The company is pulling back the covers (a bit) on its plans to produce kids’ shows and sitcoms via its “Amazon Studios” unit, which has already been dipping a toe into the movie business. Word of the new push leaked out earlier this year, via hiring notices — such a useful way to track a secretive company! — and now Amazon is ’fessing up.

A bit. Amazon Studios head Roy Price won’t discuss his budget, or the number of shows he intends to make, or a timeline for getting them on the Web. But he is willing to sketch out a couple of notions:

• Like the movie effort, Amazon is soliciting scripts for new productions via the Web, and will pay out modest fees — $10,000 for an option, $55,000 if a show gets produced, plus possible royalties — for stuff it likes.
• The big difference between his TV effort and his movie effort is that Amazon intends (with some exceptions) to actually make the shows, and distribute them via its own “Amazon Instant Video” offering. (For the movie effort, Amazon is feeding scripts it likes to Warner Bros., which will decide what to do with them.)
• Price says the shows he does make should look and feel like “real” TV shows, with commensurate production budgets.

Lots of wiggle room in all of this. So the big news is that Amazon is formally declaring that it’s in the original video business — just like Google, Hulu, Netflix, Yahoo and lots of other tech guys.

Not surprisingly, Price doesn’t want to talk about Amazon’s place in that newly formed constellation. But he does point out that this isn’t the first time the company has started making its own media. Amazon has already launched its own book-publishing business, and has started poaching “real” authors for that effort, and that has traditional book publishers terrified.

Hard to see Hollywood freaking out about this right now — particularly when they’re making a ton of money selling Amazon their old shows. But if this ever takes off, that could change.

This morning, for example, Google’s YouTube is announcing a deal to rent movies from Viacom’s Paramount studio. The move will bring some 500 titles to Google, ranging from newish hits like the “Transformers” movies to oldies like “The Godfather” trilogy; users will also be able to rent the movies from Google’s new Google Play hub.

The announcement means that Google, which has been struggling for years to figure out Hollywood, now has rental deals with five of the six big studios: Paramount, Sony, Time Warner’s Warner Bros., Disney, and Comcast’s Universal.

The lone holdout is 20th Century Fox, which, like this Web site, is owned by News Corp. All six studios rent their movies via Apple’s iTunes. It’s worth noting that Paramount is one of the few studios that has experimented with direct-to-customer sales and rentals, via its own Web site.

Totally evil.

Also, totally untrue.

So says Netflix PR rep Steve Swasey. “Completely bogus,” he says.

And I’ll take his word over the tale that has spread over the Web the last few days — that whoever owns the streaming rights to the 1992 Whitney Houston/Kevin Costner film had yanked them away from Netflix after Houston’s death, so it could make more money selling discs.

The reason that story didn’t make any sense to me isn’t because Hollywood studios are paragons of virtue, but because digital licensing deals are usually rigid, and start and stop on certain dates. If they allowed rights holders to yank their stuff on a whim, then we’d see it all the time, right?

And sure enough, it turns out Netflix hasn’t had the streaming rights to “The Bodyguard” — which belong to Time Warner’s Warner Bros. — since the end of last year. “We didn’t renew it,” Swasey says.* Netflix still rents the DVDs, if you’re into that kind of thing.

Ah. But what about that Netflix rep who supposedly told talk show host and publisher Dan McDermott that a “production company” was pulling “all the streaming titles we have of Whitney Houston,” so it can make a “very large amount of money”?

This one is harder for Swasey to say is categorically false, since he didn’t hear the exchange himself. But he says it’s “highly doubtful” that a rep told any caller anything beyond the fact that the movie wasn’t available. Because support reps are trained to offer very little information beyond that, Swasey says.

So, perhaps a rep did think way outside the box here, but I tend to believe Swasey’s story here, too. Always more fun to imagine big companies behaving outrageously, but if that happened every time we imagined it did, it wouldn’t be outrageous.

*Perhaps there’s a good story about Warner Bros. titles leaving Netflix in general, since the studio and its parent company have had a … strained relationship with the movie service.

The two companies put out a press release without a whole lot of detail (below) but are holding a press conference shortly where we may be able to tease some more out of them. (Update: Well, that was a waste of 10 minutes. Verizon is also promising to make executives available for interviews this morning, but my expectations are now very, very, very low. Subterranean.)

Right now, all they’re really saying is that they’ll have video content, delivered over the Web and via mobile devices, and that consumers will be able to stream some of it and download some of it.

Roping Redbox into the JV — Verizon will own 65 percent of the company, and the movie rental service will have the remainder — makes sense, because it will give the unnamed service a digital-plus-physical option. Just like Netflix and Dish Network’s Blockbuster already have.

But while the big media companies are very happy to license some of their content to Verizon or any other player that wants to pay for digital rights, they are much less comfortable with Coinstar’s Redbox, and have tangled with that service in court.

Right now, for instance, Redbox has announced that it won’t work with Warner Bros.’ new 56-day “window” for new movies on DVD, and will buy discs from third-party sources instead of getting them directly from the studio. So it will be interesting to see how Warner Bros. and parent company Time Warner treat the new venture, and whether that dynamic plays out with other content guys.

VERIZON AND COINSTAR’S REDBOX FORM JOINT VENTURE TO CREATE NEW CONSUMER CHOICE FOR VIDEO ENTERTAINMENT
Joint Venture Will Offer the Best of Both Worlds – Physical and Digital – to All Consumers Nationwide

NEW YORK – Verizon and Coinstar, Inc. today announced the formation of a joint venture that will create a new choice for quality- and value-conscious consumers seeking a simple and affordable way to access the video entertainment they crave. The venture’s services will offer all of the convenience, simplicity and value of Redbox® new release DVD and Blu-ray Disc® rentals combined with a new content-rich video on-demand streaming and download service from Verizon.

