someone willing to pick up their programming. And most likely at a premium.
I for one am extremely tired of this kind of stuff happening and as a result, never knowing wheat I can watch, and can't watch, with Netflix streaming.
Two weeks ago, my son and I were watching LOTR and had to pause for some travel. When we got back, I was puzzled that I couldn't find a way to get it back on to finish...turns out their contract expired.
How is this OK for a company in this day and age? I'm tired of giving Netflix a pass because the content partners aren't playing fair. I'm sorry, but that's your business model, and now that you put the competition out of business, I need you to perform and not act like a 10 day old startup.
Screw both TV and video. If this is how it's going to be, I'm out. I'll stick to This Week in Startups, 5by5, and my book collection.
"However, executives at Starz apparently concluded that they would lose even more money by giving consumers a reason to subscribe to Netflix instead of the cable channel."
s/subscribe to Netflix/download from bittorrent
The level of disconnect is shocking, however I doubt the Netflix guys are sweating it. No one is going cancel instant content for $8/mo based on Starz backing out.
I watch a goodly percentage of my content through Netflix instant, and I actively avoid the Starz provided content. It's never in HD, and even for that the quality varies from middling to almost poor. I've watched a couple of things from Starz, but mostly it's because I didn't notice until I had my heart set on watching it.
So, I don't really care if Netflix loses this. I hope it lets them be more aggressive at doing new deals to get movies.
I hope that this frees up some more capital for them to do direct deals with production houses (like their Lionsgate deal). I know that Sony already bolted from Netflix (via Starz), but perhaps directly dealing with the studios (and more money) will help Netflix start to get more current movies faster.
I kept getting my hopes up by seeing decent movies listed on Netflix, only to then realize that they're low (visual) quality Starz movies. Good riddance.
This is a stupid (or desparate) move by Starz, but it also shows the weakness of Netflix: if you rely on someone else for content (same goes for API) for revenue, theye can screw you up (e.g. there goes 11% of our valuation), even if it's in the short term. I think Netflix should be more aggressive in creating own content (key to HBO's success). They are already moving in this direction but very slowly. Why doesn't Netflix outsource content (to film & journalism schools or just YouTube era amateurs) and stream it theirselves?
The real question in my mind is "what is Netflix bringing to the table?" I mean, there's no reason Starz can't set up its own download channel right next to Netflix and Amazon on my Roku, is there? Why should they give Netflix a cut?
For Roku, at least, I think the way it works is you give your credit card once and then you select channels through Roku. So in this case it's not any less convenient.
It made sense to go with Netflix when nobody else really had a streaming implementation, and Netflix had its own advertising the content providers could piggyback off of. But these days more and more people are getting content through third party boxes that already act as payment processors.
I have been critical of Netflix in the past for the quality of their streaming material. Honestly, I like Netflix most because if I see a Starz movie on my cable box I know I can watch it later on Netflix. I dont have Starz.
What I do have though is HBO. I pay for it in my cable bill, but they also let me stream 100% of their content using HBO GO. I admit HBO GO has a long way to go and isn't the online video store, but for quality shows to stream it is hard to beat.
This seems like a big blow for netflix; I thought the streaming material was consistently getting better, this will make it worse.
Starz was breaking new ground for cable tv content providers. Now they decide to return to the stone age? Of course their internal numbers might tell a different story, but this still seems shortsighted.
It never would've really worked because Starz is an unnecessary middleman through this whole process. Netflix should be dealing with the studios directly. Prices would always be higher since Starz wants their cut of the action.
As long as Netflix keeps streaming Korean crime movies and Japanese dystopia movies and Scandinavian crime/thriller movies and The Third Man, I could give a rats ass about Starz.
I'm assuming most people here have Netflix and do not have cable. Here is Starz' dilemma: Let's take all cable subscribers and consider them potential Starz customers. They can A. Pay $15/month to get Starz or B. Pay $8/month to get Netflix + Starz. They would all choose B.
Now let's take all the non-cable subscribers and call them potential Starz customers. Starz technically wants to keep this too, but they would lose out on all the customers in the 1st scenario, which make them more money. Thus, their unfortunate decision.
As consumers, we need to wage war against cable companies by not subscribing. Unfortunately, this is difficult to do considering quality sports programming is dominantly viewed via cable and the like.
@bittermang : true, going back is painful and networks & cable operators are probably aware of this. But, as wsj puts it - investors of netflix are scared that its expenditure on the content deals will overtake their revenue and with netflix threatening the existence of so many network companies, netflix soon has to create its own content OR devise an extraordinary plan to sustain the network grudges against it.
It will be interesting to see individual networks starting up their own streaming services.
