The Changing Landscape of European TV - ITU · 6/7/2019 · The Changing Landscape of European TV Tom Morrod Chief of Research, Consumer Techologies [email protected]

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The Changing Landscape of European TV

Tom Morrod

Chief of Research, Consumer Techologies

[email protected]

ITU Workshop

The Future of TV for Europe

7 June 2019

Geneva, Switzerland

mailto:[email protected]


I’d like to discuss 3 big trends… very briefly

1.The rise of online video platforms

2.Consolidation of telecoms and media

3.The economics of platform companies

2


The world 5 years ago…

3

Online video was 3% of

viewing and 3% of

entertainment spend

200

250

2005 2006 2007 2008 2009 2010 2011 2012

0

2000

Non-connectable TVs Connectable devices TV spend Other spend Online spend

Linear viewing

was growing

Connected devices were

just reaching parity with

‘dumb’ TVs


What about the world today…

4

OTT is 20% of

viewing, growing

2% per year, and

accelerating

Online is capturing all

viewing growth and

almost all subscriber and

revenue growth

Most consumer

devices are

connected and

media-capable

Linear viewing

was growing

Online and VOD was

around 3% of viewing and

3% of entertainment

spend

There were slightly

more connected

devices than ‘dumb’

TVs


Online subscription services added just under 17 million new paid accounts

in Europe in 2018

-283

41

-25

40918

1,720

161771

16,969

3,928

-2,000

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

WE CEE WE CEE WE CEE WE CEE WE CEE

Cable DTT IPTV Satellite Online

Europe: Pay TV and Online Subscriptions Net Additions in 2018 (000)

5

Next 5 years:

+11% CAGR

Online Subscription:

2018:

+32% growthNetflix & Amazon:

Responsible for 2/3 of

the growth

Source: IHS Markit


The result is Netflix is the biggest video subscription platform in Europe

0 5 10 15 20 25 30

Netflix

Sky

Liberty Global

Tricolor

Vodafone

Rostelecom

Amazon

Orange

Altice

Deutsche Telekom

Subscriptions (m)

Europe: Video subscriptions by provider and platform (2017)

Cable Satellite IPTV Online

6

Source: IHS MarkitNote: Video subscriptions and revenues for VodafoneZiggo are allocated equally to Liberty Global and Vodafone


The reaction has been a series of merger mega-deals, positioning fewer,

larger players to better compete on a regional/global scale

7

AT&TTime

Warner

VodafoneLiberty Global

Disney Fox

Comcast Sky

Marriage of distribution and content Scale: Content, production, channels

Convergence Geographic diversification


And operators have tried implementing a range of strategies to keep pace

Bundling Unbundling Mobile video

Premium content provision

Aggregating new content owners and

outlets

TV UX and multiscreen innovation

8


But this kind of misses the elephant(s) in the room… to mix clichés

9


These companies diversified to offer a whole range of consumer services

Alibaba Alphabet Amazon Apple Baidu Facebook Tencent

Retail Advertising Retail Devices Advertising AdvertisingCommunications &

Content

1999 1998 1994 1976 2000 2004 1998

Ads Various Various Amazon ads App store search ads Baidu ads Facebook ads Tencent social ads

AI / Digital Assistant Fashion AI Google Assistant Alexa Siri Raven H Messenger bots Dingdang

Cloud Alibaba Cloud Drive, Photos Amazon Drive iCloud Baidu Cloud Workplace Tencent Cloud

Commerce & Payment Tmall, Taobao, Alipay Android Pay Amazon.com Apple Pay Baidu Wallet VariousWeChat Pay, QQ

wallet, Tenpay

Communications Ding Talk Hangouts, Allo, Duo Alexa messaging iMessage, FaceTime Baidu Hi WhatsApp, Messenger WeChat, QQ

Content Youku TudouMovies & TV on Google

Play, YouTubeAmazon Prime Video

Apple Music, Apple TV,

Podcast, Airplay 2iQiyi, PPStream Watch

Tencent Video, Tencent

Sports

Devices/ Software Yun OSNexus, Chrome,

Android Fire TV, Kindle, Echo iPhone, iPad, Mac, iOS Raven H, Duer OS Oculus -

Health Ali Health Google Fit - Apple Health - Moves WeDoctor

Home TmallGenieX1 Google Home Echo, Ring HomeKit Raven H - -

Location & Transport Various Google Maps, Waze - AppleMaps, CarPlay Baidu Maps Check-In Tencent Maps, iSpace

VR & ARAR in commerce,

gamesAR Core Amazon AR View AR Kit DuSee Oculus QAR

10


But their history and core business is a long way from the video industry

11

Alibaba Alphabet Amazon Apple Baidu Facebook Tencent

Retail Advertising Retail Devices Advertising AdvertisingCommunications &

Content

1999 1998 1994 1976 2000 2004 1998

Ads

AI

Cloud

Commerce & Pay

Communications

Content

Devices/OS

Health

Home

Location & Transport

VR & AR


Asymmetric business models are critical to platform disruption

12

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

AmazonOtherAWSSubscription servicesThird-party seller servicesPhysical storesOnline stores

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Google

Other Bets Revenues

Google Other

Google Network Members

Google Properties

Retail

business

Other

Advertising

business

Other

Share of 2017 revenue (%)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Apple

iPhoneiPadMacServicesOther products

Hardware

business

Other

Source: IHS Markit, Consumer Platforms & Ecosystems Intelligence – 01/19


World: Smart speaker installed base by assistant

Alexa

Google Assistant

Siri

Cortana

Platform companies dominate new markets

USA: Online video advertising revenue

Facebook

YouTube

Legacy TV

Other

World: Smartphone installed base by OS

iOS

Google - Android

Other - Android

Others

World: Mobile App Store revenues

Apple App Store

Google Play

Other app stores

13

Source: IHS Markit, Consumer Platforms & Ecosystems Intelligence – 01/19


And it’s starting to head that way in total video advertising…

2017

Legacy TV YouTube Facebook Others

2023


2014


Share of ‘total video’ advertising over time


And in content production

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2014 2015 2016 2017 2014 2015 2016 2017 2014 2015 2016 2017 2014 2015 2016 2017 2014 2015 2016 2017 2014 2015 2016 2017 2014 2015 2016 2017 2014 2015 2016 2017

Walt Disney Co NBC Universal Sky Discovery Comms. Viacom Inc. HBO Netflix Amazon

Original & Acquired Program spend ($m)

15Note: Excludes Sport


And it’s worth considering what we want this pie to look like in another 5 years

Netflix44%

Amazon18%

HBO4%

Sky3%

Turkcell2%

Türk Telekom2%

Discovery2%

MTG2%

Sky1%

Others22%

16

Europe: Online video subscriptions by provider and type (2018)

Source: IHS Markit


What are the key takeaways from this?

• The TV industry isn’t driven by traditional economics anymore

• There is a more fundamental and philosophical discussion about public access,

local culture and privacy

• National broadcasters and broadcast itself actually answer a lot of those concerns

• And perhaps what is missing is shared platforms and technology strategy

• Smaller broadcast channels should move to online distribution

• Major channels at higher quality across more broadcast spectrum

17

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18

Thank youTom Morrod

[email protected]

@tommorrod

mailto:[email protected]

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The Changing Landscape of European TV - ITU · 6/7/2019 · The Changing Landscape of European TV Tom Morrod Chief of Research, Consumer Techologies [email protected]