Consumers are watching content more than ever. They are also watching it on different devices. The explosion of mobile is the key factor. Multiscreen devices come now in any form, size and and provide any kind of interaction. They address any potential demand that consumers might have.
Today, while portable devices may not manage to compete with television in the traditional long form video formats, they can still attract the attention and time of consumers that would have otherwise been spending on a traditional TV set. At the end of the day, the smartphone is a permanent companion in the day of each consumer. A research from Deloitte has shown that over 33% of adults are looking at their phone more than 25 times per day, and about a 15% use it 50 or more times per day. And often, this is done while watching television.
The response of traditional television companies and production houses is an effort in trying to catch-up with the new trend. The state of a country’s infrastructures and connection might cause, in turn a sluggish development of the audiovisual markets, that are today focused on the concept of mobility and are internet-dependent. Evidently, the patterns of usage of a mobile device are with the level of connectivity in the country.
While the pay-tv markets in more mature countries are nowadays very static markets, in which the number of subscribers seldom varies, the broadband services are steadily gaining pace, in a steep surge of popularity. The crucial point that must be underlined is first of all the strong difference in terms of service offered of the two main components of the on demand landscape: SVOD and TVOD. TVOD and EST services have nothing in common with the market of SVOD and pay television. TVOD is basically a complementary product, not only for SVOD, but for pay-TV as well.
The United States’ SVOD market, with nearly 61 million subscribers, is alone more than tenfold the United Kingdom’s market, let alone French and German ones, that are on a different scale, and, despite their growth, far from being comparable. Netflix today offers its SVOD services in more than 190 countries, making it by far the first operator worldwide. In January 2016 had tripled its reach globally by expanding into an additional 130 countries, in what was its most aggressive expansion, yet.
As of April 2016, Netflix reported over 81 million subscribers worldwide, including more than 46 million in the U.S.. The revenue figures, for the first quarter 2016, have reached $1,8 billion, from the company’s streaming segment. Netflix is the undisputable leader in the global SVOD arena. In Europe, there is evidence of an intense fragmentation into very different national markets. This peculiar situation that is rather peculiar from anything else in the world: broadband connections, linguistic and cultural barriers, technology gaps, and uneven development and maturity of such markets constitute barriers to what could be a common market for audiovisual content.
The United Kingdom features subscription numbers that are unmatched in continental Europe. By the same token, there is an higher degree of sophistication, and the consumers are more informed, and used to VOD fruition. The UK is the leader of a first tier of countries, like Sweden, Denmark, Finland or the Netherlands, that are characterized by quick adoption rate, a consequent early entry of Netflix, and local reaction by national players.
A second tier of markets, like the French and German ones, are still new, but reflect an increase in consumer awareness for these new forms of entertainment: the number of subscriptions rapidly increases, and will keep growing in the following years. Among such markets there are most notably Ireland, Austria and Luxembourg.
In a third tier of underdeveloped markets belong countries like Italy, Spain, as well as Greece. SVOD services are new, face strong competition from traditional media, and the consumer usually lacks the culture and the interest into what is often considered too new. By the same token, language barriers also arise in most of these countries.
Even less consistent than in UK, the SVOD offer in France is very dynamic, as it includes all types of programs on all existing media, thanks to a wide range and number of operators. Each operator thus has its own peculiarity, that applies to specific audiences, either by the diversity of its supply, its mode of consumption, etc. In France, 2015 has been a positive year for the SVOD providers, whose share of the total digitalvideo market has risen.
The peculiarity of the German market is that is has attracted a strong presence of the main SVOD players that are competing across Europe. Netflix, Amazon, Sky - with its Snap service - ProSiebenSat, with its Maxdome service, and the latest entrant, Vivendi, with Watchever, that deployed in the second half of 2015. In the light of the above mentioned evolution, a consistent growth is forecast for the video on demand services in the next years.
As a consequence, 2016 is expected as the year of the VOD final breakthrough in Europe, experiencing the greatest increase in revenues, that will also continue to grow considerably, even if at a lower average annual rate, in the following years.
As a result, it's estimated the total revenues of the VOD sector in Western Europe will reach €6,549 billion in 2019, with a CAGR of 17%. TVOD, with the entrance of pay broadcaster and OTT in the subscription business, is doomed to reduce its market share, that will go from 39% in 2016 to 28% in 2019, even increasing its revenues from €1,603 million in 2016 to €1,857 million in 2019.
SVOD revenues will steadily increase, at an average annual growth rate of 23%, starting from €2,520 million in 2016 to €4,691 million in 2019 France, Germany and the UK, although with many differences among them, represent the most important countries in the Western Europe VOD market.
