Italy Investigating Netflix on Alleged Tax Evasion

Italian officials have reportedly opened an investigation into Netflix regarding possible tax evasion operating its subscription streaming video service in the country.

Reuters, citing a source familiar with the situation, said prosecutors in Milan opened the inquiry despite the fact Netflix does not have a physical presence in the country.

Netflix Italy has about 1.4 million subscribers who access content through servers, desktop computers, TVs and mobile devices, which officials say amounts to a physical presence in the country.

Netflix bases European operations out of Amsterdam, Holland.

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Italy has pursued similar investigations of Apple, Facebook and Amazon, reportedly resulting in substantial fines and tax payments.

With the proliferation of e-commerce and streaming video, local and national governments have recognized a potential fiscal windfall targeting companies operating for-profit operations within their borders without physical presence.

Dubbed the “Netflix tax,” Chicago earlier this year became the first U.S. city to collect taxes ($2 million) from media/tech companies operating services within its city limits.

Netflix, Amazon Prime Video and Spotify, among others, have filed litigation against the 9% tax Chicago officials imposed on streaming entertainment services four years ago.

States of Iowa, Maine, Wisconsin and Colorado, among others, have imposed taxes on Internet-based companies operating within their borders.

Lawmakers in Georgia had considered taxing Netflix and other streaming services to help pay for broadband infrastructure deployment in rural parts of the state.

Netflix and other streaming platforms were removed from verbiage associated with House Bill 887, after a local poll showed 65% of consumers were opposed to taxing Internet services.

Notably, Netflix in 2018 received a €57,000 ($70,385) tax rebate in the U.K. — despite generating a reported £700 million ($864 million) in revenue from 10 million subscribers in the region.


HBO Max Expands Executive Team

AT&T’s pending subscription streaming service HBO Max Oct. 2 added several executives to its ranks.

The service, which is set to launch in Spring 2020, named Billy Wee SVP of original animation, and Nikki Reed VP of kids and family scripted originals.

Billy Wee

Wee comes from WarnerMedia’s TBS, where he was VP of original programming, and Reed hails from Viacom’s Nickelodeon, where she was VP of original series development.

“The kids and family space has a long history at WarnerMedia, from our legendary animation to classic motion pictures, and is now an essential part of HBO Max,” Kevin Reilly, chief content officer of HBO Max, and president of TNT, TBS and truTV, said in a statement. “We now have a top-notch team to create a slate of original content appealing to kids, tweens, young adults and the whole family.”

Nikki Reed

Separately, Max added Sarah Lyons as SVP of product experience. She previously worked for AT&T’s DirecTV unit as VP of OTT media products.

WarnerMedia executive Katie Soo, was named SVP of growth marketing, while Keith Camoosa, was named SVP of data insights and operations.

DirecTV Now’s Jess Miller was named VP of project management, while former Crunchroll executive Reid DeRamus was named senior director of business operations.

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Meanwhile, Sean Kisker, transitions to EVP and chief strategy officer for Otter Media and WarnerMedia direct-to-consumer. He will work with Josh Walker, chief strategy officer and EVP of financial planning, WarnerMedia Entertainment.

“We have gathered an all-star team of executives whose innovative contributions have directly advanced the digital media industry,” said Tony Goncalves, CEO of Otter Media.


Analyst: Netflix Subs Not Likely to Depart for Disney, Apple Streaming Services

The pending launch of subscription streaming video services from Disney and Apple next month has ratcheted up scuttlebutt Netflix will hemorrhage subscribers to the new players.

Not true, according to a new survey conducted by Wall Street firm Piper Jaffray — a perennial bull on Netflix shares.

“Our survey [of 1,500 respondents] suggests that the majority (~75%) of Netflix subscribers do not intend to subscribe to either Disney+ or Apple TV+,” analyst Michael Olson wrote in a note as reported by CNBC.

Olson contends many Netflix subs will try at least one of the new services. Indeed, Netflix co-founder/CEO Reed Hastings has stated publicly that he intends to subscribe to Disney+.

