Over the past few decades, TV service providers’ market power guaranteed them a certain leadership in production.
Thanks to a steady relaxation of competition rules in the United States, the resulting vertical integration trend has seen production studios merge with TV networks and cable companies. In other markets, such as France, public authorities have continued to oppose such a trend, underscoring how vital production independent of the top networks is to sustaining diversity and creativity.
A new way of consumption
Here too the Internet is changing the status quo. We watch more and more videos. We watch them more on our own, and from increasingly global sources. Content providers and pay-TV distributors are being penalised both by their costs and their only national footprint, and are having to contend with two major threats: being cut out of the service equation and being cut off from customers. Market heavyweights like the ones found in the United States are having to weigh the pros and cons of working with a platform such as Netflix that is expanding worldwide, versus setting up their own over-the-top solution… and protecting what is still their main source of income, i.e. selling programmes to TV channels (including affiliate stations). But their dilemma is still less dire than the one facing Europe’s independent providers, who have a primarily national footprint and which are often restricted in the extent to which they can exploit the rights to the programmes they help finance.
Ecosystem and legislation
The European Commission likes the idea of having TV rights negotiated for the EU as a whole. It would provide an opportunity to introduce the idea of economies of scale in a lucrative sector, and one that has a tremendous cultural influence. Unfortunately, in its revised version, this plan, which is one of the pillars of the Digital Single Market proposal unveiled in early May, is coming up against Europe’s very disparate set of national TV ecosystems. As national laws – and especially the state of the industry – currently stand, very few companies in the EU can hope to come out winners in any negotiations for rights to all 28 European markets. Bluntly put, a very cut and dried application of such a scheme would more likely be a boon for outsiders such as Netflix, Google, Apple, Facebook, Amazon, etc.
Despite which, our desire to be optimistic leads us to hope that the steady and inexorable development of the OTT video model will drive a change in legislation across Europe, and lead to cross-border and possibly continental deals between Europe’s TV sector players.
For the publication of the last study about "OTT Regulation" and the 15th edition of the DigiWorld Yearbook, IDATE is organizing a conference on the perspectives and key trends that will structure the digital economy for the next decade, DigiWorld Future
More informations about IDATE's expertise and events :
Nouveau cycle de conférences de prospective numérique sur les enjeux de l’Internet, de la télévision et des télécoms à 2025
A l’occasion de la sortie de la nouvelle édition de son DigiWorld Yearbook, l’IDATE présente son nouveau cycle de conférences de prospective numérique sur les enjeux de l’Internet, de la télévision et des télécoms à 2025 !
A partir des analyses des experts de l’IDATE, les débats seront animés par Marjorie Paillon, Journaliste, Tech 24, Philippe Escande, Rédacteur en Chef, Le Monde et Gilles Babinet, avec les contributions exceptionnelles de :
Deputy CEOs of IDATE
Deputy CEOs of IDATE
A point of view published in Les Echos 12th of february 2015
There is quite a crowd of candidates jostling to become our entertainment operators, our personalised content access platform. Heading the ranks is the famous GAFA foursome, i.e. Google, Apple, Facebook and Amazon. Each of these four giants has managed to grow its business by leveraging their initial disruptive innovation, which quickly expanded into other arenas: a search engine that became the world’s biggest ad broker, a genius hardware manufacturer that invented the app store, a social networking site now poised to become a viral content distribution platform, and an online bookshop that has become a global one-stop-shop for every product imaginable. A power that is measured in superlative figures: billions of users, record-breaking revenue, the biggest cash flows and the highest market caps… Not to mention the advantages of being a ubiquitous global brand: the ability to create local versions of online products quickly across the planet, and an apparently unquenchable thirst for diversification that today includes robots, online banking, virtual reality, cloud computing services and, so, content.
The virtuous circle of Netflix
Can Netflix carve itself a place alongside these giants? Its success lies is keeping the promise of unlimited video, with a strong emphasis on TV series. A simple and efficient product that seduced American viewers with its ultra competitive price, compared to what cable companies charge. And it now appears poised to be embraced by Europeans as well, even the younger ones who are used to getting their videos for free via streaming, but seem to be willing to pay €8 a month to access the service.
