Using multi-platform services to drive
profitability: Moving from an audience to a
customer relationship
December 2012
Adrian Drury, Lead Analyst, Media & Broadcast
Ovum
[email protected]
+44 7860 925724
1
© Copyright Ovum. All rights reserved. Ovum is part of the Datamonitor Group.
What do multi-platform services mean for your
business today?
Cost
1. Increased rights
acquisition & asset prep
costs
2. Technology platform cost
3. Increased head count cost
for MPD programming
operations
Benefit?
1.Limited the threat of churn,
unbundling or diminished
ecosystem value? Credible.
2.tVOD or aVOD revenues?
Negligable.
1.Option value on future
markets5
4. Network cost
2
© Copyright Ovum. All rights reserved. Ovum is part of the Datamonitor Group.
Global deployment of multi-platform AVOD/ SVOD / TVOD OTT services
driven by competitive supply side forces
3
© Copyright Ovum. All rights reserved. Ovum is part of the Datamonitor Group.
Headlines from Ovum business model review of top 45 media
markets worldwide
453 aVOD/sVOD/tVOD multi-screen services identified in top 45 media markets
100% of markets have a pay-TV operator with a developed multi-screen service
89% of markets have local player with a OTT strategy
63% of markets have a pay-TV provider with an untethered OTT strategy
48% of markets have a commercial broadcaster adding tVOD / sVOD to its catch-up platform
44% of markets have a party acting as a VOD managed service provider (ie. DLA, Intigral, ODG,
Acetrax)
Ovum estimate 540,000 total hours of programming available at q2 2012 from these services [total
est. rights cost = $3.6BN]
Countries in scope: Poland, India, South Africa, Colombia, Hungary, Slovakia, Chile, Russia, Indonesia, Portugal, Argentina, Taiwan, Brazil, Italy, Israel,
USA, Norway, Ireland, Sweden, Canada, Czech Republic, Saudi Arabia, Turkey, Mexico, China, UAE, UK, Finland, Hong Kong, New Zealand, Belgium,
Austria, Denmark, Netherlands, Spain, Germany, Japan, Greece, Australia, Switzerland, France, South Korea
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© Copyright Ovum. All rights reserved. Ovum is part of the Datamonitor Group.
How many of these
services are profitable
as a standalone
operations today?
Our max estimate = 5%
(bull case)
5
© Copyright Ovum. All rights reserved. Ovum is part of the Datamonitor Group.
3% of average weekly viewing time is distributed via the web in q1 2012. 44% believe
that number rises above 20% by 2017, equivalent to 48 minutes per day. 27.5%
believe there share will be over 30%, or 72 minutes per day. This is an industry in
transition. Be ready.
“What share of total television viewing, in terms of share of total
viewing time, will be delivered via the web in 2017?”
% of broadcast & production
30.0%
27.5%
27.5%
25.0%
20.0%
17.0%
16.5%
15.0%
11.5%
10.0%
5.0%
0.0%
1 = 1 to 5%
2 = 6 to 10%
3 = 11 to 20%
4 = 21 to 30%
5 = Greater than 30%
Source: Ovum Entertainment Service Provider Survey: q3 2012
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© Copyright Ovum. All rights reserved. Ovum is a subsidiary of Informa plc.
The time to find a
sustainable business
model for MPD is now
or we risk exchanging
linear $s for ondemand ¢s
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© Copyright Ovum. All rights reserved. Ovum is a subsidiary of Informa plc.
How to increase profitability across your business with multiplatform services
Differentiated Customer Experience – use the insight you get about your customers to limit churn / increase
ARPU / customer lifetime value
Content is a Marketing Tool – treat as such and use to upsell additional services / add value to the bundle
through new customer touch points
Target high value customer segments turned off by traditional linear services but who still want access to
premium content, eg. youth sports audience
Exploit the near term web video advertising CPM rate
Charge for quality of experience - earn revenue from your OTT rivals through retail CDN strategy
Optimize against your cost line : asset prep + network + platform that scales + integrated linear & on-demand
operations + opt out of the catalogue arms race
8
© Copyright Ovum. All rights reserved. Ovum is a subsidiary of Informa plc.
$14.00
25,000,000
$12.00
20,000,000
$10.00
$8.00
15,000,000
$6.00
10,000,000
$4.00
5,000,000
$2.00
$0.00
US subscribers (End of Period)
Cost / Revenue per US Netflix sub PCM ($)
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Netflix : defining a technology and network cost model for the
industry, but trapped as an a la carte complement 30,000,000
$16.00
0
1q 09
2q 09
3q 09
4q 09
1q 10
2q 10
3q 10
4q 10
1q 11
2q 11
3q 11e
4q 11e
ARPU / sub
Postage / sub (US only)
Digital delivery (CDN) / sub
Streaming content expense / sub
DVD content expense / sub
Fufilment / sub
Tech & development / sub
Total paid subs (End of period)
CDN (variable) and technology costs (fixed) sum to <8% of ARPU.
Rights cost per subscriber is the in-built risk
© Copyright Ovum. All rights reserved. Ovum is a subsidiary of Informa plc.
Q+A
Adrian Drury, Lead Analyst, Media & Broadcast
Ovum
[email protected]
+44 7860 925724
10
© Copyright Ovum. All rights reserved. Ovum is a subsidiary of Informa plc.