Netflix was founded in 1997 by software executives Reed Hastings and Marc Randolph. Two years later, the company offered its subscription service of unlimited DVD rentals for a monthly fee. Since its inception, Netflix has grown exponentially in terms of consumer popularity and financial revenue. Today, over 40 million subscribers consume roughly 1 billion hours of content per month through the company. [1]
Reed Hastings co-founded Netflix in 1997 and has served as its Chairman, CEO, and President since. Prior to this, he founded Pure Software, which he then sold to Rational Software. Following a stint in the Peace Corps during college wherein he taught high school math in Swaziland, he has served as the president of the California State Board of Education and remains a member of the California Teachers’ Association. [2][3]
Financials
Netflix made its initial public offering on May 22, 2002 with 5,500,000 shares at $15.00 each. [4] As of November 15, 2013 one share sat at $349.78. The company’s all-time high was $389.16. However, it hasn’t always been a steadily increasing stock market commodity. On November 30, 2011 its price fell to $62.37. This came after the company’s decision to separate its DVD rental and streaming services. After watching the stock fall, company executives decided to abort the plan. Its stock recovered quickly and has climbed even higher than it was before the proposed change. [5]
Innovation
Netflix is a company that always seems to be ahead of the curve. After amassing 6.3 million members as a strictly DVD rental service, it launched its online streaming service in 2007. [4] After hovering around $20 per stock for years, this development started the company skyrocketing, topping out at roughly $290. This promptly fell after the announcement of Qwikster, which was the proposed streaming-only branch of Netflix. While this was a failure, it was innovative nonetheless.
House of Cards was the first heavily advertised piece of original content from Netflix. “A Congressman works with his equally conniving wife to exact revenge on the people who betrayed him. [6]” The entire 13 episode first season was released at once so that viewers could “binge watch” it. Many analysts questioned whether this was a good business decision, theorizing that viewers wouldn’t remain hooked long enough for Netflix to prosper financially. [7] The numbers proved those doubters wrong. In the financial quarter following the show’s debut, Netflix gained 3 million new subscribers. In that quarter alone, the company made back its money on the program in which it had invested $100 million. [8] The show received 9 Emmy nominations and won for Outstanding Casting, Directing, and Cinematography in a Drama Series. [9]
Netflix also found success in its debut of the fourth season of the cult hit Arrested Development. Executives attributed the bump of 630,000 new subscribers in the second quarter of 2013 to the show’s dedicated fan base. [10] The season earned three Emmy nominations. [11]
In addition to original content, Netflix has been innovative in customizing the user experience. In 2006, the company announced the “Netflix Prize,” which would award $1 million to the person or team who came up with the best algorithm to accurately give entertainment recommendations based on personal preference. Three years later, they had received submissions from more than 40,000 teams from 186 countries. [4] The prize was awarded in 2009, but the company never implemented the algorithm. According to Netflix, the “additional accuracy gains that we measured did not seem to justify the engineering effort needed to bring them into a production environment. [12]“
Also in the vein of user experience, Netflix recently added the option of multiple profiles to its streaming service. Chief Product Officer Neil Hunt acknowledged that most accounts are shared, usually within one household. In an effort to tailor recommendations to each user specifically, customers can now specify who is watching. The service is free of charge and will also help Netflix in collected more accurate user data. [13]
Competition
One might assume that Netflix is a competitor with cable providers. CEO Reed Hastings has a different view. In a letter to investors, he outlined his company’s main areas of focus moving forward, breaking down its competition into two categories. The first is “competitors-for-time,” meaning entertainment options that do not bid against Netflix. While markets may not overlap between Netflix and video game providers, sports networks, and piracy, all of those options eat up consumer time that could be spent watching Netflix. The other category is “competitors-for-content.” The largest competitor here is HBO. Hastings discloses that the companies have bid against each other for movie licensing and original content in the past, and that they seem to be pushing each other to be better consumer-oriented services. Hastings also lists Amazon, Hulu and others as competitors-for-content. At the same time, he believes that there will be enough room for everyone. “Many consumers will subscribe to multiple services if they each have unique compelling content. [14]
On The Horizon
Netflix plans to build upon its success with original content. It has renewed each of its original shows for second seasons, and has expressed desire to make another season of Arrested Development as well. “[We would] be delighted to produce a fifth season of Arrested Development, if possible, given fan reaction.” The company also plans to produce its own full-length documentaries and comedy specials and stream them exclusively. [15]
There is also speculation that Netflix is pushing for day-and-date movie releases, meaning that it could begin streaming a film the same day it premieres in theaters. Though Netflix has not confirmed this, theater owners are wary that the development could put them out of business. Ted Sarandos, Netflix’s Chief Content Officer, accused theaters of refusing to adapt, saying “not only are they going to kill theaters — they might kill movies.” Currently, theaters have a 90 day exclusivity deal, wherein films cannot be shown anywhere else for three months. But recent studies state that theaters make 96% of total revenue from a film’s first six weeks. At the very least, we can expect Netflix to cut the amount of time between theatrical releases to streaming down to between 30-45 days. This would spell greater profits for both Netflix and movie studios while only trimming 4% of theaters’ revenue. [16] At the very least, we can expect an innovator like Netflix to be on the forefront of the entertainment business in the years to come.