But the power of the model also lies in a service that is built around the Web’s most popular content: video, which already accounts for close to 60% of open Internet traffic in France. Added to this is Netflix’s ability to invest massively in the most sought-after creative content today: TV series. Avoiding the distribution costs of a commercial intermediary, which account for close to 50% of HBO’s business model, Netflix can finance the production of original TV series. Starting out as just one content distributor among many, the firm from Los Gatos, in the heart of Silicon Valley, soon became a true master of the genre. A genre that may well become the emblem of the early part of this century, in the same way that theatre, the novel or cinema were for previous centuries – with the potential to lay claim to the moniker of major art form, attracting the finest writers, the best actors and huge production budgets. Much as stories serialised in the written press were once amalgamated into popular novels, television series are now being binge watched, and no longer viewed by a single episode a week. In the hands of the teams at Netflix, the series is becoming a precious weapon, at once capable of securing customer loyalty with popular series like House of Cards, of opening up new markets as with the brand new series, Marco Polo, which is aimed squarely at the Asian market, and negotiating their local bona fides, as they have in France with their commitment to produce a series like Marseille locally.
An all-in-one subscription for content?
Netflix being propelled to the rank of Internet giant also rests on the supposition that the success of the all inclusive subscription to TV programmes can be expanded to include other content, in the near future. We already have unlimited subscriptions to music (Spotify and Deezer), print media (Relay.Com), video games (OnLive) and books (Oyster and Amazon, of course). But we should also note that the lines are shifting, as Pascal Nègre, President and CEO of Universal Music France, recently touted these services as the ultimate means of saving the revenue of one of the first industries in the firing line of the digital revolution. Meanwhile publishers are still debating the wisdom of applying the model to books, with most coming out against it.
As veteran specialists struggle to introduce viable subscription plans, an outside player, armed with a cross-media universal subscription model could emerge. Netflix could be the promoter in chief, buoyed up by the success of its video-centric model. It could carry that model over to other content, and overtake not just traditional players, but even Amazon, Apple and Google which, although already well entrenched in this market, have thus far failed to demonstrate any great skill. This would mark a true disruption. By dominating the universal content subscription, in the same way that Amazon has become an all-in-one store, Netflix would become our main provider of paid access to all content. A veritable earthquake that would completely shake up the way culture industries’ value chains are organised. It would also undoubtedly pave the way for a whole series of changes: cross-cutting recommendations covering all manner of content, accessing an article in the press the way we currently access songs, paying authors according to the size of their readership…
Netflix stepping into this closed circle of giants would confirm one of the Internet’s key maxims: winner takes all. In a globalised market, a single player dominates each segment. But the GAFA foursome have not yet lost the content battle, nor are they ready to lay down their arms.
Jean-Dominique Séval and Gilles Fontaine, Deputy CEOs of IDATE
Head of "Video Distribution" Practice
IDATE has released its White Paper on personalised video consumption, explored through the development of network based programme recording made possible by network PVR (nPVR) technology.
For Jacques Bajon, Head of IDATE’s Video Distribution Practice and author of this report, “consumers are taking control and shifting gradually from passive viewers to active participants in their consumption of TV services. Recording programmes is a major example of this shift. Network based recording and storage functions thanks to nPVR systems is a solution that makes it possible to strengthen the synergies between linear and on-demand TV services, paving the way for a win-win model for consumers, rights holders and network operators”.
The cloudification of TV
The network PVR (nPVR) is an evolution of PVR which moves the storage of programme recordings to operators’ servers.. It is thus part of a wider process of deployment of platforms in the area of video distribution into “the cloud”, i.e. the moving of distribution features from the home television to remote servers. This “cloud” approach to managing video content is being progressively adopted due to the flexibility given to the editors of TV services, network operators and consumers.
Distributors around the world that have implemented this solution are many, especially in Europe, seeking to capitalise on the positive externalities for all of the parties involved:
• The user benefits from an improvement of the recording feature, now available on all viewing devices. In addition, a new population is becoming eligible for the facilities of digital recording, without bearing the cost of expensive equipment.
• Rights holders rely on networking solutions to better monitor the use of their content outside linear programming, create a new link with television viewers/users and thus better monetise that content. Influential in terms of programmes, TV channels can then promote the relationship between linear and non-linear offers and find new revenue leverage based on cumulative audiences. This evolution applies more and more in a secure environment that does not necessarily question the rights holders’ remuneration systems.
