Dutch Media Hub – business intelligence Report 2 – B2B video facility process

Menno Bangma, Thomas Bachet, Frits Klok

2

Presentation outline

Content distribution chain

Market analysis

Market developments

County profiles

3

Content Distribution chain

Content provider

Distributor/aggregator

Consumer

Digital Media

ServicesFacilitator

Digital Media

ServicesFacilitator

Digital Media

ServicesFacilitator

Cinema Rental

Retail (Pay) TV

VoD

Catch-Up

4

Complete overview of the digital media distribution proces

IPTV/CaTV VoD platform

cinema reel replication Booker

35mm subtitling facilities

Cinema’s

Optical Media Replication

DVD/Blu-ray rental and

retailer

Digital cinema platform (future)

Linear Broadcast Playout

Web VoD platform

IPTV/CaTVCatchUp TV platform

Mobile On Demand Platform

STBTV

STB

Web Catch-up TV platform

STB

PCMedia

extender

PC

Mobile

In House Digital Media Services

Archiving- digitization- storage

Media Asset Management- meta-data- subs, dubs- …

Enterprise encoding

Digital Media Service facilitator:

Enterprise encoding

Authoring & encoding

subtitling

dubbing

Content Providers: - Majors - Independents- Broadcasters- etc.

Media Asset Management- meta-data- subs, dubs- …

Postal Service

Digital Distr. network

Postal Service

Digital Distr.

network

Archiving- digitization- storage

Digital Distr.

network

Facilitating service in DMH scopeFacilitating service out of DMH scope

Service Provider in DMH scopeService Provider out of DMH scope

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Service Providers (retail outlets)

Content Providers

Majors

Indies

Broadcasters

Others

Many existing cross relations for the Benelux market

KPN

Ziggo

Belgacom

UPC

Telenet

Tele2

TEG

Stervideotheek

Digital Media Services facilitator

OD Media

The Site

Videohouse

Parkpost

DMC

Sony DADC

UBF

In the Benelux the market is fragmented with respect to Digital Media Services facilitators

There are about seven large Digital Media Services faciliattors

These parties have relationships with one or more content providers and provide that

content to one or more retail outlets.

6

Presentation outline

Content distribution chain

Market analysis

Market developments

County profiles

7

United Kingdom

Almost every household has access to TV in the UK. The TV market is dominated by digital terrestrial (56%) followed by satellite (31%). The technologies that supports Video on Demand on TV, digital cable (11%) and IPTV (2%), are in the minority.

The broadband penetration in the united kingdom is above average. Almost 63% of the households has access to a broadband connection. Although it is not defined what speeds are delivered and these results vary dependent of the supplier of the connection and the subscription, it is save to say that these people probably can use their connection to make use of video of demand.

In the United Kingdom consumers clearly prefer buying physical media over renting. Based on the amount of transactions shown in the table, slightly more that 75% of the transactions are sales transactions. This means that the introduction of a Video on Demand service needs to respond on this in some way.

Potential VoD channels: Online, Digital Cable & IPTV

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20-01-20118

United Kingdom 20-01-20118

SATELLITE    Sky AnytimeCABLE    FilmFlex (virgin media)  Sasktel  Vrigin Media Cable TV  TopUpTv  Sky boxIPTV    BT Vision  TalkTalk TV  Xbox Live marketplace  PlaystationWEB    SeeSaw  Lovefilm.com  Blinkbox

VOD TYPE Unique Viewers (mln) TV 15.2 Web 15.0 Mobile 3.0Total Audience 24.4

14 pure vod service are available in the UK 06/2010 (EAO, 2011)

Suppliers

The business model that is most common in the UK is the rental download model. Download to own follows, with eight providers offering this product.

The largest video on demand provider, Lovefilm, offers physical- and digital streaming rental. The all you can eat model is popular under consumers.

Research results shows that people who watch Video on Demand are using both TV and Web. This suggest that cable, IPTV and web vod suppliers have an equal user base. But video on demand in these results includes also TV content. It is possible that users don’t mind using the pc to watch TV shows, but want to view movies on a large screen because of the experience.

Usage of Video on Demand in the UK during 1 month. (2010)

There are several video on demand suppliers. The most are pure vod service that offer vod via the web.