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“Most existing Netflix subs appear to be trending towards multiple streaming video subscriptions, especially as many continue to reduce their spend on traditional TV offerings,” Olson said.

Netflix shares have fallen from historic highs over the past 90 days since it reported poor Q2 subscriber growth numbers worldwide. Indeed, the downturn has erased all fiscal gains in 2019.

The company’s stock was trading at $262 a share at noon Oct. 3 (Eastern Time), about 59% of Piper Jaffray’s target of $440 per share.

“[It] now trades at multiyear valuation lows, suggesting shares reflect much of the upcoming competition risk and periodic sub add volatility,” Olson wrote.

Percentage of U.S. Households With Multiple OTT Subs Has Jumped by 130% Since 2014

The percentage of U.S. households with multiple OTT subscriptions has increased by 130% since 2014, according to Parks Associates research.

In 2019, 46% of U.S. broadband households subscribe to two or more OTT services. The report, Partnering, Aggregation, and Bundling in Video Services found only 33% subscribed to multiple services in early 2017 and 20% in 2014.

“The number of OTT services available in the U.S. increased by 140% in five years, giving consumers an unprecedented number of options to meet their video needs,” said Parks Associates senior analyst Steve Nason in a statement. “Most OTT households are anchored by one of the three major OTT services — Netflix, Hulu, or Amazon Prime Video — but consumers are finding they can’t fulfill all their interests through a single service. Many small and medium-sized services are building their brand and subscriber base by filling in these gaps in content.”

Several trends in the video services industry are shaping partnerships, including intense competition, the move of content providers to launch direct-to-consumer offerings, the lack of differentiation among OTT services, and the existing infrastructure and consumer relationships among larger players, according to Parks.

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While overall adoption and awareness of OTT video services as a category are high, awareness of any specific individual service is low, which will make it difficult for smaller services to match the scale, revenues, and marketing efforts of larger players, according to the research firm.

Parks Associates research shows nearly three in 10 OTT services in the United States are on Amazon’s Prime Video Channels aggregation platform, more than four times the rate from two years ago.

“Netflix can afford to license high-value content like ‘Seinfeld’ to supplement its original content, and Apple can buy commercial space during the Emmys and NFL games to promote its upcoming Apple TV+ service and its array of content and stars,” Nason said in a statement. “By contrast, smaller OTT services are having to harness the power of a partnership with an aggregator, bundling or content partner, or marketing and promotion partner to boost awareness of their brand and offerings.”

Additional findings include:

  • More than half (53%) of U.S. broadband households subscribe to at least one OTT service and a pay-TV service;
  • Nearly three-quarters subscribe to an OTT video service, up from 52% in 2014; and
  • Among the OTT video services available in the United States, approximately 90 have fewer than 50,000 subscribers and 72 have fewer than 20,000.

‘Aladdin’ Takes Over Redbox Disc Rentals, ‘Yesterday’ Tops On Demand

Disney’s live-action Aladdin remake took over the No. 1 spot on the Redbox kiosk disc rental chart the week ended Sept. 29. The Redbox disc rental chart tracks DVD and Blu-ray Disc rentals at the company’s more than 40,000 red kiosks.

The musical fantasy had debuted at No. 3 on the chart two weeks earlier before hitting the second spot in its second week.

Universal Pictures’ Yesterday debuted at No. 1 on the Redbox On Demand chart, which tracks digital transactions, including both electronic sellthrough and streaming rentals.

Yesterday, which earned $73 million at the domestic box office, is about an aspiring musician who, when he learns he is the only one who remembers the Beatles, begins re-introducing their songs to the world as his own. It debuted as the No. 6 disc rental.

The previous week’s top rental and digital title, Fox’ X-Men: Dark Phoenix, slid to No. 2 on both charts.

The No. 3 disc rental was Warner’s latest reboot of Shaft, which was No. 5 on the On Demand chart. It earned $21 million at U.S. theaters.