• The network operator sees in the deployment of nPVR the possibility of an optimisation of the costs of digital recording solutions in comparison with hard drives deployed in homes. These gains could allow operators to invest in the ergonomics and functionalities of the services, which are now the heart of the added value of video content distribution.
With the consumer gaining flexibility in video use, rights holders transforming the threat of delinearisation into an opportunity for better exploitation of their content and operators able to better manage those services operationally, there is the possibility of creating a virtuous circle, made possible through nPVR solutions.
Map of nPVR deployments in Europe
The 2014 digiworld summit "drawn from life" by Aurélie Bordenave, alias Léely. Discover all the strong moments. (texts are in french or in english)
Plenary: Business models, Rethinking the telcos business models in the 5G era
Keynote : Smart Glasses
Business models: Rethinking the telcos business models in the 5G era
Disruptive innovations: one step towards 5G
Smart City & Mobile living
Seminar "TV everywhere"
Seminar : "Business models: M2M & Internet of Things - Smarter objects, smarter processes"
Europe on the rebound ?
TV & facing Mobility
Le digiworld summit 2014 a réuni autour des questions de la mobilité près de 1 200 participants et 140 speakers du monde numérique. Les vidéos des moments forts de ces deux journées.
- L'interview de Laurent Solly, DG de Facebook France
- L'interview de Carlos Moreno, "La ville nous parle"
Consultant de l'IDATE
The study on how the online shift is affecting content industries analyse four main segments: books, recorded music, vide0 games and video products. Presentation.
For each sector, it provides readers with detailed market figures, analyses the move to the internet, its impact on industry structure and revenue sharing, and delivers market forecasts up to 2018, both global and for seven key national markets.
Alexandre Jolin, the Project manager for the report remarks that, “the global content market topped €140 billion in 2014, or only just over 1% more than in 2012, which marked a record low since the onset of electronic distribution channels”. Keeping in mind that 37% of content industries’ revenue come from these online distribution channels, or double the amount in 2010, albeit with huge disparities between the segments: 13% for books versus 67% for video games.
Content dematerialisation produces certain common effects to these different segments, despite the characteristics of books, recorded music, video games and video:
• a rise in subscriptions, at the expense of per-unit sales
• lower prices, which, combined with piracy, has an impact on household spending
• simplification of the value chain, with technical costs and intermediaries having less of an influence, which benefits consumers as well as those involved in creating, publishing and producing content
• piracy has a significant effect, although it seems to be stabilising thanks to new unlimited offerings, at least in developed markets
• a trend towards concentration upstream (production/editing) and downstream (distribution)
The various segments of the content industry are expected to follow different trajectories in the next five years:
• Publishing, which has only just started the process of dematerialisation, is likely to see revenues stagnate.
• Music, video and video games are likely to continue to grow or return to growth.
• The overall dematerialisation rate will reach 63% in 2018.
IDATE has identified the following key factors in digital content market development:
• a tighter link between purchase of a physical copy and a dematerialised copy
• the rise of the 'service' function, which allows personalised content recommendations
• innovative pricing models, individualised for each type of content (yield management)
Household spending expected to be back on the up
Falling in recent years, household spending on cultural products and services should start to increase from 2014, reaching 84.20 EUR per year worldwide in 2018. We nevertheless expect to see huge regional disparities, as North American households will continue to be by far the heaviest spenders on cultural goods and services, totalling an average €375 per household in 2018.
Source: IDATE, Content Economics, September 2014
Would you like to discover ous study ? This way.
The "TV Everywhere" Executive Seminar at the 36th annual DigiWorld Summit helped shed some light on new viewer behaviours, the possibilities opened up by hybridisation and cloud technologies, and how they will impact video watching down the road, both inside and outside the home.
TV Everywhere becoming an habit
On-demand viewing has become one of the most widely adopted new behaviours, whether via catch-up, TVoD or SVoD. IDATE nevertheless underscored that on-demand access to content can be limited by regulatory or contractual restrictions, especially when it comes to feature films.
Accessing video content from anywhere is not yet commonplace behaviour, particularly for users on the move. This can be explained in part by technological constraints in certain locations, and by the fact that TV service providers do not make all of their content, particularly live programmes, available for mobile viewing.
