{"id":8734,"date":"2018-10-03T14:55:36","date_gmt":"2018-10-03T18:55:36","guid":{"rendered":"http:\/\/worldscreen.com\/tveurope\/stream-wars\/"},"modified":"2018-10-03T15:38:00","modified_gmt":"2018-10-03T19:38:00","slug":"stream-wars","status":"publish","type":"post","link":"https:\/\/worldscreen.com\/tveurope\/2018\/10\/03\/stream-wars\/","title":{"rendered":"Stream Wars"},"content":{"rendered":"

\"\"Jay Stuart reports on the fast-developing OTT landscape across Europe.<\/em><\/p>\n

In the ongoing battle between legacy operators and digital upstarts, it seems a turning point has already been reached in the U.K. The total number of subscriptions to the three most popular online streaming services has surpassed pay-TV subs.<\/p>\n

Per Ofcom, Netflix, Amazon Prime and Sky\u2019s linear online NOW TV reached a total of 15.4 million subscribers in the first quarter of this year, topping 15.1 million for pay TV. Revenue for the latter, dominated by Sky, declined for the first time last year\u2014by 2.7 percent\u2014to \u00a36.4 billion. Meanwhile, online audiovisual revenues jumped 25 percent to \u00a32.3 billion. Overall U.K. OTT customers will reach 20 million in 2022, according to research firm Ovum.<\/p>\n

Britain leads the way among the biggest markets in Europe for the growth of OTT, but the upward trend is also visible across the continent. In Germany, OTT video subs will rise from 8 million this year to 12 million in 2022. Italian OTT will grow more slowly, from 3 million to 4 million over the same period, while in France, subscriptions will increase from 4 million to 7 million.<\/p>\n

SHIFTING LEGACIES<\/strong>
\n<\/strong>So how is the traditional ecosystem responding to the rising dominance of OTT? For broadcasters, OTT used to be about offering flexibility to the consumer. Catch-up television made it possible for viewers to see what they missed the first time around. And it has become a real must-have, as the BBC saw this summer.<\/p>\n

Fremantle\u2019s Picnic at Hanging Rock<\/em> launched on BBC Two on July 11 at 9 p.m. The only problem was, much to everyone\u2019s surprise\u2014certainly the BBC schedulers\u2014England was playing Croatia in the World Cup semi-finals at the same time on ITV. A few years ago, that would have been a total disaster. Now, viewers could find the show on catch-up.<\/p>\n

\u201cIf I go to catch-up and I can only see a new show I\u2019ve heard about from episode three, I won\u2019t be happy,\u201d says Jamie Lynn, the executive VP, head of sales and distribution for EMEA, International, at Fremantle. \u201cI\u2019ll be even more unhappy if I\u2019m paying for a subscription and can\u2019t see what I want. Everybody has to adapt to viewer expectations.\u201d<\/p>\n

The change in expectations has naturally affected the way programs are sold. \u201cIt used to be that linear could launch a show and have catch-up but couldn\u2019t stack episodes, so an SVOD partner could come in and they could coexist,\u201d Lynn says. \u201cThat has been changing. Now the question is whether they can still coexist or if it\u2019s winner takes all.\u201d<\/p>\n

Lynn continues, \u201cWhat\u2019s important is the first window. Broadcasters still live for the overnights. They want the big bang. But that is changing because they can\u2019t live on the overnights. Now it\u2019s about live+7 ratings. So they need the catch-up.\u201d<\/p>\n

PLAYING CATCH-UP<\/strong>
\n<\/strong>All of the big broadcasters in Europe have OTT offerings with their linear programming available on catch-up. Louis Matignon, multiplatform solutions manager at Eurovision, the business arm of the European Broadcasting Union (EBU), says it is still early days with regard to the competitive picture.<\/p>\n

\u201cThey are not dominant in OTT, but they are catching up, and that\u2019s because they are learning how to leverage one of the strategic pillars of their businesses\u2014knowledge of their audiences. It\u2019s not just about micro-data, it\u2019s about 50 years of experience in curating content. This is a genuine competitive advantage. There are no better-placed organizations than the big broadcasters to thrive in the OTT market. The EBU members are in a very good position. They have strong commercial relationships, and they have their own powerful trusted brands as content providers.\u201d<\/p>\n

To build scale, European broadcasters have been reaching out to each other. France T\u00e9l\u00e9visions, M6 and TF1 have joined forces in an online SVOD platform called Salto. In Germany, ProSiebenSat.1 has teamed with Discovery, Inc., to launch a VOD service in 2019. The fifty-fifty partnership would be based on the existing 7TV alliance formed last year and integrate ProSieben\u2019s maxdome SVOD offering and Discovery\u2019s Eurosport Player. The goal is to reach 10 million users two years after launch, with a free ad-supported service as well as premium tiers with access to exclusive sports and films.<\/p>\n

ORIGINAL SPIN<\/strong>
\n<\/strong>In the Nordic region, entertainment provider Nordic Entertainment Group (NENT) is driving its SVOD service Viaplay with its own exclusive original content. \u201cI don\u2019t see us going head-to-head with Netflix because what they offer is usually coming from the U.S., while our focus is very strongly on local Nordic content, especially local drama,\u201d says Alexander Bastin, the senior VP at NENT Group and the head of Viaplay and Viafree.<\/p>\n

