The battle for TV customers: will spending on original content pay off?

Wednesday 18 January 2017 | 14:46 CET | Background

Following the introduction of Netflix in 2013, the launch of Ziggo Sport in 2015 and the battle between Fox Sports and KPN in 2016, the telecom market in the Netherlands is set to even more about video in 2017. 

NLziet is expected to introduce its live TV offering this year, turning it from a sVOD service to a full competitor for pay-TV providers. MVNO Youfone is also entering the TV market with plans to launch its own OTT service in 2017, following a similar offering from Lycamobile

For the moment, the OTT services offered by TV and mobile operators, such as KPN's Play or T-Mobile's Knippr, are still in the tens of thousands of customers. They are ready though, for if/when consumers start cancelling their pay-TV subscriptions in large numbers. Until then, KPN is focusing on the 'cord nevers', and T-Mobile is trying to win over the TV customers of rivals. How will VodafoneZiggo and Tele2 respond? With only TV everywhere services, they don't appear ready for the battle everyone is expecting, but no one knows when will start.

Offline viewing or streaming, the viewer chooses

In 2016, Videoland launched a download function for the series and films in its VoD library. It started first with children's content and later added the rest of its offering. The USP, underlined clearly in its latest marketing campaign, did not last long, as Netflix also added downloads at the end of November. According to recent research by Netflix Netherlands, 22 percent of its customers are already using the new feature. 

Consumers are also finding more ways to stream content as a growing number have 4G devices and access. Telecompaper research shows that 12 percent of 4G users say they stream films and TV more than when they were on 3G (9% say they do so less). The better quality networks are also supported by bigger, more affordable data bundles. T-Mobile's recent launch of unlimited data plans should only strengthen the tendency to stream video over mobile devices while on the go.

Sport still big business

As sport most often is viewed live, it will always remain an interesting differentiator for content providers. The free Ziggo Sport channel attracted 1.4 million viewers last year during a Formula 1 race with local driver Max Verstappen. Fox Sports capitalised on the end of its carriage contracts to develop new offers.This has offered pay-TV providers another way to differentiate, with some including a Fox channel free in packages or offering it free to customers who take multiple services, and others reducing prices for the premium add-on. Fox Sports saw its reach grow 38 percent as a result, taking it to over 600,000 subscribers.

Unique content to attract, lock in customers

Besides sport, unique or exclusive content is an important way to differentiate. Netflix's continued success is largely down to its own productions. The Netherlands is one of the few countries where Netflix first launched that has yet to receive any original content. CEO Reed Hastings said last summer that Dutch content is in the planning. KPN is expected to market heavily in 2017 its own channel, with its first original production, the series 'Brussels', as well as exclusive sports and music programmes. The new series and handful of programmes is not expected to attract many new customers, but it should help KPN limit churn. Videoland's exclusive series 'Black Tulip' did not have much impact on its subscriber numbers either.

Who will win over the consumer?

At the end of 2016, two new entrants launched - Amazon Prime Video and Wuaki.tv. Their impact is expected to be minimal to start. Prime Video offers a free trial period, the same as the other sVOD providers, which will likely be tried by many consumers without cancelling their existing subscriptions. There are also around 300,000 former HBO subscribers up for grabs, after HBO stopped its Dutch service at the start of 2017. They can choose from the rebranded Film1, take a Netflix or Prime Video subscription, opt for Fox Sports free with a KPN Compleet subscription or just hold on to their money. We will be watching, to see how the latest developments pan out for the key players.

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