The joint venture plans to introduce the product portfolio in the second half of 2012. It will offer subscription services and more in an easy-to-use, flexible and affordable service that will allow all consumers across the U.S. to enjoy the new and popular entertainment they want, whenever they choose, using the media and devices they prefer. Additional brand and product information will be revealed in the coming months.

“When you consider the core elements the parties bring to this venture – our powerful brands; our national rental kiosk footprint; our anytime, anywhere network presence; and our mutual commitment to customer-focused innovation – it’s clear that Verizon and Redbox are a powerful entertainment team,” said Bob Mudge, president of Verizon consumer and mass business markets.

“Consumers rely on Redbox for the latest new release movies at a great value, and our joint venture with Verizon will enable us to bring them even more value by offering expanded content offerings and greater flexibility for how and when they enjoy entertainment,” said Paul Davis, chief executive officer of Coinstar, Inc. “This alliance is the result of a deliberate and strategic process to identify a partner who shares our commitment to delivering innovative solutions to consumers. We look forward to rolling out the shared benefits this venture will bring to consumers, retailers, and shareholders.”

This venture between Verizon and Redbox will create the kind of national multi-platform product that customers are demanding from video entertainment service providers. It will leverage Verizon’s industry-wide relationships with entertainment content providers, its advanced cloud computing technologies and state-of-the-art IP network infrastructure to distribute video on-demand content to its customers.

“The joint venture will combine the accessibility and value of Redbox with Verizon’s vision for a borderless lifestyle – where consumers easily accomplish what they want or need to do, on their terms, through the power of the network,” said Mudge. “Together, we are erasing old technology boundaries, freeing people to spontaneously enjoy the entertainment they want, whenever they choose, using the devices and media they prefer, at home or away.”

By offering instantly available online and mobile content with immediate access to physical media through rental kiosks, Verizon and Redbox will be uniquely positioned to deliver the best of both worlds – digital and physical – to consumers across the country.
The joint venture is a limited liability company with Verizon holding a 65 percent ownership share and Redbox holding a 35 percent ownership share at the outset.

Which means we’re in for an interesting game of chicken between Time Warner’s movie studio and the two rental services. And the result will be meaningful for Netflix, too.

Here’s where things stand: Warner Bros wants to double the “window” that keeps new DVDs away from rental services from 28 days to 56 days, a strategy that’s supposed to encourage would-be renters to buy DVDs instead. Netflix intends on going along with the plan and will be able to buy discs directly from the studio at wholesale rates.

Warner plans on announcing the new terms next week at the Consumer Electronics Show. But though I reported yesterday that Dish Network’s Blockbuster and Coinstar’s Redbox had signed on, the two companies — directly and indirectly —  say that’s not the case. Earlier today a Coinstar rep told me the company won’t agree to a longer window, and a person familiar with Blockbuster’s thinking now says the same thing.

If neither side backs down, then Blockbuster and Redbox would have a marketing advantage over Netflix, since the companies could boast about getting new movies before their rival.

But that assumes they can get their hands on the movies. That will be costly, and perhaps quite difficult.

In the past, Redbox has bought movies directly from retailers (Netflix also used to do the same thing in the service’s early days. But chains like Wal-Mart and Target have instituted buying caps on their discs  that are supposed to thwart that strategy. (Thanks, Janko Roettgers.)

Grab your popcorn!

And if you didn’t understand that one, he offered another metaphor: A “200-pound chimp.”

In the following months, Bewkes cut back on his rhetoric, which may or may not have had anything to do with a lucrative deal to sell reruns of “Gossip Girl” to Netflix. But now that deal has been inked, Netflix stock has been crushed and lots of smart people think the video service may be on a permanent spiral.

So here’s Bewkes again, damning his new partners with very faint praise, this time in the Financial Times instead of the New York Times: Netflix and similar services (read: Hulu and Amazon, for now) can’t get the best stuff anymore, he says, and are stuck showing “archival content that nobody would want in Blockbuster.”

Not that there’s anything wrong with that! Bewkes adds. “It can do certain things and not other things. It can fly, it’s not a submarine. Don’t turn a hamburger into a cow.”

And that is how a pro mixes metaphors and backhanded compliments.

Again, remember that the real purpose of this stuff isn’t to hurt Netflix CEO Reed Hastings’s feelings — Hastings can probably take it — but to make Time Warner shareholders feel better about the company’s cable holdings. Because Time Warner’s cable channels — like TBS and TNT, and its HBO premium channel — are absolutely competing with Netflix for viewer time and dollars, no matter how much either company tries to insist otherwise.

Does this sort of semi-smack-talk entertain you? (It’s okay to admit it. Me, too.) Then you’ll want to check back on Tuesday: Both Bewkes and Hastings are scheduled to present that day at the annual UBS Media/Telecom conference. I’ll be there to record the slings and arrows, and I’ll report back.

In all, physical sales of both hardware and software totaled $1.08 billion, up from $1.07 billion year over year, according to NPD Group’s monthly U.S. game industry report.

The biggest console performer was the Xbox for the ninth month in a row. It sold 393,000 units, up 21 percent compared to October 2010 — resulting in a 44 percent industry share.

David Dennis, Group Product Manager of Microsoft’s Interactive Entertainment Business, told AllThingsD that sales were driven by blockbuster games that started to launch in September and grew in October.

During the month, six of the top 10 console games were available on the Xbox, including Battlefield 3, Batman, NBA 2K12, Rage, and exclusives including Forza Motorsport 4 and Gears of War 3.

The other hardware platform that performed surprisingly well was Nintendo’s portable 3DS, which clearly has benefited from a steep price drop. After a poor reception in July, Nintendo slashed the price of the 3DS to $169.99 from $249.99.

