As reported this week in Ad Age, Time Warner CEO Jeff Bewkes was asked by interviewer Charlie Rose what he now thought of Netflix, which had just reported record subscribers and earnings. As THR reported, Bewkes said:
"With fondness. I have a fondness for subscription television, and Netflix is subscription television, so 'Welcome, brother,' is what I have to say to them....I love those guys."
A few years ago, Netflix wasn't even on the map of incumbent PayTV operators (unless they were TDG clients, of course!). Just a few months ago, Bewkes himself compared Netflix to a small army in a small country, incapable of posing a legitimate threat to the true powers. Today, it seems, Netflix is sufficiently legitimate to be inducted into the hallowed halls of "subscription television."
While the accolades are nice, what Bewkes and others fail to realize is that Netflix is not just another subscription TV company limited to serving a specific geographic area. In fact, it is a geographically unbounded over-the-top video player that (1) has a tremendous head start on all competitors, (2) has cut billion dollar deals to secure high-quality content for years to come, and (3) is now reaching internationally, thus giving these same U.S. studios a completely different way of reaching consumers around the world. The worth of Netflix has improved not only among consumers but among content studios, a frustrating combination for incumbent PayTV providers in the U.S. struggling to ramp up their TV-Everywhere efforts.
Time Warner's quarterly financials were released on Thursday, reflecting a net loss of Residential Video subscribers (down to 12.19 million).
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