The State of SVOD in Europe
Salto will include linear terrestrial channels and catch-up along with SVOD, but the partners must commit to a series of remedies to prevent anti-competitive coordination in rights acquisition, the commercialisation of TV channels, and the distribution of pay TV services and the advertising market.
In November, UK broadcasters ITV, BBC, Channel 4, and Viacom-owned Channel 5 launched SVOD service BritBox. It costs £5.99 a month and contains mostly archive programming from the UK broadcasters, with the BBC only placing shows on the platform after they have been available on iPlayer for a year.
As was widely reported, BritBox president Soumya Sriraman had this to say about the service on its launch: "BritBox is proudly a mass niche service. We blend the immediacy of broadcast with the swagger of a digital streamer creating a 'broad-streamer.'"
"BritBox feels like it's over before it even started," believes Chris Wood, CTO at software solutions developer Spicy Mango. "There has been little promotion of the new service in the UK, and the promotion that has taken place is limited. Unfortunately, this service might not make the cut, but realistically, there has to be some streaming victims in 2020, as the industry is becoming far too fragmented, and customers won't consider paying £6 per month for content that is largely available on other platforms."
Netflix's total content spend reached $15 billion in 2019, while the BBC spent around $2 billion, highlighting the scale of the challenge local broadcasters face.
Sky also made moves to shore up its audience. In October, it began broadcasting Sky News on Amazon's Twitch and separately agreed to a new output deal to give it continued access to HBO's new production and content library.
The most ambitious attempt to achieve scale by creating a pan-European TV company is being led by Italian TV group Mediaset. In November, Reuters reported it raised its stake in ProSiebensat.1 to 15.1% as the next step in a potential merger of its Italian and Spanish operations with its German rival under a new Amsterdam-headquartered group called MediaforEurope. The merger is opposed by French group Vivendi, a minority (28.8%) stakeholder in Mediaset, with the battle to be decided in court.
SVOD Growth in Europe
Beyond Netflix and Amazon Prime Video, the market is fragmented in many countries in mainland Europe. Many local SVOD players have struggled to grow, meaning that multiple subscription uptake has not reached its potential. The arrival of new international and local services will help stimulate this "if they are unique, affordable and able to lock-in subscribers beyond any initial binge viewing," Futuresource's Sidebottom advises in a post on BizTechReports.
The year-on-year growth of the Spanish video market consumer spend will lead all other Western European countries between 2019 and 2023, according to Futuresource. This is as a result of continued strong pay-TV revenue growth (accounting for 70% of the overall video entertainment market), whilst many other countries are flatlining or even beginning to decline. Furthermore, continued rapid SVOD uptake is anticipated, similar to the region as a whole, but coming from a comparably lower base. Netflix and Amazon spearhead the market, aided by SVOD integration with pay-TV services and investment in local language production. By 2021, Spanish consumers will be spending half a billion euros on SVOD subs per year, accounting for 17% of video spend in the home.
SVOD is the key element of the German video market, which has shown "impressive" continued growth, based on Futuresource's analysis. More than 10 million households subscribe to one or more services, which means that a quarter of German households are actively engaging with SVOD. "Amazon Prime Video remains the market leader, but Netflix continues to make strong gains," according to Tristan Veale, market analyst at Futuresource. "The two services are mostly complementary, and there is room for both to thrive."
SVOD is providing most of the impetus in Italy's home video market, with annual consumer spend expected to reach nearly €1bn in 2023, says Futuresource. Growth will be driven by local services such as Telecom Italia's TIMVision, Netflix (which was added to Sky Italia's Sky Q platform in October), and Amazon Prime, along with the proliferation of new services.
"In 2019, consumers [were] expected to spend €340 million ($380m) on SVOD, up by 47%, with 5.3 million households subscribing to one or more services," says Veale. By the end of 2020, it expects there will be more SVOD than pay-TV households in Italy.
Mediaset, the largest commercial broadcaster in Italy, operates a variety of OTT services, which include Mediaset Play, Infinity, and the TivuOn hybrid DTH-OTT service in partnership with Telecom Italia and RAI. While it does not publicise subscription figures, they are expected to have declined in 2018–19 as the first year of its loss of Champions League rights to Sky Italia kicked in. It struck a deal with Netflix in October to co-produce a series of movies in the country, which will be released on Netflix first before being broadcast on Mediaset's free-to-air channels in Italy, according to Reuters.
Italy’s largest commercial broadcaster, Mediaset, operates a variety of OTT services, including Mediaset Play (pictured), Infinity, and the TivuOn hybrid DTH-OTT service, in partnership with Telecom Italia and RAI.
"The key challenge for any localised service will be the sustained provision of high quality, exclusive content when compared to both Netflix and the existing TV landscape," writes Sidebottom in a blog post. "Such services will also have to differentiate against their backer's existing live and on-demand services. This will require significant additional budget if they are to establish themselves and keep subscribers renewing."
One thing is certain: whether it's major global D2C brand launches from Disney or local broadcaster joint ventures, consumers' thirst for premium streamed video will continue to grow, driven by both increasing content and service choice.
BBC Plots Transition to iPlayer
UK free-to-air broadcasters are the most successful within Europe at encouraging their audiences to use catch-up broadcast video-on-demand (BVOD) services, ahead of those from Sweden, Germany, and Denmark. Kantar's analysis shows that only four broadcasters in Europe see more than half their audience using the associated catch-up service: the BBC and ITV in the UK and Sveriges Television (SVT) and TV4 in Sweden.
Of those, the BBC has the highest engagement, with more than two-thirds of its regular linear audience now using its iPlayer monthly, which will help the BBC transition to using the iPlayer as an interface for its entire service portfolio.
