This year’s Mipcom is hosting a slate of online, streamed presentations via its Mipcom Online Plus platform, available to accredited badge holders from anywhere in the world. In one such panel, Tony Gunnarsson of independent analysis firm Omdia delivered a 10-minute presentation, followed by a 10-minute chat with Jacob Ahlin, director of digital propositions, EMEA, at A+E Networks U.K..
Titled “Reaching the Audience: Distribution Strategies of On-Demand Providers,” Gunnarsson’s presentation demonstrated that streaming is far more than just an over-the-top and direct-to-consumer model of distribution by breaking down the landscape occupied by global OTT providers as well as local and regional competitors.
For many reasons 2020 will stand out as a milestone year for the TV and video industries. Under normal circumstances, it would have been exceptional with the launches of Disney Plus, HBO Max, Apple TV Plus, Paramount Plus and more, but when the COVID-19 pandemic closed people inside with loads of time and not much to do but watch, already existing trends were accelerated. As cord-cutting led to paid, online video customers outnumbering pay-TV customers for the first time, the online video marketplace boomed.
“To be honest, online video is really messy, hugely fragmented, and super competitive,” explained Gunnarsson. “Just taking the U.S. as an example, here Omdia tracks more than 65 individual streaming services; out of a total number of services estimated at over 150. There are already a total of 264 million subscriptions in the US; by 2024, it’ll have grown to 340 million. Beyond the hype, few video services can survive on their own, even U.S. majors like Netflix and Disney require partners to reach consumers at scale.”
One problem that such a cluttered marketplace causes is low subscriber numbers per platform. In Europe, for example, there are fewer than 10 services from the more than 500 Omdia tracks which have a subscriber base of more than one million.
From chaos the platforms must find order, and one way to do so is through partnerships. “For most online video service providers striking bundling partnerships with mobile or fixed-line telecom operators is a no-brainer. It is the quickest and cheapest way of penetrating new markets,” Gunnarsson explained.
The relationship works both ways, with telecommunication companies scooping up platforms to add to bundles.
“As the super-aggregation model takes hold, growing numbers of telcos and telco-owned pay-TV providers are forming alliances with multiple OTT video players to offer premium streaming services via their sales channels and delivery networks,” said Gunnerson.
Shifting gears, Ahlin joined Gunnarsson on screen and gave a first-person account from A+E Networks U.K.’s point of view.
Currently, A+E Networks U.K.’s SVOD services are only available as add-on channels through partnerships with platforms such as Amazon Prime Video or Apple TV. This begs the question, what is A+E looking for in distribution partners?
Number one, according to Ahlin, “Scale. You need a significant customer base to build a meaningful subscriber base for ALC channels which is precisely why the major aggregators focus on major territories.”
Having already provided a fairly fragmented outlook for the 2020 and beyond from Omdia’s point of view, Gunnarsson asked Ahlin how he sees the next marketplace evolving over the next decade, and wondered if the marketplace is close to hitting the cap of services consumers will pick up.
“Not anytime soon,” according to Ahlin. “A household includes different customers with different needs. A household is unlikely to trade in Amazon Prime for Netflix because of all the other benefits you get with your membership, and increasingly subscription services are bundled with other products and services.”
Finally, the two broke down the AVOD model, currently more prevalent in the U.S. than in Europe, and questioned whether that might change.
“Sure, with the right execution,” said Ahlin. “Europe is twice the size of the U.S., but more fragmented, throughout the value chain. Localization, intermediates, devices, all become barriers of entry and you really want scale for AVOD to make meaningful returns, plus there’s a lot of competition from local BVOD, which might be why some of the U.S. AVOD players haven’t made the same impact, certainly not at the speed we’ve seen in the U.S.”