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Summary:

Netflix isn’t going to produce elaborate second-screen apps with a whole bunch of additional content any time soon. Instead, it’s investing in second-screen control – and having high hopes for Chromecast.


Transcription details:
Date:
18-Oct-2013
Input sound file:
10-16 pm Session 1_1004.MP3

Transcription results:
Session Nme: Capitalizing on the second screen
Speakers:
Cormac Foster
Todd Yellin

Announcer 00:02
Thank you Bill. All right. Before we bring him out, you’re going to like our next speaker. I mean, you’re going to like them all but, in particular, this one is probably a little more home for a lot of you. How many of you have a Netflix account? All right. That’s a fair lot of you. You are in for a treat because, coming up, we have Mr. Todd Yellin. He is the VP of Product Innovation for Netflix and he’s going to be talking with the moderator, Cormac Foster. He is the Research Director for Mobility for GigaOM Research. They’re going to be talking about “Capitalizing On The Second Screen”. Please welcome our next panel.

[Applause]
Cormac Foster 00:44
Hi there. I know “Capitalizing On The Second Screen” is the title of what we are supposed to be talking about, and I promise we’ll get to that, but I wanted to start off– since Netflix is an interesting case and, in many respects, because of your digital distribution, you are aware a lot of media companies are probably going to end up in a few years. I would like to spend a little bit of time talking about mobile devices as a primary consumption device as well. To start off, I was wondering if you could just tell us a little bit about how you approach mobility. Are mobile devices just another platform for you to port to like a Blu-ray player or a game console? How do you approach that?
Todd Yellin 01:29
We’re on hundreds of devices. People stream across whether they are streaming on what we call the ten-foot experience which is the TV experience, or they’re going on their phone, or going on their tablet, and so forth. We want to make a great experience on all but not all devices are created equally. They’re not created equally in two different ways. Way number one is how consumers watch content on the different devices. If you think about– some of this isn’t surprising, some of it is. Something that’s isn’t surprising is, even though something like a phone, has really broad reach. A lot of people stream on a month over month whether to iOS or Android on Netflix on a phone. They don’t watch that much in one sitting. You’re not going to marathon watch all of House of Cards on your phone. There’s a few exceptions but not many people are going to do that. They’re going to watch little snack sized bites. A tablet, a little more. A tablet tends to be more like a PC of how much they’ll watch at once. The difference with the PC and a tablet is a tablet has become more like a book. Get into bed- and this is a really common use case- get into bed, take your tablet, watch some Netflix, go to sleep. That’s very typical. Whereas, a TV, you’re much more likely to watch a lot more content but you won’t do it as frequently. You won’t be start-stop, start-stop. In terms of approaching what we do around those different devices, obviously, there are different form factors. If you’re with a touch screen, you’re going to deal with it a lot differently than if you are a left, right, up, down navigating on your screen set and then a touch screen with bigger real estate, a tablet versus a phone. We’re also going to deal differently in what we’re going to test on a better UI for those different kinds of devices.
Cormac Foster 03:05
Operationally though, do you have a mobile team? Do you have a tablet team? How much of that is shared and how much of it is just the one app, expanding or compressing to fit the real estate?
Todd Yellin 03:17
It’s funny. When we first started figuring out your teams and your company, we had a mind for all the product leaders at Netflix. We had someone focused on– you’re taking guesses a few years ago. Tablet and phone, we put as one device class and someone was focusing on innovating on that. Then, we had website. Then, we had a ten-foot, like I said, the TV UI. We divided those up. We started noticing a tablet is used in some ways a lot more like a PC than a phone but they’re both touch screen. It gets to the point where you don’t want to make all your devices so inconsistent that the user doesn’t even realize they’re on Netflix and they’re not used to some conventions that they get from one device to the other. Now, we’ve broadened it out. We have some engineers who are used to pretty much writing code for different kinds of platforms. We have designers who are used to doing things for a touch screen but, from the product leadership perspective, we tend to jump from platform to platform and try to get a more holistic view of the Netflix user experience.
Cormac Foster 04:16
