Wall St Speaks Out on Netflix OTT, Roku 4K, Facebook Video & DVD Sales - Janney/MediaEntertainment

OTT Updates amp8211 NFLX usage is increasing with 36 of subs using the service daily in 2014 and 72 using it weekly according to Leichtman Research Group Usage has increased since 2010 when only 10 streamed daily and 43 weekly although this is likely mostly driven by the amount of content now available We suspect that the increased amount of children39s content is also a driver Daily usage is slightly lower for subs that also subscribe to pay TV 32 Penetration among pay TV subs is 36 and 48 among nonpay TV subs implying that consumers substitute the two services We believe that the pay TV subscriber base will continue to face pressure from ondemand alternatives including SVOD and online videoSocial Video amp8211 FB is seeing significant success with video content consumption by its users A company blog mentioned the amount of videos shared by users and brands increased over 300 over the past year while the number of video posts per US user nearly doubled Its new design for Video Pages and recent acquisition of Quickfire Networks point to continued development in this area for mobile video in particular Separately TWTR is also stepping up its plans in video with a new video feature reportedly quotweeks awayquot TWTR39s plans include auto playing 6second ad previews potentially combined with the ability to charge advertisers only for fully viewed ads if previews are clicked on TWTR also has an unmonetized video platform in VineDVD Declines amp8211 In 2014 US spending on home entertainment fell 18 to 178 billion as increases in digital spend did not offset declines in physical DVD sales according to Digital Entertainment Group In 4Q14 the decline in spending accelerated to 41 with DVDs falling 16 physical rentals shrinking 85 and digital increasing 16 While this confirms the wellknown shift to digital media we believe there is also an increasing shift to renting vs owning and that SVOD services play an important part in this consumer transition4K Momentum amp8211 The CES conference continued to showcase 4K as more suppliers announced plans to incorporate 4K into their products Roku is the first OTT device maker to announce its support and said it is working with hardware partners for a Roku powered 4K TV as well as with NFLX to provide 4K content Separately DISH was the first MVPD to launch a 4K settop box We view these offerings as critical to accelerate the adoption of 4K and OTT offerings in particular may be early sources for 4K content However data and UBB constraints may be magnified with 4K given the significantly higher datarates neededGaming Updates amp8211 Sony announced a subscription option for its streaming service PlayStation Now which will allow gamers to play games from a library on an unlimited basis for 20 per month or 45 per quarter Subscriptions will only be available to PS4 owners at first but Sony expects to broaden support over time Separately over half 53 of US video gamers preferred to buy console games on disc vs 22 digital according to MarketCast Physical still accounts for 82 of console game purchases which should support retailers in the near term Lastly ESPN is considering entering the daily fantasy sports market according to SportBusiness Daily This could potentially be a strong competitor to ZNGA39s NFL gameTony Wible can be reached at twiblejanneycom IMPORTANT DISCLOSURESResearch Analyst CertificationI Tony Wible the Primarily Responsible Analyst for this research report hereby certify that all of the views expressed in this research report accurately reflect my personal views about any and all of the subject securities or issuers No part of my compensation was is or will be directly or indirectly related to the specific recommendations or views I expressed in this research reportJanney Montgomery Scott LLC quotJanneyquot Equity Research Disclosure LegendIndividual disclosures for the companies mentioned in this report can be obtained by accessing our Firmamp8217s Disclosure SiteRead all Tony39s MediaBizBloggers commentaries at Wible39s Weekly JanneyMediaEntertainment Check us out on Facebook at MediaBizBloggerscomFollow our Twitter updates MediaBizBloggerThe opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of MediaBizBloggerscom management or associated bloggers MediaBizBloggers is an open thought leadership platform and readers may share their comments and opinions in response to all commentaries

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Wall St Speaks Out on Netflix OTT, Roku 4K, Facebook Video & DVD Sales - Janney/MediaEntertainment

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