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Broadband

VoD extends its reach

Friday 13 January 2012 | 13:02 CET | Background

Digital TV and broadband internet are making VoD and OTT (over the top) delivery of live and not-live content possible. Traditional TV still leads the market, but watching TV elsewhere in the home or on the go with a laptop or tablet is increasingly popular.

The rise of broadband internet, connected TVs and digital TV are driving consumers to consume video content in different ways. The majority of films, series and other programmes are still consumed live via 'old-fashioned' TV channels and the TV, delivered through the ether (Digitenne), satellite, internet (IPTV from KPN or Tele2 or through fibre ISPs such as XMS) and of course cable. The same is true for content watched on a DVD or Blu-ray. 

This way of TV watching is expected to gradually lose ground to watching TV over a PC or mobile device (via apps such as those offered by KPN, UPC/Ziggo and smaller service providers), catch-up TV (through dedicated platforms such as Uitzending Gemist), VoD offerings (films and series) and OTT TV ( from providers such as Apple, Google, YouTube, iPhion). Viewing content anywhere, live or on-demand, will take off in the coming years, although the exact turning point is still difficult to pinpoint. Below an overview of the latest developments in recent months. 

TV still dominant

Television is still the dominant way of viewing audiovisual content, according to the ratings agency Stichting Kijkonderzoek in October 2011. Of all viewing time, 78 percent is spent in front of the TV. Of all audiovisual content consumed, 70 percent is TV content (films, series, programmes). Among the remaining 30 percent, 12 percent is user-generated content, according to the Moving Pictures study by Intomart GfK for SKO (survey of 1,300 Dutch people over the age of 13).

Other screens' share of viewing time is already substantial. Among the respondents who owned a PC, 52 percent said they sometimes watch video on the computer. Among owners of smartphones and tablets, the percentages watching video on the devices were respectively 42 and 34 percent. Those who watch video daily on the device reached 42 percent among PC owners, 15 percent among smartphone owners and 4 percent among tablet owners. 


Digital TV revolution

The possibilities for watching delayed content or VoD on the TV are also increasing. Digital TV penetration increased to 81 percent in September 2011 from 79 percent three months earlier, according to the Monitor Digitale TV from iMMovator Cross Media Netwerk. It also found growth in new products such as 3D TVs and connected TVs. 

Research by Telecompaper found that the number of digital TV connections rose 4.2 percent in the third quarter to a total 5.97 million. Of the total, 3.37 million used digital as well as analogue cable. Digital TV penetration rose to 75 percent. Ziggo was the biggest player on the market and increased its market share during the quarter. KPN, UPC and CanalDigitaal followed in the rankings. UPC announced in December that it passed the milestone of 1 million digital TV subscribers, out of a total base of 1.8 million households. 

Cable is the most important infrastructure, accounting for 57 percent of digital connections. This is followed by digital terrestrial and satellite, both of which saw their market share fall in the last quarter. IPTV and FTTH won market share and remained in fourth and fifth place.

In 2010, the number of digital TV connections grew by 15 percent over the full year. Telecompaper expects growth in 2011 of 13 percent to 6.1 million connections, driven by the growing number of triple-play offers. New players are also entering the triple-play market, such as Vodafone (over fibre). Another factor is the launch of TV products for other screens – PC, laptop, smartphone and tablet. KPN offers such as service since September, and UPC and Ziggo are expected to expand the services on their apps for Apple devices. 

Watching video online

Eighty-six percent of the Dutch say they watch video online sometimes, and a third claim to do so daily, according to research from December by MetrixLab, Ster, Microsoft Advertising, Mindshare and the IAB. In 2009, 78 percent said they sometimes watched online video. 

YouTube is by far the most popular website when its comes to user-generated videos. Of the respondents, 93 percent said that they watch a video now and then on YouTube.  The most-watched site when it comes to professional content is Uitzending Gemist, the public broadcaster's catch-up TV service; more than half of respondents said they have watched videos on this platform. In 2011, Uitzending Gemist recorded 206.8 million video streams viewed over a PC, laptop, tablet or smartphone, Broadcast Magazine reported. That's 16 percent more than in 2010.


