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Multiscreen & OTT Series 2019 Multiscreen & OTT 2019 > AVOD Digital TV Europe July 2019 July 2019 Part 1 AVOD Multiscreen & OTT Series 2019 Multiscreen & OTT 2019 > AVOD Digital TV Europe July 2019 Ad-supported broadcaster such as Channel 4 are among those that believe in the potential of the free VOD model. The rise of the AVODs With subscription costs mounting and the SVOD market becoming more crowded, Jonathan Easton looks at the attractions of advertising-supported video-on-demand. Netflix added aAmazon Unbox in 2006, which, through be pointed out that it only became a legal When streaming option to its various transformations and name changes, requirement for viewers to have purchased DVD rental service as an optional extra in became what we now know as Amazon a TV licence in 2016. 2010, few could have predicted that it would Prime Video. In the wake of the iPlayer’s UK success, create the seismic shift that it did in the Other ‘free’ VOD services have also similar services launched in the UK, such following years. sprung up in this time. The BBC launched as ITV Hub and All 4 (formerly 4OD). Of course, Netflix was not the first BBC iPlayer in 2007 which was, ostensibly, Without the benefit of funding from TV company to offer a subscription-based video freely available to anyone in the UK, paid licence fees, these platforms are, like on demand service. Amazon launched for by the TV licence. Though it should their linear counterparts, free to view but Visit us at www.digitaltveurope.com 2 Digital TV Europe Multiscreen & OTT 2019 > AVOD July 2019 94% of the execs believe major platforms This way of looking at the market then in European markets will carry 20% fewer creates a huge gulf between those niche linear pay TV channels than today, with services and the aforementioned likes of VOD being the way to go. Netflix, Amazon and Disney. Such a gap, as Gupta suggests, is the place where AVODs will thrive. State of play Despite rising in prominence recently, AVOD is hardly a new phenomenon, as Realistically, we live in a world where most Rhys Nölke, senior vice president strategy OTT households will have one, if not both, and business development at RTL Group of Netflix and Amazon Prime Video. For says: “We were among the frontrunners in many cord-cutters and cord-nevers these advertising-funded VOD offers in Europe. platforms are the basis of their viewing Back in 2007, we launched our first AVOD experience and, as such, will view any new service in Germany, which is called TV platforms as an addition to, rather than Now today. Ever since, we have continued a replacement for Netflix and Amazon. to expand our VOD services in all countries Even Disney – arguably the biggest name where we have strong families of TV in global entertainment – and its Disney+ channels leveraging our platforms across SVOD is likely to live next to Netflix. the Group.” This is okay for Disney, but not everybody There are many audiences across Europe has the name recognition or library of who have only known free to air television. Disney. And Disney only viewed launching For them, an ad-supported model which an SVOD as viable having acquired 20th incurs no financial cost is a more familiar Century Fox and its back catalogue of and appealing proposition than paying for content for US$71.3 billion (€62.59 billion). an SVOD. Even for those who subscribe For Justin Gupta, head of broadcast and to a service such as Netflix or Amazon entertainment, UK & Ireland at Google, the Prime Video, a recent report from Parks market will logically divide between SVODs & Associates suggested that the SVOD and AVODs based on one main key factor. market has become “saturated” and that behind an information paywall and funded “For video platforms and broadcasters fewer viewers are looking to add another by advertising – AVODs. This is a model going direct to consumer, AVOD is the subscription. that is seeing a huge amount of interest obvious choice,” he says. “For niche content Similarly, broadcasters want to best internationally. providers, SVOD makes more sense, in the utilise their extensive content libraries to Safe to say that, over the past decade, beginning at least.” reach as wide an audience as possible while the landscape of video consumption Though there is never a ‘one size fits all’ simultaneously maximising revenue. In has radically transformed. Established rule, Gupta’s description reflects how we this sense, removing the financial barrier broadcasters are looking over their shoulders at the burgeoning competition and are trying to get a piece of the action. “We were among the frontrunners in But for any broadcaster that wants to get ahead in VOD, they are posed with several advertising-funded VOD offers in Europe. different questions. First do they licence Ever since, we have continued to expand our their content to one of the big players, or do they decide to