Not specifically Starz, but the idea about how to handle all of the different cable networks has been on my mind for awhile now. Here's a question for Comcast, Time Warner, and all of the other service providers out there: why don't you quit wasting time and compete with Netflix? The one thing cable and satellite companies have that Netflix doesn't is a large collection of long-standing relationships with networks. With a bit of work, cable/satellite providers could easily build a system just like Netflix.
Offer a web-based, a la carte service. All content is presented just like Netflix in a VOD package. Users sign up for an account and are given the option to pick out which networks they want to receive content from. Any network can be dropped/added whenever the user wants.
Worried about costs? Tier the service out: $29.99 a month gets you 10 networks, $49.99 gets you 20, and so on so forth. No real change to what's taking place now aside from customers being happy and being allowed to access content whenever they want, wherever they want.
Oh, and let's not forget the social layer that would fit beautifully on top of this. Allow users to easily post episodes/networks to Facebook/Twitter/etc. Facilitate a conversation between people watching a show. Each show page has a comments section where fans can discuss what they just watched/are watching.
Just the beginning of ideas for this. If you want to keep discussing (hint: I'd love to), shoot me an email: ryan@getconduit.com.
If there was a standard way of getting video from the producer to the consumer then producers could either go through middle-men (like Netflix) or host the videos themselves, and it wouldn't matter at all to the viewer.
I want to sit in front of my TV (or iPad, or laptop), choose some video from the biggest menu in the history of mankind, and watch it. I have no interest in who produced it, or who shipped me the bits. And I shouldn't have to have.
We have standards. Anyone can play an x264 file. Anyone can play an MPG. Wrap whatever media player you like around them.
But... the standards don't have DRM.
If you could buy videos like you could buy MP3s off of Amazon, and nobody flipped out about the DRM, we wouldn't need middlemen to do the job of standing up for their customers and making sure the videos actually work, which they basically wouldn't if the studios had their way, unopposed.
Everyone is looking negatively at Starz, but I imagine there might be some outside pressures from the cable providers, Starz main source of revenue, to not continue. They are in a tough position. We've seen online services set back with this, and the recent Fox - hulu waiting period. I imagine these cable providers are not ready to give up yet.
What does Starz DO? They own content, but beyond that they don't create hardly any, don't do the to-eyeball distribution, etc.
As I posted earlier, they're falling for what killed Kodak: they're confusing distributors with customers, and when the customers switch en masse to a different distribution model they'll have missed the boat and paying end-consumers will be content with a very different product line.
"Because we’ve licensed so much other great content, Starz content is now down to about 8% of domestic Netflix subscribers’ viewing. "
How about "Because all Sony films disappeared from Starz, Starz content is now down to about 8% of domestic Netflix subscribers' viewing." That would be more honest
I wonder if this shot across Netflix's bow (which it likely is, way too early to definitively walk away), combined with Netflix's lower (base) digital subscription, will open the door to premium Netflix packages -- Starz as a premium add-on for $5/mo.
That might create tons of new opportunities network content bundles or al a carte show seasons, and mute the furor over the digital-only switch. For $15/mo. you might be able to get Netflix Streaming + Starz + Breaking Bad.
I think that there is sufficient hatred for cable and satellite TV that people who are on the instant streaming only plan will pay for a DVD plan as well. Currently I am on streaming only but would rather pay for a DVD plan than for cable. It's much cheaper this way.
I think an unintended consequence of this is that Netflix ends up making more money.
Netflix streaming doesn't have waynes world and many of these movies I would love to watch... how much more do i have to pay to get this content legally? Who's up for making a grooveshark for movies? ;)
I don't think they get it. The landscape has changed and I'm not going back.
I don't have cable. I don't have satelite. I don't have an antenna for broadcast TV. I have the Internet serving content to my TV via my Xbox, and I use it to watch Netflix.
If your content isn't available on Netflix. I'm not consuming your content. Period.
I'm done bending over backwards. I'm done with schedules. I'm done with managing the space on my DVR. I'm done keeping up with new episodes and seasons. I'm done with movie theaters full of loud other people who aren't me, and the litany of other issues that have been discussed to death from overpriced tickets, to concessions, to 3D projector woes and content. I'm done with physical media getting scratched. Hell, I'm even done with sketchy torrent sites, and different scene groups fighting over who gets to release what, and a billion codecs and formats. I'm done with it. I'm done.
So frankly, good bye and good riddance to Starz. Go climb this hill and die upon it. I never liked the fact that their schizophrenic content releases would appear during a timed window, only to disappear from my list later before I actually got a chance to watch it. I grew to avoid movies labeled with the Starz logo, and my heart would sink when a feature would open with one, because I knew the experience was fleeting and I wouldn't be able to enjoy the content later. So I'm done with that too.