TW’s Jeff Bewkes: Streaming Is Stabilizing Home-Entertainment Revenues

Jeff Bewkes predicts that more studios will experiment with early digital releases

Time Warner Chief Executive Officer Jeff Bewkes believes the bleeding has stopped in the home-entertainment market and that streaming services are to thank for the change in fortunes.

Getty ImagesThe media chief told analysts and investors Wednesday that Time Warner brought in $100 million from streaming services like Netflix and Amazon in its third quarter. So far this year, revenue from these digital platforms has topped $250 million, leading to what Bewkes termed a "stabilization" in the industry.

"We are doing business with multiple players," Bewkes said. "We see greater opportunities in the future to sell greater amounts of product."

Also read: Time Warner Q3 Profits Rise Thanks to Cable

Bewkes' optimism mirrors numbers that show revenue in the U.S. home entertainment industry remaining steady. In the first six months of 2012, revenue in the industry rose 1.4 percent, according to the Digital Entertainment Group, and most analysts project only modest decreases for the entire year. Of particular importance were subscription video on demand services like Netflix, which  saw revenue jump 430 percent to $1.1 billion during the first half of 2012.

Bewkes said that roughly two-thirds of the content Time Warner is licensing to these services is from its television properties like CW and not its film studio. He said that subscription streaming services were a more "natural place" for shows that were in syndication than for more recent theatrical films.

It's a change of tone for Bewkes, who has been the most dismissive of Netflix's influence among the major media chieftains. In 2010, he famously scoffed at any threat that Netflix might pose to premium cable channels like Time Warner-owned HBO by calling it both the “Albanian Army" and a "200 pound chimp."

The reason he may be looking more favorably at a company he once derided as a digital pip-squeak is that Netflix is responsible for 40 to 45 percent of Time Warner's streaming video on demand revenue. Profits make the heart grow fonder.

Overall for the third quarter, Time Warner beat Wall Street's projections as net income jumped to $838 million, or 86 cents a share, from $822 million, or 78 cents a share, a year ago. Revenue at the company dropped 3 percent to $6.84 billion.

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