The group is ramping up its originals push. The plan is to reach 50 originals by 2020. New series Rig 45<\/em> made its exclusive Viaplay debut in June, with Conspiracy of Silence<\/em> slated for September and Four Hands Menu <\/em>and The Restaurant <\/em>also scheduled for the autumn. The average Viaplay customer watches 32 hours of the service per month.<\/p>\n

Sometimes, the OTT operation collaborates with the free-TV channels in the group as additional windows, or with public broadcasters if there\u2019s a better fit. NENT Group is basically the broadcast, streaming and production sister to MTG, which split its business in two earlier this year. Viaplay can tap into a big portfolio of production companies as well as produce with others.<\/p>\n

\u201cWe work in tight collaboration with the rest of the group to maximize opportunities,\u201d Bastin notes. \u201cThat said, most of the push to fill the drama pipeline comes from Viaplay, and you could say that the SVOD sometimes shares with the broadcast channels, rather than the other way around.\u201d<\/p>\n

In France, Canal+ axed its CanalPlay SVOD platform and is consolidating its OTT offerings under myCanal. S\u00e9bastien Audoux, head of sports, digital, at Canal+, comments, \u201cWe want all of our customers, including traditional linear satellite subscribers, to be able to enjoy the OTT features.\u201d<\/p>\n

Apple TV has already become the main device for Canal+ subscriptions. The group is also upgrading its own set-top box for existing linear subscribers, to enable them to access OTT seamlessly.<\/p>\n

\u201cWe used to have many different platforms and apps and websites for different digital packages,\u201d Audoux says. \u201cNow it\u2019s all going to be myCanal, and it will be available on all devices. You can start watching a match or a program on the TV at home and continue seamlessly on your mobile or wherever you want to watch.\u201d<\/p>\n

In Eastern Europe, meanwhile, OTT is lagging. \u201cThe take-up in our markets is ongoing, but generally the level of subscribers is comparatively lower than Western Europe and more developed markets,\u201d says Hendrik von der Linden, COO of PRO TV and coordinator of digital initiatives at CME. \u201cThis can be attributed to many factors, including broadband penetration, payment mechanisms and cost of a VOD subscription relative to that of the average pay-TV package. We also see higher rates of piracy in our markets.\u201d<\/p>\n

CME launched its OTT service Voyo in 2011, and it has been operating as an SVOD platform in the Czech Republic, Slovakia, Romania and Bulgaria. A subscription generally includes on-demand viewing of each country\u2019s local library and select foreign titles where CME has rights, as well as streaming of the linear channels.<\/p>\n

\u201cWe think that the success of an OTT product in our markets will depend on the availability of local content,\u201d von der Linden says. \u201cGiven that our markets are smaller and consumers are price sensitive, it is difficult for an OTT platform itself to support the production of high-quality, local entertainment programming for one single market as viewers are accustomed to seeing on TV, but Voyo does provide an alternative way to consume TV content. We have produced some limited titles exclusively for VOD platforms, including spin-offs of popular TV shows. We also provide extended coverage and behind-the-scenes footage on Voyo related to our popular TV shows.\u201d<\/p>\n

CME also has AVOD platforms, which it plans to relaunch to offer a state-of-the-art user experience that combines live-streaming with catch-up content and online exclusives.<\/p>\n

GLOBAL GIANTS
\n<\/strong>While local incumbents expand their OTT services, the global giants are continuing to make big plays in the region. Netflix in particular has been aggressively expanding across Europe, aligning with Liberty Global and spending heavily on local content. Originals are being produced in Germany, Scandinavia and other markets. Its first European production hub is being established in Madrid to serve as a central facility for the platform\u2019s growing slate of Spanish-language original content in the coming years.<\/p>\n

\u201cNetflix and Amazon have the financial firepower to produce that blows everyone else away,\u201d says Ed Barton, chief analyst of the entertainment practice at Ovum.<\/p>\n

And yet, despite the dominance of global giants, new services are emerging, especially for niche audiences. Take, for example, the success of Walter Presents, which specializes in non-English-language scripted content.<\/p>\n

The service was created by London-based Global Series Network and is a joint venture with the U.K.\u2019s Channel 4. In the U.K., it is offered through the ad-supported All 4 platform. International expansion is underway. In the U.S., it\u2019s up and running as an SVOD service. Walter Presents is launching in Italy as a block on cable channels Nove and Giallo.<\/p>\n

Walter Iuzzolino, co-founder and curator of Walter Presents, says that Channel 4 understood the concept right away. \u201cThey saw that it was a clear niche proposition that was not big enough for linear. But they understood the power of linear to drive OTT and their All 4 on-demand platform. They also saw the value of AVOD. We originally envisioned being behind a paywall.\u201d<\/p>\n

According to Iuzzolino, the real differentiator for the Walter Presents brand is curation. There is so much content in the market that viewers have trouble finding something they want to watch. The proposition is about finding what viewers want for them.<\/p>\n

