Wible's Weekly: Privacy, Netflix, IPTV Updates, Machinima and OTT - Janney/MediaEntertainment

Internet Privacy amp8211 Ongoing efforts by the online industry to selfregulate on privacy appear to have stalled with the tracking protection working group of the World Wide Web Consortium rejecting the Digital Advertising Alliance39s proposal At issue is a browserbased mechanism that could potentially restrict the data collected by advertisers and hamper behavioral targeting If no agreement is reached by Julyend the issue may end up in Congress who is likely to take a more consumerfriendly stance In the near term this could be a positive for other forms of advertising including TV particularly for networks that target niche audiencesOriginal Recognition amp8211 NFLX39s efforts in original programming could pay off at the Emmy39s as three of its shows House of Cards Hemlock Grove and Arrested Development were nominated for awards Despite being eligible for 7 years this is the first time a digitally broadcast series has been nominated NFLX received only 14 nominations vs HBO39s 108 but the company has shown it can acquire some quality original content that may help driveimprove sub religion an imperative for NFLX to achieve its long term targetsIPTV Updates amp8211 GOOG is reportedly in talks with content producers to develop a virtual MVPD platform We question the viability of these VMVPD models as they would require premium payments to media owners that will want to hedge cannibalization Consumers may end up paying more for less This dynamic could push GOOG and others towards a SVOD model that will drive up the cost of content Meanwhile AAPL is exploring an adskipping feature for Apple TV that would allow customers to purchase the ability to bypass advertisements while viewing content Under this arrangement AAPL would pass along a portion of proceeds to networks every time a customer skips through advertisements It is unclear why consumers would pay extra for this service since it is already available for free on DVRs This would also be very costly as over 60 billion is spent on TV ads each yearStudio Content amp8211 Machinima a small startup online television provider backed by GOOG is in talks with Paramount and Warner Bros about licensing original content Machinima which began as a YouTube content producer is one of many companies looking to move into the online television space The trend toward adding professional content is driving greater demand for content a positive force behind studio companies However content from studios is likely to be expensive and will force online distributors to focus on monetization quickly to cover licensing costsGlobal OTT amp8211 Global OTT service are gaining traction and are expected to triple revenues from 106 billion to over 35 billion by 2017 or 15 of the overall TV market according to Informa Telecoms and Media The OTT services are particularly attractive to pricesensitive consumers who are willing to compromise on the amount of content in exchange for a lower subscription and supplement with payper view andor SVOD Panelists at the tvXperience conference suggested that over time popularity of OTT services could undermine the current business model of bundled TV as consumers39 viewing habits become more ondemand and a la carte While this is a risk we doubt this is imminent however changes in viewership patterns may limit MVPD pricing power which over time will force MVPDs to stabilize content costsTony Wible joined Janney Montgomery Scott in 2008 and is a Managing Director covering the Media and Entertainment sector after spending the previous 10 years at Citigroup Investment Researchamp8212most recently covering the Broadcasting and Entertainment Services industries Tony can be reached at twiblejanneycom Janney Montgomery Scott LLC is a US brokerdealer registered with the US Securities and Exchange Commission and a member of the New York Stock Exchange the Financial Industry Regulatory Authority and the Securities Investor Protection Corp Disclosures may be reviewed at Wible39s WeeklyRead 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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Wible's Weekly: Privacy, Netflix, IPTV Updates, Machinima and OTT - Janney/MediaEntertainment

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