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Netflix's Euro Welcoming Party: 3,000 OTT Video Services

11 Jul, 2014 By: Erik Gruenwedel

Netflix’s pending European “invasion” into France, Germany, Belgium, Austria, Switzerland and Luxembourg comes 70 years after the Allied D-Day invasion of Normandy, France, during World War II. While the subscription streaming pioneer might consider its expansion a form of liberation from European pay-TV, it will encounter “resistance” from more than 3,000 third-party video-on-demand services.

That’s the tally of digital services disclosed July 10 in a study released by the European Union. With more than 46 million subscribers globally (11.6 million internationally), Netflix’s brand and legacy for interrupting the TV business model are well-documented — and feared. European media companies aren’t taking any chances.

Leading the charge, according to the EU report, are TV Everywhere services (1,104 listed), branded channels of broadcasters on open platforms (711 services) and transactional VOD and electronic sellthrough movie services (409) — spearheaded by iTunes and Amazon Instant Video. The countries with the most established platforms are the United Kingdom (682 services), France (434) and Germany (330).

Also included are 223 OTT video platforms established in the United States and targeting Europe. This includes Netflix and Amazon Prime Instant Video, which the EU contends have formed a duopoly of sorts in the U.K., with a combined market penetration of 97.8%, leaving just 1.1% to BT Vision and 1.1% to the rest of the players (Sky Now, Wuaki.tv, Club SFR, FilmoTV, etc.). The report says the U.K. SVOD market revenue grew to £160 ($274 million) in 2013 largely on the backs of Netflix and Amazon Prime.

In 2012, the worldwide SVOD market accounted for $4.7 billion in revenue with 66 million subscribers (more than 50 million in the U.S., an increase of 50% compared to 2011).

The nascent SVOD market in Western Europe is estimated at $575 million, representing 11% of worldwide subs (7 million). In Eastern Europe, the SVOD market is estimated at $255 million, with 7% of worldwide subs (4 million).

The global SVOD market is projected to generate $8 billion in revenue by 2017, with more than 120 million subscribers. According to IHS, SVOD viewing represented one in every seven minutes of online long-form video viewing in Europe in 2012.

Germany has four SVOD services: Lovefilm (Amazon), Watchever (Vivendi), Maxdome (Pro7) and Videoload (Deutsche Telekom).

France has two SVOD providers: Canal Play and FilmoTV, each with 200,000 subscribers. It also has the longest delayed release window for SVOD (by law, 36 months after theatrical bow), which is why the country lags behind the rest of Europe in SVOD adoption.

France and Germany are two of the six largest broadband markets in the world and there is greater potential for online streaming to grow in Western Europe than in the rest of the world, according to Goldman Sachs.

Meanwhile, Belgium primarily has transactional VOD and electronic sellthrough platforms via pay-TV operators.

Belgium saw a 30.5% revenue increase to 71.5 million Euros from 2011 to 2012 from transactional VOD. The country reported a 700% increase in revenue to 9.8 million Euros from electronic sellthrough of movies and TV series.

“As with other Internet businesses, size matter and the first-mover advantage plays a key role in the SVOD market,” the EU report states. “Content acquisition is crucial in order to have a rich and diversified video library that appeals to customers. Pay-TV operators are still the financial powerhouses for content acquisition and rights, but new entrants of the ilk of Netflix are slowly catching up."


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