Walter Presents premieres the first episodes of new series on linear Channel 4 in a branded window. Then the whole series is available to binge-watch online. The broadcaster connection is critical. \u201cBroadcast television has the marketing real estate,\u201d Iuzzolino says. \u201cYou can be in millions of homes 24\/7. That is a massive advantage.\u201d<\/p>\n

GAME DAY<\/strong>
\n<\/strong>Another niche offering that is becoming increasingly important in the OTT space is sports, so much so that even global players like Amazon are getting involved. The platform bought a share of the U.K. rights to the English Premier League, the most valuable content in the British market, for Prime Video in the U.K.<\/p>\n

Leading sports-specialist digital agency Seven League, which advises many top rights owners including the likes of FC Barcelona, the Bundesliga, UFC and the NBA, has built a model that values this package at approximately \u00a380 million.<\/p>\n

Sports rights are tricky because they come up for renewal with new bidding, and the appetite for sports can be very different based on the territory. But that can be a good thing because it enables Amazon to test how much various rights move the needle. They can experiment. If something works, they might want more, or if not, they can leave it. They can do the analysis directly from the data and correlate the rights cost to the value. So they can see precisely how, for example, The Man in the High Castle<\/em> compares with the Premier League.<\/p>\n

In contrast, Netflix has said they are not interested in sports rights, and there is no indication that the policy is about to change. Amazon may also be dipping into sports as a differentiator from Netflix.<\/p>\n

DAZN, which is part of U.K.-based Perform Group, has raced to make itself the preeminent global OTT player in sports, with high-profile deals such as buying live Italian Serie A this season for Italy. Ex-ESPN chief John Skipper recently became executive chairman of Perform Group, which is controlled by Len Blavatnik, purportedly the wealthiest man in the U.K.<\/p>\n

\u201cThe model of a Netflix of sports is achievable,\u201d says David Dellea, director and head of the sports business advisory at PwC. \u201cIf you have very broad reach and you pick up the rights, it may be possible for one player to achieve critical mass and move the needle in terms of the whole future of the market.\u201d<\/p>\n

SPORTS WARS<\/strong>
\n<\/strong>A leading sports market consultant and insider at Perform who asked not be named says, \u201cThere is going to be a Netflix of sports that isn\u2019t Netflix. The American view is that it\u2019s all about content, and the center of the world for content is Hollywood. That may be true for movies and TV drama, but it\u2019s not true for sports. The center of the world for sports is Europe and European football. A big difference between movies and TV drama is that there is a finite amount of sports available. The TV market for these rights is softening, and the rights owners of these sports are fed up with three-year deals. They want to see a longer-term commitment to their sports.\u201d<\/p>\n

PwC\u2019s Dellea reports that DAZN is buying \u201cglobal non-exclusive rights, and it can geo-block where it has to. It\u2019s not unlike buying movies. If you can buy highlights rights for everywhere and the rights are relatively cheap, you can establish a product that gives consumers a decent level of access to content no matter where they are. You can then build from there. We\u2019re not going to reinvent the wheel in sports. We have to watch the broader trends. Geographical exclusivity is the basis of the sports market and it is very difficult to break up exclusivity. That said, exclusivity is mainly about live rights. You have to make the transition to a global market with highlights.\u201d<\/p>\n

With so many services available across Europe, the question of market saturation is an important one to answer. \u201cWe are in a period of unbundling,\u201d says Charlie Beall, a senior consultant at Seven League. \u201cWhen it comes to consumer tolerance to pay for entertainment, there is an upper limit. People may be willing to pay for two or three OTT services, and that would leave room for both Amazon and Netflix. It\u2019s hard to see them paying for six or seven. So there is only a bit of space for niche products to squeeze in.\u201d<\/p>\n

\u201cThere is quite a small tail in OTT,\u201d adds Ovum\u2019s Barton. \u201cSelling yourself as a standalone subscriber service is extremely difficult. Many standalone services have horrible numbers, and it\u2019s hard to see how they will survive. A lot of them could use an aggregation platform to climb onto.\u201d<\/p>\n

In the view of Eurovision\u2019s Matignon, smaller content owners can play in the OTT game. \u201cWhy not? There is no reason why, say, Studio 100 or Talpa couldn\u2019t create a platform with their own content available on-demand.\u201d<\/p>\n

AGGREGATION OPPORTUNITY
\n<\/strong>He agrees that aggregation is the likely direction of the market. \u201cIf you think about it, it\u2019s what the cable and satellite players already do by offering bouquets. The key issue of OTT is going to be knowing which platform you can watch things on. If content owners are building their own OTT services, how can you find things? Netflix tried to be that facilitator or aggregator of content, then they started producing and owning content and got into another kind of competition.\u201d<\/p>\n

Both Amazon and Netflix will have to soon allocate more funds to European content; the European Commission has mandated that at least 30 percent of operators\u2019 slates must be from the region. That is very good news for European producers and distributors.<\/p>\n

Pictured: Netflix\u2019s<\/em> The Crown.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

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