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Does everybody need to do everything to do video right?

If you were to cook up a video service for subscribers today, what ingredients would you need?

The recipe for success would surely include a significant measure of exclusive content, mixed with a generous combination of subscriber and other data sets, served with full control over brand, content and delivery. And of course, appetizing presentation would also be crucial, regardless of screen size.

But we’ve inherited a rather different offering, and the video content industry – previously horizontally split into studios creating content, and operators and networks curating and distributing it – is now gravitating towards a vertically integrated end-to-end model, inspired by Netflix and Amazon Prime. At the IBC conference in Amsterdam on September 10, 2016, a panel of industry leaders and experts will discuss how they see the future of video emerging.

Getting the right recipe – Exclusive content, Flexibility, and Ease of Use

The overwhelming reason that users sign up to Netflix is for its original content. In the GfK SVOD content consumption tracker, we have seen the importance of exclusive content grow, mirroring Netflix’s increasing investment in producing its own programming. Netflix-owned titles make up half of the top ten titles viewed on the service, and include dramas like “House of Cards” and “Orange is the New Black”, as well as factual series such as “Making a Murderer”.

Amazon too is investing more in content creation, though it’s not yet the principal reason to subscribe. This is already changing, however, and we expect massive publicity and advertising around the launch of its original content series, such as the multi-million pound UK investment in “The Grand Tour”.

Flexibility and ease of access – enabled by end-to-end control of content, platform and subscribers – are also key elements that underpin the attractiveness and value of subscription video on demand (SVOD) services. Our tracking shows that, far from being watched on the move and on mobile devices, the majority of content is viewed at home and on a TV screen. This is where the vertical integration of some services pays dividends, as they also control the method of delivery. More than half (54 percent) of viewing events for Now TV are watched on a TV screen using another device, and two thirds of these are through the Now TV box. The Amazon Fire device also drives most of the connected viewing for Amazon. The fact that Amazon can control the distribution of its app across connected devices, including its own branded product, adds more value for users.

Finally, ease of use is crucial, too. Viewscape, our new global viewing study, shows that Netflix rates higher on satisfaction metrics than almost every other digital video provider in the UK, with the exception of BBC’s iPlayer.

What’s next? SVOD and going direct

For decades the industry has prospered with horizontally segmented industry models. If this indeed is the only blueprint, then it has huge implications for licensed content owners, broadcasters, networks, cable operators – even (smart) television manufacturers.

Many players that have previously been part of the existing industry models are contemplating launching end-to-end vertical SVOD services. Going direct is a global trend. It is true for broadcasters (Globo’s AVOD launch in Brazil, November 2015), media owners (Turner’s FilmStruck, TYVO by Doğuş Media Group for Turkish drama) and cable operators (Sky’s Now TV). With everyone trying to go direct, will all these different services actually reach their respective targeted audiences or will there have to be consolidation?

The industry – to some extent – has answers here, too. Smart TV manufacturers like Samsung are vying to become over-the-top content (OTT) hubs which help manage different “light” subscriptions. Even more interesting is Amazon’s move to offer its new Streaming Partner’s Program, which bundles video subscription services à la carte.

The result could be a few powerful hubs with a menu of “light” subscriptions available. The key question for the future landscape is which players will be able to offer a hub, and which will have to become subsidiary services to the hub?

I can’t wait to see what our panel of senior industry leaders and influencers including Christian Brent from Fox, Francesco Venturini of Accenture, Martin Guillaume from Ericsson, William Linders from UPC and Efe Cakarel of MUBI will have to say about the future of SVOD on 10th September.

Email me at niko.waesche@gfk.com to share your thoughts.

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