Mobile revolution

The growth is also partly due to the growing use of laptops, tablets and smartphones. The increase in content available and faster connections also contribute. Among young people aged 13-19, there is a huge increase in viewing online: 66 percent of young people say that they watch online video five days or more per week, up from 44 percent in 2009. Some 86 percent watch online video on a laptop, 78 percent from a desktop, 73 percent on a tablet and 59 percent via a smartphone. 

Around three-quarters of owners of a mobile device also sometimes watch audiovisual content on their device. This includes 78 percent of tablet owners and 75 percent of those with a smartphone and involves mainly user-generated content, according to the SKO study Moving Pictures. The most content is still viewed on the TV (85%) and computer (81% sometimes watch via a laptop or desktop). 

Among owners of a mobile device aged 13-19, 92 percent say they sometimes watch AV content on a tablet and 91 percent watch from a PC. TV was at only 90 percent, while the smartphone was used by 85 percent. Among those over 50, only 60 percent watch AV content from a smartphone. 

Intomart GfK researched for SKO the use of fixed and mobile devices for watching audiovisual content in a survey of 1,300 Dutch people aged 13 or older. Most Dutch people have a TV or PC. Those aged 20-34 are most likely to have a smartphone or tablet (68%), followed by 13-19 year-olds (50%) and the 35-49 group (46%).


TV apps

There are more and more apps being developed to programme the TV remotely from an iPhone, Android or other device, or, such as at KPN, to watch IPTV from a laptop or tablet at home. New apps with new features are regularly coming to the market, such as the recent introduction by Glashart Media of an iPad application. The app can be used as a dashboard and remote control for the TV. The dashboard offers features such as access to the TV guide and checking scheduled recordings. Service provider Solcon, which uses Glashart Media services, will offer the app from 17 January.

Ziggo launched in December 2011 version 2.0 of its TV app for the iPad. The new version allows users to watch ten Dutch channels in near HD quality, live. An internet subscription with Ziggo is required for access. The on-demand offering was also expanded with new music films and series.

VoD use growing

In 2011 around 500,000 Dutch households started using a form of video-on-demand (VoD), according to GfK. The total base for the services rose to 1.2 million. Among households surveyed by GfK, 96 percent watch VoD content from their (HD)TV, while 20 percent watch from a PC. VoD is offered by TV providers such as KPN, Ziggo and UPC, as well as media companies such as Pathé and TEG (The Entertainment Group).

In 2012, the Dutch are expected for the first time to spend more on VoD than on physical media such as DVDs and Blu-ray, GfK said in October 2011. In 2011, the Dutch spent EUR 53 million on renting and buying online films and series. 

The market is helped by the growing availability of VoD content, via both telecom and cable operators, as well as connected TVs. GfK forecast in October that  1.8 million devices with internet access would be sold in 2011, including Blu-ray players, TVs and game consoles. In addition, it expects some 4.1 million smartphones sold in 2011, further growing the base of devices for watching online video. 

Currently, 4.9 percent of the Dutch watch VoD via the TV, 2.9 percent over a PC and 2.5 percent on a smartphone or tablet, according to GfK. One of its important conclusions is that cable operators, which currently take the majority of the market's EUR 53 million in revenue, are going to start losing market share to OTT players such as Pathe, Videoland, Apple (which rents films over iTunes) and Google.

According to the market researcher, VoD was first introduced in the Netherlands in 2006. Now most VoD films have adopted the 'day and date' principle. This means that the same day a film appears on DVD, it's also available via VoD. This provides a significant boost to the VoD market. 


VoD subscriptions

Around a third of consumers are considering taking a subscription to a VoD service direct from the content producer, according to a study by Telecompaper. Interest is highest among 20-39 year-olds. Consumers were least likely to pay for a subscription to Uitzending Gemist (currently free).

The Telecompaper consumer panel asked around 2,500 people if they would be interested in buying content direct from the producer. Around a third said they would consider it, but only a small number said they would definitely sign up to such an offer. Most people said they would not pay extra for programmes, films or TV series. Among those with an initial interest, around 20 percent said they could pay EUR 5 per month for the service. 


20 percent growth

An example of the growth in VoD: use at UPC increased 20 percent in a year to 32 million streams viewed. In the first half of 2011, around 411,000 customers per month used the VoD service, up from  340,000 a year earlier. Around half of customers use the service monthly. 

