Video Content: The New El Dorado? - Competition for Content between Telecom Operators, Audiovisual Players and the Internet
The report looks at the potential success of vertical integration in the audiovisual value chain by telcos, TV broadcasters and Internet players.
It analyses the reasons for the many operations we are seeing by exploring the changes taking place in the audiovisual environment.
It provides an overview of the major acquisitions involving companies and content rights, as well as the new companies and services created by players downstream in the chain.
It then seeks to understand the role played by content in the strategy of each category of player based on concrete examples.
The report also examines the strengths and weaknesses of the three player categories involved in this race to acquire content, before exploring each one’s prospects for success and possible alternative strategies.
It analyses the reasons for the many operations we are seeing by exploring the changes taking place in the audiovisual environment.
It provides an overview of the major acquisitions involving companies and content rights, as well as the new companies and services created by players downstream in the chain.
It then seeks to understand the role played by content in the strategy of each category of player based on concrete examples.
The report also examines the strengths and weaknesses of the three player categories involved in this race to acquire content, before exploring each one’s prospects for success and possible alternative strategies.
1. EXECUTIVE SUMMARY
2. METHODOLOGY & DEFINITIONS
3. GENERAL CONTEXT
3.1. A changing TV environment
3.1.1. A saturated pay-TV market in some countries
3.1.2. Emergence of the cord-cutting phenomenon
3.1.3. Declining linear TV consumption
3.1.4. Rising multiscreen consumption, especially among younger generations
3.1.5. Rapid growth of new video consumption patterns
3.1.6. Internationalisation of video players
3.2. The value is in content
3.2.1. Spiralling premium rights costs
3.2.2. With digital, the value is moving upstream in the chain
4. THE RACE FOR OWNERSHIP OF CONTENT
4.1. Telecom and cable operators integrating upstream in the chain
4.1.1. Audiovisual group acquisitions
4.1.2. Purchase or creation of production companies
4.1.3. Purchase of sports rights for creating sports channels
4.1.4. Movie/series rights acquisitions
4.1.5. Creation of OTT-exclusive “channels”
4.1.6. Vertical integration operations by telecom and cable operators
4.2. Integration of production activities by TV channel broadcasters
4.2.1. TV production
4.2.2. OTT production
4.2.3. Vertical integration operations by TV broadcasters
4.3. Premium rights acquisition by Internet players
4.3.1. Funding of exclusive content
4.3.2. Acquisition of sports rights
4.3.3. Vertical integration operations by Internet players
4.4. Rare movements from upstream to downstream in the value chain
5. WHAT ARE THE PROSPECTS FOR SUCCESS?
5.1. The role of content in player strategies
5.1.1. Telecom/cable operators: content is not an end in itself, but a way to strengthen broadband positioning
5.1.2. Channel broadcasters: different challenges for FTA and pay-TV players
5.1.3. Internet players: positionings also differ according to type of player
5.2. The various players’ strengths and weaknesses in developing a content strategy
5.2.1. Telecom operators/cable operators
5.2.2. TV broadcasters
5.2.3. The Internet players
5.3. Telecom operators, TV broadcasters, Internet players: who can win the race for content?
5.3.1. Pipes–content convergence: an old idea
5.3.2. New conditions for implementation
5.3.3. Telecom operators: content integration strategy vs partnerships strategy?
5.3.4. TV broadcasters: production integration strategy vs horizontal concentration strategy?
5.3.5. Internet players: in-house production strategy vs open distribution?
5.3.6. What will the future hold?
2. METHODOLOGY & DEFINITIONS
3. GENERAL CONTEXT
3.1. A changing TV environment
3.1.1. A saturated pay-TV market in some countries
3.1.2. Emergence of the cord-cutting phenomenon
3.1.3. Declining linear TV consumption
3.1.4. Rising multiscreen consumption, especially among younger generations
3.1.5. Rapid growth of new video consumption patterns
3.1.6. Internationalisation of video players
3.2. The value is in content
3.2.1. Spiralling premium rights costs
3.2.2. With digital, the value is moving upstream in the chain
4. THE RACE FOR OWNERSHIP OF CONTENT
4.1. Telecom and cable operators integrating upstream in the chain
