The Year in Review: Media & Entertainment
[Editor's Note: This article will appear in the 2009 Streaming Media Industry Sourcebook, along with other "year in review," how-to, and buyers' guide articles. Click here for your free subscription.
The story of the year in the European streaming media space was a simple one—significant growth in audience numbers for online video. Viewing figures for August in Germany published by comScore showed 25.9 million German internet users (73.2% of the total internet audience) viewing more than 3 billion videos online. In the U.K. in June, there was a similar picture with more than 27.4 million internet users (78% of the total internet audience) viewing 3.2 billion videos online. By July, 28% of Europeans regularly watched video online, and the total time spent viewing content online had risen by 50% since 2007.
VOD and TV Catch-Up Services
Apart from the general picture of growth, one of the most significant developments of 2008 actually had its origins in December 2007. On Christmas Day 2007, the BBC officially launched its free (for U.K. residents) iPlayer service. The iPlayer is an online TV catch-up service that allows users to view almost every program shown in the last 7 days on the BBC’s channels. The iPlayer’s fortunes during 2008 are a microcosm reflecting the problems and successes that video services were having all over Europe.
The iPlayer service has had an extremely successful first year, serving 248 million pieces of content by the end of October, in line with other European services which saw audiences for online VOD (video on demand) and TV catch-up services growing rapidly.
The prevalence of free broadband services in the U.K. and other parts of Europe has left ISPs trying to find alternative revenue streams to bolster their thin margins. Research has shown that services such as VOD help to differentiate broadband offerings, suggesting that such services actually reduce subscriber churn.
However, recent reports by Screen Digest have suggested that these services may simply be running to stand still and questioned if they would ever see a suitable return on the content investment model. For example, Belgacom, the Belgium IPTV provider, which in 2008 won exclusive rights to broadcast the Belgian First Division Jupiler Football League for the next 3 years, is still struggling to break even, despite adding a significant number of new subscribers.
IPTV
There is still plenty of growth out there on the IPTV platforms. A Gartner report suggested that Western Europe has the highest number of IPTV subscribers—8.2 million users by the end of 2008. France’s IPTV market again showed significant growth, but the picture across Europe is still patchy; Italian numbers in particular continue to be low, and seven out of 17 European countries account for 94% of IPTV usage. Central and Eastern Europe (CEE) IPTV providers are also seeing their platform grow significantly in popularity. Despite a so-far limited uptake of IPTV, total IPTV subscriber connections in the CEE will grow by more than 100% by the end of 2008, admittedly from a very low base.
The outlook for the continued popularity of these services is at least positive. ABI Research analyst Paul Lee predicted that in the next 4 years, “Western Europe will see the strongest surge in VOD users, with the largest subscriber base and a slightly higher average revenue per unit than North America, thereby making it the eventual leader in the market.”
New platforms for IPTV have also been a theme for the year with the Xbox 360 launching a movie download platform and the PS3 to follow suit in early 2009. The Xbox 360 is first out of the gate, but both systems look to suffer from a reasonably poor selection of content. However, with the New Xbox 360 Experience (a fundamental redesign of its existing user interface) looking to incorporate Netflix in the U.S., it appears that it will be only a matter of time before integration with similar European providers will become a reality. Despite this, the proposed use of the BT Vision service announced in January has yet to materialize.
Bypassing Traditional Media Platforms
Small-scale self-generation of content may be a new way forward for platform holders, as Sony announced the intention to begin the production of its own pay-per-view magazine program in HD for download through the console.
There has also been a diversification of growth in content development not simply driven by platform owners placing all their content online. Platform creators such as Brightcove have been signing deals to enable content owners to create channels based on their own properties. Brightcove has made significant inroads into mainland Europe with the opening of a German office this year and by signing deals with Gruner + Jahr AG & Co KG, Europe’s largest magazine publisher, among others. This along with some of Brightcove’s other customers, such as British Emap, Guardian News & Media, Hachette Filipacchi UK, IPC Media, and the Telegraph Media Group, show a model developing where brands themselves are becoming content generators, bypassing traditional media platforms to deliver self-developed content directly to their users to add value and to supply a new advertising revenue stream with sponsored programming and traditional preroll and postroll advertisements.
The Role of the ISP
The iPlayer is in the unique position of being a free service backed by a large publicly funded institution, but that doesn’t make it any less susceptible to controversy. A dispute in April with U.K. ISPs led to Tiscali and others publicly demanding that the BBC consider sharing bandwidth costs with them after the iPlayer’s successful launch resulted in a spike in online video traffic. This very clearly highlighted the ISPs’ different attitudes to their own IPTV offerings and those from third parties. The very public dispute has led to ill will between the two groups after the ISPs threatened to throttle bandwidth to the service and the BBC in turn threatened to blacklist the ISPs that throttle bandwidth.
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