IPTV is relatively small

Leading Business Models

Medium usage

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European country overview

We assessed European countries on three metrics:

Metric Indication

cable penetration high cable penetration means that there is an infrastructure available suitable for cable VoD services

broadband penetration > 2 Mbps high broadband penetration indicates a suitable infrastructure available for web VoD or IPTV VoD services

Number of DVDs rented and sold per household in 2006 (best selling year)

high DVD sales and rental figures indicates willingness to spend money for film services and a need for film distributors to migrate to the digital channel

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VoD potential in Europe

BE

NL

NO SE

Fi

DK

CHATGR

SL

SR

HR

BGRO

HU

CZ

PL

DE

UK

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Cable TV adoption (2010)

Bro

ad

ba

nd

pe

ne

tra

tion

(>

2M

bp

s, 2

01

0)

0-7

DVD rental + sales per HH (in year 2006)

7-14

>14

N/A Low VoD potential Cable VoD potential

Web and IPTV VoD potential Full VoD potential

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Conclusions country overview

Northern European countries have high VoD potential

Denmark, Norway, Sweden, Germany, Netherlands, Belgium all have a cable

penetration and broadband penetration (>2 Mbps) over 50%

UK is typically a Web VoD country, due to the low penetration of cable networks

Other promising countries are Finland, Hungary, Romania, Switzerland, Austria, Bulgaria

Note that Hungary and Romania have a very fragmented cable market

Austria and Switzerland have a strong presence of UPC, which uses DMC for Digital

Media Services facilities

Other countries have limited VoD potential for the near future

Poland and Czech Republic have a rather low broadband penetration and cable market

Slovenia and Croatia (HR) are small markets

Greece has almost no cable infrastructure

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10 januari 2011M Bouman

TNO Nieuwe huisstijl

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• Some providers offer VoD services or TV services in multiple countries

• HBO

• UPC

• Sony

• Amazon

• Apple

• Telenor

• T-home

• RDS-RCS

Large players

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• HBO (Home Box Office), is an American premium cable television network, owned by Time Warner

• HBO offers PayTV channels in 12 Central and East European countries, Cyprus, UK and Ireland (tbdhttp://corporate.sky.com/media/press_releases/2010/sky_atlantic.htm)

• HBO on-demand is a subscription VoD services available in 8 central European countries, Cyprus and UK

• HBO Go is a transactional VoD service available in the US. In Europe it has launched in Poland at a small operator (INEA) and expected to spread across all active countries. (http://www.bizpoland.pl/news/index.php?contentid=203576)

• In the UK and Italy, HBO is available as svod on Mobile TV.

HBO

14

• UPC Broadband is a Pan-European Communications company owned by Liberty Global providing bundled cable television, internet and telephone services.

• UPC cable TV services and Internet services are available in 11 European countries.

• In Netherlands, Belgium, Austria, Switzerland, Hungary and Poland VoD services are available as well.

• UPC Direct the Satellite service is avlaiavle in Czech, Hungary, Slovenia and Romaina.

• In all countries UPC is the largest or 2nd largest cable operator. RCS&RDS is reported to acquire UPC Romania.

• DMC (chellomedia) provides the Digital Media Services management for UPC, which performs the video facility functions , similar to the ambition of the Dutch Media Hub.

UPC

15

Google - Youtube• Youtube is the no 1 video portal for user

generated videos worldwide

• Youtube adds ~35 hours of video material each minute

• In the US, YouTube does have a movie rental service in cooperation with the Sundance Film festival

• However, there are as yet no contract with major US studios for rental of Hollywood blockbusters.

• Recently, YouTube denied coming to Europe to start a premium video rental service.

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Sony Qriocity

• Sony launched the Qriocity media service for streaming music, games, e-books and video in the US in April 2010.

• The service is available on Sony Blu-ray players, personal computers, the PlayStation 3, BRAVIA televisions and some portable music players.

• It launched in Europe end of 2010 and is now available in United Kingdom, Republic of Ireland, Italy, Germany, France, Spain, Portugal.

• The service offers films from all the major film studio’s.

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20-01-201117

Amazon

- Amazon has experience with video on demand in the US with “Amazon Instant Video”. Amazon has its own distribution network.

- By buying Lovefilm it will target the European market. Lovefilm is available in 5 countries and provides customers with physical and online movie rentals.

- Online movie rentals can be accessed by personal computer and game consoles.

- In the UK lovefilm is the dominant online DVD rental outlet and surpasses 10 million subscribers.

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20-01-201118

Apple- Apple has its own platform (iTunes) for

content distribution that is well integrated with the hardware they sell.