4.1.1. Audiovisual group acquisitions
4.1.2. Purchase or creation of production companies
4.1.3. Purchase of sports rights for creating sports channels
4.1.4. Movie/series rights acquisitions
4.1.5. Creation of OTT-exclusive “channels”
4.1.6. Vertical integration operations by telecom and cable operators
4.2. Integration of production activities by TV channel broadcasters
4.2.1. TV production
4.2.2. OTT production
4.2.3. Vertical integration operations by TV broadcasters
4.3. Premium rights acquisition by Internet players
4.3.1. Funding of exclusive content
4.3.2. Acquisition of sports rights
4.3.3. Vertical integration operations by Internet players
4.4. Rare movements from upstream to downstream in the value chain
5. WHAT ARE THE PROSPECTS FOR SUCCESS?
5.1. The role of content in player strategies
5.1.1. Telecom/cable operators: content is not an end in itself, but a way to strengthen broadband positioning
5.1.2. Channel broadcasters: different challenges for FTA and pay-TV players
5.1.3. Internet players: positionings also differ according to type of player
5.2. The various players’ strengths and weaknesses in developing a content strategy
5.2.1. Telecom operators/cable operators
5.2.2. TV broadcasters
5.2.3. The Internet players
5.3. Telecom operators, TV broadcasters, Internet players: who can win the race for content?
5.3.1. Pipes–content convergence: an old idea
5.3.2. New conditions for implementation
5.3.3. Telecom operators: content integration strategy vs partnerships strategy?
5.3.4. TV broadcasters: production integration strategy vs horizontal concentration strategy?
5.3.5. Internet players: in-house production strategy vs open distribution?
5.3.6. What will the future hold?
TABLES
Table 1: Audiovisual group acquisitions by telcos and cablecos
Table 2: Sports rights acquisitions by telcos and cablecos
Table 3: Integration of TV production companies by TV broadcasters
Table 4: Integration of MCNs by TV broadcasters
Table 5: OTT package prices from the major pay-TV services
Table 6: Advantages/disadvantages of the content integration strategy
Table 7: Advantages/disadvantages of the partnership strategy
Table 1: Audiovisual group acquisitions by telcos and cablecos
Table 2: Sports rights acquisitions by telcos and cablecos
Table 3: Integration of TV production companies by TV broadcasters
Table 4: Integration of MCNs by TV broadcasters
Table 5: OTT package prices from the major pay-TV services
Table 6: Advantages/disadvantages of the content integration strategy
Table 7: Advantages/disadvantages of the partnership strategy
FIGURES
Figure 1: Overview of vertical integration by the various categories of players
Figure 2: Households with a pay-TV subscription in the United States and in the five major European countries, 2008-2016
Figure 3: Pay-TV households in the United States, 2008-2016
Figure 4: Time spent watching live and time-shifted TV in the United Kingdom, France and the United States, 2011-2016
Figure 5: Breakdown of time spent watching TV by screen, 2010-2016, and average daily time spent watching TV
Figure 6: The most important electronic devices according to younger generations, United Kingdom, 2015 and 2016
Figure 7: Daily time spent watching TV content by source (live, recorded, SVOD) in North America
Figure 8: Global footprint of the OTT video services of Netflix and Amazon as of early February 2017
Figure 9: Growth in the fees received by the major sports leagues during recent renegotiations for the rights to broadcast on national markets
Figure 10: Comparison of physical and dematerialised distribution chains in the video sector
Figure 11: How value in the video market is distributed in the physical world (left) and the dematerialised world (right) in 2015
Figure 12: Go90 strategy 2017
Figure 13: Major vertical integration operations by telecom and cable operators
Figure 14: The main MCNs active in France and their major shareholders
Figure 15: Major vertical integration operations by TV broadcasters
Figure 16: Major vertical integration operations by Internet players
Figure 17: CAPEX and content costs in total revenues (domestic market) of BT, Orange and Telefónica
Figure 18: Growth forecasts for mobile data traffic by 2021 and proportion of video traffic
Figure 19: BT’s broadband and TV subscribers, consumer ARPU and content acquisition costs
Figure 20: Deutsche Telekom’s broadband and TV subscribers, and average broadband and video revenue per subscriber
Figure 21: Growth in subscribers, broadband revenue and total revenue for Telecom Italia