go direct to consumers? VOD services in all countries.” Should they settle on the latter, what model Rhys Nölke, RTL Group for revenue should they follow: the free-to- view AVOD or a paid-for SVOD? have seen the OTT landscape take shape to entry of a subscription from audiences And these are the questions being asked over its first decade or so. More specialist has the potential to increase viewership, by the entire industry amid an increasing services which could be considered, as making AVOD such an attractive model. shift to non-linear programming. According Gupta puts it, ‘niche’, are thriving. Viacom, while still being largely dedicated to the European edition of the 2019 Pay-TV For example, both anime platform to pay TV and cable networks, is one such Innovation Forum from Nagra and research Crunchyroll and pro wrestling service WWE broadcaster that has heavily invested in consultancy MTM, 79% of executives feel Network boast over two million members the AVOD space. The company grabbed that these rapidly growing OTT services each worldwide. Both have been disruptive, headlines in March 2019 with the US$340 present a major opportunity to become both serve a core niche audience, and both million (€298.45 million) acquisition of ‘super-aggregators’ of content. By 2024, are subscription-based. Pluto TV. Visit us at www.digitaltveurope.com 3 Sponsored content Zattoo brings white label TVaaS to Android TV Operator Tier market oogle has achieved significant success over the last couple of Kleemann says that Zattoo has found a partner for the initiative that years for Android TV on the back of its Android TV Operator Tier can deliver a “perfect combination” of a high-specification system-on- Gprogram. TV operators have been able to tap into Android TV chip platform at “a very competitive price”, opening up the market to a to deliver fast time to market, enable access to Google Play and provide new range of operators that may not be as well-resourced as tier-one the potential to deploy advanced set-top boxes at an affordable cost, players. while allowing them to retain control of the look and feel of their service. “We have a good, strong partner with a solid roadmap that can While Android TV for operators has simplified the business of launching move very quickly and efficiently,” says Kleemann. According to a pay TV service, operators have until now still needed to source a Kleemann, that roadmap means that operators will benefit from a clear device manufacturer to supply a set top box and also an experienced path to upgrade to next generation devices, giving them certainty integration partner to launch the service. This potentially involves that they will be able to keep up with changes to Android TV without significant cost, time and complexity. needing to allocate lots of resources to achieve this. Zattoo is currently Step in multiscreen technology provider Zattoo, which is now taking offering a pure IP solution, but plans to follow up with a hybrid box its TV-as-a-service concept to Android TV, enabling operators to get to including broadcast tuners later. market quickly by providing a white label 4K set-top solution that relieves As part of its TVaaS service – and part of the Android TV operator clients from the burden of developing and integration of a their own tier program – Zattoo has also upgraded its content discovery and launcher applications. “Network operators are opting more and more for VOD offering. According to Stefan Tiess, product manager of Zattoo’s set-top boxes powered by Android TV as an discovery squad, the first goal of what alternative to Linux-based set-top boxes, so Zattoo has branded Discovery 2.0 is to we had two main objectives. The first was to enable viewers to search for and select offer Android TV as a white label offering as content via a single interface across linear part of our TVaaS platform. and non-linear channels, recordings and The second was to satisfy the “all kinds of VOD content”. requirements of existing and future B2B Second, he says, content discovery customers,” says Franziska Kleemann, should be personalised. To enable this Product Owner for Android TV Operator Zattoo has introduced recommendation Tier at Zattoo. Kleemann says that one of based on previous viewing behaviour the challenges operators face in getting across all types of content that users can to market quickly is to find a suitable access. Zattoo’s content discovery portal, manufacturer to not only supply their which is powered by a recommendation set-top boxes but also manage the entire system that was built in-house, taps integration effort. With a ready-to-roll white label solution from Zattoo, machine learning algorithms that are extendable across all types of operators can rely on a trusted partner to do most of the heavy lifting, content, most recently with the addition of transactional VOD and says Kleemann.
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