Digital TV Research came up with a new sum and predicted that by 2024 1 billion people will use SVOD.
You may wonder at the number in this heading whether it is about John de Mol's latest earn-out or about the shrinking budget of the Dutch public broadcaster. The interesting thing is that it is not about money but about the number of SVOD subscribers worldwide. Before the summer recess, a large number of research agencies will provide the latest data on the growth of the global audiovisual market, including perspectives for the next 5 years. Digital TV Research came up with a new sum and predicted that by 2024 1 billion people will use SVOD. What an incredible growth market!
The researchers made predictions about the number of users per VOD provider and came to the conclusion that Netflix would reach a market share of just under 25%. Amazon would remain a solid second at around 15%, while Disney would grow from 0 to 75 million users and eventually achieve a global market share of 10%. Those figures are backed up by the excellent London-based research firm Ampère, which reported this week that 22% of Americans will subscribe to Disney +. If we subtract China (which is more of a "local" market served by "local" players, who "serve" only "300 million people), there remains a market for over 200 million" other "suppliers. There are of course Americans such as Comcast / Universal and AT & T / Warner with mixed AVOD and SVOD models, but also many local players who serve their own market.
It has been argued so often here: for broadcasters, who generally operate in one country, it is very important to build a significant VOD business. AVOD is usually available in-house, but because it is so important to build a direct relationship with the consumer / viewer, an SVOD operation becomes essential. RTL Nederland realized this early on, the acquisition of Videoland is still etched in our memory and it seems to be heading in the right direction with this proposition. Other good examples are Nine in Australia, which has a very successful service in house with Stan. But otherwise developments are going too slowly.
This is all the more convincing after the analyzes published by PwC in its annual media outlook. The television advertising market is going to crumble and may even shrink worldwide in the coming years. Broadcasters can therefore only achieve growth from new business ventures and VOD is of course the most attractive opportunity. Developing multiple propositions per country will be difficult, because consumers are only willing to take out a few subscriptions and not an infinitely long series. Collaboration is essential and that seems to be difficult to achieve: Britbox of ITV and BBC is struggling to get off the ground, the frustrations among the participants in the French Salto are increasing and NL Ziet in the Netherlands also seems more and more like a stillborn child. .
Pro Sieben Sat1 and Discovery do put in the pass and have already brought ZDF on board. The new Joyn must become the German alternative to Netflix and Amazon. Because there is still plenty of growth in this market segment, this new service will soon gain momentum, while RTL Germany chooses a completely different course and builds its own SVOD service. In short, it is a true spectacle in this large growth market. Different choices are made in each territory and new players emerge. The FANGAs will play their own worldwide game here, but there will be plenty of room left for local players. They have to act in the short term to attract some of those more than 200 million potential users.
A new year is upon us. What are the major trends for the next 12 months, and what can we expect, not only in the Netherlands but also internationally? For those wanting to know what lies ahead in the longer term, it is best to turn to Evan Shapiro, the leading futurist in the American TMT sector. According to Shapiro, the valuations of Big Tech have once again risen to such incredible heights (for example, Apple and Microsoft are now worth over 3 trillion (!) each), that it's only a matter of time before Big Tech will truly infiltrate and dominate the media world, in pursuit of advertising revenue. This invasion is expected to unfold through sports rights. While it hasn't reached the Netherlands yet, what happens in the US will undoubtedly make its way to us. The most captivating sports rights deal for us this year revolves around Formula 1, and it seems logical that this will be a battle between Ziggo and RTL. Amazon Prime will not join this battle for now.
Prediction 2: After a year of rest, media companies are actively pursuing economies of scale again. The initial talks between Warner Bros Discovery and Paramount have already taken place. It will be a busy year for dealmakers. As mentioned, Big Tech casts its shadow ahead, leading traditional media concerns (which are comparatively negligible in size) to strengthen their defenses. Big Tech might outpace them: the acquisition of a 'cheaply valued' company like Paramount is small matter for the new rulers. Many significant deals are on the horizon this year, surpassing the magnitude of the last major deal - the merger between Warner Bros and Discovery.
Prediction 3: The use of data will play an even larger role in the media world. The measurement of viewership and listenership figures has seen a revamp this year, and we can expect many more changes. The direction it will take is uncertain; currently, media companies benefit from various less objective measurement systems, but in the long run, this will change due to the arrival of Big Tech. In this domain, a real revolution is on the horizon.
Prediction 4: Public broadcasters will retain their value in Europe. Although we can anticipate the new coalition in the Netherlands will reduce the funding for the public broadcasting system, public broadcasters in our neighboring countries (and here as well) will survive. The required changes are enormous; just take a glance at the funding system of the BBC, which is under intense pressure. Nevertheless, the public broadcaster is definitely not heading for the slaughterhouse, contrary to the notion of many that its days are numbered.
The final prediction concerns the world of sports rights. In the past year, Serie A in Italy struggled to sell its rights. My prediction is that, also due to Big Tech's interest, sports rights prices will soar again. Excellent news for sports rights holders!
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2023 was again a tumultuous year in both domestic and international audiovisual markets. A lot happened, yet much remained the same. In January, I attempted to predict the major developments. Now, eleven months later, it's time to review and assess: where were my predictions wrong, and where did they hit the mark?
A bold prediction was that streaming would surpass linear television in terms of market share within this year. It's undeniable that the trend has continued, especially due to the significant growth of AVOD. However, the magical 50% threshold has yet to be reached, not least because public and commercial broadcasters (including the constantly-evolving pay-tv operators) fiercely defend their position in the battle for viewers. A prime example is ESPN retaining the Dutch Eredivisie rights. The transition from linear to streaming is thus slower than I anticipated.
I also foresaw a correction in the production market, expecting streamers to limit their content investments and broadcasters to intervene in their budgets due to the declining advertising market. However, I underestimated the impact: my projection was a 10% correction, but investments decreased much more rapidly over the past eighteen months. As a result, many freelancers in major European countries suddenly find themselves without work, whereas just over a year ago, the market was completely overheated. That’s how swiftly things can change.
Most of the other predictions were reasonably accurate. The projection that AVOD would take off has been proven to be true. Netflix regained its subscriber growth trajectory by fully embracing AVOD. Clearly, the measures taken to limit the illegal sharing of subscriptions played a role, but the availability of a cheaper subscription proved to be decisive. Disney also shifted towards AVOD and achieved success in doing so. Local streaming providers are moving into this same direction, resulting in a sensible mix of SVOD and AVOD. This will accelerate the development of streaming, potentially marking 2024 as the moment streaming surpasses linear TV in terms of market share.
Another prediction was that broadcasters within the streaming domain would concentrate more on their own brands, leading to the demise of joint national platforms. In the UK, ITV launched the new platform ITVX, and competing organizations also increasingly focused on their own brands. Britbox is becoming more of an American platform for British television but hardly plays a significant role in the UK anymore. The impact was even more pronounced in France, with the joint platform Salto being shut down. If NLZIET hadn't clearly positioned itself as a 'cable disruptor' in the Netherlands, it would likely have faced a similar fate.
I also predicted that the consolidation of media companies would be halted. Indeed, major deals didn't occur, and mergers between broadcasters (TF1 and M6 in France and RTL and Talpa in the Netherlands) were prevented by the regulating authorities. These regulators shouldn’t take much pride in this: the reasoning used by the ACM in the Netherlands could also have been written down within six weeks. This made 2023 a media year for many to nót take pride in.