The 3DS was the second-best-selling hardware platform, and when combined with the older DS model sales, Nintendo sold 25 percent more compared to last October.

In all, it sold 1.65 million units, Nintendo said, to put it on track to surpass the first-year total of the Nintendo DS, which sold 2.37 million in its first 12 months on market.

Nintendo’s home console system, the Wii, didn’t do as well. It sold 250,000 units.

Disney has re-upped a two-year-old deal with Netflix to stream older shows that aired on ABC, ABC Family and the Disney Channel. And it announced what is essentially the same deal with Amazon, which will make the shows available via its Amazon Prime streaming service.

The Amazon deal also includes animated shows featuring Marvel characters, and it’s possible that the two deals have minor differences. The Netflix release, for instance, says that some shows that are still on the air — like “Grey’s Anatomy” — will be available 30 days after the last episode of each season runs on TV. There’s no reference to window length with Amazon.

But for the average Web video viewer, this stuff is going to mean the same thing: Both Amazon and Netflix are going to have a bunch of old ABC shows. A few of them will be programs that are still running on TV, but they’ll be from previous seasons, not this year’s reruns. And everything else will be even older.

That’s now the standard for most Big TV Web-video licensing deals. The networks and studios are quite happy to sell their shows to digital distributors, as long as they’re a bit musty.

It’s basically found money, and it will drop straight to Disney’s bottom line, just like equivalent deals at Comcast’s NBC, News Corp.’s Fox, etc. (News Corp. also owns this Web site).

And the networks are finding ways to sell the same stuff multiple times, like today’s pacts, or deals announced earlier this month to show CW Network shows on Netflix and Hulu, which (could) bring more than a $1 billion in new revenue to owners CBS and Time Warner.

The deals also show that Amazon continues to cut into the lead Netflix has built up in its Web video catalog. Netflix is moving toward an exclusivity strategy, where it pays a premium for stuff you’re not going to be find anywhere else on the Web. But it can’t fill its 20,000-title catalog with exclusives alone. And in this deal, at least, it doesn’t appear to have carved out any exclusives at all.

When word first got out that most of Hollywood and the tech industry was working on a “Giant Media DRM Cloud Coalition Featuring Everyone Except Apple and Disney” (and Amazon ), the safe bet was to assume the thing would never see the light of day.

But here it is. Today you can buy “Horrible Bosses,” the first UltraViolet-blessed movie, on DVD or Blu-ray, and it will come with a code that will let you stream and/or download the film on other devices, like iPads, Android phones and laptops.

At least in theory. Time Warner’s Warner Bros. showed me some slides yesterday that spelled out how it’s supposed to work — digital access to the movie is tethered to the Flixster app/site the studio bought in May, using Facebook as a login (Mark Zuckerberg = Big Media’s new buddy). But I can’t vouch for it in any way, because I have no idea if it really works.

The idea, though, makes perfect sense: Of course a DVD purchase should entitle you to watch the same movie on multiple machines.

And if Warner Bros. doesn’t charge a premium for UltraViolet movies — which they don’t appear to be doing with “Horrible Bosses” — then it makes a whole lot more sense.

No one is going to get too excited about the prospect of watching “Horrible Bosses” on your laptop and your TV. But Warner Bros., which has been banging the drum hard on this cloud/locker idea, will be rolling out big movies for UltraViolet later this year, including the newest “Harry Potter” and the “Hangover” sequel. Sony will chip in some movies soon, too.

And later on, the UltraViolet folks promise that they’ll have more movies, and more compatible devices, too, like connected TVs and game players like Xbox 360, etc.

A couple of things to think about as this stuff rolls out:

• The UltraViolet people say they can make this work without buy-in from Apple and Amazon, both of whom are launching their own not-that-compatible cloud media services. I’m not so sure about that. For now, UltraViolet is leaning on Flixster, which is already well-distributed on both iOS and Android — which means this should work on Amazon’s Kindle Fire, too. But there will be plenty of places for Apple or Amazon to flex their muscles and make it more difficult for UltraViolet down the line. On the other hand, the studios pushing UltraViolet have stuff that both Apple and Amazon want — digital rights for their movies and TV shows — so there could also be some horse trading.
• All of this only matters if people still want to own movies. The movie guys are quite clear about their motivation for UltraViolet — they think it will sustain a huge revenue stream by encouraging DVD sales. But the technology that makes UltraViolet’s locker work (in theory) also means there’s no reason to own a film at all — if you can pull down whatever you want from the cloud, wherever you are, who cares whether you “own” it or not? This concept used to be hard for people to grasp, but not anymore — which is why Netflix, despite its months of missteps, still has some 24 million subscribers.

Pay $3.99 and you can watch Optimus Prime and his pals romp through Chicago on your PC as many times as you’d like, for up to 48 hours. If you’re running a Windows machine, you can pay $4.99 for an HD stream (you’ll need to have Microsoft’s Silverlight installed for both versions, so no iPad/iPhone option).

Advertising Age describes this as an end run around Netflix, but since Reed Hastings’s video service never streams movies during their initial VOD/DVD window, a more apt analogy would be Amazon and Apple, which do.

Studios like Time Warner’s Warner Bros. have also experimented with renting movies directly via Facebook, but those are generally older catalog films, not fresh stuff.

You can see why Paramount would be interested in trying this out — if it works, the studio keeps all of the rental fee, and it establishes a direct billing and marketing relationship with its customers — but it’s also easy to see the hurdles.

Unlike Apple, Amazon and Facebook, etc., Paramount will have a difficult time finding its fans. And once it does, it will require them to pull out a credit card to complete the transaction — a PayPal, Facebook Credits or iTunes account won’t help you here.

Paramount is careful to describe this as a “toe-dip” experiment. Nothing wrong with that. Hard to see where this leads, though.

