Comcast Pledges Net Neutrality Support as Government Safeguards Expire

Comcast reiterated support for so-called net neutrality provisions the same day (June 11) the Federal Communication Commission’s “Restoring Internet Freedom Order” took effect, rolling back many safeguards intended to mandate a level playing field on the Internet.

In a blog post, Dave Watson, CEO of Comcast Cable, said the nation’s largest cable pay-TV operator would not change how it handles third-party streaming services on its broadband network.

“We still don’t and won’t block, throttle or discriminate against lawful content,” Watson wrote. “We’re still not creating fast lanes. We still don’t have plans to enter into any so-called paid prioritization agreements.”

Yet, throttling is precisely what Netflix co-founder and CEO Reed Hastings accused Comcast and other Internet Service Providers of doing in 2014. Hastings said Netflix was forced into paying “a toll” to “some big ISPs” so its subscribers wouldn’t be subjected to buffering and pixilated images.

“The essence of net neutrality is that ISPs such as AT&T and Comcast don’t restrict, influence, or otherwise meddle with the choices consumers make,” said Hastings at the time. “The traditional form of net neutrality which was recently overturned by a Verizon lawsuit is important, but insufficient. This weak [pre- 2015] net neutrality isn’t enough to protect an open, competitive internet; a stronger form of net neutrality is required.”

Hastings’ grumblings reached President Obama, who, together with former FCC chairman Tom Wheeler in 2015 helped push through tougher safeguards for streaming services – much to the chagrin of ISPs.

Under new FCC chairman Ajit Pai – a former cable lobbyist and Obama appointee – the agency did away with what Pai considered “unnecessary, heavy-handed regulations” imposed by Wheeler that characterized the Internet as a utility and regulated under the Telecommunications Act of 1934.

Watson contends the Internet can be better safeguarded under the same regulatory-light (i.e. scant government oversight) approach that helped create it.

“We continue to believe the best way to ensure lasting net neutrality rules that protect consumers and promote investment is for Congress to enact legislation,” he wrote.

Netflix Greenlights ’13 Reasons Why’ Third Season Despite Parents Group Criticism

Netflix has approved a third season of its controversial teen original drama, “13 Reasons Why,” despite pushback from a parents group calling on Netflix to drop the show.

The series is about fictional teenage girl Hannah Baker (Katherine Langford) explaining posthumously why she committed suicide.

The SVOD behemoth announced the third season June 6, the same day of its annual shareholder meeting. CEO and co-founder Reed Hastings said “13 Reasons Why” has been “enormously popular and successful” among its subscribers, without providing exact numbers.

Nielsen claimed the recent launch of the show’s second season generated 2.6 million viewers. Netflix does not officially reveal viewership data of its original programming.

Hastings admitted the show is controversial, which is what he has long advocated Netflix must do to separate itself in the cluttered media landscape.

“But nobody has to watch it,” Hastings told shareholders.

Which is exactly what the Parents Television Council, a Los Angeles-based conservative Christian advocacy group founded in 1995, hopes to accomplish through an online petition launched last month.

Claiming to want to protect “young minds from dangerous streaming content,” the group – in the petition – is asking Netflix to immediately cease streaming season two of “13 Reasons Why,” in addition to implementing a pricing structure that enables Netflix subs to opt-out of streaming “sexually explicit, graphically violent, and harshly profane programming.”

“Netflix has delivered a ticking time bomb to teens and children who watch ‘13 Reasons Why.’ The content and thematic elements of the second season are even worse than we expected,” Tim Winter, president of PTC, said in a statement. “We would have liked to have 13 reasons for hope and redemption following the graphic suicide of the lead female teen character, but rather than providing a path forward, the season only provides cause for despondency.”

The PTC itself has long courted its own controversy, with critics contending the group is doing nothing more than promoting censorship. Indeed, the FCC reportedly disclosed in 2004 that the majority of its content complaints originated from the PTC.

Netflix Ranked No. 2 TV Network in Popularity

Netflix is ranked the second most-popular TV network behind Discovery Channel, according to new data from YouGov.

In a survey of more than 5,500 adults through May 28, Redwood City, Calif.-based YouGov found 76% of respondents viewed Netflix favorably — about the same as Discovery Channel.

Other channels in the Top 10 included National Geographic Channels, History, The Weather Channel, Animal Planet, PBS, AMC Networks, A&E Networks and FX. TNT, HBO, ABC, CBS ranked 12th-15th, respectively.

The findings come as support for the subscription streaming video pioneer has fallen 16% among Republicans, while increasing 15% among Democrats.

