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 Custom TV
Advantech Accelerates 100G Traffic Handling

10|17|14   |   7:56   |   (0) comments


Paul Stevens from Advantech explains why handling 100GbE needs a whole new platform design approach and how Advantech is addressing the needs of equipment providers and carriers to give them the flexibility and performance they will need for SDN and NFV deployment.
LRTV Huawei Video Resource Center
Holland's Imtech Traffic & Infra Discusses Huawei's ICT Solution and Services

10|16|14   |   4:49   |   (0) comments


Dimitry Theebe is from the business unit at Imtech Traffic & Infra which delivers communications solutions for transportations. His partnershp with Huawei began about a years ago. In this video, Theebe speaks more about this partnership and what he hopes to accomplish with Huawei.
LRTV Huawei Video Resource Center
Huawei's Comprehensive Storage Solutions Vital for SVR

10|16|14   |   6:16   |   (0) comments


SVR Information Technology provides cloud services for academic and special sectors. With Huawei's support, SVR and Yildiz Technical University has established Turkey's largest and most advanced High Performance Computing system. CSO Ismail Cem Aslan talks about what he hopes Huawei's OceanStor storage system will bring for him.
LRTV Huawei Video Resource Center
Mexico's Servitron's Impression of Huawei at CCW 2014

10|16|14   |   6:35   |   (0) comments


Servitron is a network operator in Mexico that has been in the trunking industry for the past 20 years. Its COO, Ing. Ragnar Trillo O., explains at Critical Communications World 2014 that his company has been interested in the long-term evolution of LTE technology and its adoption for TETRA.
LRTV Huawei Video Resource Center
Building a Better Dubai

10|16|14   |   2:06   |   (0) comments


Abdulla Ahmed Al Falasi is the director of commercial affairs, a telecommunications coordinator for the government of Dubai. Their areas of service span across multiple industries, including police, safety, shopping malls and more. In this video, Abdulla talks about his department's work with Huawei.
LRTV Huawei Video Resource Center
Huawei Lights Up Malaysia Partner Maju Nusa

10|16|14   |   1:59   |   (0) comments


Malaysia's Maju Nusa is an enterprise partner to Huawei in networking, route switches and telco equipment. At this year's Critical Communications World in Singapore, CTO Pushpender Singh talks about what Huawei's eLTE solutions mean to his company and for Malaysia.
LRTV Custom TV
Evolving From HFC to FTTH Networks

10|15|14   |   2:19   |   (0) comments


Cisco's Todd McCrum delves into the future of cable's HFC plant, examining how DOCSIS 3.1 and advanced video compression will extend its life and how the IP video transition will usher in GPON and EPON over FTTH.
LRTV Custom TV
Exploring the Future of Cable Access

10|15|14   |   6:23   |   (0) comments


Cisco's Brett Wingo looks at where cable access architectures are heading, discussing the impact of DOCSIS 3.1, CCAP, Remote PHY, SDN, virtualization of cable networks and related technologies.
LRTV Custom TV
Optimizing & Monetizing WiFi

10|15|14   |   5:53   |   (0) comments


Cisco's Vince Pandolfi outlines the reasons for cable WiFi's rapid growth, lays out the issues with the technology and explains the new Cisco tools that can help operators monitor and improve their WiFi delivery.
LRTV Huawei Video Resource Center
Emulex & Huawei Collaboration Mutually Beneficial

10|14|14   |   4:17   |   (0) comments


US company Emulex collaborates with Huawei in areas such as blade servers and workload documentation. Mike Heumann of Emulex believes that Huawei has done incredibly well moving from a telecom company into servers and networks, working closely with customers to realize their needs.
LRTV Huawei Video Resource Center
Chile's VZION Looks Forward to Seeing More of Huawei

10|14|14   |   4:43   |   (0) comments


VZION is a systems integrator company in Chile with a focus on virtulization technology. In this video, Cesar Alcacibar talks about the challenges in virtualization and how Huawei helps his company to achieve the best results possible. Alcacibar is expecting more adoption and integration of Huawei technologies in Chile.
LRTV Huawei Video Resource Center
Pro-Datech & Huawei for a High-Tech Singapore

10|14|14   |   2:59   |   (0) comments


Pro-Datech Systems is a specialty IT solution provider based in Singapore. For an added value to its customers, the company uses Huawei's hardware and trusted performance and features for a total solution. It's looking forward to the creation of a lab, to be based in Singapore, for the two companies' coorporation on total storage solution.
Upcoming Live Events
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
WhoIsHostingThis.com presents six of the world's most extreme WiFi hotspots, enabling the most epic selfies you can imagine.
Hot Topics
Forget the Internet, Brace for Skynet
Stephen Saunders, 10/15/2014
HBO Will Go OTT in 2015
Mari Silbey, Independent Technology Editor, 10/15/2014
Google: Carriers & Cloud Providers Need to Cooperate
Mitch Wagner, West Coast Bureau Chief, Light Reading, 10/16/2014
CBS Takes OTT Plunge
Mari Silbey, Independent Technology Editor, 10/16/2014
iPad Air 2 Lets Users Switch Carriers Any Time
Mitch Wagner, West Coast Bureau Chief, Light Reading, 10/17/2014
Like Us on Facebook
Twitter Feed