July 2019

Part 4 Subscription services

Multiscreen & OTT Series 2019 Multiscreen & OTT 2019 > Subscription services Digital TV Europe July 2019

Confluence of streams

Subscription video-on-demand services are proliferating, but questions are arising about the affordability and convenience of stacking multiple offerings. Stuart Thomson reports.

video- with Joyn, and France Televisions, TF1 Subscription on- and M6 with Salto are making late moves The regional player demand has transformed the video to find a place. distribution landscape, with global players In such an increasingly crowded The fortunes of local players have varied such as Netflix and Amazon effectively landscape, questions have been raised hugely between markets. While Canal+’s disrupting traditional pay TV with a low-cost about how much growth remains possible Canalplay service in France clearly lost its subscription model. in SVOD. Netflix’s latest quarterly figures battle with Netflix – something that the Disney+, Apple TV+ and WarnerMedia’s alarmed market-watchers, as the clear service’s owner blamed on local regulatory HBO Max will soon join an already crowded leader in the field signed up half as many shackles – Nordic Entertainment’s Viaplay market, while other content companies new subscribers as expected, leading to a in the Nordic market appears to have gone such as Viacom and NBCUniversal sharp drop in its share price. from strength to strength, adding 65,000 adopt advertising or hybrid strategies, If Netflix is stumbling, what hope is customers in the normally quiet second supplemented by SVOD services targeted at there for smaller premium streaming quarter of this year. specific niche audiences. outfits? That depends on where you look. “Viaplay is doing very well and we are The SVOD field of play is also occupied While French pay TV operator Canal+ signing up new subscribers all the time,” by slightly less high-profile services such saw subscriptions to its Canalplay SVOD says Alexander Bastin, SVP and head of as Lionsgate-owned Starzplay – now offering collapse thanks to competition Viaplay and Viafree at Nordic Entertainment. building a strong international base – from Netflix and restrictive local windowing Bastin says that he believes there is or MGM’s Epix. At the same time, local rules, there are plenty of examples of other broadcasters such as the BBC and ITV with streaming offerings – whether regional, Above: Starzplay’s The Rook: the streamer Britbox, ProSiebenSat.1 (and Discovery) international or highly niche. has received support from owner Lionsgate.

