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Multiscreen, no longer a subset of TV, is rapidly becoming the norm

Jonathan Doran, Principal Analyst, TV

From listening to the conference presentations as well as speaking with both delegates and exhibitors at TV Connect, it becomes clear that multiscreen delivery has become integral to the concept of TV rather than remaining the value-added subcategory it was previously. While TV Connect no longer hosts conference streams specifically dedicated to multiscreen, it is now a dimension of video consumption and delivery that permeates virtually every aspect of the broadcast and TV industries. A panel session during the Millennial Monetization section of the event (itself heavily informed by the growing prevalence of multiscreen usage among 16–35 year-olds) touched on the potentially far greater challenge of how the TV and video industries should address the post-millennial generation that comprises an audience that was effectively born into a multiscreen environment.

Ovum recommends the following:

  • As audiences move further toward a multi-device environment, content producers and broadcasters should be thinking in terms of cross-platform content rather than TV programming. This shift must cater to future demand for differential, device-specific content.

  • Broadcasters and pay-TV distributors will have to rethink both their distribution and business models, as consumption of professional video entertainment content gravitates inevitably toward multi-device – and in many cases mobile-first – TV.

  • Both traditional and next-generation infrastructure and consumer tech (e.g. set-top box) vendors will need to work across any silos that exist between them to ensure that there is seamless delivery and a seamless user experience (UX) across both regular TV and mobile/multiscreen delivery channels.

Related research:

Availability Analyzer: Operator Multiscreen TV Services in Western Europe, March 2016, ME0003-000665 (April 2016)

Channel 4's unique vision for All 4 breathes new life into online TV, accompanying its linear parent

Ismail Patel, Analyst, TV

Channel 4 has outlined its vision for its online video platform, All 4 (formerly known as 4oD). Although it started out as a pure-play catch-up service, the broadcaster – in line with its commitment to have a distinctive proposition – has successfully converted All 4 into a unique platform in its own right.

The broadcaster has 11.4 million registrants to its All 4 service, with its in-house metrics showing impressive 200% growth in viewership on its online video platform. However, the broadcaster stated on the TV Connect conference stage that it does not want All 4 to be subservient to its main linear channel, and it has already achieved this by:

  • Creating short-form, niche content to sit on All 4's "Shorts" stream. This is content that would not normally be broadcast on traditional TV. Channel 4 says it generated an impressive 3 million views of Shorts titles during 2014.

  • Leading the way in box-sets for international non-Anglophone hit shows, including programs such as Deutschland 83, Mafiosa, and Thicker Than Water. This stream is branded "Walter Presents," claiming to curate the best in world drama. As a result of the Shorts and Walter Presents streams, the broadcaster announced at TV Connect that 65% of All 4 viewership comes from catch-up, but this number is consistently falling in favor of noncatch-up online video.

  • All 4 is leading the way in targeted ads, by virtue of being an ad-funded video on demand (AVOD) service. Advertisers can leverage the enhanced analytics provided by Channel 4, acquired through All 4, to personalize their ads with dynamically positioned information to a level that is relevant to a specific individual. For this, Channel 4 is combining Core4 viewership and behavioral data to create what it describes as "viewer interest segments," allowing the broadcaster to identify viewers with affinities to specific retail categories, such as technology and cosmetics. Channel 4 also stated that 30% of its ad revenues now come from its online platform, and this will soon surpass 50%. It is also worth noting that Channel 4's online videos do not work on ad-blocked browsers, guaranteeing that viewers have to endure ad breaks before and during their selected shows.

Ovum recommends the following for AVOD providers:

  • Ensure viewers have to go through a registration process.

  • Leverage customer viewership data to make ads relevant to specific viewers, by geography, taste, and age.

  • Guarantee anti-ad-blocking technology is in place.

  • Enhance the experience over and above what is provided on linear platforms, through curated user-generated content, nontraditional formats such as shorts, and popular international content.

