In summary, the changes did away with the joint streaming and DVD subscription service and made each service its own at a rate of $7.99 apiece per month. For users that had the joint plan, they will have to pay 60 percent more if they want to keep the same services.

Have you decided to drop Netflix or at least part of the service? Let us know.

According to Bryan Gonzalez, the director of Social Media Labs at the Entertainment Technology Center at the University of Southern California, a lot of people are trying to determine whether or not they want to keep both the streaming and the DVD services. Other users have said that they are dropping the Netflix completely.

It seems clear that Netflix’s action was a step toward moving away from DVDs. Although video streaming is still a very young industry, the company didn’t want to get left behind like Blockbuster did. There was also an obvious financial motivation, because, as Gonzalez explained, the company would have to have a lot of cash in order to obtain all the high quality content that it wants distribute.

The user reaction to the news was quite loud, from what we could tell, but Netflix CEO Reed Hastings apparently thought otherwise. In the company’s recent earnings call, he said, “Believe it or not, the noise level was actually less than we expected, given a 60 percent price increase for some subscribers.”

Gonzalez told us that he thinks Hastings was trying to be optimistic about the situation. It is, however, worth noting that a recent report from The Diffusion Group found that even though 70 percent of users were disappointed by Netflix’s price hike, only 12-15 percent would actually cancel their services.

“The fact that there were so many Netflix users that were upset, kind of really proves to you how much Netflix is really loved, or at least used,” Gonzalez said. “Truth be told, Netflix is still a pretty good deal compared to all the other offerings out there.”

If users do decide to jump the Netflix ship, he pointed out that there were other alternatives for them such as Amazon Prime or pay per view models like Apple iTunes or Vudu, Walmart’s new streaming service.

“The positive news for consumers, and everyone, is that there are tons of options out there and maybe this will expose the market or the user to this great market of content,” he said.

Gonzalez believes that there are other players that could benefit from Netflix’s move as well. For instance, any company that is trying to figure out how to distribute content could take this as a learning experience. Additionally, he thinks that consumer electronics manufacturers who have TVs with built-in apps other than Netflix will have more streaming opportunities as a result.

“I think, ultimately, a lot of companies will benefit, not just because it will expose users to more options, but also, users will benefit because they’ll move outside of Netflix and see what else is out there,” he said.

From the entertainment side of the business, it’s no secret that the studios are struggling to establish a business model around streaming. As a result, Gonzalex believes they are pleased to see Netflix and other players experiment with revenue models because “high quality content does demand a certain price.”

His new company is called Bedrocket Properties, and Lerer is starting with the help of Brian Bedol, founder of Classic Sports Networks and College Sports Television.  Bedol grew the two successful networks before selling them to ESPN and CBS, respectively.  He will serve as CEO.  Also on board is Patrick Keane, a former marketing exec with both Google and CBS.  He’ll be the president.  Lerer himself will be the chairman.

According to the Wall Street Journal’s All Things Digital, Lerer isn’t being too loquacious about his new venture:

Bedol and Lerer aren’t ready to go into detail about their plans, other than that they intend to build slates of programming – you could call them “channels”, if you like – that they can sell to distributors. And that they likely won’t have programming in front of viewers until the end of the year. They won’t discuss the amount they’ve invested in Bedrocket

You won’t get much more from the Bedrocket website, as the only thing displayed so far is this graphic:

It’s obvious that the market for quality digital content will grow in the upcoming months as distributors call for it.  The line between web programming and traditional television is already much blurrier than it was a year ago and that division should continue to become more permeable.  Apple TV, Google TV and Netflix among others are beginning to demand original content.  Netflix has made the biggest splash so far in that regard, recently acquiring the Fincher-Spacey piloted “House of Cards” series.

The people behind Bedrocket sure seem to believe they are on the cusp of the next big thing.  Lerer says, “I think this is the next sweet spot.  The distribution is all built out. It just needs to be filled with content. It’s absolutely identical to cable in the 80s.”  Yes, the whole cable thing seemed to work out just fine.