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still room for growth, even in the highly player. “Maintaining a position in local In Germany, commercial broadcaster penetrated Nordic market, where streaming content is our second differentiator. Nordic ProSiebenSat.1 has taken a slightly different services are taken by around half of the Entertainment has been active in producing tack, teaming up with Discovery to launch region’s 12 million or so households. The and delivering local content since 1987, with a joint service, Joyn, that will initially focus market itself is particularly conducive to 20 original productions per year. We also on advertising-supported VOD with plans take-up of streaming services because of benefit from local content coming from the to build a subscription play as the service the high-level of broadband penetration and local free TV ecosystem,” he says. evolves. the high quality of connectivity. The market is traditionally home to a large proportion of early adopters of new technology and “Rights tend to be exclusive to platforms and adoption of streaming offerings is helped by widespread proficiency in English among there are reasons for people to sign up to the general population. multiple services, unlike with music.” “Streaming is not a niche service. It is becoming mainstream,” says Bastin, adding that he expects a significant proportion of the Alexander Bastin, Viaplay remaining 50% of non-streaming homes to sign up for a service. He also expects further With regards to sports, Bastin says that Talking with Digital TV Europe at the growth through service stacking. Currently the more sophisticated user experience of recent Variety TV Summit Europe in streaming households take an average of the streaming service gives it an edge over London, Nicolas Eglau, ProSiebenSat.1’s around 1.4 services per household in this broadcast TV, the traditional home of mass- executive vice-president, international, said market. market live television. “Using the Olympics that “there is a space in the market” for “a “We don’t see this as a winner-takes- as an example, we were able to stream local champion”. However, he cautioned that all market. Rights tend to be exclusive to far more events than on pay TV. We have “the consumer doesn’t want three different platforms and there are reasons for people technology features that enable people to outlets” to sign up to. For this reason, he to sign up to multiple services, unlike choose camera angles and so on,” he says. says, an open approach that welcomes other with music,” says Bastin. “At some point Nordic Entertainment is also active in broadcasters on board makes sense. streaming will be the norm and vast majority pay TV, and subscribers have access to the “This is a one-stop shop. If you want to of people will be taking something. There are streaming offering, but Bastin says that the watch something in German you know not many households that would not venture company is actively “pushing streaming on where to go. There is no other destination into streaming at all. It is then up to us to its own as a market strategy” with Viaplay as that can deliver all these channels ad-free, maintain our edge through differentiation to a standalone service. and we want to make it very easy for people capitalise on that growth. We are quite well The strategy includes developing with one price point,” he said. positioned. Viaplay costs about €10 or €11 on distribution partnerships so that the average which is tremendous value.” streaming offering is available via Nordic Bastin says that increasing competition broadband service providers. For Bastin, Service stacking is a sign that “streaming is a very attractive service providers can play a role in making market”. New entrants mean more access to multiple services easy for While local players have their unique competition for subscribers but also more consumers and he expects the importance of strengths, Netflix and Amazon have made competition for rights, and more of a the aggregator of multiple services to grow as the running in popularising SVOD in premium placed on exclusive content as a the market becomes more fragmented. most international markets. Despite the differentiator. “There will be consolidation. Some players challenges facing Netflix, evidence of which Unlike some global rivals that have set up will not find a space and may merger, and was provided by highly disappointing shop in the Nordic market, Viaplay provides there will also be new types of service that quarterly subscriber growth in the second live sports as part of its offering alongside aim to aggregate different offerings,” he says. quarter, the streaming outfit remains by far movies, series and kids programming. Pay and free-to-air broadcast players the market leader globally. However other Bastin says that Viaplay is not a niche service, rooted in specific regional or national US-based streaming offerings are available but it is complementary to other offerings in markets are increasingly following Nordic and are trying to develop their presence the market rather than a direct substitute. Entertainment’s example. French national in international markets. One of these is He says that two things in particular make broadcasters France Télévisions, TF1 and Lionsgate-owned Starzplay, a streaming Viaplay stand out. One is that it combines M6 have teamed up to create Salto, plans offshoot of the US premium television films and series with live sports, unlike for which are now being examined by the network Starz. rivals. “We have the best sports portfolio in country’s regulator, while in the UK, the Superna Kalle, executive vice-president the market and that is a clear differentiator,” BBC and ITV have joined forces to launch of international digital networks for Starz, he says. a version of their existing US joint venture believes that the overall market still has The second is that Viaplay is a local BritBox for the domestic market. plenty of room for growth internationally,

