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CE Oh no he didn't!: Time Warner chief likens Netflix threat to Albanian army
Think the relationship between Netflix and cable and content executives is amicable? Not. Even. Close. Certainly not after Netflix CEO Reed Hastings blazed a trail into the living room on the strength of the company's streaming television and movie content originally made possible by a shrewd 2008 deal with Starz. A move that netted streaming access rights to Sony and Disney content for an estimated $25 million -- next to nothing compared to the traditional licensing fees charged to cable operators. That deal is set to expire in 2011 and could cost Netflix as much as $250 million a year to renew. Time Warner CEO Jeff Bewkes thinks that Netflix's days at the top are numbered having been made possible by an era of experimentation that's now ending. "It's a little bit like, is the Albanian army going to take over the world?" said Bewkes, "I don't think so." According to the New York Times, the comments were made last week as UBS sponsored a media conference in New York that it says turned into a "platform for executives to express their grievances and emphasize that they will now aggressively try to tilt the economic balance between Netflix and content creators back toward the media conglomerates." Wow. Don't worry though Netflix subscribers, we're sure that the implied collusion is the good kind.
UBS analyst praises new MacBook Pros and approaching clouds
The sun had not even set on Tuesday when UBS analyst Maynard Um expressed his pleasure over Apple's new MacBook Pros. "The MacBook Pro refresh positions Apple well heading into the education and back to school spending seasons," said Um, adding that Macs are still a critical part of Apple's growth, and that most financial expectations for the company could prove conservative. Um is expecting something else on top of the hardware, or over it really. In the note he reiterated his firm's view that Apple is working on its very own cloud service or services. His forecast: "We envision a service that allows access to media-focused content of iTunes, user-generated content of MobileMe and social networking integration from any Apple product," meaning Maynard sees Apple-branded clouds on the horizon, and those -- he thinks -- will lead to the sale of more Apple hardware. Um maintained his "Buy" rating on Apple shares and his price target of $280. [via The Mac Observer]
Analyst Roundup: Bullish on the iPhone
UBS analyst Maynard Um says that Apple could sell 7 million iPhones in the first quarter of the year if they sell a low-cost, 4GB model, according to Electronista. Citing "checks" with industry partners, Um claims a 4GB model is in the works, though it's unclear if it will be a regular iPhone at a lower price point, or a smaller iPhone nano device rumored to be in development. While it may cannibalize sales from the current low-end 8GB model, a significantly lower price could add 1.5 million more sales for the quarter. Generator Research's Andrew Sheehy goes even further, projecting that Apple could sell 77 million iPhones by 2013, according to Philip Elmer-DeWitt. Sheehy has three reasons why Apple will dominate the smartphone business: Apple's ability to combine hardware and software, making it easy for users to consume The App Store's vertical platform model leads the market so far Smartphones are the only kind of phone that Apple makes, unlike other handset manufacturers like Nokia. Sheehy says that, among other recommendations, Apple must broaden its offering to include higher- and lower-end units, including tablets and entry-level smartphones: All with access to the App Store. He also says that Apple will capitalize on the paralysis brought on by a weak global economy, and use its cash to get "one or two design cycles ahead of the competition." "When rivals start spending again, they may discover that Apple has built an unassailable lead," Sheehy writes.
Analyst roundup: iPhone sales could drop, production cuts possible
Several analysts have been lowering their expectations for iPhone sales during the first quarter of 2009, pointing to possible cuts in the number of units manufactured, according to a series of articles by Cult of Mac's Ed Sutherland. Barclays Capital today cut its estimate of iPhone sales to 5 million handsets, down from 6.2 million. Yesterday, BMO Capital lowered its expectations to a slightly-better 5.6 million units, but still down from an earlier estimate of 6.6 million. On Wednesday, UBS said iPhone production could drop to 6.7 million units, down from 9 million in the last quarter. Earlier this week, FBR Capital Markets analyst Craig Berger said that Apple could have already cut iPhone production by 40 percent. Barclays analyst Ben Reitzes suggested that Apple could cut prices on iPhones and develop a new low-end handset to stimulate sales, taking the lead from how the iPod and iPod mini sold. Reitzes also speculated that a low-cost laptop could sell 3.5 million units per year. It's unclear if Apple will take Reitzes' advice, as Steve Jobs said at last month's laptop event that "We don't know how to make a $500 computer that's not a piece of junk, and our DNA will not let us ship that."