Okay. Last question on the the kind of first screen. What is the balance of consumption on mobile devices versus TVs? I guess, PC is somewhere in the middle. Do you see that changing?
Todd Yellin 04:29
Yes. What I was leaning to before, you’re not going to watch long stuff on a phone but here is something surprising. We made the big assumption that a phone – such a small screen and it’s going to be in bite-sized chunks – you’ll be much more likely to watch a sitcom like New Girl or How I Met Your Mother. Whereas, if you’re going to watch a feature film – you’re going to watch Avengers or something like that on Netflix – you’re going to watch it on your TV. Not necessarily true, actually. What tends to be the case more likely is people now watch much more segmented. Since you can move seamlessly form one device to another, you’re just as likely – overall, if you look at the whole population – to watch a feature film on your phone. You just won’t watch the whole thing. You’ll continue or finish watching it on the tablet, on the TV, or on the PC.
Cormac Foster 05:17
Okay. Second screen, traditionally – people think of it – a lot of supplementary content one way or another. We were talking earlier about what made sense and what didn’t make sense. Let’s start with what didn’t make sense because it’s always just fun to talk trash. We had the Autorama example. We’re talking about John Waters in polyester and the scratch and sniff cards that went along with it. It was a supplementary experience that might not necessarily translate to the world. What are bad ideas that you’ve tried that maybe don’t address as wide a market as you thought?
Todd Yellin 05:54
We never have a bad idea. Okay. It’s always good. Totally kidding. I’m glad you guys laughed. We are always testing things and some of them, if you’re not testing things that fail, you’re not not testing aggressively enough. We do testings that don’t work. We haven’t Autorama, yet, where you scratch your phone and it starts smelling like something like that. We haven’t built that up. I don’t plan it on the near future. When it comes to second screens and, kind of, like those content-enhancing moments, there’s an example of something I found really amusing I don’t know if you guys heard about. There was a Dutch film that came out recently, big screen movie, released theatrically, and they had a big second screen experience around this thing. The movie was called “App” and it was a horror film. Basically, the way this movie worked is you would download an app to watch “App”. You didn’t have to do that but it added to the experience supposedly. It was about the app on a teenager’s phone. It’s possessed. It’s made crazy things. What you could see on your phone is it would vibrate and, during the movie, you would see what they’re texting between the friends and you’d have enhanced moments or you’d see a news article about what’s going on. That is the modern version of John Water’s Autorama and I’d be really impressed if more than half of you knew what that Autorama movie is. Look it up at Wikipedia if you don’t. It’s the gimmicky, one-off, hopefully. I don’t know if they did “App”. I didn’t met the filmmaker. Hopefully, they did it with a little tongue in cheek.
Cormac Foster 07:22
Do you guys have that? Because I would totally watch that.
Todd Yellin 07:24
It’s good to hear because, like I was saying to Cormac before, there is no such thing as a bad movie or TV show. There’s just a mismatch between a person and that show. Even if the only great audience for a movie is the director and the director’s mother, there’s always an audience for every piece of content. There is an audience for “App” and I’m glad to see I’m meeting one right now. I haven’t seen the movie. I don’t want to [diss?] him in any way. As far as Netflix trying, having fun I would say. We’re trying something where there’s some supplementary experience, I think Game of Thrones from HBO is an interesting tale which I’ve been talking to people over there and they did an award-winning second screen app on Game of Thrones. We could follow the different kingdoms and the different maps. It was super elaborate and, by the way, super expensive to build. I don’t think it’s a shock to anyone that almost no one used that. It was a tiny percent of real super fans who watched it. I might have another one.
Cormac Foster 08:20
Okay [chcuckles].
Todd Yellin 08:21
That’s “App”, “Game of Thrones” on second screen. Here’s the kicker that I’ve heard from people over there which is not only did it used by the tiny percent of users but, the people who did used it were such super fans, they were disappointed with it. They invested so much in this thing because they were such super fans that that really good thing had to go even deeper to make them happy. I don’t want a Netflix like any company. We have certain number of chips to keep on innovating on our product. I want to keep on pushing those chips in the right thing to make a better and better user experience. Making an expanded second screen experience, it’s not like we’re going to not test that ever. It’s not like another way of Netflix originals. It’s not like there won’t be an original to come along. We’ll all be tempted. When I’m tempted – and myself and my team – we’re working on something like that, I don’t imagine we’re just going to do something like that and go for that tiny percentage or go for the PR of something that no one’s going to use because that doesn’t improve the user experience. Hopefully, if we try something like that, we have that lightning bolt of an idea that it’s more than just a tiny percent using it.
