Understand what are the causes and effects of the increased use of “Video on Demand”: - Internet Access and Audience - USA Crisis and Cable TV Fee - Netflix VOD Operation and Content Negotiation - Cable TV own VOD products and Market competition

1. M A R C E L A K L E I N
S E P T E M B E R / 2 0 1 3
What are the causes and effects of
the increased use of
“Video on Demand”?

2. Agenda
 Video on Demand: Introduction and definition
 Cause and Effects:
 Internet Access and Audience
 USA Crisis and Cable TV Fee
 Netflix VOD Operation and Content Negotiation
 Cable TV own VOD products and Market competition
 Summary
 Discussion
 Conclusion and Recommendation
 Reference List

3. Agenda
 Video on Demand: Introduction and definition
 Cause and Effects:
 Internet Access and Audience
 USA Crisis and Cable TV Fee
 Netflix VOD Operation and Content Negotiation
 Cable TV own VOD products and Market competition
 Summary
 Discussion
 Conclusion and Recommendation
 Reference List

4. Video on Demand: Introduction and definition
 Video consumption
 Free access - Youtube
 Video On Demand known as VOD is a process that
enable users to watch videos whenever they wish to.
 Required: Device (TV, Mobile, Tablet, Computer) +
internet connection + content provider

5. Video on Demand: Introduction and definition
 Entertainment business
 Do not need to:
 follow the schedule of the TV channels
 move physically to a certain place to watch or rent a movie

6. Agenda
 Video on Demand: Introduction and definition
 Cause and Effects:
 Internet Access and Audience
 USA Crisis and Cable TV fee
 Netflix VOD Operation and Content Negotiation
 Cable TV own VOD products and Market competition
 Summary
 Discussion
 Conclusion and Recommendation
 Reference List

7. Cause and Effects:
Internet Access and Audience
USA Crisis and Cable TV fee
Netflix VOD Operation and Content
Negotiation
Cable TV own VOD products and Market
competition

8. Cause and Effects:
Internet Access and Video
Audience
 USA Crisis and Cable TV fee
 Netflix VOD Operation and Content Negotiation
 Cable TV own VOD products and Market competition

9. Internet Access and Video Audience
 Changed how to
communicate and get
entertained: habit of
watching TV
The total video
audience was
concentrated on
the big screen

10. Internet Access and Video Audience
 Internet changed how to
communicate and get
entertained: habit of
watching TV
 Computers, notebooks
and smartphone are now
little televisions
accessing websites that
provide videos

11. Internet Access and Video Audience
 Share of Television
Viewing by Device
(18-44 years old)
348 responses
The Multiscreen Marketer, page 15, online

12. Internet Access and Video Audience
 Public consequence:
 TV programs were recorded and upload on Youtube
 Find it online its favorite show or news
 Business consequence:
 New scenario could affect advertisement revenue
(Advertisement)
 Build a Youtube channel uploading their own content

13. Cause and Effects:
 Internet Access and Audience
USA Crisis and Cable TV fee
 Netflix VOD Operation and Content Negotiation
 Cable TV own VOD products and Market competition

14. USA Crisis and Cable TV fee
 USA economic crisis - 2007 - peak in 2009.
Consequences:
 Financial arrangements
 Identify other possibilities to access entertainment
“A sharp rise in housing
vacancies due to the mortgage
crisis alone has led to five million
fewer U.S. households viewing
pay-TV services”.
(The NPD Group, para. 2, online)

15. USA Crisis and Cable TV fee
 Netflix was already known in the market by
delivering DVD‟s.
 The company saw in this scenario the opportunity to
grow its business in a niche not yet explored: online.

16. Cause and Effects:
 Internet Access and Audience
 USA Crisis and Cable TV fee
Netflix VOD Operation and
Content Negotiation
 Cable TV own VOD products and Market competition

17. Netflix VOD Operation and Content
Negotiation
 Netflix background:
Reed Hastings
had to pay $40
in fines due date
returning of the
movie Apollo 13
1998: Founded
NETFLIX.
His clients would
choose the title
online, order the
DVD, receive it at
home, and return by
mail
1999: monthly
subscription.
No due
dates, late
fees, or shipping
and handling -
2007: one
billion
DVDs
delivered

18. Netflix VOD Operation and Content
Negotiation
 Now: + than 37 millions subscribers*
 Do not disclose the number of titles in its catalog
 Was never able to negotiate movie releases with the
content provider
 New releases are sold as „gold‟ and they are exhibited
in the premium hour
Netflix subscribers = US$ 10/month - full access to a
“second hand” content
Cable TV subscribers = more than US$ 100/month – some
new releases + scheduled “second hand” content
*Netflix.com – 2013

19. Netflix VOD Operation and Content
Negotiation
 With the healthy business
situation content providers
started to “coming to Netflix
for deals instead of vice
versa.”
 Content providers had to start
to consider a new business
model to sell content. Studios
“are considering them a viable
distribution partner. ”
(Fitzgerald, qtd in Foley, para. 2, online)

