Category Archives: Netflix

The weak link in OTT

Having been involved in OTT for many a year it was always obvious to anyone working in the industry that the whole DRM system is mostly a waste of time and money. This is the system that the movie industry forces on the OTT industry through lobbying that has driven up the cost of everything.

The idea being that if you pay for DRM that at least if anything happens, meaning someone steals a stream, you can say you are covered by so and so’s DRM. Essentially DRM is like insurance.

However, if you have ever worked in the OTT industry, the general security around how movies are sent around would floor you. Companies mail hard drives around, ship DVD’s, put movies on Google drive and all sorts of file transfer methods that are semi secure or not even remotely secure.

But since all these systems are run by people, usually any sort of leakage starts from the inside and involves people paying for access. Or, there is just a lack of security and any system that is based on people will usually have a flaw or someone makes a simple mistake which will allow a sophisticated tech person a chance to steal stuff.

https://daringfireball.net/linked/2017/04/29/orange-is-the-new-black

In this specific case it sounds like the hacker got into the post production studio’s system and was able to take the episodes. These episodes probably were not even completed or ready to be streamed. Around the emerging markets there is quite a racket for copying the movies and selling them to pirates while they are being transferred around, supposedly in safe hands, but in places like India it is quite common for the film canisters to be dropped off at the pirates on the way to the cinemas.

I am sure Netflix is pissed and will be interesting to see if they figure this one out. As more and more media moves to online only – my guess is this type of situation will happen again. It also brings to light the issue in companies like Netflix realising all episodes at once since in order to do this all the shows have to be ready to go. This means all the shows are sitting there if someone gains acccess where in a normal TV show- they are being made as you watch or getting finished as you watch.

Told ya Netflix would add download 

Welcome to the world of download :: http://www.theverge.com/2016/11/30/13792376/netflix-offline-downloads-now-available

Of course it is not the full catalog but don’t blame Netflix for that – lots of dumbass content companies don’t allow it.

My guess is this will be used a ton.

Looks like the competition is having an effect at this point :: http://www.cnbc.com/2016/11/02/netflix-offline-mode-could-be-on-the-way-but-not-for-us-users.html

Also another way to entice local and non VPN usage.

Talked about it here before – they will say no but they will eventually do it.

Boom.

http://www.techinsider.io/reed-hasting-comments-on-netflix-offline-viewing-2016-4

“We should keep an open mind on all this… as we expand around the world where we see an uneven set of networks, it’s something we should keep an open mind about.”

We’ve had our share of churn.

Another Mumbrella post about HOOQ :: http://www.mumbrella.asia/2016/11/hooq-to-launch-in-singapore-in-january/

I have, obviously, talked about this before :: http://www.nokpis.com/2016/11/08/growing-pains-comical-excuse-for-the-truth/

A couple of things in the new post that are interesting. It seems the CXO churn is starting to hurt a little bit and HOOQ is now deciding to try and comment on it some. I think Krishnan is actually being pretty honest here:

Rajagopalan conceded: “We’ve had our share of churn.”

“It’s been combination of what’s natural for a startup, and the unique context of Hooq as a brand. It’s a startup that has deep-pocketed investors who have certain expectations. That has contributed to churn in certain ways, as has different personalities that have joined us.”

High churn has meant that Hooq has taken longer than previously to bring in new people.

“We’ve been careful about replacing the CXO suite. This time we want to make sure have the right people in place,” said Rajagopalan, who said that Hooq staff needed to be comfortable in both a startup and corporate environment.

I think the issue with HOOQ is that people go there expecting it to be like a startup. Unfortunately it is nothing like a startup except for the fact that it is a new company. What happens is employees, like myself, join expecting to work in a place similar to a startup but not knowing that there are three shareholders that are nothing like a startup. All that is okay but HOOQ is essentially just a mini video arm of Singtel and we all know Singtel is not a startup. This culture clash has probably been the major driver of churn across the CXO suite and into many of the other groups at HOOQ. Such is life.

It is also smart that they are being careful about how to replace the CXO team with folks who understand what they are signing up for.