While Netflix has largely avoided politics, it’s two most prominent executives — Reed Hastings and Ted Sarandos — are Democrats. Sarandos’ wife Nicole was U.S. Ambassador to the Bahamas during the Obama Administration. The couple gave more than $500,000 to the Obama presidential campaign in 2012.

The Sarandos were also largely responsible for convincing Barack Obama and his wife Michelle to recently ink a production deal with the SVOD behemoth.

Earlier this year, Netflix signed former Obama national security advisor Susan Rice to its board of directors.

Netflix cut its teeth in the political talk show genre with Chelsea Chandler’s “Chelsea,” which streamed for two years through 2017. It now hosts a periodic talk show format series with David Letterman, whose first guest was Barack Obama.

Last month, it started streaming “The Break with Michelle Wolf,” a late-night talk show starring the comic who infamously savaged the press and White House, including press secretary Sarah Huckabee Sanders, during the White House Correspondents Dinner in April.

That said, only 5% of YouGov respondents viewed Netflix negatively, with 17% neutral and 2% claiming to have never heard of Netflix.

Speaking at the New York Paley Center for Media May 29, Sarandos responded to allegations Netflix skews toward the left politically.

“This is not The Obama Network,” said Sarandos, as reported by Variety. “There’s no political slant to the programming.”

 

Despite the Hype, Out-of-Home Video Consumption Remains Small

NEWS ANALYSIS — Pay-TV distributors and over-the-top video platforms have long pushed for mobile video consumption in an effort to expand viewership and market size.

New data from IHS Markit suggests out-of-home video consumption is still a minor activity — even among Internet users between the ages of 17 and 24 who seemingly can’t exist without their smartphones.

More than 50% of Internet users surveyed in the United States, United Kingdom, Brazil, Japan and Germany watched video content out of their homes at least once a month, according to the study conducted in the first quarter of 2018.

Of those viewers, nearly 17% did so on a daily basis. Among the previously-mentioned younger demo, 80% viewed video content outside the home at least once a month, with a quarter doing so on a daily basis.

That also means the vast majority of respondents DO NOT view video outside the home or on portable devices.

IHS correctly contends pay-TV operators are expanding distribution of their multiscreen services across devices and bringing third-party apps onto their own set-top boxes. The latter is true only for in-home consumption.

“In the U.K., Virgin Media customers are twice as likely to have a Netflix subscription than Sky TV customers, highlighting the benefits of content discovery integration,” said Fateha Begum, associate director for connected devices and media consumption at IHS Markit.

Indeed, more than half of survey respondents said watching video on their mobile devices was “somewhat or very important,” rising to 75% among those aged 17 to 34.

Yet, that same demo also said they only used multiscreen services on a smartphone or tablet “at least once a month,” compared with 50% among those aged 35 to 54.

“At least once a month” does not portend a trend or paradigm shift in video consumption.

YouTube, Netflix and Amazon were the most popular video platforms in the five countries surveyed — beating pay-TV and video-on-demand services.

In the Netflix earnings call in April, CEO and co-founder Reed Hastings said apps represented the new TV network.

“All apps on your phone will have some form of video, or most apps will,” Hastings said. “And so, you just see a very wide spread of entertainment options, some of which are movies and TV shows, some are more interactive.”

All true, except accessing that video on mobile devices takes data. Lots of data. And data costs money — a challenge to younger demos.

Indeed, IHS said the popularity of these platforms varied according to geography. For example, YouTube was the most popular service in Japan, with 84% reporting it as their first choice when looking for something to watch, while Sky TV in the U.K. was the only pay-TV operator to maintain the top position in any country surveyed, with 30% of respondents claiming it their first choice.

“The extensive reach of online video platforms, covering customers from across the various pay TV platforms and devices, threatens pay-TV service viewership and value perceptions,” said Begum. “Bringing online video services to set-top boxes allow pay-TV operators to maintain and control their customer relationships and experiences, while presenting their platforms as the best way to find and view the widest variety of content.”

Again true, but not outside the home.

Netflix Enters Pact with Spain’s Largest Telecom

As expected, Netflix and Telefónica, Spain’s largest telecom, have inked an agreement enabling the SVOD pioneer to be embedded in the latter’s Movistar over-the-top video service in Europe and Latin America.

The first launches in several countries will be announced in the next few weeks and further launches will happen throughout the region in 2018.

The agreement is part of Telefónica’s plan to collaborate with top media and distribution companies around the world, according to the telecom’s president Álvarez-Pallete.

“We want to offer our customers the most compelling video offering possible, whether it’s our own content or third party providers,” he said. “The partnership with Netflix will significantly enhance our existing multichannel video platforms.”

