The recently released report On-demand Audiovisual Markets in the European Union published by the European Audiovisual Observatory covers more than 3,000 service providers.
According to the report “the sector is growing fast and the number of on-demand audiovisual services available in Europe is rising, driven by rapid consumer adoption and made possible by technological innovations and a shift in consumption habits”.
As of February 2014, 3 088 on-demand audiovisual services were established in the EU and listed in the MAVISE database of on-demand audiovisual services (http://mavise.obs.coe.int/). The leading categories are catch-up TV services (1 104 services listed), branded channels of broadcasters on open platforms (711 services listed) and VoD film services (409 listed). The countries with the most established services are the United Kingdom (682 services established), France (434 services established) and Germany (330 services established). Also, 223 services established in the USA and targeting European countries are currently available in one or several European countries.
One of the main objectives of the report is to describe the various business models of on-demand audiovisual media services and their roll-out in the EU:
- Advertising-financed on-demand audiovisual services (catch-up TV, open platform, branded channels,…)
- Paying transactional VoD services (rental and retail)
- Subscription VoD (SVoD)
- On-demand audiovisual media services provided by public broadcasters
The most interesting, biggest, and fastest growing model is SVoD. The OTT SVoD market in Western Europe is estimated at $575 million in 2012, representing 11% of worldwide SVoD subscribers (7 million). In Eastern Europe, the OTT SVoD market is estimated at $255 million, with 7% of worldwide subscribers (4 million). The world-wide OTT SVoD market is estimated to generate $8 billion in revenue by 2017, with more than 120 million worldwide subscribers.
The rapid adoption of SVoD by consumers is based on several growth drivers:
- The proliferation of connected devices,
- The service is offered anytime, anywhere and on any device (ATAWAD),
- Exclusive licensing,
- Attractive content libraries through licensing deals with major studios and networks,
- Original programming financed by the major players (Netflix, Amazon and Hulu),
- Personalised viewing experiences for the individual subscriber.
Release windows are playing an important role for SVoD providers and determine how attractive their content library is to subscribers. France, with the longest window for movies for SVoD services (36 months), lags behind the rest of Europe in SVoD adoption. Increasingly, OTT SVoD providers are challenging established pay-TV channels and networks on their turf, as illustrated by Netflix surpassing HBO in the number of subscribers in the USA. The question for the near future will be whether “cord cutting” (abandoning traditional pay-TV for OTT SVoD) will become more widespread or whether co-existence between the two services will be established.
The report also analyses the number of VoD services available in the European Union by country of establishment. This analysis highlights the importance of cross-border and international circulation of on-demand audiovisual services. Around 60% of the VoD services available in individual EU Member States are established in one other country. This illustrates the reality of the pan-European circulation of on-demand audiovisual media services through the EU, one of the objectives of the AVMS Directive adopted in 2007.
Furthermore, it contains a sample study on the presence of 50 European films selected among award winners and blockbusters on catalogues of VOD service providers in 7 EU Member States, as well as a description of the pan-European strategies of major on-demand audiovisual services providers such as Apple’s iTunes and Microsoft’s Xbox.
Finally, smart TVs are identified as a key driver for the growth of the VOD market.