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
LRTV Huawei Video Resource Center
Sales Director of INIT on Plug & Play Switch Devices

9|19|14   |   3:21   |   (0) comments


INIT Italy uses both the Huawei S5700 and S7700 series switches for the campus LAN environment. Sales Director Andrea Curti says their company chose these Huawei devices over others because of their performance, flexible scalability and plug-and-play features.
LRTV Huawei Video Resource Center
Saudi Arabia Upgrades Vocational Training System

9|19|14   |   3:31   |   (0) comments


The Technical and Vocational Training Corporation (TVTC) has 100,000 students, 150 government-owned institutions and oversees 1000 private institutes. The CIO of TVTC explains that Huawei devices have allowed them to manage multiple datacenters using just one software program, scientifically tracking the progress of students and teachers, saving them millions.
LRTV Huawei Video Resource Center
Huawei's Media Solutions Are Here to Stay

9|19|14   |   4:35   |   (0) comments


The current media revolution requires rapid upgrades in technology. New formats (HD, 3D, 4K etc.) and the subsequent explosion of file sizes demand sophisticated network and storage architecture. Social media and the multiple distribution channels require a robust asset management system. Gartner analyst Venecia Liu speaks about the current technological trends in ...
LRTV Huawei Video Resource Center
Microgenesis on Huawei's Switches

9|19|14   |   3:57   |   (0) comments


Microgenesis is a solutions and system integrator company in the Philippines whose areas of expertise include data centers, networking and security products. In this video, Executive Director Jeffrey Choa talks to us about his customers needs and they benefit from using Huawei switches.
LRTV Huawei Video Resource Center
Network Solutions Help the Philippines Jump Ahead

9|17|14   |   2:59   |   (0) comments


In the past, the Philippines has under-invested in technology. Now, the CEO of Softshell talks about how Huawei products help the Philippines jump ahead as the economy improves.
LRTV Huawei Video Resource Center
VCS Observation for Safer Cities in the Netherlands

9|17|14   |   5:20   |   (0) comments


Holland's VCS Observation has been operating for 22 years. Its main goal is to get cities safer. CEO Wim van Deijzen tells us some of the challenges his company faces and how Huawei is helping to overcome these challenges.
LRTV Huawei Video Resource Center
A Conversation With Serbia's Ministry of Interior

9|17|14   |   4:38   |   (0) comments


At HCC 2014, the Assistant Minister of the Ministry of Interior of the Republic of Serbia talks to us about his projects and corporation with Huawei. Solutions like Safe City and E-Government and services like cloud computing are just some of the areas his department is interested in.
LRTV Huawei Video Resource Center
IHS Analyst Discusses eLTE at CCW 2014

9|10|14   |   7:09   |   (0) comments


Thomas Lynch, associate director of critical communications at IHS Technology, talks about broadband in critical communications.
LRTV Huawei Video Resource Center
TCAA on Huawei eLTE: A Broadband Solution for Mission-Critical Communications

9|10|14   |   2:29   |   (0) comments


At CCW2014 in Singapore, the TCCA's Phil Kidner talks about the importance of broadband data for critical communications.
LRTV Custom TV
Spotlight on Cisco: SDN for Optical Networks

9|8|14   |   9:27   |   (0) comments


Cisco's Greg Nehib talks OpenFlow and more on the 'Software-Defined Networking for Optical Networks' panel at the Big Telecom Event in June 2014.
LRTV Custom TV
Cisco's Evolved Programmable Network (EPN)

9|8|14   |   4:05   |   (0) comments


A look at the various demos Cisco showed at Light Reading's Big Telecom Event highlighting Cisco's EPN innovation and how SDN and NFV technologies are enabling a variety of new services.
LRTV Huawei Video Resource Center
The Future of Ultra-Broadband, With Kevin Kelly (UBBF2014)

9|5|14   |   1:13   |   (1) comment


If you think the technological changes we've seen up to now are astounding, just wait until you see what the future has in store. Discuss upcoming breakthroughs with Kevin Kelly, Founding Executive Editor of Wired Magazine, at the Huawei Ultra-Broadband Forum on September 24.
Upcoming Live Events!!
September 23, 2014, Denver, CO
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 2, 2014, New York City
December 3, 2014, New York City
December 9-10, 2014, Reykjavik, Iceland
June 9-10, 2015, Chicago, IL
Infographics
A survey conducted by Vasona Networks suggests that 72% of mobile users expect good performance all the time, and they'll blame the network operator when it's not up to par.
Today's Cartoon
Vacation Special Caption Competition Click Here
Latest Comment
Hot Topics
AT&T: We'll Bundle Fixed Wireless & DirecTV
Mari Silbey, Independent Technology Editor, 9/15/2014
New NFV Forum Focused on Interoperability
Carol Wilson, Editor-at-large, 9/16/2014
NFV & The Data Center: Top 10 Takeaways
Sarah Reedy, Senior Editor, 9/18/2014
Connecticut Cities Crowdsource Gigabit Nets
Jason Meyers, Senior Editor, Utility Communications/IoT, 9/15/2014
Pics: LR's Women in Telecom Breakfast
Sarah Reedy, Senior Editor, 9/16/2014
Like Us on Facebook
Twitter Feed