Last year UPC on Demand users watched an average 100 hours of on-demand video. Per stream that's around 38 minutes. Content viewed varied from video clips to series and films, a UPC spokesman said, making the average time spent difficult to measure. 

The cable company offers not only its own content under the UPC on Demand service, but also content from TV channels, including premium paid services. Only Film1 is not included. The amount of content continues to grow: UPC is expanding its own film catalogue from 400 to 2,000 titles, including new releases available from the same day as the DVD and rentals. 


Independent VoD providers

Alongside the traditional TV providers such as UPC, KPN and Ziggo, there are independent VoD providers, which in part distribute their offerings through the TV providers. For example Film1 offers an on-demand service through UPC and Ziggo. The Entertainment Group (TEG) offers its VoD portfolio through KPN and on Samsung Net TV, LG Netcast TV, Philips Net TV and Belgium's Mobistar. TEG has VoD contracts with studios such as Fox, Warner Brothers, Sony, Paramount and Disney.

Cinema chain Pathe started in December 2011 the VoD service Pathe Thuis (Pathe at Home). Pathe Thuis is available on smart TVs from Samsung since 2010, and Pathe is looking to make the service more widely available. It targets within a few years 3 million downloads per year. 

ISPs also offer VoD, often with existing TV providers. For example, OnsNet Nuenen announced at the end of last year that it will start offering VoD in early 2012. Films and other content will be available for subscribers of its Interactive TV service. 


Apple and Google

Apple and Google are among the two most talked about OTT providers of TV and video content. Despite resistance from TV broadcasters and producers, they are working hard on developing a diverse offering, on their own and in cooperation with TV manufacturers such as Samsung. 

Apple TV is currently the most popular media player in the quickly growing market for connected TV players, according to Strategy Analytics in its study 'Connected TV Players: Another Battlefield in the Smart TV War'. Global shipments of connected TV players were expected to more than double in 2011, to 12 million units. Of the total, Apple is estimated to ship 4 million. In the US, an estimated 8 percent of households have a connected TV player, while the figure is around 7 percent in Europe. Thirty percent of Apple TV owners use VoD services, versus 20 percent of other media player users.

Apple has been rumoured to be considering a bid for the English Premier League rights, the Daily Mail reported. Acquiring the premium content would boost sales of Apple TV and other devices, both within and outside the UK. Google is reportedly also considering a bid. 


TV as content centre

Samsung and Google have confirmed plans to launch a new TV supported by Google software, and LG introduced its own Google TV at the annual Consumer Electronics Show in Las Vegas. The Google TVs allow users to browse the internet and watch online videos on the TV set. Samsung and LG are not the only ones working with Google; the company also announced Marvell, Mediatek and Vizio as new partners.

In the meantime Apple is reportedly working on its own TV that would work seamlessly with other Apple products, sources familiar with the matter told Bloomberg. The TV is expected to have the same effect on the market as the Apple smartphone and computer and would not work as a set-top box like the Apple TV product. The TV set is expected to hit the market some time in early 2012. 


Google's broad vision

Google has more irons in the fire. Disney and Google subsidiary YouTube announced a partnership to offer Disney content on a dedicated channel on YouTube. Disney hopes the deal, worth some USD 15 million, will help it profit from YouTube's popularity among young people. Its own effort, Disney Interactive, has failed to reach the target group. For its part YouTube hopes to offer more professional video content. 

Google is also aiming to provide TV services over telecom networks, sources familiar with the matter told the Wall Street Journal. Its sources said Google was in talks with Walt Disney, Time Warner and Discovery Communications. The plans to offer TV arose from Google's project to roll out a trial fibre network in Kansas City.


Regulation

The VoD market has not escaped regulation. The Dutch media commission (Commissariaat voor de Media - CvdM) published guidelines on commercial on-demand audiovisual services in 2011. These help the CvdM determine which VoD services fall under the Media Act and the commission's oversight. 

The new rules took effect on 1 November 2011. Providers must meet the requirements of the Media Act of 2008 on advertising, sponsoring and product placement. Regulated providers must also register with the commission within two weeks of launching service, and all existing providers must also register at the CvdM. In addition, VoD providers must meet the terms of the Advertising Code. 



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