Similar to other direct-access deals between pay-TV operators and Netflix, Telefónica embeds the SVOD app on its platform affording members with a Netflix account easier access to programming.

“Over the next several years, our partnership with Telefónica will benefit millions of consumers who will be able to easily access their favorite Netflix shows, documentaries, stand-ups, kids content and movies across a range of Telefónica platforms,” said Reed Hastings, co-founder and CEO of Netflix. “Making Netflix available on Telefónica’s familiar, easy-to-use TV and video platforms enables consumers to watch all the content they love in one place.”

Netflix Crushes Q1 New Subscriber Estimates

Netflix April 16 said it added record 7.4 million new subscribers in the first quarter (ended March 31) – topping Wall Street estimates of 6.5 million. The service added 5.4 million subs internationally, compared to 1.96 million (1.45 million forecast) in the United States.

International operations now account for 50% of revenue and 55% of memberships. Netflix has 125 million members globally. Netflix added 1.98 million domestically in the fourth quarter, underscoring the service’s maturity in the U.S.

Financially, the SVOD service generated $290 million net income on revenue of more than $3.7 billion. That compared to net income of $178 million and revenue of $2.63 billion during the previous-year period.

Netflix generated $56.3 million contribution income from its legacy by-mail disc rental unit. Revenue topped $98.7 million, compared to revenue of $120.3 million during the previous-year period. The business ended the period with more than 3.1 million subscribers, down from 3.94 million subs last year.

In the shareholder letter, CEO Reed Hastings and CFO David Wells reiterated Netflix would spend upwards of $8 billion on original content in 2018.

Scripted original series debuts in Q1 included coming of age story The End of the F***ing World and sci-fi thriller Altered Carbon as well as returning seasons of “Marvel’s Jessica Jones,” “Grace and Frankie,Santa Clarita Diet” and “A Series of Unfortunate Events.”

“Last year, we expanded our efforts in original programming to unscripted shows across several genres. Our output in this area is now comparable to similarly-focused domestic cable networks,” Hastings and Wells wrote.

The executives said the surprise launch of sci-fi movie, The Cloverfield Paradox on Super Bowl Sunday underscored a “tight” coordination between original film, product, marketing and PR teams.

“The event showcased how a big branded film can be marketed and delivered to consumers instantaneously across the globe without a wait for the theatrical window,” Hastings and Wells wrote.

Netflix continues to generate controversy releasing original feature films worldwide concurrent with any theatrical distribution. The service is skipping the Cannes Film Festival competition since its movies in France must first be screened theatrically for 36 months.

“We would never want to do that to our French members,” wrote the executives.

Hastings and Wells heralded Netflix’s first Oscar win for bike racing doping documentary Icarus.

“We’re thrilled when the creators with whom we partner are recognized for their exceptional work,” they wrote.

Netflix Turns 21, Co-Founder Reed Hastings Talks Facebook

Netflix quietly turned 21 years old on April 14, and co-founder/CEO Reed Hastings was on a stage in Vancouver, BC, discussing lessons learned from the recent data breach scandal at Facebook.

During a Q&A on the last day of the Technology, Entertainment, Design (TED) conference, Hastings, who has been on Facebook’s board of directors since 2011, attempted to downplay recent revelations that the personal data of 87 million Facebook users had been compromised by a third party for profit.

Comparing Facebook and similar interrupting technologies to the rising popularity of the television in the United States in the 1960s, Hastings said Facebook remains sometimes misunderstood, on a steep learning curve, prone to making occasional mistakes.

“[TV] was [once] called a vast wasteland. [It] was going to rock the minds of everybody. And it turns out everybody’s minds were fine. There were some adjustments,” said Hastings, as reported by Recode.

Mistake or not, the fact millions of Facebook users’ data was used by a foreign company to impact the 2016 presidential election, found apologetic founder/CEO Mark Zuckerberg in Washington, D.C., fielding questions from lawmakers – many of whom appeared unaware how the social media platform worked.

“How do you sustain a business model in which users don’t pay for your service?” asked Utah Senator Orrin Hatch.

“Senator, we run ads,” responded Zuckerberg after a pause.

Hatch later tweeted that he knew how Facebook’s business model worked and that the real issue remained transparency in the Internet age.

Netflix’s Hastings, who is up for re-election to Facebook’s board, appeared to have Hatch’s sentiment in mind. He said Facebook deserved to be criticized and that senior management was taking the issue of protecting user data seriously.

“So, I think of it as all new technologies have pros and cons. And in social [media] we’re just figuring that out,” Hastings said.

