Light Reading
Netflix intends to spend $3 billion on content rights, expand reach in Europe, and roll out service with US cable operators in the coming year.

Netflix to Spend Big, Strike Cable Deals in 2014

Alan Breznick
2/6/2014
50%
50%

Flexing its muscles as the world's leading online video player, Netflix plans to spend about $3 billion on content rights in 2014 as it snaps up more movies and TV shows and invests more heavily in original programming.

The OTT giant also expects to seal its first service partnership deals with US cable operators this year.

In its annual report for 2013, Netflix Inc. (Nasdaq: NFLX) said it will shell out $7.25 billion on its current content licensing deals with movie and TV studios over the next five years, including a record $3 billion this year and another $3.3 billion in 2015 and 2016. Those figures, of course, could always go up if the online video giant signs more licensing pacts with programmers and rights holders.

Of that $3 billion in 2014, Netflix aims to spend up to $300 million, or 10% of the total, on developing original content. Previously, the company, which took home its first Emmy awards for its House of Cards series last year, said it will bring back House of Cards and five other original series for new seasons while also launching its first animated series for adults, an "epic series" based on the adventures of Marco Polo, and new children's shows from DreamWorks Animation.

In its annual report, which was posted on its website earlier this week, Netflix also said it expects to embark on "a substantial European expansion" this year. The company, which last expanded to Scandinavia in late 2012 and the Netherlands last September and now operates in seven European nations, did not say where it would strike next. But previous press reports have suggested that it may target France and Germany next because of their high broadband penetration rates.

To finance that international expansion and heavier spending on original content, Netflix is seeking to raise $400 million through the sale of long-term debt. The company announced Tuesday that it will offer 10-year senior notes to investors to round up the cash for its ambitious plans.

Moreover, Netflix said it expects to launch its first integrated service with US cable operators in 2014, after years of clashing with the industry. In their annual letter to shareholders, Netflix CEO Reed Hastings and CFO David Wells said they "anticipate rolling out our first MVPD (multichannel video programming distributor) integrations soon with some of the smaller MVPDs."

Hastings and Wells did not name the cable operators. But, as reported here and elsewhere last fall, Netflix is purportedly negotiating with several major US MSOs, including Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Suddenlink Communications , about placing its popular streaming video service on advanced cable set-tops. Under the framework for these deals, the popular Netflix video streaming service would become an app on these set-tops. (See Netflix-MSO Deal in the Works?)

But the wording of the shareholders letter suggests that Comcast won't be serving up Netflix to its subscribers all that soon, even if it manages to work out a deal with its online video rival. Instead, it seems more likely that more midsized MSOs such as Suddenlink might be the first to offer a Netflix service to cable customers.

Netflix already has similar cable integration deals in place with two European MSOs -- Virgin Media Inc. (Nasdaq: VMED) in the UK and com hem AB in Sweden. But up until now it's been stymied in trying to strike such deals in the US because of content rights restrictions and strong MSO resistance to the idea. (See Com Hem Rolls Out Netflix.)

— Alan Breznick, Cable/Video Practice Leader, Light Reading

(4)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
albreznick
50%
50%
albreznick,
User Rank: Blogger
2/18/2014 | 9:57:19 PM
Re: Yes and No!
Well, Sam, now that Comcast is buying Time Warner Cable, you may not have to worry about that prospect. Looks like Comcast is already putting the kibosh on any deals between Netflix and TWC. So that may scotch other cable deals for Netflix too. 
sam masud
50%
50%
sam masud,
User Rank: Light Sabre
2/10/2014 | 2:43:02 PM
Yes and No!
I think it's great that Netflix is buying more content, BUT I don't like the idea of it getting into bed with MSOs in any way.
DOShea
50%
50%
DOShea,
User Rank: Blogger
2/6/2014 | 5:23:07 PM
Starting small?
I don't see one of the big cable operators doing this just yet, even though the possibility has been reported. The mention of Suddenlink or a company about that size sound more likely the type of operator that would actually move quickly to sign a partnership with netflix.
Ariella
50%
50%
Ariella,
User Rank: Light Sabre
2/6/2014 | 12:03:10 PM
Netflix
Netflix has been very successful here, so it's now wonder it wants to try to expand abroad. If it can apply its algorithms to anticipate European tastes and expectations as well as it does American ones, it should do very well. 
Flash Poll
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Interviews
From 4G to 5G: Alcatel-Lucent's Dave Geary