But one of the most important elements of today’s news will take place outside of Facebook’s walls. A crucial part of the new strategy involves letting people sign up for someone else’s site, or service, with a single click, using their Facebook ID.

In other words, lots of big players are going to start sharing their locks and keys with Facebook.

The trade-off is straightforward: You give up (some) control of your own territory, with all the attendant risks that come with that, and in return you get a lot more people showing up at your door.

The media companies that are working with Facebook today are familiar with this dynamic — it’s quite similar to the one they face when they work with Apple and its App Store.

And my guess is they’re now more willing to engage so deeply with Facebook precisely because they’re already deep with Apple. This helps them gain a bit of leverage back.

Hollywood, for instance, doesn’t want Tim Cook to control digital access to their stuff in the way that Steve Jobs locked in the music industry. So it’s likely to let Facebook become an authentication system for various locker/cloud strategies the studios roll out, most notably their Ultraviolet program coming out this year. The cable industry has talked about the same thing.

I don’t think you’re going to see this kind of really deep integration announced today, though. Instead, you’ll see the groundwork for it.

Warner Bros’ Flixster, for instance, will be a launch partner, and that service’s new features allow users to share their collections of movies they watched and would like to watch with their friends. And once you’re signed up for that, it’s easy to imagine registering collections of movies that you actually own with Flixster, too. And once you’ve done that, you could access them from a locker/cloud service, all using your Facebook ID and password.

That’s a (potentially) very big deal. Keep your eyes open.

[Image via Shutterstock/Péter Gudella]

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I’ve given the service — which uses the Flixster brand that Warner Bros acquired earlier this year but which the studio built on its own over the last 12 months — a quick spin. Given that it just went into public beta yesterday, there’s no way to really assess how it’s going to work. Particularly since it’s supposed to be a social experience, and if no one you know is using it, it can’t be that social.

That said, you can at least get a sense of what Warner Bros. is trying to do here, and it’s a lot: They want Flixster to serve as your starting point whenever you’re thinking about renting, buying or watching a movie, or even when you’re thinking about thinking about it.

The free service ties into users’ Amazon, Apple iTunes, Hulu and Netflix accounts — as well as your hard drive, if you let it. And it lets you and your friends see what you’ve already watched, via “collections” that get displayed as movie posters (it doesn’t seem to have hang-ups about the “Bork law” that Netflix says prevents a Facebook integration the rental service wants to launch in the U.S.). It can also direct you back to those services when you want to watch something else.

And if you’d like to see a movie that’s actually in theaters, it can help there, too, via links to movie reviews, trailers and online ticketing services. You can also imagine how this will tie in to “Ultraviolet,” the cloud/locker system for video that Warner and a big coalition of movie studios and tech companies (except for Apple and Amazon) are pushing.

Sound like a lot of … stuff? It is! And the scope of the service’s offerings, plus the fact that it requires a standalone download (for Mac and PCs only for now, though mobile apps will be coming), may be a lot for casual video fans to take in. Especially since Facebook and Twitter already do a pretty good job of letting you and your friends gab about movies — without the privacy worries of letting a service look into your Netflix queue or root around in your hard drive.

And again, since the service is really supposed to shine once you can start sharing your likes and dislikes with friends, getting enough folks to sign on might be a challenge. Still, there’s nothing wrong with trying something big and ambitious.

Am I a total nerd that I am completely stoked to see the the last “Harry Potter” movie this weekend and completely bummed it is over?

For those who love the films, here’s a great compilation Warner Bros. did of the whole series:

You can chillax, Mark Zuckerberg–it’s not “The Social Network 2: The Winklevii Stroke, Stroke, Strooooke Back.”

In fact, it’s more like: “You’ve Got Social Network Mail.”

That’s because Facebook and AOL will star together in a just signed movie, which will be made from a young adult novel that will not hit the shelves until November.

Titled “The Future of Us,” the book is set in 1996 and concerns two friends who sign onto AOL–the Facebook of its day–only to find their pages on the social networking giant from 15 years hence (as in now!).

Agonized agonizing presumably ensues, probably around how to erase all those drunken college photos.

“The Future of Us” has a Facebook page, of course, which noted its screen-rights sale to Warner Bros. The book itself will be published in November in a big printing by Penguin’s young adult imprint, Razorbill.

As I wrote in April, YouTube is adding movies from big studios including Time Warner’s Warner Bros., Sony and Comcast’s Universal to existing service, which has previously had a limited selection of titles from small studios.

For now, the YouTube movie store appears to be a work in progress: Google says it will rent newish movies like Inception, The King’s Speech, Little Fockers from the store, but so far I can’t find any of them. Same goes for new old titles like Caddyshack, which are also MIA.

Once YouTube gets this thing ready for prime time, though, it’s going to look very similar to what consumers can already get from competitors like Apple and Amazon: The ability to rent a movie that they can watch anytime over a 30-day period, except that once they start watching it they’ll have 24 hours before it evaporates. Pricing should be comparable to YouTube’s peers — $3.99 for new movies $2.99 for older ones.

Beyond that, the only wrinkles of note here:

• As I reported last month, the movies will be streamed, not downloaded. So presumably you’ll need a live Web connection to watch them, unlike Apple’s videos, which reside on your device for the duration of the rental.
• It’s unclear whether consumers will have to sign up for Google Checkout or some other Google-specific e-commerce platform to rent the movies; a FAQ sent out by Google only mentions that “the service accepts all major credit cards.”. Not linking the service to a Google account may make things slightly easier for consumers, since it’s an extra step they won’t have to take. On the other hand, you’d think Google would be very interested in establishing a credit card relationship with their customers, like Amazon, Apple and Netflix do.

By all accounts, this is an intermediate, incremental step for Google, which has had movie rentals for a year but hasn’t had much to show for it. Now it has the backing of some big studios, but is missing others, including News Corp.’s Fox (News Corp. also owns this Web site), Viacom’s Paramount and Disney.