“We’re at the beginning of a new paradigm, and you’re going to see a generation of really valuable content properties come out of this,” says Bedol to the WSJ.

The report, "Global Media & Entertainment Market Forecast, 2004-2012," predicts that global revenues from media and entertainment will exceed $845 billion this year, with more than 10 percent, or $90 billion, coming from online and mobile channels.

In comparison, the worldwide filmed entertainment market will generate $83.1 billion in revenues this year.

Martin Olausson, Director of Digital Media Research at Strategy Analytics, said, "The fact that digital media revenues now exceed those from movie theaters and home video supports the large online investments made by most major media companies."

The research concludes that total revenues from all online channels will grow on average of 18 percent annually until 2012, while revenues from traditional media channels will grow at only 3 percent a year over the same time period.

"Like most industries, the media sector faces a challenging 2009," said David Mercer, VP Digital Consumer Practice.

"However, while revenues from traditional routes to market stagnate, digital business models still provide the growth opportunities that are vital to the industry’s future prosperity."
 

Accenture talked to 100 individuals, and found that 66 of them believed new platforms or ways of delivering content will be the largest drivers of revenue growth over the next five years.  Ad-supported business models were popular with 62 execs, and 68 felt that social media and user-generated content represent a "high-growth opportunity."

 Execs Only Partway To Digital Media Goals

Unfortunately, regardless of where their eyes are focused, the execs seem to have their hands in their pockets.  Accenture stated, "While half (50 percent) of the executives interviewed said they know which capabilities they need to take advantage of in this new digital market, Accenture believes that many have a false sense of their current capabilities."  Which means more than half may not have a clue.

Also, "Sixty-six percent of the respondents have less than 40 percent of required capabilities, a number that is unchanged since last year’s survey, indicating that companies need to implement new digital technologies or be left behind."

For the companies corresponding to the 100 execs (who hail from the U.S., the U.K., Switzerland, Belgium, Germany, Austria, Italy, France, and Brazil), this is bad news.  The survey highlights a great opportunity for other businesses to get ahead of the curve, however, since smaller outfits should be able to adapt more quickly.

Finally, for whatever it’s worth to either small businesses or the average Web user, the majority of Accenture’s execs don’t expect any Web 2.0 bubble-bursting to take place in the near future.

As consumers become more comfortable with new digital media, hardware manufactures that can best balance traditional use-cases with new ones will be most able to profit from the growing class of digital media users.

"Today we see a growing class of consumers that are just beginning to watch Internet video or are getting their first PVR," says research director Michael Wolf.

"This transition has them in search of better ways to manage this content cohesively. We believe that those device vendors and service providers that emphasize consumer experience while seamlessly integrating the worlds of old and new media will see the most success over time."

Generational differences will impact the transition to new media consumption. Those generations that consume both old and new media will continue to use traditional formats while sampling more new ones. People who are between the ages of 30 to 34 are possibly the most prolific in their use of both old and new formats, ahead of other groups when it comes to the size of their DVD collections (53% have more than 40DVDs), the likelihood they use a DVR (43% own one), and if they purchase music online (24%).

"One of the trickle-down effects of these generational changes to new media consumption is the impact on storage requirements," adds Wolf. "Hardware vendors will benefit from growing libraries of digital media as the average amount of storage required for digital photos doubles to 1.5 GB in 2012, while the average number of digital music tracks the average consumer has in his or her library will grow from 221 to 372 by 2012."

Control issues aren’t just something that city dwellers in the Big Apple or the Bay Area talk to their Dr. Melfi’s about in bi-weekly therapy sessions. Big media content companies have control issues that would put a couple of graduating classes full of therapists into the Forbes 500 list of wealthiest people.

The unlikely source of help for those companies might come out of Cambridge, Massachusetts, but not from Harvard or MIT. Multimedia search firm PodZinger has a therapeutic plan for Big Media, with new CEO Tom Wilde wearing the disarming smile while toting a substantial dose of control issue cure.

He chatted with WebProNews for a few minutes about taking PodZinger forward and building on what Laats has created. PodZinger’s technology can index audio and video content effectively and make it searchable. A content owner can then make that indexed content available in short snippets, in response to searches for it.