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given that penetration outside the US overall this is where marketing dollars are allocated. aggregators such as Amazon or Roku, both is only about 5%. In this context, Kalle acknowledges that of which have developed ‘channels’ platforms “There is a lot of opportunity for more a strong supply of original content is key to specifically as a vehicle for third-party partner service to come into play,” she says. selling SVOD as a proposition. The pipeline services. Like Bastin, she views her service as of content from the US domestic Starz pay BFI Player, the digital service from the a complement to Netflix rather than a TV network to the streaming service is UK’s British Film Institute, recently launched substitute for it. “We are not competing with seen as crucial to the US offering, and Kalle on Roku Channels in the US with an SVOD Netflix. We are a companion to them and to says this will be extended to the European proposition focused on classic British movies pay TV. We are a fabulous add-on.” services. She says that Lionsgate too has been – a shift from its UK proposition that includes Kalle believes that many subscribers will “incredibly supportive of the international a free archive offering, transactional and typically be able to stack between four to rollout of Starzplay, citing the example of rental VOD, an SVOD service and a focus on six services before affordability becomes an paranormal thriller The Rook. world cinema as well as British movies. In the issue, particularly where distribution deals “In the US everything that is on Starz UK, the domestic version of the BFI service is are done with partners that can bundle comes to Starzplay exclusively. When it available on Amazon Channels. several services together. In Spain, Starzplay comes to Lionsgate we have our first pick of Edward Humphrey, director of digital at is bundled with Movistar’s offering, with what we want, and there are a few shows that the BFI, says that Roku, which launched its a discount for subscribers that take both we are taking internationally that are on other own channels proposition relatively recently, services, for example. platforms in the US,” she says. had a “shared set of priorities” that made it Kalle says that launching on third-party Allied to securing a steady pipeline of a suitable partner for the US launch. “The platforms makes sense for SVOD players to original content for the service is the use of opportunity to create and launch channels at gain an entry into new markets and achieve data to optimise the use of that content. “One relatively low cost with the potential to plug scale. She says that Amazon has proved of the benefits of being part of Starz is that they into a large known subscriber base, with to be a “fantastic” partner for Starzplay. have a well-oiled machine to put together app harmonisation around billing and subscriber Nevertheless, she adds, “there is room for and consumer data with social monitoring management, can’t be overestimated.” direct-to-consumer too”. Launching with tools and that helps drive content acquisition Humphrey says that the BFI chose the a D2C offerings enables a provider such as and subscriber retention,” says Kalle. In SVOD model because it “wanted to focus on Starzplay to decide how much to spend on addition to data gathered via Starzplay’s own where we would have the most commercial subscriber acquisition and to gain control of apps, she says that Amazon and Apple are potential”. Given the scale of Roku – and of consumer data in a way that may not always also more inclined to share data with content Amazon in the UK – the conversion rate be possible with third-party partnerships. partners than many people suspect. required to make what he describes as “a Establishing a brand presence in a market proudly niche service” a commercial success is challenging for new players, but Kalle says is “relatively modest”, he says. that Starzplay’s main focus is to ensure the Niche service Marketing and raising awareness of the service maintains a high profile for its titles service leaned on Roku’s in-house marketing on platforms such as Amazon or Apple TV, While direct-to-consumer has advantages, of the channels proposition combined with with whom it has a revenue-share agreement. SVOD providers increasingly are focused the BFI’s existing reach in the US through She says that a franchise such as The Hunger on striking partnerships with pay TV service its website and social media. Humphrey says Games has more resonance with subscribers providers – or more accurately with multi- that about a quarter of the BFI’s total website than Starzplay as a brand in its own right, and play service providers and emerging online traffic comes from the US, giving the brand significant reach. “We have an active, passionate fanbase, especially in the East and West Coast markets. We have a strong sense of the scale of the connected audience over there,” he says. The level of data feedback obtained by partnering with a third-party is “obviously different than the data you get on your own platform”, Humphrey says. However, from the BFI’s perspective, data is less significant as a tool than curatorial expertise. “What is unique about our brand is that it stands for curation. People come to us to see something they wouldn’t necessarily search for,” he says.

The BFI Player is a niche offering that serves a tightly curated array of content.

Visit us at www.digitaltveurope.com 4 Q&A: Simon Trudelle, NAGRA

Simon Trudelle, senior director, product marketing, NAGRA, talks about super-aggregation, sports OTT services, advances in content protection and the importance of leveraging data.

