Netflix does it again.
It beats forecasts of subscriber numbers and shares climb +12%.
New subscribers rose +22% year on year, to 4.88 million (forecasted at 4.05 million). Good forecasting though but it's a staggering growth.
It now has a total of over 62 million subscribers.
This is driven by original content such as 'House of Cards' which is better than excellent and the decline in traditional TV viewing as viewers switch online. The original shows are also giving Netflix the edge of competitors such as Hulu. Revenue is 1.57 Billion usd, which shows that their pricing is right.
It's a tremendous success and it's hard to see Netflix not continuing to power on as its penetration in international markets is still low.
The growth in online video is explosive but the growth in user generated content using video, is moving fast.
Using drone footage (auto helicopters with cams) has allowed filmmakers to do special things like this from Alex Chacon and it's pre-rolled by Guinness. So he can earn a few bob from his work.
Because they're a mixture of Selfies and Drone footage, they're called 'Dronies' and with access to free YouTube (only 10 years old!) gives an outlet for this type of work. Beautiful it is too.
But the growth in Go Pro cameras and combined on Drones, gives high definition, ultra sharp pictures in miniature size so they're fairly transportable. Streamabout uses them all the time and notably Go Pros are great for attaching to cars to get good, low driving shots. Great in the pool too for swimming shots - just great anywhere.
This is building a YouTube audience because one thing is for sure, this type of footage would never surface on traditional TV broadcasters. And when you look at it, you'll see it's long form (over 3 minutes) so that's more engaging than any 30 second TV commercial.
If you're a fan of 'House of Cards' you'll notice that the opening sequence is built around time lapse shots of buildings. The person that was commissioned to produce those was found on YouTube.
Lovin' it.
Online video isn't just YouTube or streaming old editions of old shows, but an opportunity to create top-end content. Online video is creating programmes and the 65th Emmy Awards, the bastion of traditional TV, proves it.
Netflix is actually spending its money generating productions for exclusive content so that's no bad thing. They're getting a unique proposition in doing this by providing viewers with something no one else has - really good content they've made themselves.
Netflix has received 14 Emmy nominations for three series which they created, they produced and were broadcast exclusively on Netflix. It's the first time ever, online has been nominated.
The very excellent 'House of Cards' got 9 nominations, 'Arrested Development' got 3 and 'Hemlock Grove' got 2.
The Awards are on September 22nd and no doubt a win, will further bring audiences to Netflix in order to view the award-winning series.
Which of course you can only see on....Netflix.
Internet-only film businesses, have really declared war on Television. Netflix have invested 100 million usd in the remake of the British series, 'House of cards' with Kevin Spacey, as you'll probably know.
A 26 episode series that's not on Television.
Rather too, than asking people to wait week-by-week for each episode, it was all released at the same time to subscribers. Viewers could then schedule it as required, as it suited them - something which kills the rigidness of TV schedules.
Indeed they produced 6 trailers. Each one targeting the particular demographic of the Netflix subscriber. So female subscribers got the weepy trailer, young males the fight scenes - another thing you can't do on traditional TV.
Online content is also not beholden to advertisers...rather, is driven by subscriptions and subscribers on fixed monthly rates.
Consequently programme viewership fluctuations, is not the issue anymore for online broadcasters - another gaping hole in the way TV works and is funded. Netflix, with nearly 30 million subscribers, just needs to keep attracting those subscribers to stay or join the service, nothing more. Whereas, TV stations have to keep reaching out to audiences, to get them to watch, to generate Ads, when we know, through second screen viewing, their audiences are shrinking. No, Collapsing.
Netflix has already commissioned another feature, a horror called 'Hemlock Grove' and because they're not advertising dependent, they need to simply feature on quality broadcasting.
But online broadcasters will force change too. Voice control is the future too, for Netflix rather than "gesture control" being considered by other online broadcasters (like the Xbox function). So you simply "call out" your movie and up it comes and online will eventually create too many features that will just force TV stations to close because they simply haven't the technology to match.
Online broadcasting is affecting traditional movie-making too and not just TV.
Profits in the traditional movie business are down. Between 2004-2011, the big 5 studios profits were down -40%. Time Warner for example, in generating 12 billion usd in 2012 from film, generated 14 billion usd from TV/Online. And that balance is quickly shifting away from traditional movie-making towards content making that has subscribers attached such as cable/online.
Fees to cable/subscriber channels are estimated to be in the US, about 32 billion usd a year and growing +7% annually. And it's this steady income that content makers want to chase, rather than traditional TV dependent on advertising swings and thereby, focused on shows being popular (or not). Cinema revenue for film is equally volatile with "hits" and "misses". Content makers want broadcasters with steady income.
Film Theatre/Cinema attendance is not a growth business with too many distractions, such as Netflix, at home on multiple devices.
DVD/Blue Ray sales are obviously down too, about -46% in the past 6 years. DVD Pirating in Russia and China has become an issue too nevermind general illegal downloads. Actor and Director salaries are being cut, as are the number of projects.
It is the likes of Netflix that has been the lifeline for Hollywood, with big talent like Spacey/Hoffman/Jeff Daniels moving away from movies into online content.
Equally too, Netflix and Amazon's Love film are competing for broadcast rights against traditional broadcasters and have the cash war chests, to win. It's estimated that Netflix spent 5 billion usd in 2012 acquiring content.
In terms of 'connected devices' such as smartphones, games consoles, laptops, ipads and so on, Americans own 2.6 of them in each household. So the "theatrical window" of holding back online movie release is now becoming defunct to allow movies access this online market. 'Arbitrage' with Richard Gere, was released everywhere at once and understood to have made 3 times the money because it had a massive global audience at once.
But movie makers don't like it (because they'll lose the cinema premium) and theatre owners don't like it either.
So digital programme/content provision is winning time and time again meaning traditional movie makers will switch (as will talent) into creating online content. It also means traditional TV stations are getting more and more stuffed.
They're being outbid for content; they're losing audiences; they're losing money (180m+ euro a year in Ireland for RTE) every year; their content is poor; and their model has a doubtful future.
Even their anchor product - news - is being covered better and quicker (much quicker) by national newspapers online.
This game is over.
