Video content is king

Tuesday 29 September 2015 | 09:10 CET | Background

Content is king they say and at the moment it appears as if everyone sees a gold mine in content, or at least a way to limit the loss of revenue.

The battle for content rights is raging around the world, with for example Amazon reportedly fighting offf Netflix to pay USD 250 million for the Top Gear trio. Netflix also recently lost a deal in the US with Epix to rival Hulu. Content is also increasingly important in the Netherlands. KPN and Ziggo are in a battle over content in order to hold on to their subscribers and stop them switching to the competition. KPN has started commissioning its own content, co-producing a TV series, while Ziggo is reportedly developing its own sports channel. Especially for Ziggo, which has been losing TV subscribers according to our Dutch Television Market report, content may offer a way to hold on to customers. The broadcast market is not sitting still either: Discovery has completely acquired Eurosport, SBS is getting more active in football and also entering the world of vloggers with the planned online channel S1.

expects S1 to help it attract younger viewers. Market research from the US shows that it’s mainly young people who are giving up on TV subscriptions, while it’s precisely this group that’s most attractive for advertisers. Young people are consuming video content in different ways. Only a quarter of their viewing time is spent on traditional linear TV, according to our recent Video behaviour of Dutch consumers report. Internet content (YouTube) and SVOD/TVOD together account already for 37 percent of viewing time. Young people are pioneers in this sense compared to the rest of the Dutch population, and also elsewhere in the world linear TV is under pressure.

An important driver in the above trends is the rise of OTT services. Netflix subscribers, which number already 1.1 million in the Netherlands according to our Consumer Panel, watch around a half hour less per day of linear TV than other Dutch consumers. They are also more likely to order a pay-per-view film (TVOD) and watch catch-up TV more. As the number of subscribers grows, this trend will only become more common. Nevertheless, the traditional way of watching TV is far from being abandoned. While recent research shows that a fifth of triple-play subscribers would consider cord-cutting, very few have actually done so. Still, even the TV providers are taking the first steps towards OTT. Vodafone has launched its TV Everywhere app, and KPN is testing the service Play van KPN.

In other new developments, Ericsson recently unveiled its mediafirst platform, and Dutch media group Sanoma and its affiliate SBS are among the first users. This will give viewers even more ways to view content from Sanoma/SBS. Also the new Apple TV will provider another platform for the distribution of OTT video services. The first-generation Apple TV is in about 2 percent of Dutch households already. While Apple is also rumoured to be preparing an OTT video service with live TV channels in the US, this is unlikely to reach the Netherlands anytime soon. Possibly Amazon Prime, which includes the Amazon Prime Video service, could be expanded in the near term. Its footprint is currently limited to the US, UK, Germany and Japan, but the high price of content like Top Gear may drive the need for further scale, bringing it to countries such as Netherlands.

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