They say imitation is the sincerest form of flattery. And, with Hulu yet to launch services outside its home market of the U.S., it’s no surprise, perhaps, that there are some sites bearing an uncanny resemblance to Hulu launching in other markets.
The latest is ivi.ru, a Russian portal that launched at the end of February with 9,000 hours of video content including films and television series, all ad-supported and free to view. Oleg Tumanov, the head of owners Digital Access Holding, even says the site was intentionally created as an “analogue” of Hulu, according to Vedomosti. (via Ria Novosti).
Digital Access is a music portal that used to be owned by Warner Music and Sony (NYSE: SNE) Music, among others, which was sold to ru-net II, a division of the investment firm ru-net Holdings, in February 2009. Digital Access also sells the ads on the site.
The site also streams content from the Russian broadcasts of networks like TNT and MTV. Vedomosti notes that 100 content owners have signed up to the service so far.
Looking at the similarities between Hulu and ivi.ru, it’s surprising to think there haven’t been more companies litigating to protect their web site designs as extensions of their own brands, particularly those companies that ultimately have international ambitions.
Russia has track record…
—The main page for the search engine Yandex, of which ru-net is also a shareholder, owes a lot to Google’s minimalist approach.
—Rutube, on the other hand, doesn’t look like YouTube, but certainly rhymes with it. (The site, owned by the media division of the energy giant Gazprom, is also a video uploading portal).
Maybe it’s hard to win copy-cat cases across international boundaries. Facebook lost a case against StudiVZ in Germany last year, in which it claimed that the site ripped off its look and some of its code. Meanwhile, Groovle.com, a Canadian site that lets users customise their search pages, won a case brought against it by Google (NSDQ: GOOG), when the search giant said Groovle’s domain name was too similar to its own.
Yes Movielink and Cinemanow sucked for a long time, and iTunes never became a huge movie seller. That was 2-3 years ago. So what happened since, as online streaming has taken off? Turns out, not much on the uptick, only downside, in terms of revenues. According to new data coming out later this week from ScreenDigest, the total revenues from downloads came to $291 million in 2009, down from $360 million for FY09 that research firm was forecasting even as late as first half last year. The expected holiday surge never arrived, it says. It looks at data from iTunes, Zune (Xbox) Video Marketplace, Sony PS3 Playstation Network, Amazon VOD, four of the biggest online/digital sources accounting for 97 percent of the market; iTunes alone has 80 percent share, it says.
What’s missing: online streaming sources like Netflix (NSDQ: NFLX) and Hulu. Neither of them are downloads; also the former is tough to breakout revenue-wise separately as the DVD packages bundle in streaming, and the latter, which doesn’t have a lot of movies, is ad-supported. But these two could also explain some of the slower growth trend: as the number of free options to online streaming video increase (TV network shows and other short form), users are entertaining themselves by other means than conventional movies. Another reason, according to SD analyst Arash Amel: “The reason has been a failure by content owners to grow consumer interest in the digital product.” Meaning they haven’t marketed it well. “We don’t believe the 2009 experience was seasonal, or purely economy related…we consider the problem to be endemic.”
And the analyst doesn’t see anything major changing the equation in the next five year, and “we’re taking a 30 percent+ chunk out of our 5-year forecasts for the total movie downloads business, until we see signs that [download] proposition are being given unconstrained strategic priority by Hollywood.” That means from a forecast of $1.5 billion in 2014, it will now barely reach $1 billion by then, the firm believes.
US online movie downloads market
Internet VOD: $24m
Total (DTO+IVOD): $122m
Total (DTO+IVOD): $213m
Total (DTO+IVOD): $291m
Total (DTO+IVOD): $943m
As if Blockbuster (NYSE: BBI) didn’t have enough competition, this week’s news that Wal-Mart (NYSE: WMT) is buying digital home video service Vudu comes just as the Dallas-based movie renter is taking a cautious approach to build its vending and on-demand. Blockbuster’s net loss widened to $434.9 million in Q4 from $359.8 million last year. During the earnings call, Jim Keyes, Blockbuster’s chairman and CEO, said that the company will proceed cautiously as to how aggressive the company should be on store closing and pursuing its streaming and vending services. Keyes said he was encouraged by Netflix’s and Redbox’s agreements with Warner Bros. (NYSE: TWX) on holding new releases for a 28-day window.
Blockbuster has already closed several hundred retails outlets, while at the same time, it’s added 2,000 new Blockbuster Express kiosks. The company plans to rapidly expand that kiosk business to 7,000. The Blockbuster On-Demand service remains small, with MSO partners including Mediacom and Suddenlink. Keyes: “If the other studios follow suit on the 28-day window agreement with Redbox and Netflix (NSDQ: NFLX), that would make sense to keep stores open. We’re not just about rentals, we have a strong retail sales business. So if everyone has to keep to that 28-day window, we would be in a good position.
Asked if Blockbuster a being a bit too conservative in its approach to the digital VOD business, Keyes responded, “This is an industry that is going to experience more dynamic change over the next six months. These times demand a conservative approach.”
On the digital and international end, executives said that Blockbuster is looking for strategic partners in other companies to digital and retail stores. CFO Tom Casey said, “You wouldn’t want to see 10 different Blockbuster digital solutions worldwide. We want one bridge to digital. If someone wanted the digital assets and not the stores, we could do a straight sale. But mostly, we’re looking at this as a shared partnership. But it will depend on the buyer and on the price.”
Asked about Wal-Mart’s purchase of Vudu, Keyes said that all the activity in the VOD space will work in our favor. “We think the Wal-Mart deal is ultimately a good thing. Best Buy has declared as well. You have to understand, they’re not just going to stock their own brand. They’re going to have to stock the leading brands, and that will include Netflix and perhaps Amazon (NSDQ: AMZN) as well. And Wal-Mart is in a perfect position to work with consumer electronics companies to press them on VOD streaming capabilities. As for the competition, we’re not worried. The Blockbuster brand is so well-known. Netflix is much more longtail. We’re known for hit movies. So this is all very good to us.”
While Blockbuster might be moving too slowly on its overall digital business, Keyes said he believes that mobile is a space it can take the lead on. He expressed disappointment that the company didn’t get much traction for its announcement this month it would provide on-demand video services to the HTC HD2 smartphone. “Netflix has said that it is not interested in going into mobile. So we think we’ve got a nice head start in mobile.”
Two months after hiring former HBO CEO Chris Albrecht to oversee Starz as part of an original programming push, Liberty Media (NSDQ: LINTA) says it is evaluating strategic alternatives for Starz’s Overture Films division, which was established three years ago to produce and distribute 8-12 full length films annually. In Liberty Media’s earnings release, Albrecht says that Overture “continues to face significant challenges” and that “while no final decisions have been made, we do not expect it to incur annual operating losses in the future of the same magnitude that it has experienced in recent years.”
The news was a contrast to what was otherwise a strong, across-the-board quarterly performance at Liberty Media. The breakdown of results at Liberty’s many units: Liberty Interactive posted a 14 percent jump in revenue to $2.7 billion—driven by strong sales at home shopping channel QVC. The company’s smaller ecommerce business, which includes Backcountry.com and Bodybuilding.com, posted a 17 percent increase in revenue.
Sales at Liberty Starz, which includes the Starz premium networks and broadband service, were up six percent, although operating income dropped slightly because of production costs of original series like Crash. And Liberty Capital, which includes the Starz production and distribution units, saw its revenue jump 18 percent, although operating income was down in part because of expenses associated with Overture Films and Starz animation. Overture’s titles include Capitalism: A Love Story and Sunshine Cleaning.