Even if YouTube does bring on more partners — Paramount seems like a particularly long shot, given the ongoing Viacom/YouTube lawsuit, but the rest could show up one day — that will just bring Google up to par with other online a la carte movie rental outlets, which haven’t gained much traction yet.

Nothing wrong with that, but that doesn’t seem to be the end game for either Google or the studios. Google seems interested in building up YouTube, period. And if making video rentals available as part of the huge swell of content that lives on the site helps, then great.

The movies will also work on Google TV, which can use any help it can get. So that’s good, too.

At least part of Hollywood, meanwhile, seems to believe it can keep its DVD business alive by launching a locker/cloud system that would give disc owners the right to watch their movies whenever they want, on different devices . They’re also gung ho about anything that isn’t a Netflix all-you-can-eat subscription plans.

I’m doubtful that can work. Because beyond kids’ movies, which get watched hundreds and hundreds and hundreds of times (I know the name of every character in Cars – try me!) most consumers don’t want to watch a movie multiple times. It’s not like a music collection, which does make quite a bit of sense in the cloud.

But the studios seem to like this idea, and at least some of them are convinced Google can help them do it — or, at least, provide leverage with other potential cloud partners, like Apple or Facebook. Watch for more developments in this vein.

And while you’re waiting, you can try renting a movie from YouTube.

He’s full of good will, too! No surprise: The Netflix CEO has always tried to present his company as an ally to Hollywood and the TV guys. So everything should be cool from here on out, right?

The reality is that the studios and TV networks aren’t quite sure what to do about Netflix: They’re happy to take Hastings’s checks, but they’re worried he’s using the money to disrupt their businesses.

So let’s hear Hastings make his case in his own words, via an interview I conducted with him on Tuesday. That’s a day before Bewkes made his latest comments about Netflix and other Web video services. But I don’t think Bewkes said anything that would have changed Hastings’s answers.

I used my time to focus primarily on Hastings’s approach to the TV business, but we touched on some other topics as well, including his take on competition from Amazon and Hulu.

Alas, right after I finished up with Hastings, I realized I had forgotten to ask him about Apple’s new subscription rules and what impact they would have on his Web service. I tried following up, but it was too late: Hastings, via a PR rep, declined to comment.

Here’s an edited and condensed transcript from our talk:

Peter Kafka: There’s been a lot of rumbling from Hollywood about slowing down your growth by delaying or cutting off your access to content, and Time Warner has been the most vocal about this. What happens if they follow through?

Reed Hastings: We license only a small part of our streaming content from Warners today, and we hope to be able to license more as we go. We’ll see what their perspective is on it. But we’re doing great, even though we haven’t licensed essentially any Time Warner streaming content.

But beyond streaming, they could make it much harder for you to distribute their DVDs, too. You have a distribution agreement with them now, but it will expire this year.

Discs I think we should set to the side, because we’re mostly focused on streaming. And on streaming we only license a few shows from them today. It’s a very tiny amount.

And [because they're] not licensing to us, they’re missing out on a lot of revenue, and we’re putting that revenue into their competitors. We spend a lot of money with News Corp. We spend a lot of money with Viacom. That’s a choice that they’re making.

Do you think Jeff Bewkes is more concerned about your impact on his Warner Bros., or his HBO pay channel?

I’m not sure. You’d have to ask Jeff that.

I ask because in the ongoing cord-cutting/cord-shaving/cord-nevers debate, there seems to be a growing consensus that services like Netflix are most competitive with premium TV like HBO.

We compete with HBO like baseball and football compete. We sell to the same person, we deliver some of the same emotion, but it’s not direct competition. People subscribe to both. And the people who love us often subscribe to HBO.

They don’t have any of the same content we have, and we don’t have any of the content they have. So it’s a pretty indirect competition for time and money.

How many Netflix subscribers also have HBO?

The last time we checked was a couple years ago. It was about a third.

Again, there really isn’t a direct competition. We’re creating this new market where consumers get to choose what they want, and it’s on demand, and it’s a very different experience.

In your last shareholders letter, you specifically referred to competition from Amazon and Hulu Plus. Do you think those are your two biggest threats?

What we said is that they’ve entered the market in the last year, and that we’ve continued to prosper and grow.

You’ve been focusing more energy on acquiring TV programs. And while you keep saying you’re not interested in providing TV shows the day after they air, like Hulu does, many people think that’s what you’ll do sooner or later. How do you look at TV programming?

TV content on DVD was about 20 percent of our viewing. And on streaming it’s about half. The difference between “Terminator” 1, 2 and 3, and episode 1, 2 and 3 of a TV show is not that large. We’ve always been consistent that movies and TV shows are what we do, and we haven’t changed.

We’re not focused on same day [TV shows], because what we really want to do is spend that money on prior. You can buy two or three prior season shows for the price of a same day show. You can get same day on cable, satellite, pretty easily.

What about when you have more money? Would you get into same day then? Or do you always want to be an archival business?

I wouldn’t call it archival. [Comcast CEO] Brian Roberts’s phrase was “rerun TV.” And there’s a lot of great reruns, because you might not catch everything when it’s new and fresh. At least for the next five years, we’re really focused on that rerun model on television, and the pay [TV window] model on movies. And we have our global expansion, which we’re putting a lot of money and time into.

But you are paying for the first run of “House of Cards,” and possibly other shows. That seems like you’re edging closer to premium content.

We like premium content. We just did a big deal licensing “Glee,”and a big deal licensing “Mad Men.” And “House of Cards” is similar except that it’s premiering on Netflix.

So it’s a little bolder and a little riskier than other shows, but we’re not really in the original content business. We didn’t create that content, we didn’t find the script, we didn’t put the cast together, we didn’t talk Kevin Spacey into it. And it’s a small part of what we do, as a test.