What are the key ingredients in today’s converged pay-TV and OTT era That’s a tall order, but it’s vital. Operators have to make multi-platform for pay-TV operators to deliver compelling consumer propositions? acquisition frictionless and adopt an increasing number of cloud-based Providers intent on creating a compelling consumer proposition must technologies to reduce overall cost and time to market. focus on one key ingredient – super-aggregation. As super-aggregators, they must become the central gateway to all NAGRA has been a market leader in content protection for the last 25 the content consumers love on any screen – not just OTT but linear years. What do you see as the “next big thing” in content protection? broadcast and live sports, too. They will need to also consider their The next big thing is simply thinking beyond just content protection, audience acquisition approach which in turn drives the platforms they to scalable service protection. This means taking a holistic approach will support. to service protection – one that scales on the backend across multiple In delivering this extended audience reach, it’s important to also networks, devices and applications. consider a common UX across all platforms. So when consumers The other aspect of scalability is to naturally span all device ecosystems change platforms, the environment is instantly recognizable, with with an adaptive security approach. That way, we can leverage the their personalised content displayed identically on each platform once security infrastructure of any client device, from smartphones to set-top signed in. boxes to Smart TVs. We’re entering the era of active content monetisation. Providers will Thinking further ahead, scalable service protection will also allow us have to rely on a smart combination of data analytics and curation to to naturally extend content protection to extra business propositions, not just constantly monitor and tune the catalogue, but also to actively like Smart Home devices and network security. track and promote content. What are the most effective anti-piracy strategies and approaches? You recently released a report on the state of the sports OTT market We’ve anticipated the shift to online piracy, developing a comprehensive as part of the 2019 Pay-TV Innovation Forum programme. What is the line-up of technologies and service. What makes them effective is their impact on the growth of sports OTT services on the pay-TV industry? ability to stop commercial piracy by marking content at the source, More than a third of the top 25 football clubs now offer premium direct- providing real-time delisting, taking down pirate cloud infrastructure to-consumer OTT services. and blocking pirate traffic at the residential ISP level where possible. And while sports have historically been a key driver of growth in pay- And at infrastructure level, we provide scalable monitoring and take- TV, the advent of these OTT sports services means we could potentially down services that, combined with our intelligence on pirate services, see reduced demand for pay-TV as a result. allow us to disrupt illicit streaming services and measure the impact. It’s critical for pay-TV companies to retain tier-one sports rights Of course, no single method will magically take down piracy – the and augment the multiscreen experience they deliver. And pay-TV most effective strategy is to utilise all of these technologies and best companies are potentially well-placed to retain these rights – especially practices, alongside cross-industry and legislative collaboration to tackle if you consider multi-play operators’ ability to cross-subsidise sports piracy at its source and protect content end-to-end. from high-margin broadband businesses and their existing billing relationships. How can incumbent pay-TV operators leverage data to compete with emerging platforms? How important is digital business transformation for pay-TV providers Pay-TV operators have long been sitting on a wealth of under-utilised and what are the biggest organisational or operational challenges consumer and behavioural data. Thankfully, most of them are all set to facing pay-TV businesses as they seek to transform? catch up now. Pay-TV service providers find themselves at a pivotal time where the With actionable business intelligence designed by pay-TV experts for lines between pay-TV and OTT are increasingly blurred. And more than pay-TV experts, providers can keep and grow their customer base, all ever, they face the challenge of proactively embracing “true digital while continuously optimising their content catalogue and marketing transformation” in order to anticipate the rapidly changing market campaigns to increase revenues and margins. conditions. We’re entering the era of super-aggregation and active content But in terms of specific challenges, providers have to embrace client monetisation. Incumbent pay-TV operators must harness a smart horizontalisation, service virtualisation and a data-driven methodology combination of data analytics and curation. With this, they can then to define and evolve their consumer propositions – all while claiming monitor, update and promote content in line with what consumers their super-aggregator role and ensuring continuous solution renewal. want. Multiscreen & OTT 2019 > Subscription services Digital TV Europe July 2019

Nordic Entertainment’s Viaplay added 65,000 customers in Q2 2019.

