Netflix releases, then removes, House of Cards season 3 two weeks early

Frank Underwood wouldn’t have wanted it any other way: Netflix briefly got its subscribers excited Wednesday afternoon by making the entire season three of House of Cards available on its service two weeks ahead of its official release date — only to remove all of the videos again minutes later.

hoc leak

Season three of the political drama was supposed to become available on February 27. I have asked [company]Netflix[/company] for comment, but have yet to hear back. However, the company told CNBC that the early showing was due to “a technical glitch.” And on Twitter, Netflix indicated that it will stick to its original release schedule and make the show available on February 27:

Netflix is reportedly working on a Zelda live action TV show

Netflix is working on a live action TV show based on the popular Nintendo video game Legend of Zelda, according to a Wall Street Journal report that quotes an unnamed source pitching the show as Game of Thrones for a family audience. I suspect that means no red weddings, but lots is still up in the air: Netflix is still looking for a writer for the show, and the Journal cations that Netflix or Nintendo may kill the project altogether before it ever reaches our TVs.

It’s confirmed: Netflix is launching in Japan this fall

Netflix is getting ready to enter the Asian market: The video streaming service will launch in Japan this fall. News of the expansion first broke on Twitter Wednesday afternoon, with CNBC reporter Julia Borstin tweeting that “sources familiar with the situation” had told the network Netflix was going to Japan this fall. A Netflix spokesperson initially declined to comment when contacted for this story, but the service eventually confirmed the news on Twitter:

In a press release issued Wednesday afternoon, Netflix said that it promoted its Chief Partnerships Officer Greg Peters, who speaks Japanese, to become the general manager of Netflix Japan. The release also quotes Netflix CEO Reed Hastings:

“With its rich culture and celebrated creative traditions, Japan is a critical component of our plan to connect people around the world to stories they love. As we expand into Asia, we’re excited Netflix members increasingly will have access to some of their favorite movies and TV shows no matter where they are.”

Netflix surprised investors last month when executives announced as part of the company’s Q4 earnings that they wanted to complete the company’s international expansion to a total of 200 countries within the next two years. Netflix currently operates in close to 50 countries, and has announced that it is going to launch in Australia and New Zealand next month.

The majority of Netflix customers still reside in the U.S., but the company has for some time seen more growth in international markets. In fact, late last year, Netflix added two international subscribers for every new domestic subscriber.

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Some international markets have in the past proven challenging for Netflix. In Latin America, for example, the company initially struggled with payment problems. But it has since managed to turn the situation around, and now has more than five million subscribers across that region.

The launch in Japan will be the first time Netflix has entered the Asian market, which comes with its own set of opportunities and challenges. Japan in particular is a very mobile-centric country, which Netflix should be well-prepared for: The company has been heavily investing in its mobile experience over the past couple of months.

Content and regulatory issues could also be challenging, especially as Netflix looks to take its service to other markets in Asia in its quest to cover the entire world by the end of next year. China is heavily regulated, and Netflix CEO Reed Hastings had to admit during the company’s most recent earnings call that it isn’t certain that Netflix will get a license to operate in China.

This post was updated at 4:38pm with Netflix’s official confirmation.

No, it wasn’t just you: Netflix went down Tuesday afternoon

Netflix experienced an extended outage this Tuesday afternoon, with users reporting on Twitter that it went down around 3:40pm PT, according to Netflix’s website remained inaccessible for a little over an hour, and streaming on mobile devices didn’t work either. Netflix acknowledged the outage on Twitter:

But a little over an hour after the first reports came in, Netflix managed to get back online:

Netflix has been working hard to make its cloud-based infrastructure more resilient. Last fall, the company’s service managed to stay online despite Amazon rebooting 218 of its servers. However, even Netflix isn’t immune to extended outages. On Christmas eve of 2012, Netflix went down for the count due to a 23 hour AWS outage, and didn’t completely recover until the next day.

This post was updated several times as more information became available.

Rivals launch “Don’t Comcast the Internet” to oppose TWC merger

In the current debate over how the U.S. should oversee the internet, the worst case scenario for many is the web reinvented as cable TV: a service where subscribers pay a lot of money for a limited number of channels, and in which the distributor chooses which shows can even appear on the platform.