If it works, will you build out a staff to find more of this stuff, or develop it?

If there’s a market of buyers, then those shows tend to get developed. We’ll take it year by year and see what happens.

We tried an experiment a couple of years ago with Red Envelope entertainment, where we bought films out of Sundance and similar festivals. And it was very fun, but we lost $10 million, and then we stopped. So we’ll see what we find.

So you don’t see yourself producing originals in the way that HBO does?

Very unlikely, especially given my background. What we’d prefer to be is the buyer of prior season, or expired season, like an “In Treatment.” Or have all the episodes of “Dexter.” We think if we focus on prior season, we can help build audience for current season.

Speaking of expired season, I’ve heard some networks talk about extending the life of shows they were going to cancel if you’re going to pay them to keep going. Does that make sense?

Yes. For example, “Friday Night Lights” wasn’t going to get continued two seasons ago on NBC, and DirecTV did a deal to extend that show. So we can see ourselves doing something like that–extending a season of something that was doing well on Netflix.

TheWrap’s Sharon Waxman first reported the news Monday evening. I’ve been able to confirm much of her story from people familiar with the plans.

Waxman’s report says the revamped store at Google’s video site “may start as early as this week or next;” I’m told it could be “weeks, but not months.” Big studios including Sony, Time Warner’s Warner Bros. and Comcast’s Universal are on board. So are indies like Lionsgate.

Notable holdouts: News Corp.’s Fox (News Corp. also owns this Web site) and Paramount, whose corporate parent Viacom is still suing Google over YouTube copyright claims.

YouTube started testing movie rentals internally in 2009, and has been renting a small handful to the public since 2010. Those movies have been offered as a streaming file, instead of the downloads that Apple’s iTunes rents, and I’m told the plan is for that to continue.

The difference is that you’ve probably only heard of a handful of the movies in YouTube’s existing store (I think “Made” is really under-appreciated). Post-expansion, you’ll get the same stuff, or much of the same stuff, that you can get from Apple, Amazon, and several other Web services.

So here’s the real question: Will you, or anyone else, use it?

Waxman quotes an unnamed executive who says they are “pretty excited,” but primarily because YouTube is embracing individual rentals, instead of a Netflix-style subscription plan.

A source I talked to from a participating studio, though, is less enthused: “A small VOD [video on demand] deal? Who cares? There are 40,000 other people who are selling VOD. This is a short-term, transactional deal.”

Another source familiar with the plans cautions that the initial expansion will only be the “first inning” of a longer game. Other features that Google could add down the road would be the ability to purchase movies, and store them in a cloud-based locker service.

Google is unlikely to get that ability until it makes several moves to mollify the big studios, primarily around copyright issues: They want the search giant to make it harder to find pirated movies, and they don’t want Google placing its ads on pirate sites, etc.

Google has been making some moves along those lines, but apparently not enough of them. (The flip side of this argument: Many studios are very interested cloud-based lockers, because they think that system, which allows people who own an individual movie to watch it on different machines, will support their eroding DVD sales. That may be more wishful thinking than anything else, but that’s for a different story.)

But the problem for both Google and the studios is that so far digital consumers seem largely uninterested in renting or buying individual movies.

Given the choice, consumers have overwhelmingly gone for Netflix, which now boasts 23.6 million subscribers. Research firm NPD estimates the company has 61 percent of the digital movie market.

That’s the takeaway from Accel Partners’ $40 million bet (via secondary shares) on Legendary Pictures, the producers behind hits like “The Hangover” and “The Dark Knight”.

You can already rent “The Dark Knight” on Facebook, via a Warner Bros. test program. But Accel’s Jim Breyer figures the social network will move beyond tests and become an important distribution platform for the movie business–and all content businesses–in the future.

And since Breyer is a Facebook board member (Accel is Facebook’s second-largest shareholder, after Mark Zuckerberg) content-makers ought to pay close attention to what he’s thinking and doing.

Peter Kafka: We’re not used to seeing VCs pour money into Hollywood studios, because they don’t seem like places where you can get huge returns. What is Accel thinking?

Jim Breyer: We believe there are a number of extraordinary opportunities that sit at the intersection of content and social networking platforms like Facebook. And there will be multichannel distribution capabilities for video content beyond classic theatrical and television release.

We try to take a 3-5 year view, and we feel more deeply than ever that proprietary content and creativity that can be delivered across multiple channels is an extremely attractive investment area.

As someone who makes content, that’s nice to hear. Because it seems like most tech investors are interested in putting money into content platforms and distribution plays, not content-makers.

I think in selected cases there’s extraordinary value in investing in content. It is a really unique time for deeply creative content developers to build very signifcant businesses that scale extremely quickly.

This is also one of the reasons behind our opening an office New York, in January. My vision is that a reasonable amount of our New York investments will have a very significant content flavor.

I can already rent and watch one Legendary movie on Facebook. Accel is a Facebook investor, and you’re on Facebook’s board. Where do you think the company is headed when it comes to video?

My hope is that Facebook continues to build out a platform that enables not only traditional video to be distributed, in an extremely meaningful way, but that enables new content and experiences to be deployed creatively, successfuly, and on a global basis.

But does that mean Facebook will become a distributor? Or a retailer? Or a hub where you can consume video?

I think there are number of different models. But at the heart of what Facebook is trying to do is enable outstanding content and application developers to develop breakthrough video and media applications.

So it’s going to fundamentally be a platform where outside companies can set up shop.

That would be my view, as a board member.

What other content plays interest you? What about music? If you wanted to, you could buy a piece of Warner Music Group right now.

We are looking at a wide range of content-driven companies. We are looking at libraries of entertainment, new opportunities in areas such as sports, news, publishing, as well as social games and other applications that fit very well with the social nature of today’s emerging platforms.