Time Warner Inc. is a multinational media corporation that provides high-quality media and entertainment content through varied outlets. It is one of the largest media conglomerates in the world. [16] It has businesses in television networks, film and television shows, and publishing. The company’s four operating divisions are Home Box Office (HBO), Time Inc., Turner Broadcasting System and Warner Bros. Entertainment.[1]
[31] Visual representation of Time Warner’s TV assets
HBO is the most successful TV-service in the world. In 2012 it was the number one domestic premium pay television service in primetime and total day ratings. As of 2013, there are approximately 114 million HBO and Cinemax cable subscribers worldwide. There are 8.5 million registered users on HBO GO, which is an unlimited access online/tablet/smart-phone service to watch HBO shows and movies that comes free with an HBO subscription. [1] Current popular HBO shows include The Newsroom, Girls, Veep, True Blood and Game of Thrones. [4]
[18] Girls – A show about 20-something girls in New York created by Lena Dunham is currently filming it’s third season, set to air in January
[33] The Newsroom – A political drama series created by Aaron Sorkin just finished its second season on HBO
A Brief History Starting with the Warner Brothers in 1923……
[36] A graphic representing the unsuccessful merger of Time Warner and AOL that led to its split in 2009
In 1923, Polish immigrant brothers, the Warners, created the film company Warner Brothers Pictures Inc. in Los Angelos. [2] In 1972, Kinney National Company bought Warner Bros. and established Warner Communications (WCI). [2] In 1989, Time Inc., which was at the time, the third largest cable operator in the country, merged with WCI and Time Warner was formed. [3] The company purchased Turner Broadcasting System in 1996. [3] In January 2001, a $106 billion merger between AOL and Time Warner was approved. [2] The company was called AOL Time Warner, but in 2003 it became just Time Warner. [3] In 2009, Time Warner split with AOL. [2]
Financials:
Time Warner is publicly traded under the NYSE with the symbol TWX.
Chart over the last three months (Sept. 18-Nov. 18) Visible upward trend [38]
The third quarter for the company ended September 30, 2013. [6]
IMPORTANT STATS FROM 3RD QUARTER:
44 percent increase in earnings from $822 million for the same quarter a year ago to $1.18 billion for the third quarter of 2013 [5]
HBO and Turner’s channels provided the biggest increase for Time Warner in the quarter, revenue rose by $182 million to $3.5 billion, increasing 5% [5]
Adjusted Operating Income increased 8% to $1.7 billion [6]
Adjusted Operating Income margins increased year-over-year for the eighth time in the last nine quarters [6]
September 22, 2013: HBO received 27 Primetime Emmy Awards, for series including Veep, The Newsroom, 5 for Boardwalk Empire and 11 for the HBO movie Behind the Candelabra. [25] This is the 12th year in the row that HBO has the highest number of Emmy Awards than other station) [6]
[1]Gravity was released October 4, 2013 and has made $234,279,000 so far. [29]
Alfonso Cuaron’s 3D space movie, Gravity, was the top October opening of all-time. It debuted to $55.8 million in North America. Sandra Bullock and George Clooney star in the movie. The movie contributes to Time Warner Inc.’s total revenue. [19]
RECENT NEWS:
Home Box Office:
September 2013: HBO is set to release a new series, Looking, which stars Jonathon Groff, best known for Glee and the broadway show, Spring Awakening. The series centers on the life of three gay friends living in San Francisco. The show is created by Andrew Haigh and is set to be released Sunday, January 19th at 10:30 p.m. on HBO. It is currently filming in San Francisco. [9]
[23] Susan Lacy and her Emmy Awards for American Masters and Inventing David Geffen
September 2013:Susan Lacy is moving from PBS to HBO to produce and direct documentaries for HBO. She is best known as the creator and executive producer of American Masters, a television series that documents the history of icons of American culture. [17] As well as numerous Emmys for American Masters, Lacy has received an Emmy for “Outstanding Documentary or Non-Fiction series” for Inventing David Geffen. [17]
[24] Susan Lacy produced and directed under PBS before she signed the multiyear deal with HBO
[30] Poster for Valentine Road which premiered October 7th on HBO