It’s just what Big Media needs, Wilde told us. PodZinger isn’t trying to find the philosopher’s stone by divining the alchemy of a business to consumer strategy. For every YouTube or MySpace that evolves, many more do not.

Being the solution for business to business to consumer has much more appeal. Big Media has the content, while the Internet audience has the demand. Why should a Viacom or a Time Warner settle for an all or nothing approach to putting content online, when they can make snippets of desirable content available through the familiar process of search?

Searchable content can be categorized, Wilde reasoned, and if it can be categorized it can be organized into channels. The Big Media company that does this suddenly has a medium that can be monetized too.

Wilde said this would lead to higher values per ad impression, as people will be able to find the content they want. PodZinger’s technology would also empower Big Media with the ability to whitelist or blacklist certain ads, based on content or just competitor status.

Consumers would feel in control, as they have come to expect from their online search and media consumption experience. Big Media would also enjoy knowing that they can make content available without dumping all of it completely online.

Wilde said PodZinger has been talking to several companies, and explaining how such a strategy with PodZinger’s technology as a centerpiece could benefit them. The time seems right for the content power brokers to give people this kind of access; we will see if they agree.

Big Media Fears Your Video Upload

What happens if people decide in large numbers to bring some talent and a passionate obsession for detail to the content they create? Believe it or not, as the old TV show goes, they could bring a big headache to media and entertainment.

Consulting firm Accenture asked executives in those fields about the biggest threats to their businesses. More than half of them, 57 percent by Accenture’s count, feel The Fear coming from user-generated content.

Digital video, podcasting, camera phones, wikis, and blogs. Oh my Hollywood, you sure aren’t in the 20th Century anymore.

70 percent of Accenture’s respondents said they believe that social media, one of the largest segments of user-generated content, will continue to grow, compared with only 3 percent of respondents who said they view social media as a fad.

A few well-known names participated in Accenture’s study, including CBS honcho Leslie Moonves and WPP Group’s Martin Sorrell. "The winners will be those who can probe and analyze the changes and manage and merge on-line and the off-line most successfully," Sorrell said of the consolidation between on- and off-line media.

Moonves cited the ongoing need for quality content: "Current technologically driven distribution channels will expand and new ones will open. But without compelling content, every new platform is an empty shell."

That’s the conundrum for Big Media. It’s become very narrow-minded, because they tend to fear taking chances and failing. But the same lack of courage holds them back. Meanwhile there is the prospect of someone, or lots of someones, coming along without any fear but with a sackful of digital tools and making something interesting that Big Media does not control.

Eventually someone with real vision, and the forceful, benevolent dictator personality needed to create something great in long-form digital video will do that, and just toss it out there to be shared. No producer meetings, no distribution negotiations, no theater contracts. Lights, camera, action, edit, upload, done.

Then Big Media has to do something that truly terrifies the corner office dwellers. They have to deal with compelling talent on its terms. Not theirs.

CBS president and CEO Leslie Moonves will be a keynote speaker at the Consumer Electronics Show in Las Vegas next Tuesday. Some research conducted at CBS may provide a brighter paragraph or two for the executive who has been pushing the venerable network onto the cutting edge of digital media.

He’s already scheduled to talk about how media companies like CBS will work with all this new technology and interactivity people have embraced. Being talked at was the modus operandi of the 20th Century. This is 2007, and the people talk back.

But even now, actions speak louder than words, and what people have said with their actions is they want more digital media so they can have greater engagement with the shows they see on TV.

David Poltrack, chief research officer for CBS, said people complement viewership with participation, and that extends beyond the web browser:

This has been driven by several factors. Greater adoption of faster Internet connections by people enabled CBS and other content providers to push the limits of their offerings. As more of this audience becomes aware it can enjoy a streamed video option, the more likely people will give them a try.

From there, it’s a short step to the television to watch the program (and its ads) at its regularly scheduled time.

—
Tag:

Add to Del.icio.us | Digg | Reddit | Furl

Bookmark WebProNews:

David Utter is a staff writer for WebProNews covering technology and business.