Rivals of the telco giant [company]Comcast[/company] fear this is exactly what the company is trying cook up through acquiring its next largest competitor, [company]Time Warner Cable[/company]. The proposed merger is already unpopular with consumer groups, and now industry opponents are going into high gear to try a stop it.

On Monday, a consortium of smaller phone and broadband companies launched a campaign called “Don’t Comcast The Internet” to draw attention to a parade of potential horribles that could arise if regulators allow the merger.

At an event in Washington to kick off the campaign, the group presented antitrust authorities who predicted that a combined Comcast-TWC would stifle would-be competitors. One way it could allegedly do so is by using its market power to pressure content partners to keep their content — which is the lifeblood of both TV and broadband — away from new entrants.

The group also warned of danger to another part of the internet, predicting that younger internet and content companies would struggle to obtain permission from Comcast-TWC to appear before subscribers in the first place.

Nick Grossman of venture capital firm Union Square Ventures said he worried that start-ups could find themselves asking “Will Comcast greenlight it?” as a pre-condition to launching their business on the internet.

Others worried that the Comcast would exploit its set-top box to control the user experience and business ecosystem, much as Microsoft exploited its operating system monopoly in the 1990s.

It’s too soon of course to say if all — or any — of these dire predictions might come to pass. The FCC and the Justice Department still appear to be months away from finishing a review of the merger, a process that Comcast VP David Cohen had earlier predicted would be finished by the end of 2014.

In recent months, however, Comcast critics appear to have gained momentum as approval for the merger, which once seemed a near-sure thing, has come under growing doubt.

Comcast, meanwhile, appeared unfazed by the appearance of the coalition, offering the following statement:

“There’s no real news here — just another group of existing opponents making the same arguments they have already made at the FCC for months, many of which weren’t found to be credible in our past transaction reviews, and all of which we’ve refuted directly with evidence in the FCC record.  The real facts remain the same:  consumers don’t lose choice in the broadband or video markets.  Consumers will see real benefits in faster broadband speeds and better video products, and a host of other benefits.  And there are no transaction-specific harms to this merger.”

The “Don’t Comcast the Internet” crowd consists of industry umbrella groups Comptel, ITTA (The Independent Telephone & Telecommunications Alliance) and NTCA–The Rural Broadband Association. It’s not the first anti-Comcast posse to spring up of late: content providers like Netflix and Dish launched an initiative late last year called “Stop Mega Comcast” to point out the alleged downsides of the deal.

This story was updated on Tuesday at 12:30pm ET to include Comcast’s statement.

Does the FCC want to oversee peering deals like Netflix vs. Comcast?

The FCC will soon pass new rules for how ISP’s must handle broadband traffic and, while it’s expected to impose a policy of net neutrality when it comes to consumers, it’s been less clear how the agency will resolve another thorny internet issue: whether network providers can charge content companies to accept their traffic — and throttle their streams if they don’t pay. On Wednesday, a report surfaced that suggested how the issue will play out.

The issue, known in the industry as peering or interconnectedness, became a hot topic last year as Netflix feeds failed across the country, leaving consumers to shout at their screens and wonder who to blame. Big broadband providers like Comcast and Verizon sought to fault Netflix and the content companies, claiming they should have to pay a toll to offset the large volumes of internet traffic they create.

Netflix and traffic management services like Level 3, however, claimed that the ISPs has deliberately degraded their traffic by refusing to carry out low-cost upgrades to key internet ports. Calling the tactic a form of extortion, the content companies have also accused the ISPs of double-dipping — saying the ISP’s already charge consumers to receive the internet, and those charges should include all infrastructure fees on the backend.

Now, a long report from Bloomberg cited a source that claims to know how FCC Chairman Tom Wheeler plans to resolve this grand conflict.

According to the source, Wheeler is prepared to bless those paid peering deals as part of a larger framework of internet rules. But he will reportedly also do so in a way that permits the likes of YouTube or Vimeo to complain if the ISP’s are not being “fair or reasonable” with their agreements. As the report said:

FCC Chairman Tom Wheeler has decided the rules, scheduled for a vote next month, will permit the agreements but include a procedure for companies to ask for agency review, said the person, who asked to remain anonymous because the plan hasn’t been made public.

This pronouncement, however, may be premature.

Blanket ban or case-by-case?