Related research:

Channel 4 is right to try to connect better with its audience, but does it have the right content strategy? ME0002-000487 (February 2013)

Demystifying OTT TV in China

Tony Gunnarsson, Senior Analyst, TV

ZTE's Jinshan Liu presented a case study on China yesterday, subtitled "demystifying over-the-top (OTT) TV in China," which is timely, considering the news of Disney being forced to pull its Chinese OTT platform DisneyLife as well as Apple having to pull its iMovie and iBooks services from iTunes in the country recently. China has 500 million online video users, of which 405 million are mobile users. But interestingly, only 17% of Chinese online video users pay to access content. The big online video players in China – iQiyi, Baidu, Alibaba, and Tencent – have all invested heavily in content production for OTT video delivery and are producing original programming for OTT faster than operators. However, the one area of Chinese OTT where online video players are unable to compete is live TV, because the regulator has not allowed live TV licenses for any online companies yet. In addition, Chinese living rooms (apparently) tend to be larger than in other places in the world, e.g. in Europe. Given that large TV screens are particularly important for Chinese families, 4K/ultra-high definition (UHD) will play a particularly important role in China, with some statistics citing that about half of all new screens sold there are now 4K/UHD. Clearly, as outlined by Jinshan, live TV and 4K are the two key means for operators to differentiate themselves from OTT services.

Ovum recommends the following:

  • The news of Western OTT services being turned off in China will come as a reality check for foreign OTT specialists hoping to exploit the huge Chinese market. The need to work with local regulators is paramount; however, even doing everything by the book may not guarantee a permanent anchor in the Chinese market as the recent news shows.

  • Aside from state regulation, which must appear both idiosyncratic and monolithic to some, the reality of the Chinese OTT market is that the big Chinese OTT players have already sliced up the market between them and there is very little ground left for foreign players.

  • Content owners, OTT players, and pay-TV operators should therefore look to partner with established Chinese OTT service providers.

  • Many Chinese premium-based OTT services cost less than in the West, but more commonly content is made available legitimately through free or AVOD services. The core issue remains how to sell content to Chinese partners for a decent price. The accepted wisdom at the major studios is to sell the content to legitimate local streaming partners at a low price rather than risk titles being picked up and consumed through online piracy.

Related research:

Open sesame: Hollywood looks to China for OTT video push, ME0003-000501 (November 2014)

Starz Play Arabia shrugs off the arrival of Netflix and continues to expand

Tony Gunnarsson, Senior Analyst, TV

The MENA region subscription video on demand (SVOD) incumbent Starz Play Arabia is launching 4K on Samsung TVs and adding Arabic local content to the Hollywood-skewed streaming service next month. Operating in 17 markets across MENA (excluding Iran, which remains under US sanctions), Starz is not worried about the entry of Netflix (which launched in MENA in January 2016) for a number of reasons, and Starz has already experienced an uptick in new subscribers following the news of Netflix's launch. Interestingly, Starz found that the broadband infrastructure providers in the MENA region have not acted against the service, largely due to its partnering with telcos across the region. Indeed, 70% of new subscribers signed up using their mobiles. However, when it comes to accessing the service and watching videos, the device-screen split tends to be more focused toward larger screens. Finally, although it is now adding local content to the service, Starz said that Arab content will continue to play a complementary role to Hollywood and Western content, and the need for censoring content in this region is perhaps overstated. MENA consumers, as everywhere, simply cannot get enough of popular series such as Breaking Bad.

Ovum recommends the following:

As a case study, Starz Play Arabia illustrates many of the textbook examples of how to launch an OTT service, from national localization of service and availability of Arabic and French language subtitling and voiceovers to the flexibility to adjust price for the service according to the needs of each particular market. However, being the effective incumbent in the MENA region – it is certainly not the only OTT service in the region, but definitely the first and most plausible one so far – may not guarantee Starz market dominance for long (which will inevitably be lost to Netflix). However, Starz's very strong proposition will ensure it has a very strong, and growing, SVOD service that will likely end up being part of many consumers' future OTT TV offerings alongside Netflix.

  • Not every OTT service will survive; as often explained by Ovum, the trend points toward consolidation of global OTT video services in the coming years (the most recent casualty was QuickFlix in Australia, which found itself unable to compete in a market already dominated by Netflix, and rival local services Stan and Presto).

  • The two key video services in the MENA region in the coming decade will clearly be Netflix and Starz.

  • Consumer electronics manufacturers should build set-top boxes, smartphones, and smart TVs with Netflix and Starz in mind. Likewise for telcos: bundling access and data with these services is crucial.