Then this:

He pointed to Singtel’s acquisition of marketing business Amobee, which the telco acquired in 2012, as an example of another company that took a while to settle in to corporate life with the telco giant.

Hard to know from the outside how Amobee is doing. It may take years to know how it all went.

https://adexchanger.com/publishers/amobee-sunsets-ssp-lays-off-around-5-employees/

Lots of ad exchanges are struggling so the layoffs might be needed to compete globally. It is a tough space for sure.

As to HOOQ entering Singapore – this part I am baffled by. I have a hard time understanding how a product that makes sense for the emerging markets, Singapore is NOT an emerging market, would do well in Singapore.

However I think this is actually more akin to what HOOQ is becoming. Just a video product for Singtel to use in their network. Potentially that is the future of HOOQ – as a subsidiary of Singtel, yes it is JV but run like a subsidiary, to be the video product for the Singtel network. This might be a great business – who knows yet. However it means competitors like iFlix are starting to run in a league of their own as they move to be in all emerging countries regardless of their telco partnerships.

This then points to a larger debate to have. Is the OTT market in emerging markets going to be won by a large player cutting across many regions? Will the Netflix/Amazon’s of the world slowly be the global player? Or will a company like HOOQ, focused on servicing their telco parent, be the model? I don’t know.

I wouldn’t profess to see the future but I tend to think that a proper startup might have a better chance but at the same time the global players will probably have the best tech and the best content. However the telcos in Asia are quite powerful.

Let the games begin.

Good to see some Netflix truth telling

Was sent this about Netflix on Bloomberg today.

According to a statement issued last week, international subscribers grew at the slowest rate since 2014, when Netflix was available to far fewer people.

Not surprising – I wonder if Netflix tries to use Netflix from Singapore – the catalog is shit. I wouldn’t even bother using it in Singapore if it wasn’t for my ISP’s feature of routing my Netflix and HBO traffic to the states. It’s amazing the difference between the local catalog and the USA one – it’s still comical to me I can’t watch the latest season of the House of Cards on Netflix Singapore. Would be one thing if Netflix Singapore cost 4 bucks but it doesn’t.

Ultimately Netflix may prevail but I think they have underestimated a few things –

  • Cost. They want to pull the SBUX global pricing game but that’s silly since the size of my cappuccino in Singapore is the same as the one in San Francisco. Netflix catalog differences are huge.
  • Local competition – they act like none exist.
  • Not being able to download. Not a huge issue but an issue.
  • VPN blocking. A bunch of people used Netlfix for the USA catalog – now that has stopped which means they have lost subscribers who were paying USA prices to get access and who dumped them when they saw the local catalog.

Big kudos to iFlix for getting a big mention. What’s glaring is the complete miss on HOOQ but guessing that is either cause most folks are already writing it off or that HOOQ continues to be appallingly bad at PR. 

Here you go HOOQ – got you some PR today. 

IFLix and Netflix are spot on about piracy but Netflix seems to just be burying their head in the sand when it comes to dealing with the issue:

And that won’t be easy. In September, a senior Netflix manager acknowledged piracy as the company’s biggest competitor in Asia-Pacific, the fastest-growing internet market. But instead of lowering prices or seeking different models, Netflix is charging $7.99 per month to subscribe in Cambodia — a country where the average income is about $1,000 per year, and where only 2.3 percent of the population has a credit card. In fact, fewer than half of the 600 million people in Southeast Asia carry plastic. And even if they can pay for Netflix, the experience of watching it probably won’t be pleasant. Almost every country in the region has internet speeds below the global average — oftentimes way below.

They can’t price like this, have a shitty catalog and not offer downloads. It just won’t work.

I have always said – the real competitor in Asia is piracy. Note :: http://www.nokpis.com/2016/04/18/the-actual-state-of-ott-in-emerging-markets/

Netflix, HBO and Amazon will be global video players – also it is too early to tell if FB, Apple and Google will sit this party out since it is such a minefield of losses. We know Apple keeps trying to alter the cable game but that is a USA only thing and their buy on demand model will someday not work out well but for now one gets the best content on PPV. I still buy/rent far too many movies but maybe that is cause I have kids and I want new releases so I can skip the theatre.

