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Analyst: Netflix, Hulu, Windows Among Top 2013 Home Entertainment Changes

3 Jan, 2013 By: Erik Gruenwedel

Home entertainment ranks high among BTIG Research Richard Greenfield’s top media predictions in 2013.

The New York-based analyst expects Netflix to announce an output deal with Sony Pictures, beginning with movies released in 2017, ending the studio’s relationship with Starz. 

Netflix, of course, wrestled away Starz’ distribution deal with Disney — beginning in 2016 — underscoring the value that stronger box office movies play in the pay-TV window grows as studios shrink release windows.

At the same time, Greenfield predicts Universal Studios will re-up a distribution deal with HBO for first-run feature films — scuttling rumors parent Comcast might leverage the titles to create its own premium TV service and/or acquire Starz Entertainment. The latter’s parent, Starz LLC, is being spun off by Liberty Media Group.

“Just a few years ago, it appeared that the value of movie output deals was collapsing as Showtime refused to pay anywhere near what Paramount, Lionsgate and MGM were asking,” Greenfield wrote in a Jan. 3 blog post.

Of course, the three studios rebounded by forming Epix.

Fox to Take Over Hulu?

Hulu has staked a loyal following repurposing TV shows and offering subscription video-on-demand via Hulu Plus. But with three media parents — Disney, News Corp. and NBC Universal — Hulu’s future goals are anything but clear. With Disney’s focus on direct-to-consumer apps for its major brands (ESPN, Disney, ABC and ABC Family), it appears increasingly less interested in Hulu, while NBC Universal would love a way to exit or eliminate onerous aspects of the parent Comcast acquisition’s consent decree, according to Greenfield. 

The analyst contends that once Fox Group is legally separated from News Corp., it will seek to acquire 100% of Hulu, with the deal incorporating 10-year-plus programming agreements with both NBC and ABC. 

“With full ownership of Hulu, Fox accelerates Hulu’s push into original programming and explores adding cable network content to create a virtual MVPD service,” Greenfield wrote.

Home Entertainment Release Window Shrinks

Despite stabilized home entertainment consumer spending on packaged media in 2012 due in part to a stronger box office and lower-priced titles (notably in Blu-ray Disc), spending on home entertainment is projected to fall high single digits in 2013 as the box office levels and content holders increasingly opt for cash-rich SVOD deals and shrinking retail windows.

Greenfield believes studios will revisit their release windows in earnest, focusing on significantly reducing the theatrical-to-home entertainment window. 

“While windows shortened by 14 days to 3 1/2 months in 2012, expect more [studios] to attempt 30- to 60-day windowing (post-theatrical) in 2013, disregarding the tacit conclusion of the exhibition industry to maintain three- to four-month windows,” he wrote.

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