Related research:

On the Radar: Starz Arabia, ME0003-000577 (July 2015)

OTT video strong in Pakistan and is already outperforming IPTV

Tony Gunnarsson, Senior Analyst, TV

It is remarkable how much skepticism there is about Netflix's ability to succeed in emerging markets – even among seasoned TV event delegates and speakers. At a TV Connect panel today, Usman Ali Akbar, general manager (PMO to the president and CEO) at Pakistan's number-three operator PTCL, talked about the current outlook for OTT video in Pakistan. He said that after just three months Netflix has attracted a total of 300,000 subscribers, including trial users. Remarkably, this is higher than the figure for IPTV services in Pakistan, which is only 180,000 according to Usman. This is despite the higher price of Netflix compared to IPTV. A typical IPTV service is available with approximately 130 channels and is priced at as little as $3–4 per month to subscribers in Pakistan. Netflix charges $7.99 per month.

Ovum recommends the following:

  • As outlined by Ovum previously, the appeal of Netflix has proven to be universal, from Brazil to Japan to Sweden. Wherever you are in the value chain, be prepared that Netflix will be successful in your market.

  • Netflix's entry into a new market will kick-start OTT consumption, benefiting not just Netflix but also a number of rival services. As mentioned above, Starz says it got an uptick in new subscribers when Netflix launched in the MENA region.

  • Netflix was available in more than 70 countries before 2016 and these countries provide useful lessons that can be applied to your market.

Related research:

The Implications of #NetflixEverywhere, ME0003-000630 (January 2016)

"Presence" is key if VR is to find a place in the living room

Adam Steel, Research Analyst, TV

Virtual reality's (VR's) entrance into the everyday lives of consumers has seemingly been on the cusp of happening for a long time now. But the technology's failure to do so has left us asking: will it ever happen? Judging by the reactions of TV Connect attendees who have been able to experience the technology firsthand, the answer is yes. However, for this to occur, VR systems must first achieve "presence" – a VR term that describes the visceral feeling of being in a simulated world, to which users feel truly connected. In others words, it must be utterly convincing. When this is achieved, VR can finally matriculate from a trade-show attraction to living-room staple.

Ovum recommends the following:

  • Technology vendors need to ensure presence is achieved in every aspect of the VR experience.

  • Encouraging the consumer market toward VR can be achieved by demonstrations or one-off experiences, enabling those without the hardware to enjoy the technology.

  • Cheaper, entry-level VR products like Google Cardboard could prove a useful segue into VR, allowing consumers to experience "VR-lite" before making a more substantial investment.

Related research:

Innovation Primer: Virtual Reality, ME0002-000563 (March 2015)

Virtual Reality: Are We Poisoning the Well? ME0002-000598 (August 2015)

The brilliant thing about piracy…

Adam Thomas, Lead Analyst, TV

"The brilliant thing about piracy…" is not the type of remark you expect to hear at a trade show for TV professionals, particularly when you hear the second half of the sentence: "…is that it has blown up the value chain." But so said Aditya Thakur, CEO of streaming service Lebara Play, who was speaking at the TV Connect event. The serious point he was making is that piracy is so attractive because it introduced simplified payment structures (or, often, none at all) and made content access available anytime, anywhere, irrespective of borders and release windows. The boundaries imposed by the traditional TV industry had created an environment in which piracy could thrive – there was no legal way to satisfy this massive public demand for more flexible viewing options. Of course, great strides have been made in recent years to make legitimate content more accessible, but there is no room for complacency. More needs to be done, or the pirates will continue to flourish in the areas where there is no lawful alternative.

Ovum recommends the following:

  • Content owners and broadcasters should define distribution strategies in each market and each release window, whether distributing through proprietary outlets (owned channels, OTT services) or through third parties.

  • Pay-TV operators should compete in all possible release windows by clearing content rights for OTT linear, series stacking, and electronic sell through, to address the SVOD (and pirate) threat.

  • TV technology companies need to continue to develop innovative technology solutions to help meet the enormous public demand for more flexible/personal viewing options.

Related research:

2016 Trends to Watch: TV and Video, ME0003-000639 (January 2016)

Appendix

Authors

Adam Thomas, Lead Analyst, TV

adam.thomas@ovum.com

Jonathan Doran, Principal Analyst, TV

jonathan.doran@ovum.com

Ismail Patel, Analyst, TV

ismail.patel@ovum.com

Tony Gunnarsson, Senior Analyst, TV

tony.gunnarsson@ovum.com

Adam Steel, Research Analyst, TV

adam.steel@ovum.com

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