Really Rocket Science

Interesting piece in The Drum on how Netflix does their research…

Vice president of content acquisition for Netflix, Kelly Merryman, revealed this week that the company she works for routinely use piracy sites to determine what television shows the company will buy. By gauging the popularity of shows on sites like The Pirate Bay, the company is able to determine which shows are really popular and help assist in making licensing decisions.

That’s brilliant. And it seems to be working well. The article goes on to cite “BitTorrent traffic in Canada dropped 50% after Netflix started there three years ago.” Their market skews younger, and they’re far more likely to be “cord-cutters” and view their favorite video entertainment online. Pay TV’s base is eroding and they know it.

Surely it won’t be long before pay TV services — cable, satellite and fiber — finally get smart by offering real à la carte service and dispense with the increasingly-annoying table d’hôte way of doing business. Their customers don’t want 15 shopping channels or 12 faith-based networks. They want CNN, The Weather Channel, ESPN and The Food Network — and maybe some locals. Offering packages of 200 channels for a fixed price is getting old.

Watch this video edit (4:55 RT) of actor Kevin Spacey speaking at the James MacTaggart Memorial Lecture at the Edinburgh Television Festival last month. He concludes content should be served/offered any way the customer wants it — movie theater, TV screen, iPad, streamed, iPhone et. al.

Here’s the full video (46:01 RT). Either one will lead you agree with his conclusion.

UPDATE: this report from Ian King of Bloomberg really gets into the details…

…a generation of technology-savvy, budget-conscious consumers who are taking advantage of the availability of high-speed Internet connections and the proliferation of smartphones, tablets, lower-cost TVs and other gadgets that make it easy to consume downloadable shows in a snap.

The shift in viewing habits is putting pressure on cable, satellite and phone companies by pinching subscriber numbers, which may have a knock-on effect on revenue growth. The impact on the $80 billion pay-TV industry is already being felt, with 2013 on pace to be the first year ever that total U.S. pay-TV subscriptions will decline, falling to 100.8 million from 100.9 million last year, according to researcher IHS.

And while 3.2 million new U.S. households were set up in the last three years, the paid-TV industry only added 250,000 subscriptions in that same period, according to market-researcher SNL Kagan.

It was in the cards. Keeping Blockbuster retail outlets open for video rentals is not a good business. The future, my boy, is “streaming.”

However, if you convert parts of the store into a Dish Network service center, you may have a really good proposition on your hands. Via Reuters…

“We are committed to keeping the profitable stores open that are generating positive cash flow, but there are ones that aren’t going to make it,” Clayton said in an interview. “We will close unprofitable stores. We will close additional stores.”

Clayton would not give a time frame on the closings or say how many stores were currently unprofitable. Spokesman Marc Lumpkin said the closings will be on a “case by case” basis.

Clayton, who became CEO of Dish last year when billionaire Charlie Ergen stepped down to focus on Dish’s wireless strategy as chairman, said the stores that stay open will sell Dish subscriptions and may one day provide customer support for its television customers.

“If a consumer has a problem, just bring your box in and we’ll give you a new one so you don’t have to stay at home and wait for an installation,” he said.

Subscribers to Dish’s Latino service may also be able to pay their TV bills in stores in metropolitan markets, he added.

Dish has tried to tap the Blockbuster brand by unveiling a new Internet streaming service and a program to rent DVDs by mail, in a bid to challenge Netflix Inc.

If they buy Hulu and add wireless spectrum to serve their streaming business, Dish Network can be very well positioned in remaining a good business model.

Say it ain’t so, Joe.

DISH Network’s Blockbuster brand will unveil a streaming service on Friday, via the Denver Business Journal…

CEO Joe Clayton and Blockbuster President Michael Kelly are scheduled to unveil the service from San Francisco in a press conference dubbed “A Stream Come True” (held via Ustream web streaming service, appropriately enough).

Dish Network (Nasdaq: DISH), which rarely underplays a promotional opportunity, promises the service will be “the most comprehensive entertainment package ever!”

In addition to having the webstreaming technology that Blockbuster used, Dish Network has been rumored to be bidding for the online video service Hulu.

Whatever the outlines of the new Dishbuster service, it’s likely to salt Netflix’s recent wounds.

Shortly after buying Blockbuster, Ergen said the purchase wasn’t meant to knock Netflix from the top spot in movie-streaming, because Netflix likely had an insurmountable subscriber lead.

Last week, though, Netflix forecast actually losing subscribers this quarter, and falling 1 million short of its third-quarter projections.

On Monday, the 24 million-subscriber company surprised observers and sent its stock price lower by announcing it’s splitting the company — Netflix will focus exclusively on online movie streaming, and a new wholly owned subsidiary, called Qwikster, will carry on Neflix’s legacy business of shipping DVDs to subscribers by mail.