The State of Media and Entertainment Video 2015
YouView will add more dedicated apps beyond those of the popular on-demand TV services. These apps are likely to be a mixture of existing services, such as Spotify, and emerging smaller content providers with limited catalogues. These could include arts institutions, such as the Royal Opera House, Shakespeare’s Globe, or other NGOs.
YouView’s strategy to offer both high-profile pay-per-view content along with Freeview content and specialist content through apps is a unique strategy in the market. It will be interesting to see how this strategy pays off in terms of increased subscription levels in 2015.
In 2013 there was significant growth in the availability of smart devices to attach to “dumb” TVs, and these were seen as a threat to the growing smart TV market. Smart TVs now account for about one-third of all units shipped, driven by a mix of consumer demand and the desire of manufacturers to maintain a higher price point. The popular view is that as smart TV functionality becomes a standard feature in TVs, their total market share will get closer to that of the overall flat panel TV market. This could point to a short-term future where every TV is smart but has one or more intelligent boxes connected to it.
In terms of services we are now seeing a move from devices that offer the ability to view entertainment content in the living room to a focus on services that offer content through multiple devices.
With a troubled history and a series of false starts behind it, YouView has become the fastest-growing OTT platform in the U.K. market, with total users climbing toward 2 million by the end of 2014.
An Explosion of OTT Services
Netflix has long been a poster child for over-the-top video services, and when you look at the reach and size of the service, it’s clear why. After first launching in the U.K. and Ireland in 2012, it expanded to include Norway, Finland, Sweden, Denmark, and the Netherlands in 2013. In each of these regions market penetration has been very high in a short period of time.
By the end of 2014, Netflix will have 17 million international subscribers, on top of 38.2 million U.S. subscribers, and there was 50 percent year-on-year subscriber growth in Q2 due to the “rapid growth” in its international market. Netflix launched in Germany, Austria, Switzerland, France, Belgium, and Luxembourg in late 2014.
There are now a staggering 3,088 OTT services in the EU, according to research by the European Audiovisual Observatory, comprised of 1,104 catch-up TV services, 711 branded broadcaster channels on open platforms, and 409 VOD services. These numbers look set to grow as more and more companies, particularly content owners, look to enter the market recognising the potential of grabbing some of the significant revenue being generated.
HBO has announced the launch of a service and several other U.S. content owners have made noises about launching in Europe. In the U.K. there is already Sky Go for satellite subscribers, as well as stand-alone packages for online users only. One of the newest entrants to the market is Sony, whose strategy includes a very diverse range of services, not focussed on Sony hardware and targeting a similar market to YouView and other satellite and cable providers.
The service, PlayStation Vue, is a cloud-based streaming service that offers an internet-only TV package as a direct replacement for cable or satellite. It is the service’s ability to let users view live, on-demand, catch-up TV, and exclusive programming as well as giving users the ability to tag and save favourite shows that puts it in direct competition with services such as YouView and iPlayer.
The service entered beta in the U.S. in 2014 on PlayStation 3 and 4, and is likely to launch in Europe by mid-2015. Other platforms will follow, including iOS and non-Sony Android devices.
The wide array of services and providers offers users a varied choice of service, but we are likely to see both more launches and some failures as services fail to get a critical mass of subscribers to make the services financially viable.
The Rise of the Vlogger
Of course not all entertainment content starts on the broadcast services; 2014 has been the year of growth in the vlogging sector, with platforms investing in supporting and nurturing talent.
It is not just on YouTube where vloggers are making an impact. Zoe Sugg, known on YouTube as Zoella, has more than 6.6 million subscribers, but also had the fastest-selling debut novel in the U.K.
Companies such as Pepsi, which now advertise more on digital platforms (mainly YouTube and Facebook) than they do on conventional media, have become one of the income generators that have driven vloggers’ success. Vloggers’ ability to sell products to their audiences in the real world is attracting a wider variety of brands, but there are likely to be problems along the way as vloggers and audiences are still exploring how far is too far when it comes to pushing products to a dedicated fan base.
It is not only new entertainment talent who is using channels such as YouTube; media owners are also investigating how they create and monetise content.
In 2013, Jamie Oliver established a YouTube channel called Food Tube. He now has 20 chefs doing shows, and Food Tube has 1.15 million subscribers. A second channel, Drinks Tube, launched in February 2014 and has gained 85,000 subscribers since launch.
“The appeal for us is partly that it’s a largely complementary audience,” says Richard Herd, who is in charge of networks at Food Tube. “It’s a global platform. That means you reach 200 countries when you put out a video.”
The data you get on YouTube, he adds, is “simply amazing compared to TV.”
For media owners, the lower production cost means they can cover more niche topics and subjects that would be uneconomical to cover on a standard broadcast programme.
With new talent being discovered in the vlogging community, and those talents becoming mainstream entertainment brands themselves, we are likely to see more and more cross-pollination between traditional broadcast and the vlogger community in 2015. As exemplified by ITV’s problems with recruiting talent based on Vines though, there will likely be some caution from the broadcast community when it comes to launching such talent.
In terms of Netflix-style services, we are likely to see more disruptive models come to the market, even from such sources as Sony and HBO. Along with the changes to the iPlayer, this is likely to not only deliver new services but also new more effective ways for users to engage with content, leading to 2015 being a year of significant innovation in user experiences and services.
This article appears in the 2015 Streaming Media Europe Sourcebook as "The State of Media and Entertainment."
Netflix and Amazon sit atop the cord-cutting throne. Do Disney, Apple, or any other challengers have what it takes to compete?
Social streaming is on the rise, the BBC diversifies its output, and leading subscription services Amazon and Netflix grow in international markets.
Changes in the BBC's iPlayer, the growth of YouView, and the transformation of Twitter all offer a glimpse into the issues facing content providers throughout Europe.