So if I own a big catalog of, say, songs, that could be something you’d look at.

That would be correct.

Recently, BoomTown reported that Flixster–the popular social movie site whose brands include the Rotten Tomatoes premium reviews site–was in early acquisition discussions with several suitors.

Now, said sources, Warner Bros. appears to be the frontrunner in various talks to buy the entertainment site, while Internet giant Yahoo has dropped out due to price concerns.

The reason for interest from the Time Warner-owned studio, said sources, is due to a spate of recent digital efforts, including its expansion of a movie rental experiment on Facebook.

As MediaMemo’s Peter Kafka wrote last night:

Facebook users watch “The Dark Knight” on the social network for $3. Now it has added five more movies, and is asking more money for three recent releases: It will cost you 40 Facebook Credits–the equivalent of $4–to rent “Inception,” “Life As We Know It” and “Yogi Bear” on the site. The first two “Harry Potter” movies, however, are at the original price.

Flixster has a strong presence on the Silicon Valley social networking giant, which could make it a good vehicle to attract people to the movie rental effort, as well as a popular mobile app.

Interestingly, Rotten Tomatoes was once owned outright by another traditional media giant: News Corp.

It is now only a minority shareholder, after trading Rotten Tomatoes for a 20 percent stake in the combined entity a little over a year ago.

News Corp., which owns 20th Century Fox Studios, is not bidding for Flixster, several sources said.

The price being discussed for the San Francisco-based start-up is between $60 million and $90 million.

Any acquisition negotiations could always fail, of course. In fact, Flixster held advanced discussions in late 2007 with IAC/InterActiveCorp.

Flixster trades all kinds of recommendations, ratings and news and even posts user-generated movie reviews on its Web site and via widgets on social networking sites, mostly on Facebook, and on mobile devices.

Co-founded in 2006 by CEO Joe Greenstein and CTO Saran Chari, Flixster has raised $7 million in venture funding from Lightspeed Venture Partners and Pinnacle Ventures, as well as garnering angel investments, such as from Silicon Valley entrepreneur and LinkedIn founder Reid Hoffman.

The combination with Rotten Tomatoes and its more robust Web presence made a lot of sense. It features mostly premium content, including professional reviews, trailer videos and news.

The site is famous for its clever fresh and rotten tomato rating system for movies.

I have not received a response from emails sent to Flixster and Warner Bros. requesting comment.

Flixster–the popular social movie site whose brands include the Rotten Tomatoes premium reviews site, as well as BuddyTV–is in early acquisition talks with several suitors, including Yahoo, said sources close to the situation.

The price being discussed for the San Francisco-based start-up is between $60 million and $90 million, said several sources, in talks that are “substantive.”

Nonetheless, any acquisition negotiations could always fail. In fact, Flixster held advanced discussions in late 2007 with IAC/InterActiveCorp.

Along with Yahoo, which is interested in bringing in a strong team to bolster the entertainment offerings of the Silicon Valley Internet portal, sources said several media giants are also eyeing Flixster in order to strengthen their ties to entertainment consumers. Likely candidates in this regard include Disney and Warner Bros.

Interestingly, one of Flixster’s big shareholders is News Corp., which traded its Rotten Tomatoes unit for a 20 percent stake in the combined entity a little over a year ago.

But its minority stake gives News Corp. little influence over Flixster’s fate, although its IGN gaming unit head Roy Bahat is on the Flixster board. News Corp.–which has been shedding Web properties, such as its current effort to sell MySpace–is not bidding for Flixster.

But the interest in the site by Yahoo and others is obvious.

Flixster has attracted a huge online audience, which trades all kinds of recommendations, ratings, news and even post user-generated movie reviews on the Web site and via widgets on social networking sites, mostly on Facebook. Its recent mobile app efforts have been successful.

Co-founded in 2006 by CEO Joe Greenstein and CTO Saran Chari, Flixster has raised $7 million in funding from Lightspeed Venture Partners and Pinnacle Ventures, as well as garnering angel investments, such as from Silicon Valley entrepreneur and LinkedIn founder Reid Hoffman.

The combination with Rotten Tomatoes and its more robust Web presence made a lot of sense. It features mostly premium content, including professional reviews, trailer videos and news.

The site is famous for its clever fresh and rotten tomato rating system for movies.

A Yahoo spokeswoman declined to comment and I have not received a response from emails sent to Greenstein.

Until he does, here’s my video interview with Greenstein, Chari and COO Steve Polsky, in which they talked about the deal to combine Flixster with Rotten Tomatoes:

]]> http://allthingsd.com/20110316/100-percent-fresh-exclusive-flixsterrotten-tomatoes-in-acquisition-talks-with-yahoo-and-others/feed/ 4 http://allthingsd.com/20110308/yes-facebook-could-compete-with-netflix-and-everyone-else-too/ http://allthingsd.com/20110308/yes-facebook-could-compete-with-netflix-and-everyone-else-too/#comments Tue, 08 Mar 2011 23:30:37 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=30530 Dear mythical investor:

I’m confused.

Yesterday you owned Netflix shares. Today you sold them, prompted by the news that Hollywood had begun renting movies on Facebook, using the social network’s payment platform.

That can’t possibly be true, right? Because if you were a Netflix investor, surely you knew that the company competes with every big player in tech, right? From Apple on down? Including companies that haven’t announced they’re competing with Netflix just quite yet?

Okay, then. At least we’re clear about this now.

And here’s the thing: Facebook, with its 600 million users and its own currency system, can compete with all kinds of companies–not just the ones selling Web video. So if Netflix investors are skittish today, they might have a lot of company down the road.

For the record: Warner Bros. says today’s Dark Knight rental is simply a test. And Facebook won’t say anything specific about rentals at all, just that it’s “looking forward to seeing the new and interesting ways that developers and partners use credits to offer virtual and digital goods in the future.”