• Any device
Despite the proliferation of new screens and the rapid rise in viewing on smartphones and tablets, most users still watch their programmes on their home TV, even in the most mature markets. To achieve a convincing “any device” viewing experience, service providers also need to address the issue of continuity/handover between devices.
François ABBE (Founder & CEO, Mesclado) recalled that Disney had signed an agreement with Google and Apple, thanks to which a Disney video purchased from the iTunes store could be played on an Android device, and vice-versa, which is a good first step towards providing users with a seamless experience.
The television will be the source of different challenges, depending on the broadcaster and their specific distribution issues. Vincent FLEURY (CTO and Deputy CEO for New Media, France Medias Monde), whose core challenge is to deliver the same services to all users, sees the TV as “just one screen among others,” whereas Laurent FRISCH (Vice-President Digital, France Televisions) and Valery GERFAUD (General Manager, M6 Web) believe the television remains the screen of choice for watching live programmes, and for catch-up or time-shifted viewing.
• Any Content
Because the ways for accessing video products are so fragmented, and given the glut of content available, consumers today appear more willing to pay for services that can meet their need for more structured and personalised solutions.
For IDATE, one of the biggest challenges for video services is to deliver personalised content that also takes the viewing device and situation into account. Here, the issues surrounding big data and recommendation engines are especially crucial.
Didier LEBRAT (CTO, Sky) also stressed the massive investments that Sky has made in content, and in improving quality to create a sense of value for its customers, and noted that Sky+ On Demand users now watch more pay-TV content than free to air content.
Hybridisation and new video distribution configurations
Vincent GRIVET (Group Head of Broadcast Development, TDF) reminded us that all-IP for video is not yet possible, but that on-demand viewing is on the rise. The two trends thus require hybrid solutions to be deployed. If HbbTV is expected to provide a response to this demand, it does not appear to be quite as hybrid as what was being promised three years ago. Vincent FLEURY believes the industry expected a lot more from connected TV and that, today, it is much easier to access the Web on a TV set via ISPs’ boxes and mobile solutions. His main focus is on bringing connectivity to locations that are today without it.
Darko RATKAJ (Senior Project Manager Technology & Innovation, EBU) focused on the needs of today’s users, and drew a parallel between classic TV viewing, which remains a shared experience, and on-demand viewing which is still a sort of top-up. He believes the issue is knowing whether a video platform truly meets users’ needs, in terms of both quality and coverage – the latter being not just geographical but demographic as well. Ratkaj says that hybrid solutions do exist, but not in the sense that a specific network or a technology can solve all the problems. What is important is delivering the right service under the right conditions, not whether it is delivered over a broadcast or broadband network.
Yves BOUDREAU (VP Mediacom Technology Strategy, Ericsson) has been watching the “prosumer” phenomenon develop: if vendors do not design solutions tailored to users’ behaviour, prosumers will create their own "Frankenstein video" solutions. Broadcasters, programmers and technology providers need to join forces to create products that satisfy consumers’ new demands, even if it means running the risk of it being the solutions provided by Internet giants like Google, Amazon or Apple that gain the upper hand.
We are seeing hybridisation develop around broadcast networks that have no native return path. But the momentum depends on the TV service’s business model:
• pay-TV providers such as Sky or DirecTV are capable of defining the user experience thanks to their DVRs, and so meet customers’ new demands efficiently;
• for free to air TV, the problem of standards currently appears to be a real obstacle to the development and adoption of truly viable hybrid solutions. Broadcasters need to make sizeable investments in developing their applications, which is a direct result of the huge technological fragmentation of application ecosystems. Laurent FRISCH pointed out that, in the multitude of technologies that exist today, not all are equal. TV networks are not necessarily taking a position, but rather waiting for a solution to take hold as the industry standard. Without a single or unified solution, Smart TV will not take off.
Jean-Hubert LENOTTE (Director of Strategy, Eutelsat) notes that network operators are also taking initiatives in the arena of hybridisation, spurred by the fact that, while consumers still watch a great deal of linear TV, the time spent doing so is not increasing, whereas the time spent watching on-demand and time-shifted programmes is on the rise. So market players need to be able of providing live interactivity to boost the appeal of programming. If clients such as Sky and Canal+ want to keep control over their viewers and develop their boxes and products themselves, Eutelsat is developing a smart LNB solution for other clients, in other words two-way LNBs that make it possible to integrate a return path directly in the user’s satellite dish, and so do away with the need to connect the STB to the Internet. He also reminded us that satellite makes it possible to deliver on-demand content in HD and even UHD to locations with no broadband coverage.