Cormac Foster 09:25
Okay. Another thing you did – a supplementary content on the Xbox – was Party Mode. I actually know some folks – because, apparently, I’m the statistical out layer – I know some folks who are actually really like that. They were generally people who love their Xbox already. They had a community of people who were used to communicating that way and they wanted to watch movies together. This is where, if you had an Xbox, you could do joint viewing on Netflix and communicate with your friends who are watching it at the same time as you. You discontinued that. How much of that is because you’re strictly in asynchronous viewing channel? How much of that is just that people don’t want to do that like, if I’m HBO or someone else like that, is there still an opportunity for me to do that for some second screen interface or not?
Todd Yellin 10:16
To just be super clear, Xbox continued the functionality, discontinued the functionality of Party Mode. Microsoft is a value partner of ours. We get tons of streaming on the Xbox. We think it’ a good experience. When we first launched with Xbox, Microsoft was very enthusiastic about this Party Mode which is taking basically what’s asynchronous content, watch whenever you want, wherever you want. That’s our Netflix [Credo?] and making it, like, “I can watch the same time as my friends. We can watch episode seven, season three of Breaking Bad exactly the same time. We’ll be texting. We’ll be talking. It will be amazing. I wasn’t particularly bullish on that but we are willing to testing. Since Microsoft was so bullish on it – they’re our valued partner – we might as well see if they can work because it already had the functionality on the Xbox. We tried it and, as expected, a tiny percent used it. When they pulled it away, there was the occasional long distance romance. The boyfriend living in Chicago and girlfriend living in L.A. They had watched it together for so long. Now, that functionality was gone. The challenge of introducing functionality that a tiny percent will use is you might have to take it away eventually and that could be painful for the small percent of users. You want to be careful – any company – of giving something to users that only a tiny percent will use, that it won’t be economic in your interest to support. We’re always thinking about that from our product perspective in Netflix.
Cormac Foster 11:44
What does work for you guys?
Todd Yellin 11:47
When I think of second screen, I do think it’s powerful. It’s very basic but I think it’s core which is second screen has the potential. This is an open bet. Who knows if this will come out? I’ll come back in a few years and we’ll see if this is right or wrong. Second screen, having another device lit up, handheld device while you’re watching your TV can work really well as, first step, as a remote to browse content while you’re watching something else, to find it, to play it, to throw it up on the screen. That is a powerful use case. Then, the second evolution of that, as your identification. To expand on that, right now, we’re doing, like, towing the water work. You can’t take Netflix right now. You can be playing Netflix on a PTodd Yellin, on your WiFi at home, and also have a WiFi-enabled phone or tablet, iOS or Android, and then it could talk to your PTodd Yellin. You could have something playing up on the screen while you’re browsing for something else. You could control it: pause, rewind, play something else with your PTodd Yellin. With the launch of Chromecast which has gotten off to a really auspicious start – hopefully, it keeps on doing well. Google’s Chromecast which we’re partners on – you can do something similar but the catch there and an important step which might drive second screen is that, with Chromecast, there is no UI on the TV. You need to have your phone and tablet to control the TV experience. It’s a really cheap way to take a dumb TV and make it a smart TV by just plugging in this little thing that looks like a flash drive. If that will make a consumer reason for why it might take off – because technology doesn’t just take off because, we, all in Silicon Valley, want it to take off – because we’re able to do that technology, it will take because they’ll be consumer adaption. Chromecast might be the door open for that. We’ll see.
Cormac Foster 13:39
Okay. We have a few minutes left. I’ve got a couple of more questions but, if anyone in the audience has some questions, we have two microphones right there set up. If you have a question, feel free to walk down to the microphone. You guys have recently announced some social plans for Netflix. Social and asynchronous viewing, it’s kind of an odd pairing. Can you talk about how that works?
