Netflix, Hulu, Youtube, Yahoo: In original Internet shows, hints of coming change

[Woochifer]

fter years of experimenting, the top video destinations on the Web are suddenly flush with original programming: documentaries, reality shows and scripted series.

Over the next few months, YouTube, Netflix and Hulu will roll out their most ambitious original programming yet — a digital push into a traditional television business that has money, a bevy of stars and a bold attitude of reinvention.

The long-predicted collision between Internet video and broadcast television is finally under way.

No one is suggesting that the quality on the Internet is close to that of broadcast TV, but it's becoming easy to imagine a day when it will be.

Netflix first announced its foray into original scripted programming last year when they outbid HBO and Showtime for the rights to David Fincher and Kevin Spacey's upcoming drama, House of Cards. Next month, their first scripted drama series, Lilyhammer, will premiere.

The Associated Press: In original Internet shows, hints of coming change

Now, it looks like Hulu will jump in as well with a couple of mockumentaries also set to premiere in February. And Yahoo! is set to premiere an animated series produced by Tom Hanks.

For now, much of the programming described in the AP article looks more like a dumping ground for second tier programs that could not make the cut with any of the broadcast networks.

The true test IMO will be when House of Cards premieres in the fall, because that really might be the only web-based series that can match the prestige of an acclaimed broadcast series and generate significant buzz.

One area of concern here is whether the elimination of the "water cooler" effect, would dilute and disperse whatever buzz that series might generate. Like it or not, over 75% of TV viewing is currently live. Something like the series finale of The Sopranos got huge hype because events in the previous episodes were leading up to the final episode. And the controversial ending of that series stirred up a torrent of discussion.

The article says that Netflix plans to release its series all at once, which would be a radical departure from the norm. By posting the entire series online at the same time, someone could presumably view the every episode in one or two sittings. It's not like a movie, where people watch it on opening weekend, and everyone talks about on Monday. This would be a case where some people would only watch one episode, while others would watch the whole thing. Any buzz and discussion gets disjointed.

I also don't see how this benefits Netflix, since one of the goals of going into original programming was subscriber retention. HBO's venture into original programming was supposed to lock subscribers in for the months that their favorite shows were airing new episodes. I knew people who would subscribe to HBO when the new season of The Sopranos aired, and they would cancel after the season finale.

A lot of unknowns heading into this venture. The bottomline is that short-form internet videos can generate a lot of page views, but they don't attract subscriptions or big ad buys. Going into longer form scripted shows justifies charging fees or higher ad rates, but it's also a much bigger investment for the viewer. Thus far, internet video has not proven that it can hold a viewer's attention for long periods of time. This is where that convention gets tested.

[Feanor]

It's all too confusing for me, Wooch. I'm thinking of cancelling my Netflix; when I connect I can rarely find anything I want to watch.

[Woochifer]

It's all too confusing for me, Wooch. I'm thinking of cancelling my Netflix; when I connect I can rarely find anything I want to watch.

That's probably because variety of program choices offered to Canadian viewers is much smaller than U.S. viewers. While some programs available to Canadian Netflix subscribers, such as CBS network programs, are not available to U.S. subscribers, the U.S. Netflix service has approximately 10X more movie choices than Netflix Canada.

The whole point of this confusion is that it impedes streaming video adoption, but in a way, the rights holders wouldn't want it any other way. Having multiple streaming providers split up the market puts the rights holders in a position of bidding one service against another. If anyone wants to have the full breadth of movie and TV offerings available, they will need to subscribe to multiple streaming services. That's one reason why content costs are going through the roof right now.

As I've said before, I see a future with multiple streaming video service providers carving out exclusive relationships with certain studios and content producers. This is no different than how premium cable channels such as HBO and Showtime already operate. Each channel has an exclusive window with certain studios for recent movie releases, and they produce their own programs.

Netflix, Hulu, Youtube, and Yahoo! have begun producing their own programs because they need to hold onto subscribers, generate more ad revenue, and they need their own source of programming for if/when the studios threaten to cut off their supply of movies and TV programs without paying huge fee hikes.

[Feanor]

That's probably because variety of program choices offered to Canadian viewers is much smaller than U.S. viewers. While some programs available to Canadian Netflix subscribers, such as CBS network programs, are not available to U.S. subscribers, the U.S. Netflix service has approximately 10X more movie choices than Netflix Canada.

The whole point of this confusion is that it impedes streaming video adoption, but in a way, the rights holders wouldn't want it any other way. Having multiple streaming providers split up the market puts the rights holders in a position of bidding one service against another. If anyone wants to have the full breadth of movie and TV offerings available, they will need to subscribe to multiple streaming services. That's one reason why content costs are going through the roof right now.

As I've said before, I see a future with multiple streaming video service providers carving out exclusive relationships with certain studios and content producers. This is no different than how premium cable channels such as HBO and Showtime already operate. Each channel has an exclusive window with certain studios for recent movie releases, and they produce their own programs.

Netflix, Hulu, Youtube, and Yahoo! have begun producing their own programs because they need to hold onto subscribers, generate more ad revenue, and they need their own source of programming for if/when the studios threaten to cut off their supply of movies and TV programs without paying huge fee hikes.

More often than not competition is a good thing -- I'll watch for developments up here.

[lovatoj@msn.com]

Great post. I will certainly be listening to see how things shake out.