November 2013 – HBO signs John Oliver to star is a comedy series set to start in January 2014. The show will be weekly on Sunday nights and will take a satirical view on the news and current events. John Oliver will be leaving The Daily Show with John Stewart to join the HBO family. [10]
October 2013: Turner Broadcasting and Verizon announced a multi-year renewal agreement to provide Turner’s Networks, including CNN, TBS, TNT and Cartoon Network, to Verizon FiOS TV subscribers across a plethora of platforms. This is a long term distribution agreement that will give FiOS TV subscribers’ access to a large array of on-demand programming. [26]
October 2013: A disagreement over prices between Cable ONE and Turner Broadcasting led Turner to cut channels from Cable ONE on October 1, 2013. [13] A Cable ONE press release stated that Turner Broadcasting wanted an almost 50% increase in price for the channels. It was the largest recess of channels in the company’s history. [14] Cable ONE has 730,000 customers in 19 states and is the 10th largest cable company in the U.S. [14] On October 26, 2013 Cable ONE, according to The Anniston Star, “has reached an agreement with Turner Broadcasting System Inc. to restore Cable One’s carriage of Turner’s channels CNN, CNN en Espanol, HLN, Turner Classic Movies, TNT, TBS, Cartoon Network, truTV and Boomerang.” [13]
October 2013: TNT showed exclusive NBA coverage of the Miami Heat against the Chicago Bulls game on Tuesday, Oct. 29, at 8 p.m. ET. The game was the second highest-rated and most-viewed opening night game in network history with 5.4 million viewers and a 3.3 U.S. rating. [7]
November 2013 : Turner Broadcasting is being forced to pay a $25,000 fine by the Federal Communications Commission. [15] In April 2012, a promotional gag for TBS’ Conan used the emergency weather tones to gain attention for a commercial advertising the appearance of Jack Black on the show. The FCC has warned broadcasters not to air the real EAS tones for any reason other than airing a real alert or a test to avoid panicking the public. [15]
Comcast/NBCUniversal is one of the leading companies in the fields of media, entertainment, and technology. It is under the Comcast Corporation (Nasdaq: CMCSA, CMCSK). This company owns and operates television networks, theme parks, film companies, a sports firm, television stations, and a video, Internet, and phone provider to residential customers and business [2]. The company is essentially split up into two businesses: Comcast Corporation and NBCUniversal.
NBCUniversal owns NBC cable networks like Bravo, E!, and MSNBC. NBC Broadcast television has NBC entertainment, news, and sports. NBC Universal also owns television stations in New York, Philadelphia, Washington, and many other markets. Telemundo is also under the umbrella of NBCUniversal, along with Universal Television [3].
How did Comcast/NBCUniversal Come Together?
In 1926, the Radio Corporation of America (RCA) formed NBC. At the New York World’s Fair in 1939, NBC unveiled the television and broadcasts [4]. After General Electric became it’s parent company in 1986, NBC had many successful years critically. In 2002, they bought the Spanish language broadcaster Telemundo and Bravo and a year later NBC merged with Vivendi Universal Entertainment to become NBCUniversal [5]. In 2011, Comcast purchased the controlling 51% of NBCUniversal from General Electric for $13.8 billion.
Who are the Faces of Comcast/NBCUniversal?
CEO NBCUniversal Stephen B. Burke [7] CEO Comcast Corporation Brian L. Roberts [8]
What Does Comcast/NBCUniversal Own?
The picture above [10] illustrates the cable and broadcast channels that Comcast/NBCUniversal owns, along with the digital, film, and park entities that it owns. Evidenced by the many cable channels it owns, the company is focused it’s efforts on the surging cable industry. In a visit to Syracuse University’s S.I. Newhouse School of Public Communications, CEO Brian Roberts said that, “the world is changing,” and that, “in terms of profit, cable makes more money.” He did say however that NBC is still the engine for their company and it just as much of a focus as the cable channels are [11]. NBC also owns ten stations across the United States in places like New York, Los Angeles, and Chicago. They also own 14 Telemundo stations in places like Miami, Houston, and San Antonio [21].