It's estimated that the total revenues deriving from the VOD offer in the joint Big 3 markets will be of €2,338 million in 2016, increasing to €3,846 million in 2019, with an average annual growth of 18%. The Big 3 represent almost 60% of the VOD market in the Western Europe, to be precise 57,7% of the total in 2016 and the 58,8% in 2019.
2. Executive Summary
4. New Trends: portable devices versus connected TV?
- Shifting toward mobile
- TV’s answer to the challenge
5. Technology matters
- Paradigm shift: from 4G to 5G
- Technology developments
- Smart and Ultra High Definition TV: perspectives
6. The on demand sector in Europe
- SVOD and Pay TV: complementors or substitutes?
- Case study: Netflix
- Throttling, Net Neutrality
- Netflix in Europe
- The case of WuakiTv
7. National markets
- The UK market
- The French market
- The German market
8. Market forecast
- On demand services revenues
- Revenues from single transaction: TVOD
- Subscription Revenues: SVOD
- VOD revenues in the main countries (France, Germany, UK)
- VOD revenues in the other countries
List of Figures
Figure 1. Video usage on smartphones (time length)
Figure 2. Smartphone usage while watching TV
Figure 3. Change in consumer usage patterns
Figure 4. Average TV watched per day in the UK (hh:mm
Figure 5. Shares of video time per day in the UK
Figure 6. Mobile Data and Internet traffic in Western Europe
Figure 7. Consumption patterns on public transportation
Figure 8. 4G population coverage in Europe (%) by country
Figure 9. Fixed and mobile connections in the Big 5 (2015)
Figure 10. Weekly streaming or downloading video on mobile (4G vs non-4G, 2015)
Figure 11. Average per-capita monthly mobile data use in EU
Figure 12. Smartphones in Western Europe (Ipv6 capable, in mln.)
Figure 13. Other portable devices in Western EU (Ipv6 capable; ‘000)
Figure 14. Evolution of mobile video traffic in Western EU (PB/month)
Figure 15. Percentages of total data traffic
Figure 16. Household ownership of connected TV sets in Europe (2015)
Figure 17. Development of 4K UHD offer
Figure 18. 4k Ultra HD TV shipments (in ‘000)
Figure 19. Evolution of viewing habits
Figure 20. Usage patterns in Europe: TV vs tablet
Figure 21. Shipment of tablets (2014-2016, in mln. units)
Figure 22. Video-capable devices in European households
Figure 23. Europe: Pay TV vs SVOD - Net additions (€ mln.)
Figure 24. Demographics of SVOD and Pay-TV
Figure 25. SVOD and Pay-TV households in the Big 5 and US
Figure 26. SVOD penetration in Europe (Big 3) and in the US (%)
Figure 27. SVOD and Netflix subs in EU Big 3 and in the US (2015, mln)
Figure 28. Netflix subscriptions (in mln. users)
Figure 29. SVOD-only households in the US and EU Big 5
Figure 30. Netflix ISP Speed Index country averages in Europe (Mbps)
Figure 31. Netflix ISP Speed Index in the USA (Mbps)
Figure 32. SVOD subscriptions in Western Europe (€ mln.)
Figure 33. Country of origin productions in pan-European VoD services
Figure 34. SVOD Households (UK, in '000)
Figure 35. Percentage of HH subs to major VOD services (UK, 2014)
Figure 36. Demographics of Netflix penetration (UK, 2014)
Figure 37. Demographics of TV users (UK, 2015)
Figure 38. Ownership of TV sets (in mln. HH, UK, 2015)
Figure 39. Growth of market shares in the digital video
Figure 40. Trends in the content offer of major services in France
Figure 41. Video sales (€ bln.)
Figure 42. Video on demand providers (2015)
Figure 43. Video on demand providers in Germany (2015)
Figure 44. VOD market in Europe (€ mln.)
Figure 45. Revenue Mix, by business model (%)
Figure 46. Breakdown of VOD revenue in Europe (€ mln.)
Figure 47. Market growth (% YoY)
Figure 48. TVOD revenues (€ mln.)
Figure 49. Market share (%)
Figure 50. SVOD revenues (€ mln)
Figure 51. Market shares (%)
Figure 52. Evolution of VOD revenues in the Big 3
Figure 53. Big 3 market share per business model on total VOD (%)
Figure 54. Big 3 market growth (% YoY)
Figure 55. VOD revenues in the “other countries” (€ mln.)
Figure 56. Market share per business model on total VOD (%)
Figure 57. Market growth (% YoY)
Figure 58. Revenue Mix (%)
List of Tables:
Table 1. Benchmark: from 3G to 5G
Table 2. Spectrum allocation: possible regulatory outcomes
Table 3. Video On Demand services in the United Kingdom (2016)
Table 4. Main VOD services in France (2016)
Table 5. Main VOD services in Germany (2016)
Table 6. Market share by country (on total VOD, %)
Table 7. Market share by country (on the Big 3, %)