When Hulu was up for sale if looked like the studios wanted out of the direct to consumer distribution business, and were going to encourage lots of distributors to generate competition and minimize their leverage. But deciding not selling Hulu changes my view.

I would guess that Hollywood fears that Amazon, Google and Apple will become the only distributors and they have a lot of leverage – better to keep Hulu and their own route to consumers.

In the end Hollywood get a good additional revenue stream from Netflix, there subscriber base can not be ignored, and as an independent player they help protect them against the big three interent players. It is interesting that I don’t include Yahoo or MS on that list.

Of course the other key player in all this is Walmart.

BUT: Netflix is in a much better position than all the other players listed for online streaming (Apple, Amazon, Google or Hulu) and is in pole position to even outpace the studio’s attempts at streaming.
Apple: while incredibly successful with iTunes in the music industry the movie and TV-series attempts of Apple are woefully inadequate and way too expensive. Unless, Apple can somehow leapfrog Netflix and get tens of millions of subscribers for a streaming service, Apple just cannot compete with Netflix for streaming video … and maybe doesn’t even need to. Remember: Netflix was the “killer app” for the Apple TV.
Amazon: while pursuing a very clever strategy on the content acquisition side, Amazon’s strategy to actually get the content in front of consumers should be horrifying to shareholders. I invite you to try to play an online video on Amazon’s website … THAT is how badly the streaming video part is designed. And forget streaming videos to any other (non computer) devices.
Google: while Google has an incredibly powerful tool in YouTube and its automated advertising system for video, few people even know that Youtube has professional content (that wasn’t pirated). Furthermore, Youtube is not designed to be consumed in any other way than sporadic and spontaneous consumtion, eg watching individual videos. Forget about movies in the android market … how many have used that feature? 5 people?
Hulu: listing Hulu as better positioned than Netflix must be some sick joke. The company has barely 1 million subs (vs Netflix’s 25 million) and the content selection is a joke. Until Hulu gets rid of all that stupid clip content (that absolutely nobody cares about) they will continue losing peoples’ interest. The only reason somebody would be interested in buying the company at the moment is the sweetheart deals that Hulu’s owners gave to Hulu.

At the same time Netflix appears to be doing everything they can to contain prices while at the same time getting new/more content, raising revenues and expanding internationally.
Starz: Netflix supposedly offered $250M per year for non-exclusive Starz content, while Starz wanted $300M. When Netflix didn’t cave to the higher demand, Starz walked. I find it curious that nobody (stockholders or analysts) is holding Starz accountable for walking away from that amount of money. As long as Starz gets the same (or only a little less) from cable co’s and can build out its own streaming offering (a la HBO Go), then Starz’ decision was STUPID.
Netflix integration: please name ONE smartphone, game console, internet-enabled DVD/BR-player or TV, non cable-co STB, etc that does not have Netflix integration. For some of those devices, Netflix is really the only reason for consumers to buy the device (eg Roku or Apple TV).
Netflix pricing: even the cheapest cable bill is probably in the neighborhood of $40+internet. Netflix is still A LOT cheaper than that. Don’t believe that? Compare Netflix with buying a DVD … eg Mad Men, Walking Dead, etc. Yes, Netflix lost some customer good-will by raising prices and acting like jerks about it. Yes, the way how they raised prices was STUPID. Why didn’t they simply raise prices for new customers and bring pricing for old customers up over time, all the while blaming content providers for raising prices. That would have resulted in Netflix looking like the good guys vs the bad studios. But at the same time, Netflix probably realized that growth in the US was probably severely limited at that point. How many more customers could Netflix realistically have reached? Based on the latest published sub estimates, subs continue to grow and revenues should explode for Netflix. At the same time, Netflix is doing the smartest thing they could do: expand internationally. Even with the current pricing, especially for streaming only, Netflix should steamroll most foreign competitors, provided Netflix can aggregate sufficient content.

At this point in time, there is no other viable contender for the streaming video crown, despite the studios’ best attempts to make netflix stumble. And to be honest … Netflix might be their only savior. Why should customers fuck around with something stupid like Ultraviolet, when it is easier to download the content illegally. Netflix is the only viable alternative at the moment that combines ease of use with reliability. (I would love to see a study comparing piracy for content available on Netflix with content not available on Netflix.)

Twitter: @filmfinance

Much of the debate about AppleTV assumes that the trend is for the televsion set to become smarter. But one viewpoint is that it is becoming dumber. Why does Apple need to venture into the low margin world of the television set, when all they really need to take over the medium is to have Airplay built into the televisions. The really big news would be if Apple had Airplay built into every model of Samsung and Sony for the Christmas market.

