TV shows accounted for 80% of the streams for subscription video on demand (SVOD) services in Q1, The NPD Group reports this morning — and the number of people who watched TV online was up 34% vs the period last year. But although the research group notes that Amazon Prime and Hulu Plus are gaining market share, the folks at Netflix shouldn’t be worried. The company accounted for about 89% of the TV streams, while Hulu Plus had 10% followed by Amazon Prime’s 2%. “There’s no doubt that Netflix is driving the growth in SVOD, particularly with increased attention to television programming,” says SVP of Industry Analysis Russ Crupnick. Consumers are starting to consider the alternatives. The ranks of Netflix-only SVOD subscribers dropped to 67% from 76%. Another 10% used Netflix and Amazon Prime while 8% used Netflix and Hulu. Although Netflix has had a “virtual monopoly on the SVOD market,” Crupnick says, “we are beginning to see increasing trial” of Hulu and Amazon. The data comes from a survey of 46,403 SVOD subscribers and was weighted to reflect U.S. Internet users over age 13.
Hulu said today during its upfront presentation in New York that it set a revenue record in the first quarter of this year with $695M, and that Hulu Plus subscriptions passed 4 million subscribers after doubling in 2012. The service now has almost 2500 TV series and about 57,000 hours of content. Among the talent on hand was Seth Meyers and Michael Shoemaker to promote their animated superhero series The Awesomes, one of four original series that will debut this year. Among Hulu’s four announced exclusive series is the Eva Longoria-starring animated series Mother Up!, about a disgraced former music exec who must transition to a life of suburban motherhood. Other talent working up shows are Mario Batali, Carson Daly and Jay Mohr, who is toplining the new game show Money Where Your Mouth Is. Hulu also is streaming Prospect Park’s revamped soap operas All My Children and One Life To Live, which launched yesterday and were the two most-watched TV episodes of the day. Here is Hulu’s descriptions of its new series:
I’m told that Sony is indeed sounding out cable programmers including Discovery, NBCUniversal, and News Corp to see whether they’re willing to cut deals to have their shows streamed to Sony devices such as PlayStations and Blu-ray players. The Japanese tech and entertainment giant is thinking about a model that would resemble Amazon’s with its new Kindle Fire tablet: It might cut the price of the devices, and count on subscription payments to make up the lost revenues. But nothing is imminent. And the feeling is that The Wall Street Journal, which broke the news about Sony’s plans this morning, pushed too hard on the possibility that the tech and entertainment giant might end up with a full-fledged rival to cable TV. Sony has raised the idea with programmers of offering channels live, just as they’d appear on cable. Insiders tell me, though, that there’s only a remote possibility that Sony will make much headway with that idea — except perhaps with minor networks that have few carriage deals. They consider it significant that Sony is telling programmers that it is open to creating a more conventional subscription VOD service like Netflix, Amazon, or Hulu Plus. Google, Apple, Microsoft, and Samsung have also been sniffing around to see what programming they can offer via the Internet, and on what terms. Meanwhile, pay TV companies are working on TV Everywhere deals so they can stream shows to subscribers’ digital devices.
UPDATE, 12: 00 PM: No word from Starz execs about when they might announce a digital streaming deal to replace the one with Netflix, which expires in February. “There are a lot of conversations going on,” Starz CEO Chris Albrecht told analysts today. “It’s a road that needs to be evaluated almost on a weekly basis.” The company hopes to license programs from its premium channel to a premium-priced streaming service – meaning, one that charges more than Netflix. As more companies enter the online video market “they’ll begin to segment and differentiate,” says Liberty Media CEO Greg Maffei. “That’s something we would embrace.” Albrecht said that “we didn’t believe it was appropriate to have our products included in a low-cost service.” Do they really expect lots of consumers to pay high prices in this weak economy — especially with the anemic numbers cable and satellite companies are posting for premium channels? At Starz the 3Q sub figure was
The agreement comes two weeks after CW cut a similar deal with Netflix. This one will provide CW programming both to the free Hulu service as well as the subscription Hulu Plus. It means that by year end, Hulu will have current-season episodes of shows from ABC, CW, Fox, NBC and Univision. Hulu SVP Andy Forssell says in a blog post that Hulu Plus will be “the only online subscription service to offer next-day access to the most recent five current primetime episodes, in HD” via broadband. Users of the free service “will be able to watch five episodes of current season programming eight days after airing.”
Wells Fargo analyst Marci Ryvicker says that the Hulu deal will generate a lot less cash for CBS — which co-owns CW with Time Warner — than it will see from Netflix. She estimates the new agreement will deliver about a penny a share annually which she says “is not financially material.” (She said CBS might see as much as 5 cents a share from Netflix.) Hulu will have fewer shows, and only five episodes at a time; Netflix has exclusive access to full seasons of shows that aren’t in season. Still, she adds, “this is another way that CW can approach breakeven and ultimately reach profitability.”
Here’s the release:
(October 28, 2011) –The CW Television Network, a joint venture of CBS Corporation and Warner Bros. Entertainment, announced today a five-year licensing agreement with Hulu for the rights to stream in-season episodes of The CW’s programming on the Hulu Plus subscription service and the free, ad-supported Hulu service.
With this agreement, Hulu Plus will be the only online subscription service to carry in-season episodes of The CW’s drama and reality series, with the five most recent episodes of each show available to subscribers the next day after broadcast. Users of the free, ad-supported Hulu service will be able to watch five episodes of current season programming eight days after airing on The CW.
No word about Hulu’s effort to find a buyer. But CEO Jason Kilar offers a strong sales pitch for the company in a status report he posted online today. He says the company owned by Disney, News Corp and Comcast’s NBCUniversal is “on pace to approach half a billion in 2011 revenue.” With 875,000 customers in June paying $7.99 a month to watch streamed movies and TV shows on Hulu Plus, “we anticipate exceeding 1 million paying subscribers before the end of this summer” — a target the company originally expected to hit at year’s end. Kilar says that when ad sales are thrown in, “we proudly and profitably pay the content community approximately $8 per subscriber per month for the content offering you see today on Hulu Plus.” The CEO adds that it is able to “thrive on low margins and the unusually effective Hulu advertising service we’ve built and will continue to innovate.” About 25 million DVRs, Blu-ray players, game consoles and other devices can receive streamed videos from Hulu Plus, but Kilar says that will “grow aggressively over the balance of 2011.”
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