Reed Hastings - 10 Reasons why Internet TV will continue to gain popularity

After Netflix’s blockbuster earnings sent its stock soaring yet again earlier this week, Reed Hastings, the company’s CEO made a bold prediction: TV as we know it is coming to an end.  “As Internet TV grows from millions to billions, Netflix, HBO, and ESPN are leading the way,” Hastings wrote in an 11 page manifesto about Netflix’s future. “Internet TV will replace linear TV.”

He's obviously not sharing his perspective alone because numerous networks and stations have agreed with his views on the limitations of linear television and have launched their own apps. Although Hastings cites WatchESPN, HBO GO and the BBC iPlayer as leaders in this arena, we must also acknowledge the industry disrupters in streaming television technology; Aereo and the Dish's Hopper. Each of these also have huge potential to cause a dramatic shifts in the TV business as it heads into the future. Case in point at the opening of this year’s NAB when News Corp (FOX) COO Chase Carey threatened to take their programming off the broadcast airwaves and convert to cable channels. This was followed later by Univision and later CBS. While viewed largely as saber-rattling, the idea that the networks could be converted into cable channels gained attention in the television world because such a move would have wide-reaching implications for viewers and station owners. The point may be mute if Hastings predictions hold true and we move from broadcast and cable to an unbundled & streamed viewing environment.
Feel free to look at his letter to shareholders earlier this week and the 10 reasons he believes why Internet TV will continue to gain popularity, concluding that “over the coming decades and across the world, Internet TV will replace linear TV. Apps will replace channels, remote controls will disappear, and screens will proliferate”.

Let me share them with you here:

1. The Internet will get faster, more reliable and more available
2. Smart TV sales will increase and eventually every TV will have Wifi and apps
3. Smart TV adapters (Roku, AppleTV, etc.) will get less expensive and better
4. Tablet and smartphone viewing will increase
5. Tablets and smartphones will be used as touch interfaces for Internet TV
6. Internet TV apps will rapidly improve through competition and frequent updates
7. Streaming 4k video will happen long before linear TV supports 4k video
8. Internet video advertising will be personalized and relevant
9. TV Everywhere will provide a smooth economic transition for existing networks
10. New entrants like Netflix are innovating rapidly

Update 05/01 - A view from Michael Grotticelli at Broadcast Engineering - Netflix unveils plan to replace broadcast television

Amazon will soon enter your Living Room with their own OTT/STB

Online retail giant Amazon is developing a set-top box device that will stream video content from the web to your TVs, according to Bloomberg Businessweek. The STB device, which is due later this year, will provide access to Amazon’s expanding video services, which include Amazon Prime Instant Video, a service which provides access to more than 37,000 feature films and TV episodes for free. Users will also be able to buy/rent film and TV titles via Amazon Instant Video. Much like other streaming devices from Boxee, Roku and Apple, Amazon's box will also offer access to video services like Netflix and Hulu Plus, though Amazon's video offering will likely be heavily integrated into the device.
 
Some could say that Amazon is late to the OTT game, but the reasons for doing a set-top box are obvious, with its original content being the most popular on the platform since it launched. As Amazon finds its way to more niche shows that it can present exclusively, the reasons to grab an Amazon-branded device for your TV makes more sense. In the same way that Apple leverages each of its devices to sell new ones, Amazon is learning how it’s done. Jeff Bezos leads his company by taking smart, calculated steps all the while capitalizing on mistakes made by others. Kindle-TV anyone?

Netflix - Masters of "Backward Integration"

This past February Ted Sarandos, Netflix’s chief content officer, said during an interview with GQ magazine “the goal is to become HBO faster than HBO can become us.” The company, once the leader in the DVD mail order rental business has masterfully reengineered itself into the leader in online video streaming. A strategy that appears to be paying off when yesterday the company released its first quarter results and they were much better than analysts expected. Its stock soared 24% in after-hours trading to $215.40 after they announced that it had gained two million new U.S. customers in the first three months of 2013, a total of 29.2 million and a additional 1 million internationally.

At $7.99 per subscription, revenue nearly equaled the full price of the $100 million "House of Cards" series that debuted early this year. So did "House of Cards" lure 2 million more people, alone? That's doubtful and as Piper Jaffray analyst, Michael Olson, told the New York Times, ”It appears original programming may be driving better subscriber numbers. At the least, we believe original exclusive programming is reducing subscriber churn.” A very important factor in the subscription business and a strategy that helped them to edge out HBO in total subs for the first time. That said, Netflix has a ways to go before catching up worldwide. According to SNL Kagan, HBO has 114 million subscribers across the globe, a far cry from the 7.14 million Netflix has outside the U.S. Now... I must get back to my binge-viewing... popcorn anyone?

Time Warner Cable adds Live Programming to TV Everywhere App

Following the lead of rivals Comcast and DIRECTV, Time Warner Cable has announced that today it is adding live programming to its TWC TV app.  Currently content is only available to subscribers who own Apple tablets or smartphones but they will introduce the new programming to other platforms later this year. As of today the live channels include; the Big Ten Network, the Pac-12 Network, BBC America, beIN Sports,  FearNet, GMC and some local outlets.

 
Time Warner Cable COO Rob Marcus told analysts on an earnings call in January that Time Warner was working on signing deals with programmers that include rights to out-of-home viewing. He said the TWC TV app generated more than 750,000 unique users in December. Many of the largest programmers, including Walt Disney Co. and TWC sister company Turner Networks, have not made agreements yet which include content streaming however as content deals come up for renewal this cable-industry shift toward "TV Everywhere" will prevail as the MVPD's push the content providers for broader carriage deals. MORE - 04/17/13 Rapid TV News - Time Warner Cable adds out-of-home access to TV everywhere app