- In the US iTunes took the lion’s share of the online film market. It earned 248.3 million dollar, or 64.5% of the total consumer spending on VOD.

- In Europe iTunes movie store is available in the UK and Ireland, Germany and France. In 2011 it is expected that other countries will follow (NL).

- iTunes movie store offers both electronic sell through and movie rentals. Films of most of the major studios are available.

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10 januari 2011M Bouman

TNO Nieuwe huisstijl

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• Deutsche Telekom brands its TV solution under the name T-home.

• IPTV: Germany, Greece, Hungary, Slovakia and Croatia.

• SAT: Hungary, Slovakia

• Cable: Hungary

• RCS-RDS is a Romanian company offering Digi satellite service with a focus on low cost TV service without VoD.

• Sat: Hungary, Serbia, Croatia, Slovakia, Czech Republic.

• Telenor provides TV services in the Nordic region under the brand Canal Digital to a total of 2.9 subscribers:

• Satellite: Norway, Sweden, Denmark and Finland

• Cable: Norway, Sweden, Denmark

• IPTV: Sweden, Denmakr

• DTT: Finland

Multi-region Operators

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Conclusions large players

There are some large industry players active offering Pan European

VoD services

Most players already have existing partnerships or their own

infrastructure to distribute this content throughout Europe

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Presentation outline

Content distribution chain

Market analysis

Market developments

County profiles

22

Drivers for VoD

Generate revenues

• The film industry faces a digital challenge due to the reduction of DVD/BD sales and rental.

• TV Service Providers can make extra income by selling premium TV packages and Pay Per View content.

• Broadcasters offering premium access to TV content through pay per view items:

• tomorrow’s episode now

• missed episodes

• not broadcasted series

Competitive differentiation

• Most operators offer triple play with very similar features.

• VoD offers a promotional element to differentiate from competitors.

• Many countries have fierce competition for TV services.

• Virgin vs Freeview vs Sky

•T-home vs Premiere vs Kabel Deutschland

• Telenet vs Belgacom

•KPN vs Ziggo and UPC

•UPC vs T-home vs DigiTV

Technology push

• Broadband connections enable distribution of high quality video content

• All devices are capable of playback video: Mobiles, Tablets, PCs, STB, TVs

• VoD may be something consumers will like and won’t give up once they have it.

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Barriers for VoD: Content licensing

The VoD distribution window for recent films lasts for three months. After that the film enters a blackout period for the PayTV and free TV window. The rest of the VoD offer is filled with older library titles. This model will only very slowly evolve.VoD films of the major studio’s are sold with minimum guarantees. This makes a mature VoD offer costly. Only large players are capable of creating a proper VoD service.There are no contracts sold yet for minimum guarantees to a wholesaler that serves many underlying (and competing) VoD service providers. The Dutch Media Hub cannot act as a central clearing point for content licensing costs.

Cinema

Rental/Sales

Pay TV

freeTV

premiere 3-4 month 14 mth 24 mth9 mth

VoD VoDblack-out period

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Barriers for VoD: Reduced potential of web video on demand

Consumers prefer watching content on a TV screenHowever, only 7% of the people have connected their PC to their TV. Therefore, current Web VoD offers have not reached full potential yet.The adoption of Internet connected TVs serves as an opportunity for this barrier.

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Opportunities for the DMH

The physical disc spend decline is

manifest in Europe

Therefore the opportunity for VoD

service is available in all countries

Some markets very fragmented with many cable providers

(Poland, Hungary, Romania)

Most cable providers are to small to acquire independent

interactive platform.

Most Satellite and DTT operators don’t offer VoD services yet

Local content still very popular

Localization of content required to meet local regulations.

Providing the facilitating service for VoD providers

Provide facilitating services for SAT, DTT and small cable TV service providers.

Focussing on local content for local markets

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Threats for the DMH

Large majors may partner with few large Internet VoD providers to serve

complete European market.

Amazon Lovefilm, HBO and iTunes are large players with their own

systems and business relationships.

It is very difficult for the Dutch Media Hub to gain a position here.

Streaming video via the web is on the rise.

Content Delivery Networks become more important. Players like Akamai

and Limelight have global footprint

Platforms can be created by combining CDN providers with large scale

VoD platform provider to create global reach.

Local content is one of the opportunities for the Dutch Media Hub.

However the fragmented nature of most markets requires a good

knowledge of those markets and players in detail.

Globalisation of content of majors

Consolidation of Internet VoD formats and platforms

Limited knowledge of local markets