In 2019, the BBC announced its fourth upgrade to the iPlayer in 12 years in a bid to better compete with international SVODs. Details on the revamp won't crystalise until 2020 but include the extension of programme availability for at least 12 months rather than the 30-day window and a concentration on live events (like music festival Glastonbury, the FIFA World Cup, and elections), which are not core to Amazon or Netflix. A "hero" screen will carry a main feed at the top of the iPlayer homepage, with smaller icons for concurrent feeds.
The BBC is also emphasising the role of human curators in creating innovative audience experiences as opposed to, in its characterisation, the machine-driven service of a Netflix.
iPlayer had a record 7 days in the final week of September, racking up 90 million programme requests. And, crucially, the number of people younger than 35 whom iPlayer is reaching has gone up by more than a third in the past year.
The vision is to transform iPlayer from a catch-up service into a "total TV" destination, according to BBC director general Tony Hall, speaking at the RTS Cambridge Convention in September. This includes serving personalised content to audiences which it hopes to deliver as Object-Based Media (OBM). BBC R&D has been experimenting with building out OBM at scale and toward the end of 2019 unveiled developments in a low-latency streaming technology called Remote Experience Streaming.
As befits its public service remit, the aim is universality: the streaming of a remote experience should happen on any device, no matter what its computational ability is. BBC R&D also built a prototype that allows viewers to navigate through branching narrative episodes with a mouse and keyboard, or a gamepad or remote control, when watching on a TV.
Soccer Tests Live Streams
Soccer, the world's biggest sport and Europe's most popular live-viewing pastime, remains in the hands of pay TV, but cracks appeared in its right to possess TV's crown jewels.
DAZN and Amazon are making the most concerted attack. Amazon's debut broadcasting the English Premier League (EPL) in December was considered a success.
Amazon, which paid a reported £90 million for 20 live Premier League matches a year through the 2021–22 season, aired its allocated games via its Prime Video OTT subscription service in December. Whilst the tech giant has not made its viewing figures public, it claims that "millions" watched its coverage. It is using sports as a loss leader to entice subscriptions to its £79 annual Prime service and claims Premier League coverage contributed to record numbers signing up to it since its 2007 launch in the UK.
The EPL will be satisfied too that its package of rights for games to be simultaneously streamed had increased the competition's reach by a third, according to Ampere Analysis. According to Ampere, Amazon's distribution means that 72% of fans now have access to at least some matches, compared to 54% who have either or both a BT Sport or Sky Sports subscription. That will give Amazon the impetus to seek increased involvement in more sports rights, including bidding for more Premier League games at the next auction for the 2022–2025 seasons.
There were some glitches, notably in delays of up to a minute between broadcast and live stream, a perennial problem for online casters, which new technologies like low-latency common media application format (CMAF) might iron out.
Amazon's success prompted an immediate response from BT Sport when it launched a monthly pass allowing fans to pay for content without having to commit to an annual contract. Its £25-a-month pass allows anyone to dip in and out of content, including EPL and Champions League football, which it retained rights to show along with the UEFA Europa League and new Europa Conference League in the UK from 2021–24 for £1.2 billion.
Sky went down this route of "pay lite" some time ago and found that its monthly pass to Sky Now has not dented its core pay-TV base of about 10 million subscribers.
"Given the high price of sports rights, it is a risky bet," Richard Broughton, Ampere research director, told The Guardian. "Sky's Now TV has mitigated the risk of contract customers moving to a 'dip in and dip out' culture by pricing the sports pass quite high in recognition that consumers have to pay for flexibility."
"As the public become accustomed to DTC offerings, expect innovation around the monetisation of seasonal content such as TV shows or sports leagues," says Limelight's Miller-Jones. "With the NBA, we already see options to buy game-by-game, and there is no reason why that won't also become the case with something like the Premier League, where rightsholders are trying to capitalise on their investment and encourage customers to dip their toe into the water to try out their service."
However, Germany's pay-TV incumbent rightsholder Sky Deutschland was left with nothing in the rights to air Champions League from 2021 to 2024. It was outbid by Amazon and DAZN, which split exclusive rights between them for an undisclosed amount, according to Reuters. ZDF secured live free-to-air rights to the final, along with highlights.
In December, DAZN also struck a deal with Telecom Italia (TIM) that will give TIM customers access to DAZN's content, including the Italian soccer league Serie A. The partnership builds on TIM's strategy of establishing itself as a leading aggregator of content in Italy, with a sports offering that includes Major League Baseball and IndyCar.
2019 saw esports tournaments hit the mainstream press with a big bang. Esports has been around for a long time, but with tournament prize money now exceeding $30 million in some cases, this is now an entertainment genre that cannot be ignored.
"In 2020, we'll see broadcasters trying to get in on the act and find a way to bring what has been a streaming-only format on YouTube, Twitch and Mixer to their main channels," says Spicy Mango's Wood. "It's a demographic that they are currently missing, but could this be the way to reach what should be their future subscribers?"
2020 will also see more traditional sports move into esports, Kantar's Jose Colagrossi told TVB Europe: "For example, football clubs establishing their own esports teams, and Formula One streamed over Twitch with gamification. And as coverage of esports expands into traditional media, we predict that esports players will become well-known celebrities and influencers in their own right."
2020 was a year unlike any other. Can the OTT momentum be sustained in 2021?
Netflix will lose market share despite adding 25 million subs in the next 6 years, says Digital TV Research.
Disney+ has helped SVOD revenues continue to rise on a steady pace, while COVID-19 has temporarily stunted AVOD's growth
Companies and Suppliers Mentioned