This 15th Annual Report, is an essential tool to understand the TV market and anticipate its changes. The Report focused on European TV market and broadcasters strategies in the digital content arena, is the result of an accurate work of collection and analysis of data. This year's edition, beside the figures and data on the TV market value in Western Europe also divided by revenue sources, audience share, advertising media mix, platforms distribution and multichannel sector, presents thematic focuses on the main and fastest-growing trends: mergers and acquisitions in the TV and connected big data industries; programmatic advertising; live programming on the internet and the e-sport explosion.
The TV market in 2016
At the end of 2016 the TV market in Western Europe reached €99.4 billion, at an annual growth rate of 1.8%. This corresponds to a 17.5% growth rate on the entire period 2006-2016, at an average annual rate (CAGR) of slightly more than 1%.
TV Advertising in particular shows signs of consolidated recovery, reaching €32.7 billion, with a net 2.6% gain on the 2015 level which registered also another growth. It is a positive sign; nonetheless, while it has to be welcomed, at the same time it is still barely in line with the revenues in 2010.
The biggest market, the United Kingdom, which have been growing significantly above the average since 2012, showed this time a result in line with the total market, at 2.6%. At the same time positive and significant growth rates were especially found in other markets, respectively of +5.7% for Italy and +4.5% for Spain.
In France and Germany the market remains mildly growing: the growth rate in these countries is respectively 2.6% and 3.1%. France has had a hard catch-up: the negative growth rate has stopped only in 2015 when the value reached 0.6% and now is starting to recover in line with the average WE growth.
In 2016, the UK maintains its positioning as the largest media market in Europe, followed by Germany, which lags significantly behind. Ad spend in the UK is still increasing, at a rate of 2.5% year-on-year, with mobile advertising, broadcast video on demand and digital national news brands all experiencing strong growth. It must be remembered that Brexit adversely struck the UK economy, and as a matter of fact has had now to show a visible influence on the growth rates in the audiovisual market as well.
The internet sector is by far the largest, accounting for practically half of the total advertising expense, in 2017. Of that, mobile video has shown an extreme growth and development rates that drive heavily the UK advertising investment business toward a restructuring of the existing practices and business models.
New strategies are now focusing mainly on the internet sector and the investment decisions reflect clearly this change. Internet advertising has the market lion’s share, with respect to the press and TV markets, the other two major sectors, that have traditionally enjoyed – especially in the case of TV – a prominent role. Press, out of home and cinema advertising are today a rather small niche: only television advertising has succeeded in maintaining a 25% market share without leaving too much ground to the internet ads.
Pay-TV in 2016 has finally been growing too, which is to be considered an improvement from the stagnating trend of the past years. The global growth at EU level has been of 2.5%. Excluding the German market, where growth has been more sustained, in the rest of Europe pay-TV has recorded on average a result around 2%: Spain and France in particular have faced below average growth rate of 1.8% and 1.1% respectively.
Some relevant changes happened in terms of platforms. For example, the extremely high rate of increase of subscriptions and revenues to IPTV (and broadband TV) keeps increasing at an impressive rate. Innovation and technological growth (OTT/VoD) has taken its toll on the traditional platforms. The decline of cable and satellite TV has been sharp and relentless, since 2010. With a total growth of nearly 66% in the 2011-2016 timespan, IPTV has been reducing the gap between the two leading platforms supplying pay-TV offers.
The multichannel TV sector shows a picture that is quite similar to that of 2015. Traditional sources of revenue from advertising and licence fee on terrestrial mainstream channels have lost ground to multichannel, which represents 63% of total, for a total amount of €62.3 billion.
Multichannel operators are competing in the market, by offering a wide and complex mix of alternative consumption experiences as well as bundles with some of the best offers in the telco upstream market. Within the multichannel sector, the largest share of revenues always arises from premium, pay-TV channels. The sector is however very stable and sluggish and has lost two entire percentage points to advertising. The growth of multichannel has been pushing in 2016 again, mainly thanks to advertising, which today represents 29% of the total revenues of the segment.
As many business models emerge, new forms of advertising, media and content partnerships, new mobile services including M2M, live gaming, and augmented reality, a mutually beneficial situation needs to be developed for service - over the top providers.
New partnerships, ecosystems, and strategic consolidations are expected. 2017 shows already a significant growth of mergers and acquisitions: this has occurred in particular in the TV navigation marketplace, made of metadata providers and companies that offer search, recommendation, data collection and analysis solutions in the TV industry. Such an increase of interest in TV navigation depends on the new way of TV contents consumption brought by Netflix, YouTube and the OTT operators in general. TV service providers want to use metadata to develop new services for users, broadcasters and advertisers. In this framework, with a whole sector of an industry which is evolving so fast, there is a number of relevant mergers and acquisitions that took place during the last months.