What is Comcast/NBCUniversal Doing Today?
In the ratings game, NBC won November sweeps for the first time in nine years. However, in February, NBC hit a new low, coming in fifth place in sweeps. Averaging a 1.2 rating among adults 18-49 put them behind Univision‘s 1.5 rating [23]. With shows like “Do No Harm” [34] preforming with dismal numbers (0.9/3), NBC started off badly. They cancelled the show after airing only two episodes [24].
NBC’s critically acclaimed comedy “30 Rock,” ended its seventh and final season on January 31st this year. Over the many season, “30 Rock” received a whopping 90 Emmy nominations [22]. Often on the show, Tina Fey and her fellow writers wrote what was exactly happening in their life into the show. General Electric employees and “KableTown” executives frequently appeared.
In February, Comcast also made a huge deal with General Electric to buy the remaining half of NBCUniversal earlier than intended. For $16.7 billion, Comcast now has entire control over NBCUniversal. This shows Comcast’s newly energized commitment to cable and broadcast television [25].
Recently, NBC has been going through some shake ups with ratings and hosts. “Today” lost out on ratings to ABC’s “Good Morning America.” Matt Lauer has a contract expiring soon that is also up in the air [26]. The most recent problem has been how NBC handled the Jay Leno – Jimmy Fallon debacle (pictured right [29]). After months of rumors, NBC announced Jay Leno would retire in the spring of next year, with Jimmy Fallon resuming his spot as host of “The Tonight Show” [27].
Also, in February, it was announced that David Axelrod, previous chief strategist to President Barack Obama’s recent campaign, would join NBC News as a senior political analyst [35].
What is Next for Comcast/NBCUniversal?
Comcast/NBCUniversal is preparing for the end of a legendary show, for new summer shows to be released, and for the upcoming Fall 2013 pilot season.
NBC’s “The Office” will be ending it’s run on Thursday, May 16th at 9p.m. Since 2005, “The Office” has collected Emmy’s, Golden Globes and many other awards in its amazing 9 season run [13].
NBC is beginning it’s summer roll out with Bryan Fuller’s “Hannibal” which averaged a 1.6 rating/4share in adults 18-49 in its premiere on Thursday, April 4. The show got 4.3 million viewers overall, which are not great numbers but good enough considering it’s lead in was the comedy “Go On” [12]. The video below is a season preview for the new show [18].
On Tuesday, April 9th, “Ready for Love,” a relationship show with three bachelors will premiere, with Eva Longoria as Executive Producer [14] will premiere. “America’s Got Talent” will be premiering its 8th season on June 4, with new judges Mel B and Heidi Klum appearing on July 10th [15].
NBC is also scheduled to premiere their new dramedy “Camp” from creators Liz Heldens and Peter Elkoff, starring “Six Feet Under” actress Rachel Griffiths. It is about Little Hawk family Camp and the parents and kids that inhabit it [16]. “Crossing Lines” is another series scheduled for summer 2013 starring William Fichtner and Donald Sutherland [17].
Comcast/NBCUniversal’s cable networks are preparing for the future as well. The E! network is premiering a new reality show about US gold medalist swimmer Ryan Lochte called “What Would Ryan Lochte Do?”. It premieres April 21st at 10pm [19]. Bravo is premiering “Million Dollar Listing,” “Newlyweds The First Year,” and the ever so popular “Real Housewives of New Jersey,” all in the upcoming months [20].
Over the past few months, NBC has been green lighting and shooting upcoming fall pilots for the 2013 season. With 24 pilots (15 comedies and 9 dramas) NBC has the most of any major network. Some of the most anticipated include “About A Boy” from “Parenthood” creator Jason Katims, “Untitled John Mulaney/Lorne Michaels” comedy from the two previously named, along with “The Office” vet Craig Robinson’s untitled comedy [30]. For drama, “Hatfields & McCoys,” starring Virginia Madsen, “Wonderland,” a modern set Alice and Wonderland, and “Crossbones,” which John Malkovich recently signed onto [31].
![[25]](https://bejone03.expressions.syr.edu/trf235/files/2013/11/r-300x162.jpeg)
![[32] Boardwalk Empire - Award winning HBO series](https://bejone03.expressions.syr.edu/trf235/files/2013/11/Boardwalk_Empire_Feature.jpg)
![[34] Jack Black guest-starring on Conan](https://bejone03.expressions.syr.edu/trf235/files/2013/11/conan_60383.jpg "Jack Black guest-starring on Conan")
