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Digital Content

Content vs user experience

Where to invest?

15-16 November 2017 Digital Content

(Premium) Content is king (again!) Copyright © IDATE 2017, 3 An unprecedented race for content

Telcos and cablecos integrating upstream Few but major audiovisual group acquisitions in the chain 48.5b USD 85b USD Examples of Movies / Series / Sports rights acquisitions in Europe

30b USD 3.8b USD

4.5b USD

725m EUR

Source: IDATE-DigiWorld, November 2017 Source: IDATE-DigiWorld, November 2017 Copyright © IDATE 2017, 4 An unprecedented race for content TV broadcasters integrating TV/OTT production

Recent integration of TV production companies by TV broadcasters Integration of MCNs by TV broadcasters

Amount Date

21st Century Fox (Endemol ChannelFlip / 01/2012 Shine)

Canal+ StudioBagel Several million 03/2014 EUR 09/2013

Discovery Revision3 30 million USD 05/2012

Disney Maker Studios 950 million USD 03/2014

DreamWorks Animations Big Frame 15 million USD 04/2014 AwesomenessTV 33 million USD 05/2013

Fremantle (Bertelsmann/RTL) Divimove. / 01/2015 Stylehaul 107 million USD 11/2014 BroadbandTV 36 million USD 06/2013

Hearst AwesomenessTV 81 million USD 12/2014 ITV

Legendary Media Geek & Sundry / 08/2014 Smart Girls / 10/2014 Nerdist Industries / 07/2012 3BlackDot / 01/2016

Otter Media (joint venture Fullscreen between 200 09/2014 between Chernin and AT&T) million USD and 300 million USD

ProSieben Collective Digital Studio (CDS) 83 million USD 07/2015

Rightster Base79 ($77.4 M – 07/2014) 77.4 million 07/2014 et Viral Spiral ($6.3M) USD 07/2014 6.3 million USD RTL Group StyleHaul 85 million USD 11/2014 Sky Diagonal View 03/2017 TF1/ Studio 71 53 million EUR 01/2017

Warner Bros. Machinima 18 million USD 03/2014

1 Webedia Mixicom 75 million EUR 09/2015 Paramaker / 09/2015 Melberries 1.4 million EUR 02/2014 Source: IDATE-DigiWorld, November 2017 Source: IDATE-DigiWorld, Video Content: The New El Dorado?, June 2017

1 including Cyprien, Norman and Squeezie Copyright © IDATE 2017, 5 An unprecedented race for content GAFA and other Internet giants are also part of the race

Sports & Series & other Movies content

Source: IDATE-DigiWorld, November 2017 Copyright © IDATE 2017, 6 A fierce competition leading to spiralling premium rights costs Sports rights are exploding… Investments in TV series also: •Budgets for flagship series are growing strongly - Game of Thrones = season 1: between 50 and 60 million USD season 7 : around 100 million USD

Increase of domestic costs of the main TV sports rights during the last Evolution of annual expenditure from Netflix and Amazon renegotiations in content acquisition and production (in billion EUR)

NCAA Football 386% NBA 180% MLB 100% Bundesliga 80% Premier League 71% NFL 60% NCAA Basketball 41% Ligue 1 20%

Source: IDATE-DigiWorld, according to sports leagues, November 2017 Source: Business Insider Copyright © IDATE 2017, 7 Competition is not new! Competition always pushed prices up •Either to keep the rights •Or to kill the competitors!

Evolution of the price for the rights to Ligue 1&2 / of pay-TV Evolution of the price for the rights to Premiere League/ of pay-TV penetration in penetration in the UK

Source: IDATE-DigiWorld, November 2017 Source: IDATE-DigiWorld, November 2017 Copyright © IDATE 2017, 8 But competitors are! What’s new is : •The nature of the competitors •Their financial means •The saturation of the pay-TV market / of linear TV consumption A new speculative bubble?

Evolution of pay-TV penetration and live linear TV consumption in Evolution of total revenues (in billion USD) the USA

180 300 89% 160 88%

290 TVHH % of In

140 day 87% 280 86%

120 per 85% 100 270 84% 80

minues 83% 60 260

In 82% 40 250 81% 20 2010 2011 2012 2013 2014 2015 2016 0 2010 2011 2012 2013 2014 2015 2016 Live linear TV viewing time Pay-TV penetration

Source: IDATE-DigiWorld, according to annual reports, November 2017 Source: IDATE-DigiWorld, World TV & Video Services Markets, July 2017 Digital Content

An appetite for something other than premium content Copyright © IDATE 2017, 10 An appetite for other content Fictional content •But adapted to a consumption on mobile screens •And shorter User generated content Source: Fablabchannel •Cf. the phenomenon of the YouTubers New online short news •New ways of showing the world as it is

Source: YouTube

The future of content or just a part of the future? •Will eSport dethrone football?

Source: Brut Copyright © IDATE 2017, 11 A need for a better user experience The other way to attract and retain the users? Digital Content

Content vs user experience Copyright © IDATE 2017, 13 Where to invest?

Premium content: a must have to attract subscribers ? Florence LE BORGNE TV & Digital Content Lead Analyst [email protected] +33 6 74 59 36 31

THANK YOU!

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IDATE DigiWorld is one of the foremost European ICT expert houses specializing in telecom, media & internet markets and digital territories. Since 1977, our team delivers consultancy services, market intelligence solutions & networking opportunities aiming to an in-depth understanding of the digital world and to supplement our clients’ strategic decision-making. We are proud that every year more than 400 public bodies & multinational companies all over the world renew their trust in our services. Learn more about our three activities:

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