20. Cause and Effects:
 Internet Access and Audience
 USA Crisis and Cable TV fee
 Netflix VOD Operation and Content Negotiation
Cable TV own VOD products
and Market competition

21. Cable TV own VOD products and Market
competition
 After watching the VOD trend cable TV consider
creating their own VOD
 Client subscribe for regular Cable TV + have access
to content by others devices

22. Cable TV own VOD products and Market
competition
“Foxtel Play gives even more Australians who might
not be able to access the core service the freedom
and flexibility to enjoy Foxtel across multiple
connected devices and at price points to suit
different budgets and tastes.”
(Freudenstein, qtd in Griffith, para. 19, online)

23. Cable TV own VOD products and Market
competition
 Consequence for clients when a market
competition exist:
 prices became more affordable
 the quality of the product and service improves
 companies start to create ever better business option to hold
consumer loyalty.

24. Agenda
 Video on Demand: Introduction and definition
 Cause and Effects:
 Internet Access and Audience
 USA Crisis and “expenses” on Cable TV
 Netflix VOD Operation and Content Negotiation
 Cable TV own VOD products and Market competition
 Summary
 Discussion
 Conclusion and Recommendation
 Reference List

25. Summary
 Different areas had to develop before Video On
Demand became a possibility
 Economic aspects that happened during the last 6
years had an important role
 Although cable Tv seemed to have had a solid
empire, the emergence of Netflix shook the business
structure

26. Agenda
 Video on Demand: Introduction and definition
 Cause and Effects:
 Internet Access and Audience
 USA Crisis and “expenses” on Cable TV
 Netflix VOD Operation and Content Negotiation
 Cable TV own VOD products and Market competition
 Summary
 Discussion
 Conclusion and Recommendation
 Reference List

27. Discussion
 Do you have the habit of waiting for a TV program to
start?
 Do you watch video online? Are they legal? (from a
provider, such as Foxtel) or illegal? (For a Youtube
channel)
 Would you pay to for a Video on Demand product?
 Do you have Netflix in your country?

28. Agenda
 Video on Demand: Introduction and definition
 Cause and Effects:
 Internet Access and Audience
 USA Crisis and “expenses” on Cable TV
 Netflix VOD Operation and Content Negotiation
 Cable TV own VOD products and Market competition
 Summary
 Discussion
 Conclusion and Recommendation
 Reference List

29. Conclusion and Recommendation
 VOD is winning a fixed position in the society
 New habits will probably be irreversible
 The sensation of having the power of choice will
increase even more in the following years
 The convenience of reaching any content anytime
and anywhere will became regular

30. Conclusion and Recommendation
 All parts of this market will need to adapt and
improve their service:
 devices industry - updated to video trends to produce devices
capable to support the upcoming features
 content producers and provider - develop a suitable scrip for
the online viewer
 telecom companies - provide high internet connection
 advertisement agencies – create campaigns avoiding the
traditional TV advertisement language

31. Conclusion and Recommendation
In a close world where
options to get
entertainment will not be
the main issue perhaps the
next challenge will be how
to help the audience to
choose what they will
watch…

32. Agenda
 Video on Demand: Introduction and definition
 Cause and Effects:
 Internet Access and Audience
 USA Crisis and “expenses” on Cable TV
 Netflix VOD Operation and Content Negotiation
 Cable TV own VOD products and Market competition
 Summary
 Discussion
 Conclusion and Recommendation
 Reference List

33. Reference List
 „The Multiscreen Marketer‟, 2012. IAB. Retrieved 25 August 2013 from
http://www.iab.net/media/file/The_Multiscreen_Marketer.pdf
 „The NPD Group: Average Monthly Pay-TV Subscription Bills May Top $200 by
2020‟, 2012. NPD Group. Retrieved 25 August 2013 from
https://www.npd.com/wps/portal/npd/us/news/press-releases/pr_120410/
 Fitzgerald, B., qtd in Foley, M., 2013. „Here‟s Why Content Providers Suddenly Adore
Netflix‟, Wall St Cheat Sheet. Retrieved 25 August 2013 from
http://wallstcheatsheet.com/stocks/heres-why-content-providers-suddenly-adore-
netflix.html/?a=viewall
 Freudenstein, R. qtd in Griffith, C., 2013. „Just hit play: Foxtel launches broadband
internet ground-breaker‟, The Australian. Retrieved 25 August 2013 from
http://www.theaustralian.com.au/australian-it/personal-tech/just-hit-play-foxtel-
launches-broadband-internet-ground-breaker/story-e6frgazf-1226687739169
 Netflix, 1997 (updated 2013) Retrieved 25 August 2013 from
https://signup.netflix.com/MediaCenter/Overview

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