Todd Yellin 14:03
Yes. Social, we introduced it. We’ve had it abroad outside the U.S. for a couple of years and, because of some laws about sharing that were changed by Congress, now we’ve had it in the U.S. for the last six months. That’s a very much wide open bet how social we’ll go. Let me just quickly tie it into second screen. When it comes to social and second screen, I think it’s a powerful and growing application of second screen with live events which is into business that we’re in at Netflix. We’re storytellers. We’re about TV shows and movies. If you’re watching a sports event, news, or some competition TV show, then that’s great, socially going out with your friends but the odds that you’ll be watching exactly that same episode – I already told you. We talked about the story of Party Mode – less likely. I do think social will be helpful and will give more and more expandabilities. I suspect if it tests well to be able to share or to be able to comment on some things you’re watching on Netflix for your friends to look at asynchronously but, real-time kind of thing, leave that to live kind of shows and so forth.
Cormac Foster 15:10
Okay. We might have something. Do we have a question?
S4 15:14
Yes. Todd, just a quick comment and a question. Big fan of second screen, I just discovered this on my Tevo player with YouTube and pulling up YouTube videos was extremely painful. Now, I can – with my iPhone – pair it. Man, it’s changing the entire experience. A big, big fan of that. The second question is can you talk a little bit about why it’s so hard to get additional content from the studios? It’s the whole about–
Todd Yellin 15:46
Sure. I’ll answer that quickly. I’m not the content guy. I’m the product guy. I work closely with content partners down in L.A. but we’re proud that we’ve expanded the catalog for Netflix vastly over the last year or two. We now have originals which I’m sure you’re all aware of. That’s successful and great TV shows. We think it’s hard in terms of just finding the right content, deciding what content to license and what not to but you have to pay for anything. Don’t expect to have every piece of content any service. Netflix, we think we have a very competitive offering.
Cormac Foster 16:23
Another question for media distribution companies because media has distributed so widely for so many different channels, a cable company or even a local broadcast station might have something – Friends and reruns – and they may want to create second screen content around that or build a community around that. For you, you have your Netflix originals and you have obviously creative control over that. Do you have to go back and renegotiate contracts to get supplemental content or to rework that content that you already have or the content you don’t own?
Todd Yellin 17:00
The core of the experience is watching a story that the directors and writers intended and that’s, like, 99% of what it is. The supplemental content whether that supplemental is extra features and so forth, we’re going to test that around our own originals. DVD, no one had any idea. We were deeply in the DVD business and have been for years. No one every knew how many people are really watching those special features. We’ll experiment around our originals. If it does well for originals, then we’ll go back to our partners that we license a ton of content from and I could see possibly doing some extra content, supplemental content around that. Once again, the real part is what story they’re trying to tell and watching it on your own terms.
Cormac Foster 17:41
Okay. With that, we have 10 seconds left. I apologize. We can’t get to your question but feel free to catch either us. You’ll probably want him but I’ll be there as well after this. Thank you, Todd. Thank you, everyone.
Todd Yellin 17:53
Thank you, Cormac.

[Applause]

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  1. I bought my Chromecast a few weeks ago and it’s been the best $35 I’ve spent all year. I already used netflix to stream, sometimes YouTube. Now I can can do it in HD to my flat screen easier than any smart TV, Apple TV or Roku box. And I don’t have to wear out my PS3 or use my old desktop to do it. Chromecast is the best little gadget to come out since streaming hit the main stream. Now all we need Google is more apps please.

    1. Agreed. My Roku is now gathering dust. Now if I could just get it to work with hotel wireless while traveling, I’d be set for life.

      1. Joshua Kaufmann B Thursday, October 17, 2013

        You could simply download the Connectify app and make your own wireless network. Then, setup your Chromecast with that. Where ever you go, just turn on Connectify, and your chromecast will connect and work!

  2. I wonder who use the second screen perhaps only the google boys.

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