For TV channels, hybridisation also means the development of new business models and new partnerships:
• for Didier LEBRAT, marketing the Now TV OTT service allows his company to target consumers who want a lot of flexibility, and do not necessarily want to subscribe to BSkyB’s satellite TV plan;
• Vincent FLEURY believes that hybridisation does not apply only to technical networks but is also a way to access new consumers: he underscored the importance of syndication, and recommended using the means made available by new video platforms such as YouTube and Facebook;
• according to Laurent FRISCH, broadcasters and new entrants will need to create new “hybrid” TV channels that combine linear and non linear programmes, to reinvent their value proposition;
• Valery GERFAUD reported that the percentage of ad revenue generated by catch-up TV for the M6 group is proportionate to the time spent watching the network’s catch-up TV (i.e. compared to their live programming), thanks to a solid monetisation of catch-up TV.
Lastly, Marc LE DAIN (Associate Partner, IBM Consulting Services) stressed that hybridisation also applies to customers whose behaviour differs depending on the type of programme being watched (his presentation on slideshare)
Uncertainties over switching to an unicast only model
Telcos’ and cablecos’ networks both have a return path that enables the development of advanced video products for their pay-TV customers. Plus, their point-to-point networks can use software-based security solutions that are cheaper than the broadcasting world’s conditional access systems.
Yves BOUDREAU reminded us that the Internet was not initially developed to distribute TV, and is currently not capable of taking over from free to air and pay-TV, if ever broadcasting networks were shut down in the near future. There are still lingering questions over how much telcos would need to spend to satisfy consumer demand, under a unicast-only model. For Jean-Hubert LENOTTE, the combination of broadcasting and broadband is still the most efficient solution today, especially from an economic standpoint.
Distributing TV services via LTE broadcast, thanks to eMBMS technology, is another possible new alternative for video distribution. Pierre-François DUBOIS (VP of Product Development, Orange Technocentre) pointed out that all LTE smartphones are already outfitted with an eMBMS chipset capable of receiving broadcast streams.
The technology has already been deployed commercially in South Korea, and expected to develop in other countries soon, even though uncertainties remain over the right business model, especially on mobiles. For Yves BOUDREAU, the combination between broadcasting and LTE does make it possible to create a product that consumers could be willing to pay for.
Cloud technologies’ growing role in video distribution
The development of cloud-based television and video distribution solutions is upending how all of the TV industry’s veteran players operate. Cloud TV technologies make it possible to move steadily to a more flexible model that enables swift rollouts for new services, and which alters the investment structure to an on-demand model.
nPVR technologies, for instance, make it possible to move the intelligence in operators’ networks, which would mean that STBs would no longer need to be equipped with a hard drive. Valery GERFAUD nevertheless pointed out that, should this type of solution develop, it could very well undermine catch-up TV revenue.
Cloud technologies also make it possible to solve new editorial issues tied to Social TV, such as Rising Star, centred around interactivity with viewers. According to Valery GERFAUD, incorporating interactivity into the very heart of a TV programme may be very popular with viewers, but it also creates new technical issues that need to be managed. Only the cloud enables broadcasters to handle such huge surges in traffic, from a flexibility and cost perspective. Mr Gerfaud believes that quality of service remains a very real problem, as users will quickly turn off a poor quality video, which means the provider loses money.
For Xavier POUYAT (Senior Program Manager, Azure Media Services), the cloud also allows content to have an existence that goes beyond the aired programme: e.g. for an interactive episode of the series "Bref", more than a million personalised videos were generated in three days, thanks to the cloud.
Source: Canal Plus
These technologies are also expected to be crucial in the coming years to enabling TV services to make the transition to ultra high definition, which represents both a technological and economic challenge, as Jérôme RENOUX (Regional Sales Director, Digital Media, Southern Europe, Akamai Technologies) reminded us. The introduction of new compression formats, such as HEVC, will no doubt also make a vital contribution to future developments, for both HD and UHD. Pierre-François DUBOIS hopes that, thanks to HEVC, 85% of Orange’s IPTV Orange will have access to HD programming.