Indeed the online economy is booming, and with many services becoming free, or freemium, the advertising sector is of utmost importance as a source of revenues. The greatest trend today, in the data-driven online economy, is the so-called programmatic advertising, an automated process for the sale of advertising space based on highly sophisticated technology platforms. The added value of this innovative type of advertising is to target advertising on very specific targets by using a mix of data from multiple sources. In essence, its greatest potential lies in the ability to show the content that the user wants to see, the right moment he wants to see it.
In the first place, operators must solve the challenge of effectively monetizing video traffic while increasing infrastructure capital expenditures needed to accommodate video data transmission. Key is the global increases in Internet users, faster broadband speeds, and the adoption of advanced video services. In this scenario, the importance of online and mobile in particular will be of the utmost importance, and will keep growing dramatically.
Live Internet video will account for 13% of Internet video traffic by 2021. Live video will grow 15-fold from 2016 to 2021. For this reason, we believe, traditionally live products and contents like sports will find a new life and fruition on the web in the upcoming months.
It is also important to point out how mobile gaming will be absorbing relatively huge shares of internet traffic, by 2021, growing of 1000% in five years.
In 2016, we are still the earliest stage for live OTT streaming. The quality and availability of premium live content on different platforms and devices versus TV is still growing. However, it promises to be a driving force in the future of OTT. Live offers market differentiation, parity with broadcast offerings and more engaging experiences for audiences that are still connected to the cord. Services like Hulu and Amazon have planned 2017 live bundle offering will get more and more into the live mix. All content lengths will be in play from shorter clips to extended live TV content.
Social companies can give their audiences and advertisers premium live content to increase revenue and stickiness. Some core issues with live OTT video remain: broadcasters are still working out how to integrate streaming fully into their linear broadcast operations, and latency in live environments is also a pain point, both from a content and ad perspective.
That will be particularly true of Millennial audiences, who have an expectation of instant access to content. Moving forward, look for advanced video players that are content-aware and can distinguish live and VOD content for the best viewing experience, along with tightened processes for live transformation and delivery. Broadcasters will also continue to prioritize data and the continuous monitoring of the quality of their live streams as they’re happening. The next wave of live will expand OTT in new and exciting directions. At the same time, monetization is moving on a more targeted path.
In any case, live sports streaming, is still far from becoming mainstream and available for massive fruition, for the time being. Yet, even if TV networks should be safe in the short term, they aren’t complacent to let technology companies get the upper hand when it comes to live-streaming. The networks are already preparing for a time when more people watch sports through apps than a cable box.
ESports is arguably one of the hot trends in the online “social” video, and has one leg in the sports markets and the other in the prosumer niches. A rapid rise in consumption of eSports and streamed games content will drive €3.3 billion in revenues by 2021, up from $1.8 billion in 2017. The total unique impressions reached 400 million people, worldwide for the world championship of the leading Esports discipline.
The past 5 years have seen viewership of eSports competitions rocket, with the majority of viewers coming from online streaming platforms such as Twitch. However there has also been growth in more traditional media, with dedicated TV channels, such as UK eSports network Ginx, which announced plans to launch in Canada in March 2017. Between the leading eSports tournaments in 2016, there were over 90 million unique viewers watching the final stages of these competitions.
Today YouTube is adopting a very aggressive strategy to take share from Twitch in live streaming, leveraging on the far wider social community for eSports fans to share content with. Facebook, with 1.6bn users, is getting into the game by partnering with live video content providers, including Activision Blizzard Media Networks, to show live tournaments and news programming via MLG.tv Facebook page. Activision Blizzard made its first move into e-sports in October 2015 when it set up a division purely on focus e-sports. The firm is likely to combine its powerful position in the gaming market with the live broadcasting skills that MLG has developed over the past decade. With over 100 million unique viewers, more people are watching e-sports than many real-world sports leagues, and the forecast if that the number will rise to 300 million by 2018.
The sector will become an extremely interesting resource to tap for online advertising markets.
1. The TV market in 2016
- Market trends
- The TV market in 2016
- Market overview
2. The multichannel television market
- Multichannel advertising
- Fragmentation in TV audience
3. Market Trends
- Mobile booming and the video content revolution More Mobile connections, more Mobile video
- M&A Investments in TV metadata: a growing trend
- Programmatic advertising Desktop video
- Mobile video
4. Linear TV video
- New ways of consuming Sports: live streaming
- For the first time: Twitter and the NFL
- Live Sports, Audience and Time Zones: a success story E-Sports: gaming video content, a new frontier Sports or eSports