No one will be surprised if the issue of interconnectedness appears in the first draft of the new FCC rules which, under law, must be circulated by Chairman Tom Wheeler to the other FCC Commissioners at least three weeks before a vote. These are expected to go out (and get leaked to the press) on February 5.

Indeed, Wheeler demanded data from the companies last summer, as part of an investigation into the public outrage that occurred over the stuttering Netflix streams.

The big question now is not just whether Wheeler will include peering agreements in a larger framework of rules, but the way in which such arrangements will be overseen.

According to a source familiar with the debate, ISPs are likely reconciled to the fact that their current paid arrangements with Netflix, which are currently unregulated, will come under the nose of the FCC in the future.

As such, they are now pushing to ensure that any enforcement occurs on a case-by-case basis over whether a given deal is “fair and reasonable,” rather than in response to a bright line rule that outlaws the sort of pay-for-service deals the ISP’s forced on Netflix last year.

The Bloomberg report, which does not cite any documents and on which the FCC declined to comment, suggests that Wheeler has decided to go with the case-by-case approach. While this would nominally ensure fair oversight, it would also allow the ISPs, as they have done in the past, to deploy their formidable legal teams to ensure any complaints would take years to resolve. In other words, this could be a case where ISPs are trying to make the best of a bad outcome.

As such, it’s unclear if the report is a bona fide insight into Wheeler’s thinking, or is instead just an opening salvo in what is sure to be a ferocious spin cycle as the day of the FCC vote gets closer.

Netflix is open sourcing tools for analyzing data in Hadoop

The data team at [company]Netflix[/company] is opening sourcing some of the tools it uses to analyze data stored in Hadoop. The overall open source project is called Surus, and it focuses on user-defined functions (or UDFs) that Netflix has built for the Apache Hive and Pig, two higher-level frameworks that make it easier to query Hadoop data and write data-processing jobs.

The first tool Netflix has released as part of Surus is a Pig function, called ScorePMML, for scoring predictive models at scale. Within Netflix, the goal was to standardize the process of taking a model someone has built using R, for example then tested on a small dataset, and then running it against a much larger dataset in Hadoop and possibly rolling it out as a production model.

According to the blog post introducing Surus and ScorePMML, future releases will includes tools for tasks such as pattern recognition and outlier detection. The post goes into more detail about how ScorePMML works, where it shines and what are its limitations.

Netflix, of course, has become a poster child for the benefits of data analysis — using it to inform everything from content recommendations to streaming performance — and a leader in open source technology. For more on its efforts in both of these areas, check out my November interview with Netflix Chief Product Officer Neil Hunt, and our Structure Show podcast interview with Netflix engineers Ruslan Meshenberg and Andrew Spkyer (embedded below).

To learn even more about how the best and brightest companies around are using data to glean insights and build entirely new products, check out our Structure Data conference March 18 and 19 in New York. Speakers include data experts from companies such as BuzzFeed, Facebook, ESPN, Spotify and Goldman Sachs.

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Netflix wants to expand to 200 countries within the next two years

Netflix wants to complete its global expansion within the next two years, the company announced as part of its Q4 2014 earnings release. Here’s how Netflix CEO Reed Hastings and CFO David Wells put it in a letter to investors Tuesday:

“Our international expansion strategy over the last few years has been to expand as fast as we can while staying profitable on a global basis. Progress has been so strong that we now believe we can complete our global expansion over the next two years, while staying profitable, which is earlier than we expected. We then intend to generate material global profits from 2017 onwards.”

These bold statements comes after the company once again showed significant international growth. In Q4, it added a total of 2.43 million subscribers abroad, and now has a total of 18.28 million members in its 50 international markets. Domestically, it ended 2014 with 39.11 million subscribers, compared to 33.42 million a year before that. Netflix ended the year with a total of 57.39 million subscribers, compared to 44.35 million at the end of 2013.

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So how did Netflix do money-wise? Not so shabby either: The company booked $1.305 billion in revenue from its streaming operations in Q4 of 2014, compared to $962 million during Q4 of 2013. It was able to generate a surprising $83 million of net income in Q4, compared to $48 million during the same quarter a year ago. However, that growth is in part due to tax benefits of $39 million.