They are also likely to play a major role in merging and streamlining workflow for TV industry players all down the line, to be able to tackle live and on-demand viewing on any device imaginable.
Not just a technical, but a legal issue as well
TV Everywhere and the cloud naturally create issues in the realm of user identification, and so of privacy and data protection.
While the trend around the world is towards monetising internet users’ personal data, Alain BENSOUSSAN (lawyer with the firm, Alain Bensoussan) reminded us that the notion of data ownership has no legal status: Facebook has thus given its one billion users a right that, legally speaking, does not exist, as no sovereign state recognises ownership of personal information.
In addition, while some 100 countries have adopted data protection and freedom regulation, it appears that, with big data, individuals have no control over the data that pertain to them, or do not know the data pertain to them. The important thing with big data is not knowing the name of the person behind the screen, but rather the ability to predict with more than 90% accuracy who is there and what they are going to want. So we are moving towards anonymous personalisation.
Lastly, Alain BENSOUSSAN introduced the concept of “privacy by design”, which consists of designing products and services with “privacy inside”, to reduce the anxiety-provoking aspect for users, which is one of Facebook’s chief selling points.
If you want to go further read "Live TV vs. on demand viewing: what does tomorrow’s world have in store for broadcasting?"
> You are interested by our work ? You will find our study about Future TV 2025 in our shop
Our guests' presentation are interesting you ?
> Here is the general presentation of Florence Leborgne, from Idate.
>Here is the presentation from Marc Le Dain (Associate Partner, IBM Consulting Services) : http://fr.slideshare.net/DigiWorldIDATE/tv-everywhere-41808106
> Here, you will find the presentation from Laurent Frish (Vice-President Digital, France Televisions) "TV + Digital").
Florence Le Borgne
Head of the TV & Digital content Practice, IDATE.
Can anyone compete against American on-demand vendors?
IDATE is releasing the latest version of its “TV and video services worldwide” market report and database. It provides readers with vital data on a market in the throes of major upheavals, analysing changes in viewer habits, TV access networks (terrestrial, satellite, cable, IPTV) and revenue sources (linear TV, pay-TV, DVD, Blu-ray, VoD) in more than 40 countries.
The report’s project manager, Florence Le Borgne, tells us that, ‘even though we are watching more video than ever before, revenue growth for the global video market is being stunted by the inexorable drop in video hard copy sales, and by the pressure that Over-the-top (OTT) distribution is putting on traditional TV business models’.
According to IDATE, television revenue worldwide will increase from 368.9 billion EUR in 2014 to 424.7 billion EUR in 2018, which translates into an average 3.6% annual growth, compared to the 5% reported between 2010 and 2013:
• pay-TV revenue is forecast to decrease dramatically over the next few years, with average annual growth dropping to 2.8% between 2014 and 2018, compared to 6.1% between 2010 and 2013. Despite which, it will continue to be the main source of TV revenue up to 2018, bringing in 195.9 billion EUR in 2018;
• advertising revenue is expected to enjoy more dynamic growth overall, in line with its trajectory in recent years: 4.8% a year up to 2018, compared to 4.6% per annum over the past four years, to reach 193 billion EUR in 2018;
• funding from TV licensing fees will continue to increase significantly: by an average 1.5% a year, to reach 36 billion EUR in 2018.
The revenue generated by video on demand (VoD) will climb to 34.4 billion EUR in 2018, thanks to a solid and steady increase (+131.5% compared to 2013) and will represent more than double hard copy sales (15.5 billion EUR in 2018) by that time.
• Online (OTT) video is expected to consolidate its dominance of the VoD market, accounting for more than 80% of on-demand revenue.
• VoD rentals will continue to be the central model on managed networks, generating 4.7 billion EUR in revenue in 2018, compared to 3.3 billion in 2014.
• The hard copy market will continue to shrink across the globe, losing close to a quarter of its value in 2014, despite the growth of Blu-ray.