11|25|14   |   09:09   |   (1) comment


Dave Geary, President of Wireless at Alcatel-Lucent, talks about the evolution of the 4G market, small cells, partnerships, 5G and the IoT.
LRTV Huawei Video Resource Center
Building a Secure Telefonica Network With Huawei's High-End Firewall

11|24|14   |   4:37   |   (0) comments


Andrew Davies, IP architect of the Telefonica, a leading digital communications company, discusses the Huawei security gateway solution and putting the solution into the testbed.
LRTV Huawei Video Resource Center
Huawei Partners with Spirent to Verify CE12816's 10GE Port & TRILL Networking Capabilities

11|24|14   |   2:50   |   (0) comments


Spirent Communications is the world's leading supplier for telecom testing appliances and solutions. Spirent has been in a close partnership with Huawei for a long time.
LRTV Huawei Video Resource Center
Saudi Airlines & Its ICT Transformation

11|24|14   |   2:07   |   (0) comments


In this video, Saudi Airlines discusses its network problems and how Huawei's Agile Network is its all-in-one solution.
LRTV Huawei Video Resource Center
Huawei's Agile Switch Benefiting Saudi Arabia's Yamamah Hospital

11|24|14   |   2:40   |   (0) comments


Saudi Arabia's Yamamah Hospital speaks about how Huawei's Agile Switch has improved the medical service's network infrastructure.
LRTV Huawei Video Resource Center
FanPlay & Huawei Build a Wireless Agile Smart Stadium

11|24|14   |   2:13   |   (0) comments


FanPlay is a cloud-based white label service, which is effectively a football fan engagement platform underpinned by mobile payment technology.
LRTV Huawei Video Resource Center
Building an Agile Stadium

11|24|14   |   3:54   |   (0) comments


Stadiums may be thousands of tons of concrete and steel, but they now need to be agile. Being at the stadium may not be as alluring as it once was. Sports franchises and stadium operators discuss how to get fans back.
LRTV Huawei Video Resource Center
Huawei Helps ChinaCache Tackle Challenges in the Internet Industry

11|24|14   |   3:09   |   (0) comments


ChinaCache is China's largest content distribution network supplier. Huawei's CE12800 has provided ChinaCache with very strong support in its establishment of an infrastructure network.
LRTV Huawei Video Resource Center
Cefinity on Managed Security Services & Next-Generation Firewall

11|24|14   |   7:05   |   (0) comments


Cefinity is a cloud management service provider in Southeast Asia. Ivan Zhang, CEO of the company, discusses the implementation of security service management in the cloud era.
LRTV Huawei Video Resource Center
Huawei's Agile Gateway in the Eyes of Cefinity

11|24|14   |   2:11   |   (0) comments


Cefinity is a managed service provider for enterprise networks. The company currently uses Huawei's AR series routers for the most complete range of functions. CEO Ivan Zhang speaks about the advantages of the AR series routers.
LRTV Huawei Video Resource Center
CTO of Bus-Online Talks About Huawei's Agile Gateway

11|24|14   |   2:53   |   (0) comments


Bus-Online covers around 100 million users everyday. In addition to providing mobile TV, and advertising services to the public, Bus-Online has also entered the field of mobile Internet.
LRTV Huawei Video Resource Center
Amsterdam ArenA as an Agile Campus

11|24|14   |   3:31   |   (0) comments


The Amsterdam ArenA, home of the Ajax soccer team, can be a crowded space. ArenA has partnered with Huawei to work on bringing ample bandwidth to 53,000 people at the same time.
Upcoming Live Events
December 2, 2014, New York City
December 3, 2014, New York City
December 8-10, 2014, Reykjavik, Iceland
February 10, 2015, Atlanta, GA
April 14, 2015, New York City, NY
May 6, 2015, McCormick Convention Center, Chicago, IL
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 9-10, 2015, Chicago, IL
Infographics
Irish Telecom outlines the rise of VoIP technology, including its adoption within businesses and their perception of its quality.
Hot Topics
$38.3M: Ain't That a Kik in the SMS
Sarah Reedy, Senior Editor, 11/20/2014
Do You Have a 2020 Vision?
Dennis Mendyk, Vice President of Research, Heavy Reading, 11/21/2014
Operators Should Block Ads to Get Their Cut, Startup Says
Sarah Reedy, Senior Editor, 11/24/2014
$35B+ Spectrum Auction Dings Verizon, Shines Dish
Dan Jones, Mobile Editor, 11/24/2014
Amazon Eyes Ad-Supported Video – NY Post
Mari Silbey, Independent Technology Editor, 11/25/2014
Like Us on Facebook
Twitter Feed