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Thursday, July 07, 2011

STREAMING WILL IMPACT THE CINEMA !

Like it or not there are a number of technologies that are going to impact the cinema in a BIG way.

THE THREAT
If you are a regular to Cinema Mucho Gusto, you know that I have been adamant in the belief that streaming content will have a huge impact on cinema exhibition and the urgent need for cinema operators to adjust to this inevitable event.

Hulu and Netflix are two companies which currently represent this threat to cinemas so it is important that we follow their progress and goings on.

Lets take Hulu first. Thing got pretty hot for this ad-supported on demand streamer of TV shows, movies, and webisodes.  Owned jointly, at 30% each by NBS (Comcast), Fox (NewsCorp), ABC (Disney), and Providence Equity Partners, a venture group, which owns the remaining 10%, Hulu went up for sale last week - well sort of.  Its suitors: none other then tech giants, Google, Microsoft, and Yahoo. Their motivation: to position themselves in the looming and huge on-line content streaming market. Hulu has rights to numerous TV shows available from its big media owners and has over 600 advertisers - from McDonald's to Toyota.

Hulu's advertising revenue and subscriber fees will exceed $500 million this year. That puts the price tag for Hulu north of $2 billion and what it offers is professionally produced content and 28 million monthly viewers.

However, Hulu's owners are in a pickle.  They want to provide content to Hulu but are under pressure from the TV cable and satellite companies to limit what TV programming Hulu streams.  Big media gets over $30 billion annually in affiliate fees from the cable and satellite firms.  But, by last week's end, Disney was having second thoughts about selling.  Why?
First, because a large non-studio getting into the content game would eventually demand exclusive streaming rights. Second, Disney does not want to be in a position where other content providers are supplying exclusive content competing against Disney's non-exclusive content.
On the other hand, by selling, Disney would net a cool $450 million and allow it to nurture its new relationship with Netflix, which started to stream ABC Family content last December.



Speaking of which, we've blogged a lot about this movie-by-mail turned internet content streamer over the last year.  Netflix is growing and growing fast. Last September it set up shop in Canada and has been signing up subscribers at a torrid rate (in May it signed up over 800,000). It is now moving South.  According to Jessie Becker, VP of Marketing, Netflix will be offering, " unlimited streaming of movies and TV shows" in 43 countries throughout Latin America and the Caribbean in three languages (English, Spanish, and Portuguese) on a full range of connected devices for the equivalent of their current U.S. per month charge of $8.

SUMMARY
  • Content streaming will continue to grow at a rapid rate on a worldwide basis. 
  • More and more content will be made available for streaming because consumers will demand it.
  • The movie studios will eventually provide first-run movies to the streaming providers, there is just too much money involved and it would virtually eliminate film piracy.
  • Cinemas need to move to a new business model which is much more retail oriented and consumer friendly.
This story is just unfolding. There will be many of twists and turns. Lots of deals and collaborations. But in the end it will  completely change the way we currently consume entertainment, including movies.

Best and Happy Movie Going!
Jim Lavorato

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