Figure 22: Growth in subscribers, video revenue and fixed telecom services revenue for Orange
Figure 23: Fixed ADSL and fibre ARPU and number of B2C fixed subscribers for the new SFR-Numericable group
Figure 24: Broadband subscribers, including Fusión subscribers, and revenue for Telefónica
Figure 25: The impact of content and associated costs for select pay-TV players
Figure 26: Costs of domestic TV rights to national football leagues and subscriber growth for the leading rights holders in the United Kingdom, Germany and France
Figure 27: Number of TV series produced in the United States (estimates), 2002-2016
Figure 28: Comparison of revenue and EBITDA of FTA channel broadcasters and production companies
Figure 29: Overview of TF1 Group’s strategic priorities for 2017
Figure 30: Content costs in relation to total revenue for Amazon and Netflix
Figure 31: Average cost per subscriber of season 1 of House of Cards (2013) and season 1 of The Get Down (2016)
Figure 32: Scare PewDiePie, first original series from YouTube Red
Figure 33: SWOT analysis for telecom operators
Figure 34: SWOT analysis for TV broadcasters
Figure 35: SWOT analysis for Internet players
Figure 36: Telecom operator penetration in their national TV and pay-TV markets, late 2016
Figure 1: Overview of vertical integration by the various categories of players
Figure 2: Households with a pay-TV subscription in the United States and in the five major European countries, 2008-2016
Figure 3: Pay-TV households in the United States, 2008-2016
Figure 4: Time spent watching live and time-shifted TV in the United Kingdom, France and the United States, 2011-2016
Figure 5: Breakdown of time spent watching TV by screen, 2010-2016, and average daily time spent watching TV
Figure 6: The most important electronic devices according to younger generations, United Kingdom, 2015 and 2016
Figure 7: Daily time spent watching TV content by source (live, recorded, SVOD) in North America
Figure 8: Global footprint of the OTT video services of Netflix and Amazon as of early February 2017
Figure 9: Growth in the fees received by the major sports leagues during recent renegotiations for the rights to broadcast on national markets
Figure 10: Comparison of physical and dematerialised distribution chains in the video sector
Figure 11: How value in the video market is distributed in the physical world (left) and the dematerialised world (right) in 2015
Figure 12: Go90 strategy 2017
Figure 13: Major vertical integration operations by telecom and cable operators
Figure 14: The main MCNs active in France and their major shareholders
Figure 15: Major vertical integration operations by TV broadcasters
Figure 16: Major vertical integration operations by Internet players
Figure 17: CAPEX and content costs in total revenues (domestic market) of BT, Orange and Telefónica
Figure 18: Growth forecasts for mobile data traffic by 2021 and proportion of video traffic
Figure 19: BT’s broadband and TV subscribers, consumer ARPU and content acquisition costs
Figure 20: Deutsche Telekom’s broadband and TV subscribers, and average broadband and video revenue per subscriber
Figure 21: Growth in subscribers, broadband revenue and total revenue for Telecom Italia
Figure 22: Growth in subscribers, video revenue and fixed telecom services revenue for Orange
Figure 23: Fixed ADSL and fibre ARPU and number of B2C fixed subscribers for the new SFR-Numericable group
Figure 24: Broadband subscribers, including Fusión subscribers, and revenue for Telefónica
Figure 25: The impact of content and associated costs for select pay-TV players
Figure 26: Costs of domestic TV rights to national football leagues and subscriber growth for the leading rights holders in the United Kingdom, Germany and France
Figure 27: Number of TV series produced in the United States (estimates), 2002-2016
Figure 28: Comparison of revenue and EBITDA of FTA channel broadcasters and production companies
Figure 29: Overview of TF1 Group’s strategic priorities for 2017
Figure 30: Content costs in relation to total revenue for Amazon and Netflix
Figure 31: Average cost per subscriber of season 1 of House of Cards (2013) and season 1 of The Get Down (2016)
Figure 32: Scare PewDiePie, first original series from YouTube Red
Figure 33: SWOT analysis for telecom operators
Figure 34: SWOT analysis for TV broadcasters
Figure 35: SWOT analysis for Internet players
Figure 36: Telecom operator penetration in their national TV and pay-TV markets, late 2016