Rhythm games grow industry by 32% in '08
Rhythm games have certainly been keeping the tempo up for financial growth in the industry. GameDaily notes UBS analyst Ben Schachter's report, showing "music-themed games" have made up 15% of software sales year-to-date and 32% year-over-year growth so far.The Guitar Hero franchise is already up 82% this year, with Guitar Hero: On Tour taking in $15 million in July alone. Meanwhile, Rock Band, across all platforms, took in $47 million in July ... and that doesn't even count any DLC sales. Unless the rhythm game bubble bursts in the next few months, GH: World Tour and Rock Band 2 sales -- along with their respective DLC sales -- could make up a significant portion of another record-breaking year for the industry.
Analyst: Best of E3 winners see strong domestic sales
This year's Game Critics Awards for E3 honored Fallout 3 with "Best of Show," but will that translate into sales when the game actually releases? Well, chances are, sales of the game will probably have very little to do with the title receiving the E3 award; however, according to analyst Ben Schachter of UBS, the "Best of Show" does typically go on to see an average of 2.42 million units in sales within the US.Schachter notes that every software winner over nine years has gone on to see over a million units sold (except for 2000's Jet Grind Radio). He also points out that each of the winners was either a first-party game or a console exclusive*. *Don't get nitpicky, we're way ahead of those nerdsploding and furiously typing that MGS came to the GameCube six years later.
Analyst: Timing of EA CFO departure is 'unnerving'
UBS analyst Ben Schachter wishes the sudden departure of EA CFO Warren Jenson had been a more "smooth, well-telegraphed transition." GameDaily reports on Schachter's note to investors where he believes the news wasn't a "complete surprise" and Jenson's exit from the company was a "mutual decision;" however, given EA's financials of late it may raise some eyebrows.EA already has a new CFO in the pipe after Jenson closes the books this fiscal year and Schachter maintains a "Neutral" rating for EA's stock. A far cry from Deutsche Bank's Jeetil Patel, who has a "Sell" rating for the company and believes EA has lost its luster.
3G iPhone rumored to be Infineon-powered, hitting "mid-year"
Hold the presses: Apple may be releasing a new iPhone this year... with 3G! Crazy, we know. The latest iteration of this rumor comes to us courtesy of UBS analysts, who say Infineon will likely be building chips for the phone -- they're powering the current iPhone, so no real surprise there. UBS is also betting on a mid-year 3G iPhone launch, and thinks that EDGE production will ramp down early so Apple gets a chance to clean out inventories. We've got a good feeling about this one, guys. [Thanks, Tim G.]
Analyst expects new iPods next month
We've certainly had plenty of indications that some new iPods would be coming sooner rather than later, and an analyst at UBS Investment Research now seems to be saying much the same thing, albeit with a few more rumored details and a bit more certainty. According to AppleInsider, UBS's Ben Reitzes recently told his clients that he expects to see some refreshed iPods sometime next month, including higher capacity iPod nanos at "aggressive price points," and a flash-based widescreen video iPod "likely using multi-touch technology" priced under $300. Reasonable bets to be sure, although we'd still recommend taking them with the usual grain of salt pending word from the man himself.
Analyst takes Wii to win by 2010
UBS Investment Research analyst Benjamin Schachter recently spoke with GameDaily.BIZ about his firm's 92-page report on the video game industry (that's a lotta reading!) and, more importantly, his view on the current state of the console wars. Gathering all of his mental powers, Schachter made the very tough call of predicting who will win the fight this generation and determined that by 2010, the Wii would be in the lead, with the PS3 trailing behind. Of course, they aren't the first to try and predict this generation's console war.With Nintendo doing so well in both the handheld and console market with their hardware (let's not forget their software), month after month, it's easy for anyone to see that the company is doing well. Will their business model hold up for the next 3+ years, however, as UBS is stating? Personally, we'd like to think so, but the future is a dark and choppy ocean. We just hope Nintendo has enough deck hands to ensure a safe and prosperous voyage.
Wii production exceeding expectations
Briefing.com reports (subscription only) that, according to UBS, 2 million Wii consoles were completed in Q3 (July-September) to support Nintendo's upcoming Q406 global console launch, beginning November 19th in North America. In addition, "at least 7 mln and potentially as high as 9 mln more units are in the build plan for 4Q06." The report continues, "this production ramp handily exeeds [sic] a publicly announced tgt for 6 mln units to ship by yearend"; however, Nintendo had previously announced plans to ship 6 million units by the end of their fiscal year (ending March 31, 2007) and only 4 million by the end of the calendar year. The language appears to indicate the possibility of building, if not shipping, as many as 11 million Wii consoles by the end of the calendar year!With production exceeding expectations, why release the console so much later than many anticipated, and right on top of the PlayStation 3's November 17th launch? It all comes down to software. While Nintendo may have warehouses full of Wiis, they need a launch lineup and reliable system software to go along with all that stockpiled hardware. But Zelda has to be done ... we would have been happy with just that, promise.
