HBO,CBS Streaming article out on Seeking Alpha. J
Post# of 96879
Posted On: 10/19/2014 12:52:28 AM
HBO,CBS Streaming article out on Seeking Alpha.
Just think about the implications of how the NTEK 4K streaming
business model fits into this and imo you can't help but
be even more bullish about the future of NTEK when you see
the Big Boys wanting to come to our space ! Imo this opens
the door wider for even bigger future partnerships for NTEK !
http://seekingalpha.com/article/2572605-hbo-a...t-the-cord
The last three days have proven to be quite significant for the streaming media business. Aside from Netflix's (NASDAQ: NFLX) poor third quarter earnings report, there was the news that HBO (NYSE: TWX) and CBS (NYSE: CBS) would be offering their own streaming-only service in 2015, in what some are calling the biggest shake-up to the pay TV model in over two years. This news came right on the heels of Netflix's earnings, and can be seen as one of the main reasons why the stock tanked after hours, and has continued to stay down. Even though there is some concern that the new entrants into the streaming media marketplace may eat into Netflix's future market share, the reality is that the new streaming services may be just complementary, not competitive.
A growing market for streaming
What has become obvious is that the market for streaming has grown substantially since Netflix entered the marketplace, and after dominating the marketplace for the last decade, there is more room than ever for competitors to get into the mix. According to industry analysts, 45% of American households stream content at least once a month, and that number is projected to reach 53% by 2018. This growth is driven by both the ease of streaming content on home entertainment devices, as well as a decreasing reliance by people aged 18-34 on pay TV.
Currently, 24% of those in that age bracket don't subscribe to pay TV packages, relying instead on streaming services like Netflix and Hulu to watch favorite TV shows without having to buy the whole bundle. Pay TV is still popular among older people, but even that demographic is starting to shift toward streaming for some programs, even if not as frequent as younger people do.
It is this information that has spurred HBO and CBS to announce their streaming services for 2015. With shows like The Big Bang Theory and Game of Thrones consistently grabbing high ratings both on TV and on companion services like HBO Go, it makes sense to go after the pro-streaming market. Market surveys currently show that there are 10 million homes that have internet access but don't have cable due to decreasing demand for cable packages as well as a growing number of "cord cutters" looking to save money. For HBO, this creates an opening to sell their streams to part of the 80 million HBO-less homes in America, while CBS can use the information to generate higher ratings and advertising revenue for their biggest shows without having to go through Hulu. In either case though, this is a big shake-up to the old way of delivering content, and reinforces the notion that the market is truly moving away from set-top cable boxes toward greater customization of how much content people will pay for.
While not strictly in competition with Netflix because they don't compete for the same content (and Netflix doesn't carry current HBO programming), HBO has made the move to send out a streaming service largely because of the subscription gap that Netflix has opened up. Based on second quarter figures in 2014, Netflix had 36.2 million subscribers compared to HBO's 30.4 million, marking the third straight quarter in which Netflix had the lead. HBO had the technology and services to do a stream-only subscription already in place in Scandinavia that has worked very well, but was concerned that it could subtract from the $5 billion in revenue the channel makes through cable. Yet because of the slowing number of subscribers for HBO, but buttressed by the fact that the company has $1.8 billion in operating profit (far more than the $228 million Netflix currently has), a streaming service may be what the company needs to rejuvenate their numbers.
Given the differences in content, it wouldn't hurt Netflix too much because many customers will likely opt to pay for both services rather than just picking one, just like with CBS' new service. HBO though has a lot more to gain because CBS is a lot more widespread and can depend on big advertising revenue, so it won't depend too much on streaming. HBO can increase its subscription base, which is the source of the company's revenue, and narrow the gap with Netflix in terms of users.
Media streaming is clearly becoming a big market, and Netflix won't enjoy its stranglehold on the industry for much longer, but that's a good thing for customers. With a growing marketplace, more TV channels may follow HBO and CBS' lead, which would be better for network revenue and keep their demographic advantages steady. It will be interesting to see how cable TV revenue for HBO is affected by the stream after the first quarter of 2015, but it looks like there is a lot more room for growth than there is for loss in this regard. Netflix will continue to be popular thanks to its huge library of content, but the real growth will be in the networks exploring this new frontier.
