The U.S. Home Entertainment industry is experiencing tremendous change. New online models are coming on fast. Who are the new players? What are the revenue models? And where are the opportunities for doc producers?
We invited our valued, long-time colleague Al Cattabiani to share his year-end survey, including his three big Takeaways for the non-fiction sector.
By Al Cattabiani
Senior Biz Dev and Home Entertainment Consultant
- The U.S. home entertainment industry grew this year for the first time since 2008.
- 3Q sales rose to $3.9 billion from about $3.7 billion a year ago.
- Discs are still viable:
- They account for most of the $19B in annual home entertainment revenues.
- Blu-ray growth more-or-less offsets a continuing decline in DVD. Avatar helped convert consumers to the HD format.
- Studios love Blu-ray, since it is more profitable than other delivery systems. They support it with aggressive promotion and protective windows.
- Broadband delivery is experiencing frenetic activity, experimentation and success.
- “OTT” services bypass cable/satellite operators by going “over the top” of set-top boxes. They are generating meaningful revenue for program suppliers.
- Leaders like YouTube, Netflix, Hulu and Yahoo are investing in new channels and original programming.
- The financial models vary:
- The disc model is driven by individual transactions (sales or rentals).
- OTT revenues come from subscriptions, like Netflix, or from advertisers, like YouTube and Yahoo.
- VOD is showing real strength, too, having recently overtaken video-store rentals in total revenue.
OTT: KEY TRENDS
Cord-cutting & Cord-shaving
The fastest changes are occurring in OTT delivery.
- “Cord cutting” i.e. cancelling cable/satellite subscriptions in favor of online delivery, is a source of industry anxiety.
- The U.S. pay TV industry lost nearly 200,000 subscribers in 2Q’11.
- The six largest U.S. cable and satellite providers lost 580,000+/- customers in 2Q’11, the biggest decline ever.
- Most cord-cutting, however, seems to be driven by a weak economy, with subscriber losses weighed heavily amongst lower income subscribers.
- “Cord shaving” i.e. eliminating premium channels through OTT, may become the more prevalent trend.
- The bottom line is that the cable/satellite industry is mature, and factual cable channels like Discovery, History and Nat Geo can no longer count on an expanding subscriber base to increase their viewing audiences.
- Cable/satellite providers – and premium networks – are fighting back with various “TV Anywhere” solutions that allow their paying customers to view programs on any device.
- HBO Go is a particularly well-executed service that offers HBO Documentaries.
- There’s a similar push on the disc side: UltraViolet enables DVD/Blu-ray buyers to access their purchases via a digital “locker” in the Cloud, another example of a traditional provider adapting new technology to keep its customers.
- Google’s YouTube remains by far the most popular video site, with 21 billion videos shared in October 2011.
- This year, YouTube made a major commitment to professional production, which advertisers prefer to user-generated content (UGC).
- It recently allocated $100M to underwrite 100 new channels.
- Many are from mainstream providers like Lionsgate, Freemantle and The Wall Street Journal.
- Others are from online creators like Felicia Day of The Guild and Internet-friendly stars like Rainn Wilson and Ashton Kutcher.
- Netflix now counts 23.8 million U.S. subscribers, more than cable operator Comcast’s 22.5 million.
- In contrast to its DVD business, with its huge pipeline of new releases and vast catalog, Netflix’s streaming business focuses on exclusive, original properties.
- For example, earlier this year Netflix committed $100+/- million for House of Cards, an original, 26 episode, drama series featuring Kevin Spacey.
- Netflix recently greenlit Lilyhammer, a Norwegian- produced 8 x 45” crime series featuring Sopranos’ Steven Van Zandt. The budget is $6+/- million.
- These original productions are high-profile and high-cost to compete directly with commercial and pay TV.
- Interestingly, 40% of Netflix subscribers report a decline in their TV viewing.
- Its first original efforts were short-form, low-cost series like The Morning After, a daily wrap-up of TV news.
- Hulu is now underwriting full-length unscripted series like Morgan Spurlock’s, A Day in the Life.
- Because Hulu’s viewers are accustomed to TV-quality and -length programming, these upcoming originals will likely be backed by cable-scaled production budgets.
- Yahoo’s massive home-page traffic provides a launch pad for its video content.
- It focuses on short-form, less expensive originals.
- Yahoo Studios had all 10 of the top 10 most-watched online video series in Aug ‘11, according to comScore.
- Primetime in No Time is the all-time leader, exceeding over 500 million monthly streams.