Lionsgate’s John Wick: Chapter 3 — Parabellum dropped to No. 4 on the rental chart and No. 3 on the On Demand chart.

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Another Lionsgate action thriller, Anna , debuted at No. 5 on the rental chart and No. 6 on the rental chart. It made $7.7 million at domestic theaters.

Fox’s remake of the horror film Child’s Play was No. 4 on the On Demand chart and No. 7 on the disc rental chart. It’s U.S. box office haul was $29 million.

Top DVD and Blu-ray Disc Rentals, Redbox Kiosks, Week Ended Sept. 29:

  1. Aladdin (2019) — Disney
  2. X-Men: Dark Phoenix — Fox
  3. Shaft (2019) — Warner
  4. John Wick: Chapter 3 — Parabellum — Lionsgate
  5. Anna — Lionsgate
  6. Yesterday — Universal
  7. Child’s Play (2019) — Fox
  8. Men In Black: International — Sony Pictures
  9. The Secret Life of Pets 2 — Universal
  10. Ma — Universal

Top Digital, Redbox On Demand, Week Ended Sept. 29:

  1. Yesterday — Universal
  2. X-Men: Dark Phoenix — Fox
  3. John Wick: Chapter 3 — Parabellum
  4. Child’s Play (2019) — Fox
  5. Shaft (2019) — Warner
  6. Anna — Lionsgate
  7. The Secret Life of Pets 2 — Universal
  8. Men In Black: International — Sony Pictures
  9. Ma — Universal
  10. The Hustle — MGM

Study: Android Bridging Apple iOS Divide

Apple’s operating system, iOS, had dominated mobile video market share for years due in large part to the success of the iPhone and iPad tablet.

That supremacy is now in question as longtime rival Android ratchets up market share, according to new data from Brightcove.

The Boston–based software company found that while the market share of videos played on Android phones and tablets topped 64% in the second quarter (ended June 30) — up from 56% a year ago, Apple iOS saw its share slip to 36% from 44%.

Indeed, consumption of video on Android phones reached 68% in Q2, up from 59% a year ago. Smartphone share for iOS declined to 32% from 41% 12 months earlier.

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Video plays on tablets remained flat, with iOS still dominant at 60% (down from 61% a year ago) and Android tablet plays at 40%, compared to 39% in Q2 2018.

Brightcove found viewers are more likely to watch a video to completion on a tablet (44% of the time) compared to a smartphone (35% of the time). They’re also slightly more likely to consume a video in its entirety on an iOS device than an Android device.

The average minutes spent watching video on iPhones and Android phones increased over the past year.

The report found that Android use increased 6% to 16.8 minutes, while iPhone use increased 20% to 22.3 minutes. Android maintains the lead in total video consumption at 62%.

With tablets, iOS maintains its advantage in average minutes watched and share of time watched overall. Both due to the continued strength of the iPad in the market compared to other tablets, according to the report.

iPad viewers watched an average of 23.8 minutes, up from 23.4 minutes a year ago. For Android tablets, the average was 21 minutes, slipping from 23.9 minutes a year earlier. iPad video consumption is double compared to Android tablets.

“Over the past several years, tablets have become a smaller segment of the [mobile video] market, although they still see significant use and shouldn’t be ignored,” read the report.

Report: 90% of Brits Stop at One or Two Streaming Video Services

New subscription streaming video services coming from Disney, Apple and WarnerMedia, in addition to Disney’s Hulu, all eye the United Kingdom as market growth opportunities.

But will consumers there even care?

New research from online ad exchange OpenX and The Harris Poll, found that nearly 90% of U.K. consumers limit their SVOD services to one or two, with just 12% having three or more.

Indeed, Netflix, Amazon Prime Video, BBC iPlayer, Now TV, ITV Player, and BritBox, among others, currently dominate the U.K. market. 

The report was commissioned to underscore the effectiveness of advertising in an evolving media landscape and changing consumer viewing habits.