Just think about the implications of how the NTEK 4K streaming
business model fits into this and imo you can't help but
be even more bullish about the future of NTEK when you see
the Big Boys wanting to come to our space ! Imo this opens
the door wider for even bigger future partnerships for NTEK !
http://seekingalpha.com/article/2572605-hbo-a...t-the-cord
The last three days have proven to be quite significant for the streaming media business. Aside from Netflix's (NASDAQ: NFLX) poor third quarter earnings report, there was the news that HBO (NYSE: TWX) and CBS (NYSE: CBS) would be offering their own streaming-only service in 2015, in what some are calling the biggest shake-up to the pay TV model in over two years. This news came right on the heels of Netflix's earnings, and can be seen as one of the main reasons why the stock tanked after hours, and has continued to stay down. Even though there is some concern that the new entrants into the streaming media marketplace may eat into Netflix's future market share, the reality is that the new streaming services may be just complementary, not competitive.
A growing market for streaming
What has become obvious is that the market for streaming has grown substantially since Netflix entered the marketplace, and after dominating the marketplace for the last decade, there is more room than ever for competitors to get into the mix. According to industry analysts, 45% of American households stream content at least once a month, and that number is projected to reach 53% by 2018. This growth is driven by both the ease of streaming content on home entertainment devices, as well as a decreasing reliance by people aged 18-34 on pay TV.
Currently, 24% of those in that age bracket don't subscribe to pay TV packages, relying instead on streaming services like Netflix and Hulu to watch favorite TV shows without having to buy the whole bundle. Pay TV is still popular among older people, but even that demographic is starting to shift toward streaming for some programs, even if not as frequent as younger people do.
It is this information that has spurred HBO and CBS to announce their streaming services for 2015. With shows like The Big Bang Theory and Game of Thrones consistently grabbing high ratings both on TV and on companion services like HBO Go, it makes sense to go after the pro-streaming market. Market surveys currently show that there are 10 million homes that have internet access but don't have cable due to decreasing demand for cable packages as well as a growing number of "cord cutters" looking to save money. For HBO, this creates an opening to sell their streams to part of the 80 million HBO-less homes in America, while CBS can use the information to generate higher ratings and advertising revenue for their biggest shows without having to go through Hulu. In either case though, this is a big shake-up to the old way of delivering content, and reinforces the notion that the market is truly moving away from set-top cable boxes toward greater customization of how much content people will pay for.
While not strictly in competition with Netflix because they don't compete for the same content (and Netflix doesn't carry current HBO programming), HBO has made the move to send out a streaming service largely because of the subscription gap that Netflix has opened up. Based on second quarter figures in 2014, Netflix had 36.2 million subscribers compared to HBO's 30.4 million, marking the third straight quarter in which Netflix had the lead. HBO had the technology and services to do a stream-only subscription already in place in Scandinavia that has worked very well, but was concerned that it could subtract from the $5 billion in revenue the channel makes through cable. Yet because of the slowing number of subscribers for HBO, but buttressed by the fact that the company has $1.8 billion in operating profit (far more than the $228 million Netflix currently has), a streaming service may be what the company needs to rejuvenate their numbers.
Given the differences in content, it wouldn't hurt Netflix too much because many customers will likely opt to pay for both services rather than just picking one, just like with CBS' new service. HBO though has a lot more to gain because CBS is a lot more widespread and can depend on big advertising revenue, so it won't depend too much on streaming. HBO can increase its subscription base, which is the source of the company's revenue, and narrow the gap with Netflix in terms of users.
Media streaming is clearly becoming a big market, and Netflix won't enjoy its stranglehold on the industry for much longer, but that's a good thing for customers. With a growing marketplace, more TV channels may follow HBO and CBS' lead, which would be better for network revenue and keep their demographic advantages steady. It will be interesting to see how cable TV revenue for HBO is affected by the stream after the first quarter of 2015, but it looks like there is a lot more room for growth than there is for loss in this regard. Netflix will continue to be popular thanks to its huge library of content, but the real growth will be in the networks exploring this new frontier.
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