My take is that this problem will never be globally solved and that in each GEO it may take on different patterns – just look at India with HotStar having HBO content :: http://www.hotstar.com/tv/game-of-thrones/8184. Word is that HotStar has essentially clubbed to death any of the other major players in India and I expect you will see some casualties soon. I honestly have never understood why HOOQ tried to be India – it is a race they will never win. Seems iFlix is sidestepping the India train wreck and focusing on other winnable territories.

I portend that Netflix is gonna keep bleeding and the investors might start to tire of it. Amazon has yet to show their global video hand but I suspect it will challenge Netflix in certain parts of the world. I wonder if HBO will do more HotStar like plays – I think they should. iFlix seems to be the local or strong emerging markets player to watch and it pains me to say it but I think HOOQ is toast but most folks probably labeled anything built by Singtel as toast anyway. I guess it just depends on what shade of burnt you acknowledge.

As a consumer of stuff – well, I still use my Mom’s Netlfix account, pay for HBO (VPN goodness from viewquest) and continue to wait for Apple to do something cool with the TV.

Shots fired…

Disruption

Picked up on this article by Steve Blank over the weekend – such a good read.

I have worked at a few places in my life – startups, corporates, corporates in decline (Yahoo) and joint ventures masked as vehicles for corporates to try and stem declines (HOOQ). All of them share critical components but the corporates trying to deal with disruption can be very interesting. They don’t have it easy but they also continue to display the classic behaviors that got them to where they are in the first place. 

I notice in the local space that there is not a lot of investigative journalism into the big corporates around Singapore. I am guessing it is too touchy of a subject or maybe doesn’t drive page views. Hard to say.

Having just left HOOQ I would like to say a few things about it since I am asked many times why I went from startup land, Spuul, to pseudo startup land – HOOQ. 

Let me list a few reasons:

– I wanted the chance to get to know Singapore Inc. more closely.

– I wanted exposure to Sony and Warner.

– I was generally intrigued by the concept – 2 big studios work with local telco to try and do something cool in OTT.

– The plan had a solid model – the plan that is. The execution – not so much.

I went into the gig with my eyes wide open. I would learn, I would network and I would gain much needed experience on how to deal with a big corporate giant, actually three of them, trying to innovate. I would have a seat at the board meetings – huge learning opportunity. Boards can help a lot if done right.

Lastly, most importantly for me – I would try and see if I could buck the trend of a large corporate trying a new way to innovate but normally failing. The model had the right ingredients – a joint venture versus a subsidiary, good partners, a worthy business to go after and funds. Most startups don’t have these ingredients but then again most startups also don’t come with any baggage. Usually startups have a green field advantage and the right to make plans as they go whereas a joint venture is immediately plagued with too much funds, large parents to make happy and long range planning processes.

Frankly – it is too early to tell what will happen. Right now the market for OTT in emerging markets is early days. It is all about funding, posturing and moon shots. Obviously Netflix and Amazon will be the largest global players. As I keep saying to folks who constantly ask – who is the Amazon of India – Amazon. Just wait and see.

However folks tend to only thing big and forget that there are some healthy niche businesses out there – take Spuul for example. Doing well, but most folks only want to hear about big fund raising or other PR noteworthy milestones as examples of success.

For video we tend to think of Netflix or maybe YouTube. Right now the YouTube of emerging markets is YouTube. The Netflix for emerging markets – is also probably YouTube cause free and piracy are still the leader around the emerging markets. The idea of building out a robust, and profitable, paid OTT service for the emerging markets is still a work in progress.

HOOQ has a shot but iFlix appears to have the early lead. Will guys like Rakuten, Alibaba and HotStar emerge to try and go big? Don’t know yet. Will Netflix and Amazon slowly take over? Possibly. Will Google eventually get it right around the globe when it comes to premium content? I think not likely. Apple – well, they just seem to suck at emerging markets when it comes to payment models so I am not hopeful.

The race is on. I will continue to armchair quarterback it and share more insights as I go.