And to be fair, if either party were really gung-ho about this, they’d make a bigger splash. Instead, Time Warner’s film studio is starting out by offering a three-year-old movie that its target audience has already watched over and over again.*

I can make other Facebook-won’t-kill-Netflix arguments for you, too, if that makes you feel better:

• The current set-up really competes with retailers who sell or rent movies, not the Netflix subscription model. Hard to imagine someone giving up an $8 a month Netflix all-you-can-eat account because they can rent a single movie for $3. But it is easy to imagine someone renting a movie on Facebook instead of iTunes or Amazon.
• The current set-up–individual studios distributing movies via individual fan pages–won’t compete with Netflix, for now, either. If Facebook and the studios are going to be serious about this, they’ll need a centralized storefront.
• Did we mention that this is a single movie from a single studio? The Netflix digital catalog has some 20,000 titles. And subscribers who pay for the DVD option get more than 100,000 titles.

But Warner Bros. will certainly be trying more of these, says digital distribution head Thomas Gewecke. “We think it’s a very powerful proposition to make our movies commercially available where our fans are,” he said this afternoon.

Hard to imagine other studios not reaching the same conclusion. And–this is where things get really interesting–hard to imagine other content-makers not trying the same thing.

Facebook won’t let people buy physical items with Facebook Credits–just digital goods. And if I understand the company correctly, it won’t even let you download the goods you buy. You’ve got to consume them on the site itself.

I don’t know how that restriction syncs with Warner’s announced plan to sell downloads, but I don’t see that being a long-term issue, either.  I can’t think of a reason why Facebook wouldn’t let a select group of vendors sell downloads if they wanted to. (And we’re supposedly moving to a cloud-based, rental/subscription consumption model anyway, where ownership is supposed to be less important.)

So think about everything else you could sell via Facebook Credits, if you wanted to: TV shows, of course. But also e-books, e-magazines and e-newspapers. And music. And software and games. Does this sound familiar?

It should to Steve Jobs, who moved $1.1 billion worth of virtual goods through Apple’s iTunes store last quarter.

Good thing his investors aren’t as skittish as Netflix CEO Reed Hastings’s. At least not today.

]]> http://allthingsd.com/20110308/yes-facebook-could-compete-with-netflix-and-everyone-else-too/feed/ 18 http://allthingsd.com/20110308/youtube-netflix-hulu-meet-facebook/ http://allthingsd.com/20110308/youtube-netflix-hulu-meet-facebook/#comments Tue, 08 Mar 2011 10:30:15 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=30506 Every digital heavyweight is making a play for your living room. Apple, Netflix, Hulu, Amazon, Google, Microsoft, everyone. With one odd exception: Facebook.

Now that’s over. The social media giant is taking its first step to connect you with movies and TV shows, while collecting a fee in the process. It’s going to let users rent movies directly from the site, using Facebook Credits to pay for the transaction.

First up is “The Dark Knight”, from Time Warner’s Warner Bros.. It will cost 30 credits, or $3, for a 48-hour rental, via an app the studio has built for the site. More movies, along with the ability to purchase the titles outright, are coming.

Warner Bros. describes the rental as a test, but there’s no reason this shouldn’t work. Facebook has 600 million registered users, and courtesy of Zynga and other social games, a big chunk of them are already using the site’s virtual currency. Easy to connect the dots here.

Just as important: While other video sites are trying to figure out how to add social “hooks” into their experience, Facebook doesn’t have that problem. It is the social hook.

The only odd thing about this combination is that it’s taken this long to come about. Facebook is either the 2nd or 6th-biggest video site in the U.S., depending on who’s counting. And that’s without the benefit of any Hollywood hook-up at all: Just the clips you and your pals put up.

So just imagine what could happen if Mark Zuckerberg and the big studios decide they’re really serious about making this thing work.

Press release excerpt:

WARNER BROS. ENTERTAINMENT BECOMES FIRST HOLLYWOOD STUDIO TO OFFER MOVIES DIRECTLY ON FACEBOOK®

MILLIONS OF WARNER BROS. FACEBOOK FANS CAN NOW RENT MOVIES USING FACEBOOK CREDITS AND STREAM WITHIN STUDIO’S MOVIE FAN PAGES

PROGRAM WILL EXPAND TO DIGITAL MOVIE PURCHASES IN THE NEAR FUTURE

BURBANK, CALIF., March 8, 2011 – Warner Bros. Digital Distribution (WBDD), a market leader in video-on-demand and electronic sell-through, today announced it will begin testing an offering of selected movies for purchase or rental through Warner Bros. Entertainment’s Facebook movie Pages.  Consumers will be able to use Facebook Credits to easily buy or rent a title, all while staying connected to Facebook.

Starting today, millions of fans who “Liked” Christopher Nolan’s blockbuster film “The Dark Knight” can rent the title through its official Facebook Page (http://www.facebook.com/darkknight).  Consumers simply click on the “rent” icon to apply their Facebook Credits, and within seconds they will begin enjoying the film.  The cost per rental is 30 Facebook Credits or $3.  This offering is presently available only to consumers in the United States.  Additional titles will be made available for rental and purchase on a regular basis over the coming months.

“Facebook has become a daily destination for hundreds of millions of people,” said Thomas Gewecke, President of Warner Bros. Digital Distribution.  “Making our films available through Facebook is a natural extension of our digital distribution efforts.  It gives consumers a simple, convenient way to access and enjoy our films through the world’s largest social network.”

Fans will have full control over the film while watching it through their Facebook account for up to 48 hours from purchase.  They can choose to watch it in full screen, pause the movie, and resume playing it when they log back into Facebook.  Consumers will also have full Facebook functionality including the ability to post comments on the movie, interact with friends and update their status.

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