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Regardless, television consumption continues to proliferate. The report found that consumers stream nearly seven hours of video per week. Millennials stream upwards of 10 hours weekly.

Older baby boomers, on the other hand, consume 16 hours of live TV weekly, while millennials stream 77% more than watch traditional TV.

“Whether they are watching TV, using a mobile device or browsing the web on a desktop computer, the way consumers are engaging with media is changing rapidly,” Gavin Stirrat, VP of partner services, EMEA at OpenX, said in a statement.

Analyst: Amazon Upping Prime Video Content Down Under

With Disney’s pending subscription streaming video service targeting Australia as a major market, Amazon has upped its Prime Video content availability in the region.

While Netflix remains the dominant over-the-top video player in Australia, new data from Ampere Analysis suggests Prime Video has been more aggressive with new content offerings in a SVOD market that will reach 65%  household penetration by the end of the year.

Prime Video increased its content hours by 84% from June 2018 through June 2019, compared to just 18% for Netflix.

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Ampere contends Netflix has produced fewer original productions (17) in Australia compared to other regions such as Mexico (36) and France (30).

“The Australian SVOD market is characterized by transition and opportunity, so it’s not surprising that Amazon has been concentrating efforts here,” Guy Bisson, director at Ampere Analysis, wrote in a note. “The new service from Disney will meet the demand for Children & Family and Action & Adventure content in particular, and by developing a family of streaming services, it will be a ‘super aggregator’”.

The London-based research firm says Aussie SVOD homes prefer indie/arthouse, horror, arts & culture, kids, romance and action compared to documentaries.

The latter among Amazon’s biggest content growth categories, in addition to action/adventure, crime/thrillers and reality.

Netflix continues to focus on romance, crime/thriller, comedy and drama, while local SVOD rival Stan targets kids and family.

“We believe [these trends] will continue, anticipating that the gap we’ve identified in the market for a premium streaming aggregator will be filled by partnerships, original productions and acquisitions,” Bisson wrote. “This is a great time to be a [streamer]in Australia.”


Merchandising: ‘Spider-Man’ Brings Exclusives Home

The big retailers trotted out their usual exclusive add-ons for the Oct. 1 Blu-ray release of Sony Pictures’ Spider-Man: Far From Home.

Best Buy offered the 4K Ultra HD Blu-ray of the superhero film in Steelbook packaging for $32.99.

Best Buy’s ‘Spider-Man: Far From Home’ 4K Steelbook

Target had the Blu-ray/DVD combo pack with a 48-page mini-book for $24.99.

Target’s ‘Spider-Man: Far From Home’ Blu-ray with mini-book

And Walmart packaged the Blu-ray combo pack with a Night Monkey retro action figure for $27.96.

Walmart’s ‘Spider-Man: Far From Home’ Blu-ray gift set with Night Monkey figure

Also at Walmart, fans looking to prepare for the 2020 debut of the new season of “Doctor Who could pick up the DVD of BBC Studios’ Doctor Who: The Complete Eleventh Series as a gift set with a collectible 3-inch figure of the Doctor for $29.96.

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‘Dora and the Lost City of Gold’ Travels to Digital Nov. 5, Disc Nov. 19 From Paramount

The family film Dora and the Lost City of Gold debuts on digital Nov. 5 and Blu-ray, DVD and on demand Nov. 19 from Paramount Home Entertainment.

Having spent most of her life exploring the jungle with her parents, nothing could prepare Dora (Isabela Moner) for her biggest challenge yet — high school. When her parents mysteriously disappear while searching for the Lost City of Gold, Dora must swing into action and lead a group of ill-equipped high schoolers on a wild quest to save them.

The film, based on the kids’ series “Dora the Explorer,” also stars Eugenio Derbez, Michael Peña, Eva Longoria, and Danny Trejo.

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Extras on the digital and Blu-ray releases include bloopers, deleted and extended scenes, a look at Isabela Moner’s transformation into Dora, and a tour of Dora’s Jungle House.