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CBS CEO Eager to Mine Burgeoning SVOD Market

29 Feb, 2012 By: Erik Gruenwedel

Les Moonves says subscription streaming services bringing ‘hundreds of millions of dollars’ annually to CBS

CBS CEO Les Moonves believes there is a forest beyond the Netflix subscription video-on-demand money tree just waiting to be trimmed — incremental revenue that goes straight to the bottom line.

Speaking Feb. 29 at Deutsche Bank Media & Telecom conference in Palm Beach, Fla., typically effusive Moonves said Comcast’s recent launch of Xfinity Streampix, a bundled and standalone SVOD platform, is the first of what he believes will be a flurry of SVOD launches by media companies looking to get on the Netflix bandwagon.

“Comcast has started and where [they go] Time Warner will probably be there,” Moonves said. “Apple has had some conversations with us. I certainly think there is going to be some more activity in the marketplace. Whoever has the best content wins.”

The last part of that quote obviously playing into CBS’ strategy of capitalizing on what it believes is a bulging vein of incremental revenue on predicated largely on catalog and dated programming.

“The Netflixes of the world are bringing us hundreds of millions of dollars per year for streaming our library content,” Moonves said. “That’s a very good thing.”

When asked if he would offer pay-TV channel Showtime as a standalone over-the-top service versus bundling it with cable and satellite TV subscription programs, Moonves acknowledged there have been internal discussions about doing that.

Showtime, which exclusively airs first-run episodes of “Dexter,” “Weeds,” and “Californication,” among others, in addition to theatrical releases, along with HBO are major subscriber draws for multichannel video program distributors. But with the advent of OTT services such as Netflix, Amazon Prime and Hulu Plus, there is growing sentiment that consumers would rather pay less for select pay-TV channels than be forced to buy more expensive bundled selections.

“We decided at the moment to be against that,” Moonves said. “We like Showtime being bundled.”

The CEO remains adamant that CBS programming not be repurposed on Hulu.com, preferring to go with subsidiaries TV.com and CBS.com. He does approve of SVOD service Hulu Plus, which, like Netflix and Amazon Prime, is able to pay higher content license fees than ad-supported Hulu.

“We like that better because No. 1, we keep 100 cents on every dollar, and No. 2, I don’t like joint ventures [Hulu is co-owned by News Corp., The Walt Disney Co. and NBC Universal], and No. 3, we’re controlling our own content,” Moonves said.

He said CBS is working with Netflix to create an original series — a move he doesn’t believe is a threat to traditional TV programming. CBS produces about 25 series annually for primetime (including 22 hours weekly) and syndication. 

“We don’t see them as a threat,” Moonves said. “We’ll produce for anybody.”

Finally, the CEO said Nielsen must begin tracking viewers accessing on-demand content via portable devices so media companies can monetize that access.

As media companies and pay-TV channels roll out ubiquitous access to programming for subscribers through TV Everywhere platforms, driving incremental revenue from that access has become a concern on Wall Street and to analysts. Nielsen, which tracks primetime and DVR viewership, is said to be readying a model to monitor TV Everywhere consumption.

Moonves said that as Nielsen ramps up tracking technology capable of capturing on and offline video consumption, media companies will be able establish viewership ratios that can be sold to advertisers.

“The key to all this is Nielsen,” Moonves said. “As soon as Nielsen comes up to speed … you can count every eye ball watching your show. TV Everywhere is about counting them. It will be a secondary revenue stream. We are very bullish on that happening.”


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