My view is we are seeing “second screen inversion” : http://bit.ly/r7ooot where consumers are moving to drive their television experience from their handheld devices (tablets and smartphones). I don’t need a TV that can access any and all online content sources, I need a TV that can display what I’m seeing on my phone.

apple rumors, Apple TV, AppleVision, IOS, OSX, Steve Jobs
As the Apple Turns: AppleVision 2012
In Apple Rumors on August 3, 2011 at 5:22 am

As the Apple Turns

AppleVision 2012

Apple (NASDAQ:AAPL) is planning to do TV. You can be certain there will be a recognizable difference from what we see at the local Best Buy or Sears. My flies on the wall have some interesting reports. For starters great sound will abound using technology “inspired” by Bose VideoWave. You should really listen to the surround effect with no visible speakers. OK, we have heard that rumor before. Now, moving on, what state of the art TV does not offer 3D? But which system? Word has it Apple will use a glasses free display system much like that previewed at recent trade shows with a second 3D mode (for more pop, images coming out at you) using polarized glasses. Now, the first edition will be standard 1080P but down the road higher resolution 2K monitors (think retina writ large) with double the resolution on each axis (2840 x 2160). Until standards catch up for authoring, look for interpolated data points to make a higher quality image. MacLife has some other insights into MS Kinect (NASDAQ:MSFT) like control functions. My flies have not made into that room yet. And you thought you wanted a Sony.

At this point we know that connectivity rules at Apple. A 3D TV needs contents, all the better if you created it yourself. Arise the iPhone 6 (maybe 7) with dual rear cameras for high quality 3D imaging and a screen to match. Still and high definition 3D video in your pocket! Fuji (PINK:FUJIY) already makes a similar camera. Apple has always been about doing technology right, not first. With the iCloud it is also instantly on your TV and computer as well. Tele-presence is nearly here! That should be good for another hundred million iPhones. For people with a good HDTV not wanting to spend the estimated $2-3000 for a complete new AppleVision TV, an upgraded Apple TV box will give the delivery and programing options without the new technology screen for about the existing $99.

With such cool hardware do you think Steve Jobs might have some software to go with it? Maybe make a few waves. Like maybe turning the entire TV delivery system on its ear! Currently you get your TV either over the air (yes, some still do that) via cable, over phone wires, fiber optic, satellite or microwave. In all those systems all hundreds of channels are brought down to your tuner or box, where you select a channel for viewing. Instead, what if the big data center serves up just the one show you want to watch with every other show just a request away? All you need is an internet connection that can keep up. With archives of past programs the viewer is in charge like never before. Who needs Tivo (NASDAQ:TIVO) when every show from the last year is a click away. Advertisers will be happy because the commercials are still attached. The system could even prevent you from fast forwarding through the paid messages. You are an hour late getting home and missed your favorite show, no problem. All that needs to happen is for Apple to negotiate carriage agreements with the providers of contents; cable and broadcast networks in particular. The understanding is that Steve has some pull with Disney (NYSE:DIS) (ABC, ESPN, various Disney channels) so that is a strong incentives for the other providers to join in. If a new pricing model is implemented and you are not required to buy HSN en Espanol to get the SyFy Channel (or vice versa) there may be some real economic incentive to switch even if each channel or individual show costs more. A la carte pricing, that is sure to send shivers down the spine of the execs at cable and satellite.

For anyone doing the math, figure a $2500 AppleVision TV at 1 million units sold equals an additional gross of $2.5 billion and could rise to ten times that or more. An additional ten million iPhones are worth about another $5-6 billion and cable service at $50 a month / $600 per year is $600 million per million subscribers per year. Raking in the cash this way, Steve could acquire the US Treasury in a hostile takeover. Cash dividends anyone?

Gee, that seems to leave some major players out in the rain. Will the fate of the music industry, bookstores, newspapers et al now befall cable and satellite? What about Netflix (NASDAQ:NFLX)? Is the Hulu deal a stalking horse for something much larger? Will Apple vend ALL of our media through multiple sales channels and have us thank them for it? Is Steve, with his health issues forcing him to confront his mortality actively working to complete the framework of his legacy? Tune in next spring, 2012, for the next exciting chapter of “As the Apple Turns”. Please don’t swat my flies, they are the latest micro-technology.

T2Z