For a niche service such as BFI Player, teaming up with Roku Channels means that it necessarily surrenders control of the user experience. However Humphrey says that “harmony with the platform” is more useful than “trying to be distinct” in this context. He adds that harmonised search across the proposition is useful in bringing people to content on BFI Player. “It allows people to find your content. The benefit of being within the platform ecosystem almost always plump the value of having your own platform, especially in the US where we don’t have a direct-to- consumer proposition,” he says. BFI Player’s sense of its own unique appeal Trudelle, senior director of product marketing Trudelle points out that many multi- is shared by another UK export to the US – the at Nagra. The direction of travel, he says, is play operators have moved from being pay US version of BritBox, which brings British towards more of an integrated, genuinely TV players to focusing more and more on content to an American audience. aggregated service offering. broadband, where is a possibility to increase “When Downton Abbey happened it “Partnerships with one or several SVOD margins. In this context, partnerships with became apparent that there was an appetite to services will create a small portfolio of content providers makes more and more treat British television as something unique sources that can be smartly integrated into sense. Operators can also potentially build and different,” said Soumya Sriraman, the pay TV experience, but the challenge is a business trading data rather than focusing president of BritBox, speaking with Digital to find the right model for pay TV and prove on acquiring their own content rights. TV Europe at the Variety TV Europe Summit. that this adds value for the service provider In this context, TV could simply evolve “And it behoved those of us in the content and consumer,” says Trudelle, who believes into one product within overlapping business to ask how we can create something that the current phase of fragmentation and bundled offerings. While service providers that this audiences will respond to. We know proliferation of diverse streaming options increasingly are focused on broadband and that to be successful in SVOD there are three will be superseded by more moves to pull using content partnerships to add value, things that you need: access, discovery and different offerings together. an SVOD provider such as Amazon is community. The big guys can offer the first “In the short term, there will be a phase primarily focused on bundling content with one readily. Look at any remote control or of increased fragmentation but at some point a wider retail proposition. The same could any television and you can see what apps are switching from one app to another will get theoretically be true of a Disney that could there. When you are the Google of media you too complicated. The pendulum will shift bundle entertainment park access with know what discovery can be prompted, but I back to convenient smart aggregation,” he streaming in some way. don’t think anyone can offer community the says. The precise model chosen for bundling way we can. We know there is content but Challenges in the way of this reaggregation an SVOD service will depend on the nature, getting it to the right audience is what makes include figuring out who has access to data scope and scale of the company behind that us unique.” under what terms and how to integrate service. Established operators may bundle billing of multiple services. their SVOD offerings with traditional pay “Netflix – and to some extent Amazon – TV for a discount while also providing it Re-aggregation understands that incumbent operators have as a standalone option. National free-to-air reach and being part of their packages has broadcasters will seek to forge partnerships While technology platforms such as Roku value. To achieve the same reach on their own with their peers to create joint venture open can help niche players find their audience, for requires massive investment,” says Trudelle. platforms. mainstream pay TV operators, the focus has “Our analysis is that pay TV operators have, Standalone SVOD services will likely shift been more on integrating the most popular to date, managed to retain their position in towards a place akin to that of linear pay TV mass-market services such as Netflix. TV front of consumers and in terms of their networks and forge distribution partnerships technology specialist Nagra’s has conducted content partners. They face a transformation with multi-play service providers – or, in research under the auspices of the Pay TV risk, but the best way for service providers some cases, with new aggregators such Innovation Forum that shows that pay TV to manage that risk is to keep innovating, to as Roku, Amazon or Apple. As SVOD operators, though cautious, now “see [SVOD have no limitation on the technology side, options proliferate, the case for some form partnerships] as a new source of content that and to be flexible enough with their overall of reaggregation is becoming ever-more deserve to be integrated”, according to Simon multiscreen play.” compelling. l

Visit us at www.digitaltveurope.com 6 VideoTech INNOVATION AWARDS 2019 Celebrating innovation in video services and technology VideoTech INNOVATION AWARDS 2019 3 December 2019, 116 Pall Mall, London

The VideoTech Innovation Awards from Digital TV Europe and sister publication TBI – Television Business International celebrate innovation in video services a nd the technologies that enable them. The awards honour the achievements of companies and individuals that bring video content to people worldwide.

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