- Seven new web series were launched in Oct ‘11, all targeting female audiences.
- Yahoo!Screen, a Hulu-style interface, will be the home for all Yahoo video content.
APPLE / MICROSOFT
- No discussion of OTT would be complete without mentioning Apple and Microsoft.
- The Apple rumor mill always operates at high speed. Much of the recent chatter has centered on a next generation of TV hardware, possibly powered by Siri voice-activation instead of a traditional remote.
- For its part, Microsoft recently made deals with 30+ suppliers and MSOs (including HBO, Fios and Bravo) for its Xbox LIVE platform.
- Facebook is a distant 2nd to YouTube in videos viewed
- comScore reports that 346 million videos were viewed on Facebook in October 2011.
- With more than 800 million active users, Facebook and is expected to emerge soon as a power in online video.
TAKEAWAYS FOR DOCUMENTARIANS
1. The good news is that the fluid OTT landscape is opening up new opportunities for a next generation of producers, and at a time when doc slots are shrinking on broadcast and cable channels.
- Much of the content is non-fiction.
- Most of the OTT platforms have year-round development cycles and reasonably streamlined decision-making processes.
- But there’s furious competition for finite “green lights.”
- And budgets are generally smaller than for traditional television.
2. Looking at non-fiction categories, there are a few trends worth noting:
- There is an emerging space for documentary “auteurs.” For example, Morgan Spurlock enjoys deals with both Yahoo and Hulu.
- Lifestyle programming works well in OTT, since it fits nicely – by topic and category – into search. 5min.com (acquired last year by AOL) and Howcast have built real businesses based on this content.
- Reality programming is a different matter. Most consumers discover these character-driven series on television, with OTT providing “catch up” viewing.
3. Search is vital, so pick a good title.
- Remember the search engines: Consumers often discover online programming via search. And organic search is far more powerful than paid search.
- A strong, clear title will really help your cause!
Next Week: Social TV. And ‘The New WWW’ I.e. “Whatever! Whenever! Wherever!”
Our intrepid reporter David Rosen attends three big New York conferences that address responses to the disruptive influence of ‘social television’ on the commercial TV business.
About Al Cattabiani
Al is a serial entrepreneur and advisor focused on content and distribution. He is probably best known as co-founder and CEO of Wellspring Media, the indie-film label he sold several years ago. Since then, he has helped launch several young companies, like Toronto-based iThentic.com, which produces and distributes original web series. His latest startup is TheRuckus.com, a comedy venture featuring JB Smoove (“Curb Your Enthusiasm”), where he is one of several partners. Al also consults — typically on strategy and biz dev — for companies, foundations and individual artists.
History Makers International – A Summit for Informative Media
January 25-27, 2012
Millennium Broadway Hotel, New York City
History Makers International attracts the world’s leading producers, development executives, researchers, archive houses and distributors from over 20 different countries in one place each year.
Newly announced sessions at this year’s summit illustrate the diverse concerns of program makers and their rapidly changing World.
The creators of George Harrison, Living in a Material World have agreed to show us how they combined their incredible archive and home movies with remixes of original recordings of Beattles’ songs and Harrison’s later pieces, and intimate and candid interviews, to make a powerful and fresh story.
Covering the Arab World: A Master Class With Al Jazeera -Al Jazeera has managed to create a unique on the ground approach, which has resulted in an amazing body of tough and authentic programs covering all the front lines that have been in the headlines.
The first recipient of our Outstanding Achievement Award for Archive Preservation and Restoration will be presented to Serge Bromberg of Lobster Films, Paris. As well as receiving the Award, Serge will present his highly entertaining Archive Cabaret, including a presentation of George Melies’ 1902 colour classic A Trip to the Moon.
In the year of the Obama election contest, we will be featuring the largest archive of African American History, Chicago based, The HistoryMakers. The founder and Executive Director Julieanna Richardson will be conducting a tour of this unique collection.
The Development Executives for Feature Documentaries for AE Network’s History, Molly Thompson and HBO’s Nancy Abraham will join Simon Chinn, producer of Man on Wire and Project Nim to discuss the art of successfully producing full length documentaries for Television and Cinema.
These join our already announced sessions on NHK and the Tsunami, the new AE Networks’ H2 Channel, finding the characters in reality series “Swamp People” and “American Restoration” and Opportunities for Games Integration and Interactive Storytelling to make this one of the richest mix of experiences ever at History Makers International…
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