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Virtual Video Programmers to Proliferate in 2012?

3 Jan, 2012 By: Erik Gruenwedel

Netflix will continue to rebrand its image with original programming, while YouTube, Facebook and Amazon ready standalone subscription video-on-demand platforms, increasingly taking market share from traditional cable and satellite TV operators in 2012, an analyst said.

With the Consumer Electronics Show a week away, 'tis the season for New Year’s resolutions and projections — the latter notably in video distribution. With 2011 theatrical attendance falling to a 16-year low, due to lower-quality movies and ongoing economic concerns, less expensive video entertainment alternatives are proliferating.

Netflix is pushing into original episodic programming with “Borgia,” Norwegian drama “Lilyhammer,” (see trailer) “House of Cards,” “Orange is the New Black,” and rebooted episodes of “Arrested Development” in 2013. Indeed, Netflix’s highly touted recommendation software saw 20% of its 22 million subscribers stream at least one episode of the first season of “Walking Dead” within 60 days of availability last October, according to BTIG Research analyst Richard Greenfield.

“We expect Netflix’s push into original programming to be a positive surprise for investors in 2012 and expect it to create a new form of ‘buzz’ around the brand that has been missing since the serious missteps of Q3 2011,” Greenfield wrote in a Jan. 3 post outlining his 2012 projections.

The analyst said he expects increased consumer frustration with higher-priced bundled program pricing is setting the stage for one or more non-cable and satellite TV operators to bow broadband-based video options.

“We would keep an eye on Dish Network and Verizon as first movers, with Walmart/Vudu and the TV OEMs (such as Samsung or Vizio) highly likely as well,” Greenfield wrote.

The analyst believes YouTube’s nascent original content channels could see parent Google significantly up its investment in video programming from $100 million this year to more than $1 billion in 2013. With Facebook’s pending IPO expected to generate billions, the social media networking behemoth could enter original programming, instead offering its platform as a springboard to Netflix, Hulu Plus and select studio transactional VOD movies.

Amazon could incorporate its IMDB.com movie search platform to help market a SVOD service similar to what it currently operates via LoveFilm in the Western Europe. With the e-commerce giant coming off a stellar winter holiday sales campaign, management may be inclined to expand beyond its current Prime membership loyalty shipping program, according to Greenfield.

“We continue to believe Amazon is preparing to launch a standalone video service in the US to compete more directly with Netflix,” he wrote.



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