But back to Netflix’s bold international plans. Hastings and Wells made it clear that they’re not just talking about adding a few more countries and then calling the job done:

“We already offer Netflix in about 50 countries and have learned a great deal about the content people prefer, the marketing they respond to and how to best organize ourselves for steady improvement. Acceleration to 200 countries is largely made possible by the tremendous growth of the Internet in general, including on phones, tablets and smart TVs.”

Hastings and Wells even laid out plans to enter China through a smaller, targeted service “centered on our original and other globally-licensed content.” The remarks about China include a caveat about acquiring “the necessary permissions,” which is particularly challenging for a service like Netflix that relies so heavily on smart TV apps. China’s regulators have in the past months cracked down on streaming devices and smart TV services, which they consider similar to running a broadcast station in the heavily regulated country.

The letter to investors names revenue growth as one goal of an accelerated international expansion, with a goal of getting to $10 billion in yearly revenue soon. Based on the Q4 earnings release, Netflix ended 2014 with around $5.5 billion in revenue from streaming and its domestic DVD business combined. But the letter to shareholder also paints Netflix as a global licensor for content, able to compete with some of the biggest media companies in the world:

“With the growth of the Internet over the next 20 years, there will be some amazing entertainment services available globally. We intend to be one of the leaders.”

Here are some other key metrics disclosed as part of the earnings release:

  • Netflix plans to spend $3 billion on original content in 2015.
  • The company wants to spend $600 million on marketing this year.
  • Netflix plans to spend $500 million on technology in 2015.
  • Netflix grew to five million subscribers across Latin America during Q4 of 2014.
  • The streaming service intends to release a total of 320 hours of original TV shows, documentaries, comedy specials and movies in 2015, which is three times as much as the company put out in 2014.

This post was updated at 2:30pm with additional metrics on Netflix’s spending and original content plans.

Amazon is going to start making movies for theaters and Prime

Coming to a theater near you: Amazon plans to start producing “close to twelve” movies a year. The films will “premiere on Prime Instant Video in the U.S. just 4 to 8 weeks after their theatrical debut,” so Prime members won’t need to shell out to see them in theaters. Ted Hope, who produced films such as Crouching Tiger, Hidden Dragon, is leading the effort.

Speaking of Crouching Tiger, Prime Instant Video competitor [company]Netflix[/company] is, ironically, producing a sequel to that movie, which it will begin streaming the same day it premieres in IMAX theaters. Netflix also announced in October that it had acquired exclusive rights to four upcoming Adam Sandler movies.

“[company]Amazon[/company] Original Movies will be synonymous with films that amaze, excite, and move our fans, wherever customers watch,” Hope said in a statement.

Netflix may remove My Little Pony, other Hasbro shows

You’ve got two weeks to prepare your kids for it: Netflix could be removing kids shows from Hasbro / Discovery from its streaming service at the beginning of February, according to reports from USA Today and the New York Post.

Shows like My Little Pony: Friendship is MagicLittlest Pet Shop, Transformers Rescue Bots and Transformers Prime will disappear on February 3 unless the two parties strike an eleventh-hour deal, which seems unlikely, but not totally out of the question. A [company]Netflix[/company] spokesperson declined to comment on negotiations between the two companies, but a [company]Hasbro[/company] spokesperson sent me the following statement:

“We know today’s audiences watch content on a number of different platforms and we are deeply committed to ensuring that the people who love our shows have access to them anytime and anywhere they want to watch. Hasbro Studios programs including My Little Pony: Friendship is Magic and Transformers RescueBots are currently available on numerous broadcast and streaming platforms around the world.  We are extremely hopeful that we can continue to offer our highly rated, award winning programs to Netflix U.S. subscribers. “

It’s worth noting that some movie titles with the same characters, including My Little Pony Equestria Girls, will remain on Netflix either way, as they are not covered by this deal.

Netflix regularly removes shows and movies as content deals expire, and occasionally brings back content that briefly went off the platform. But while Netflix subscribers have by and large gotten used to this dance, it’s a different story with kids shows altogether.

Last year, all hell broke lose when Netflix ended its contractual relationship with Viacom, forcing the company to remove popular kids shows like Dora the Explorer, Spongebob Squarepants and Go Diego Go, with hundreds of our readers complaining about ruined birthday parties and broken little hearts.