Separately, the CEO said Netflix’s early success revolved around willfully launching a business model with built-in obsolescence and using that sand clock to enhance its revolutionary online by-mail disc rental platform into a streaming video pioneer.

“We were born on DVD and we knew that would be temporary,” Hastings said. “No one thought we’d be mailing discs for the next 100 years.”

Netflix April 16 reports first quarter (ended March 31) fiscal results after the markets close.

 

 

Amazon Prime Video Viewership Revealed

Amazon Prime Video reportedly generated 26 million initial viewers for original programs in early 2017, including 5 million viewers for top shows such as “The Man in the High Castle,” “Transparent,” “Mozart in the Jungle,” and ‘The Grand Tour.”

Subscription streaming video heavyweights Netflix and Amazon Prime Video have staunchly refused to reveal viewership (or ratings) for their ad-free original programs, citing lack of required advertiser justification. It’s a stance that irritates ad-supported TV broadcasters beholden to live-or-die ratings.

Now, internal documents obtained by Reuters reveal in part why original programing is driving Netflix and Amazon to spend $8 billion and $5 billion, respectively, on programing in 2018: New subscribers. It’s growth that drives revenue – and that’s what Wall Street loves.

With Prime Video a free component of Amazon’s $99 annual Prime free two-day shipping membership program, original episodic programs and movies drive subscriber growth, which in turn drives growth of other items on Amazon – including movies.

Unlike Netflix, which reveals (if not champions) subscriber data, Amazon refuses to disclose Prime membership data, which was estimated to top 54 million in the United States at the end of 2015, according to a Consumer Intelligence Research Partners survey.

In a separate 2016 survey from “CutCableToday” of 380 Prime members, 40% said they rented or bought movies not available on Prime Video from Amazon Instant Video on a monthly basis. The survey also found that 20% of Prime members don’t use Prime Video.

“When we win a Golden Globe, it helps us sell more shoes,” Amazon founder/CEO Jeff Bezos told a 2016 tech confab. It’s an outlook CFO Brian Olsavsky drones on monotonously in Amazon’s conference calls.

Reuters reported that “High Castle,” which is an adaption of Philip Dick’s 1962 alternate historical fiction showcasing Axis powers Germany, Japan and Italy having won World War II, cost $72 million in first season production and marketing.

It reportedly generated 1.15 million new Prime subscribers, or about $63 in subscriber acquisition costs – 36% below the annual Prime membership fee.

Netflix Said to be in Talks with Obamas for Original Programs

Netflix is reportedly in discussions with former President Barack Obama and his wife Michelle for a series of original shows aimed at inspiring people.

While no agreements have been signed, The New York Times reports the content – unlike late night TV talk shows – would not be political or platforms aimed at criticizing President Trump or conservatives.

Since leaving the White House, Obama has kept a relatively low profile despite having more than 100 million followers on Twitter and 55 million “likes” of his Facebook page. He and Michelle were reportedly paid more than $60 million for their pending memoirs.

Obama recently appeared on the first episode of David Letterman’s original talk show on Netflix, which has more than 117 million subscribers – including 53 million domestically.

“If you watch Fox News, you are living on a different planet than you are if you are listening to NPR,” Obama told Letterman.

Netflix co-founder Reed Hastings and CCO Ted Sarandos have strong ties to Obama, with Hastings often attending state dinners and Sarandos’ wife, Nicole Avant, serving as the U.S. Ambassador to the Bahamas during the Obama presidency.

Indeed, Hastings reportedly offered to resign earlier this year from the Facebook board over his disagreement with board member Peter Thiel and the latter’s support for Trump. The idea was shot down by Facebook founder/CEO Mark Zuckerberg.

Netflix Adds International Expertise to Board

As Netflix expands globally, so too does its board of directors.

The subscription streaming video pioneer added Rodolphe Belmer, CEO of Spanish satellite TV operator Eutelsat, to its board, bringing the total number of directors to 10.

“We look forward to benefiting from Rodolphe’s wisdom, experience and global perspective as we continue to grow Netflix all over the world,” CEO Reed Hastings said in a statement.

In addition to Hastings and Belmer, Netflix’s board includes Zillow chairman Richard Barton, former Ask Jeeves chairman A. George Battle, venture capitalists Timothy Haley and Jay Hoag, former chief marketing officer Leslie Kilgore, former Pixar executive Ann Mather, Microsoft chief legal officer Brad Smith and former Disney executive Anne Sweeney.

Belmer previously held several roles at French-based Canal + Group, which he joined in 2001, most recently serving as its CEO from 2012 to 2015.

Belmer began his career in the marketing department of Procter & Gamble France before joining McKinsey in 1998. He is a graduate of France’s HEC business school.