Pushing Pause on SVOD?
Time Warner CEO Jeffrey Bewkes has seen the meteoric rise of subscription streaming (i.e. Netflix) — and he’s not happy about it. Neither are a growing number of media companies whose pay-TV assets are feeling the heat from SVOD.
Facing greater-than-expected advertising and subscriber quarterly declines at Time Warner’s networks, Bewkes Nov. 4 said the media giant will look to hold back content licensing rights to SVOD while accelerating the rollout of proprietary digital platforms, including direct-to-consumer.
Time Warner properties include Warner Bros., HBO and Turner.
Speaking on the company’s quarterly fiscal call, Bewkes — a former critic of Netflix’s impact on TV syndication — appeared to revisit that skepticism, saying the company’s brands will look to retain syndication rights to programming (while increasing investment in proprietary digital infrastructure and content spend), rather than seeking short-term gains by licensing content to Netflix.
Indeed, a Nov. 12 Wall Street Journal report said Time Warner is mulling a 25% ownership stake in Netflix-competitor Hulu for a reported $5 billion.
Time Warner’s over-the-top video ventures include HBO Now, CNN’s pending news-style “Great Big Story,” Turner Broadcasting Station’s new digital studio “Super Deluxe” and investments in iStream Planet.
“We are evaluating whether to retain our rights for a longer period of time, and forgo or delay certain content licensing,” Bewkes said. “This would effectively push the SVOD window for content on our networks to a multiyear period, more consistent with traditional syndication.”
Viacom also is reassessing its license agreements with Netflix, opting instead for distribution channels based on the programming (TV, movies, kids), including specific shows.
“We have seen growth in our presence in Hulu Plus [which includes incremental ad revenue] and a diminishment of our presence on Netflix. And that goes for both our networks here at Viacom and Epix,” said Philippe Dauman, president and CEO of Viacom. “We look at not just the monetary value, but the promotional value of having shows at different points in the cycle on SVOD.”
Media executives say SVOD drives smaller subscription revenue than pay-TV and features largely ad-free content.
Bewkes contends that if consumers pay less, media companies will generate less revenue, and in turn not produce as much content — leading to a domino effect throughout the industry.
“It’s pretty clear [SVOD] offers less monetization support in general for the quality and diversity of programming that we’ve all gotten used to seeing on the dial,” he said.
Distribution Food Chain
Dissemination of theatrical movies on broadcast television typically lagged for several years after their box office debut, according to Wedbush Securities analyst Michael Pachter. As new forms of distribution emerged, new windows followed — many of which are now shrinking. The VHS, then DVD, window was originally set six to nine months after theatrical (now three to four months); the VOD/PPV window a month later (now day-and-date), followed by premium cable nine months thereafter. …
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