TV revenue growth forecasts by market, 2014-2018 (billion EUR)
Source: IDATE, State of TV & Video Services worldwide, July 2014
Breakdown of TV revenue by source, 2010-2014 (billion EUR)
Video on Demand Focus: Increasingly competitive OTT players
• Despite the popularity of premium cable channels, Netflix now rivals top dog, HBO. Although subscriber numbers for the top premium cable channels in the US (HBO, Showtime, Starz) have remained relatively stable, and are even increasing for some – +13.3% and +14.2%, respectively, for Showtime and Starz between 2010 and 2013 – the real momentum today is behind OTT services, starting with Netflix whose customer base grew by 71.4% between 2010 and 2013. At the end of June 2014, Netflix had 36.2 million residential subscribers, including 35.1 million paying customers, compared to 28.6 million subscribers for HBO in the United States.
• Will the top American SVoD providers dominate the global market? As of October 2014, Netflix is present in 46 countries, and reporting a base of 13.8 million subscribers worldwide. This means that it alone controls two thirds of the globe’s subscription VoD customers. By way of comparison, HBO is present in 61 countries in Latin America, Asia and Europe, and has more than 35 million subscribers, of which a growing percentage to its HBO Go service. Meanwhile iTunes leads the way in electronic sell-through (EST), earning 65% and 67% of movie and TV programme sales revenue, respectively, in 2012. Virtually all European countries have access to the company’s video rental service, while residents in eight countries – Germany, Austria, Spain, France, Italy, Ireland, the UK and Switzerland – can also download to buy from the iTunes store. Only smaller national companies are competing with these heavyweights. And while some are popular – France’s CanalPlay VoD service has 520,000 subscribers – one cannot help but wonder whether they can hold their own against these global titans.
• Also noteworthy is that Netflix outperformed HBO in terms of total SVoD revenue for the first time in Q2 2014: generating 1.146 billion USD vs. 1.141 billion USD for the premium cable channel.
Netflix share of the global SVoD market as of 31 December 2013 (%)
Source: IDATE, State of TV & Video Services worldwide, July 2014
American OTT video providers’ footprint in Europe as of October 2014
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Online advertising expected to account for 33% of all media advertising by 2018
IDATE has just released its report and database dedicated to the world online advertising market. This report provides an analysis of today’s key online advertising trends and technologies (including privacy issues, retargeting, VRM, new data measurement techniques, etc.) and includes an overview of the world leaders and their KPIs (Amazon, Apple, Facebook, Google, Microsoft, Twitter and Yahoo!). It takes a look at they key markets for monetizing online advertising, including search, display, mobile, RTB, social networking and video in 15 countries, including Brazil, China, France, Germany, Italy, Japan, India, Russia, Spain, South Africa, South Korea, Switzerland, Turkey, UK and the United States.
The global online advertising market will be worth more than 160 billion EUR by 2018, enjoying an 11.4% annual growth rate from 2010 to 2014. IDATE expects a steady increase in this market for the coming years: 9.7% annual growth up to 2018.
IDATE Consultant Soichi Nakajima, who managed the production of this report, points out that “we expect the breakdown of advertising formats to remain unchanged in the five coming years. Whilst the search market is already a stable market, largely dominated by Google across the globe, overall revenue for the display market is expected to increase slightly over time, with much more competition in terms of players fighting for market share.”
Global online advertising revenue (billion EUR) and its share (%) of total media advertising revenue, 2010-2018
Major trends in the advertising market include:
• Mobile advertising expected to account for 20% of online advertising by 2018 with an expected +50.1% annual growth rate from 2014 to 2018.
• Social advertising forecast to account for 14% of online advertising by 2018, with a +39.8% annual growth rate from 2014 to 2018.
• OTT video advertising expected to account for 9% of online advertising by 2018 with +21.8% annual growth rate from 2014 to 2018.
• Global RTB advertising market accounting for 30% of display advertising, thanks to an annual growth rate of 32.7% from 2014 to 2018.
Close-up on mobile advertising: mobile ad market an extension of the fixed
The tools and technologies of fixed online advertising can be re-used for mobile, which means that Google could easily carry its dominance of the fixed market over to mobile. On the other hand, in-app tools and technologies have to be created from scratch. In-app advertising, which is unique to mobile, makes up 20% of the current market. Plus a great many apps are games, promoting their paid services rather than displaying actual ads.
Current global market breakdown: search vs. display advertising on the fixed and mobile Internet, in 2014
- If you want to come to our seminar "TV Everywhere" during the Digiworld Summint 2014 wednesday november 18.