VOD: Investing in the Future By: Trey Dodson!

April 6th, 2015

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VOD and “The Hundredth Monkey Theory”

In 1952, on the island of Koshima, scientists were providing monkeys with sweet potatoes dropped in the sand. The monkeys liked the taste of the raw sweet potatoes, but they found the dirt unpleasant. One of the zoologist taught an infant monkey that she could solve the problem by washing the potatoes in a nearby stream. The infant taught this trick to her mother, and her playmates also learned this new way and they taught their mothers too. This cultural innovation was gradually picked up by various monkeys before the eyes of the scientists. Between 1952 and 1958 several monkeys on the island learned to wash the sandy sweet potatoes to make them more palatable. Only the adults who imitated their children learned this social improvement. Six years later, a certain number of Koshima monkeys were washing sweet potatoes. This number was somewhere around 99. On that morning, “the hundredth monkey” learned to wash potatoes. Suddenly, that evening almost everyone in the tribe was washing sweet potatoes before eating them. The added energy of this hundredth monkey somehow created an ideological breakthrough. The real takeaway is the surprising phenomenon observed by these scientists. The habit of washing sweet potatoes jumped over the sea to colonies of monkeys on other islands and the mainland troop of monkeys at Takasakiyama. Thus, when a certain critical number achieves an awareness, this new awareness may be communicated from mind to mind. Although the exact number may vary, this Hundredth Monkey Phenomenon means that when only a limited number of people know of a new way, it may remain the conscious property of these people. But there is a point at which if only one more person tunes-in to a new awareness, a field is strengthened so that this awareness is picked up by almost everyone. Video on Demand is a relatively new concept. A few companies have adjusted their strategies to combat this recent trend, but most entertainment companies around the globe are still trying to figure out how to “remove the dirt from their sweet potatoes”. It is impossible for MediaXchange to cater its services to all of the entertainment companies that need help in this realm. Therefore, MediaXchange’s role moving forward is to be the zoologist who teaches a very small segment how to overcome an obstacle (Video on Demand in this case). From there, MediaXchange can watch as the awareness it instills in this particular segment catches traction across the global Video on Demand market.

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Opportunity  Analysis For the first time in history, the US box office came in second place in revenue in an industry that it has dominated since day one. Audiences across the globe are spending sixty hours viewing content across multiple devices every week and this number is increasing by the day. The VOD market is expected to grow from $25.33 billion to $54 billion by 2019. Subscription Video on Demand (SVOD) saw an increase of 25% in 2014, prompting action from the likes of Apple, Google, Youtube, Vodaphone, HBO, Viacom, CBS and several other major players within the entertainment industry. With all of the nuance, uncertainty, and sheer unpredictability surrounding VOD, there comes a unique opportunity for MediaXchange to fundamentally differentiate itself within this realm of entertainment consulting. Given the research and expertise outlined in this business proposal, MediaXchange can continue to effectively inform, enlighten, and connect companies around the globe.

Video on Demand isn’t really getting a lot of attention right now. It’s like a hot air balloon in the horizon—it is very big and rising fast but no one notices it because its not in their immediate perspective/ viewpoints. MediaXchange will shift company perspective to see the magnitude of Video on Demand as an opportunity.

This action plan is split into three different stages: Educate, Eliminate, and Embed. This process is meant to provide a thorough approach to capitalizing on the VOD shift. In the

education phase, research included in this business proposal will serve as the foundation. It will be circulated around the office as employees utilize my research to understand basic terminology, history, current trends, and the current impact of VoD on the entertainment industry. After reading, analyzing, and discussing the research I have garnered, Katrina and her office will then attend conferences I have identified to further their understanding and glean contact information from key people in the industry. The conferences are in place to make connections with future experts who will speak at panels, workshops, and labs offered by MediaXchange. But the underlying task will be to take notes, recordings, and other means of data collection to make sure the office becomes experts on the topic.

After the education phase is underway, the office will then shift to the Eliminate phase. In this phase, employees will use the spreadsheet I have created to distill the contacts into actual obtained experts. This spreadsheet will utilize the “PICK” acronym to invoke speed and efficiency in obtaining the experts. This format will reduce the time it takes to turn gathered contacts into confirmed speakers. The education and elimination phase will combine to form the third phase, Embed. “Embed”will simply involve going to market with the newly acquired expertise and contacts obtained through the previous two phases. Embed will see the full diversification of services to include expertise on Video on Demand as an added component. The official launch of this new service will take place in 2016 when MediaXchange has a firmer grasp of VOD and VOD has had more of opportunity to shake up the industry even further.

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Introduction The internet has fundamentally altered the broadcast industry as we once knew it. Viewers are no longer shackled to pre-determined schedules or content provided by a handful of terrestrial broadcasters and instead now have access to a wide range of VOD services which are simply a click, swipe or tap away. This isn’t a passing fad – VOD market is expected to grow from $25.33 billion to $54 billion by 2019.

“The television business has changed from provider-driven to consumer-driven” says Marie-José Montpetit, a lecturer at MIT in Comparative Media Studies. Emerging OTT services such as Netflix and Amazon Prime Instant Video pose a serious threat to traditional broadcasters by offering huge libraries for a relatively low cost and award-winning original content that cannot be found elsewhere. These services give customer’s choice in the entertainment they consume and have forced existing market players, who are vying to maintain as much of their customer’s viewing time as possible, to upgrade their own products. According to a study conducted by Digital TV Research almost half of the world’s TV homes will be watching over-the-top “TV” in the next five years, around 706.5 million.

The devices we use to access content has also drastically changed. Where in the past viewers were tied to watching content via one main household television, the proliferation of mobile devices such as smartphones and tablets have enabled programming to be consumed whilst outside the home. This in turn is helping to contribute to the rise in online video viewing; it is expected that within the next five years video will account for 55% of all global mobile data traffic.

These transformations are largely being led by a younger, more tech-savvy generation who have grown up in a world where access to the internet is as common an activity as reading a book. Ofcom, reports that among 16-24 year olds linear television makes up only around 50% of viewing time with the rest being taken up by VOD services. This number can only be expected to grow and, as television moves from a linear to an on-demand experience, broadcasters are must consider how they will compete in an increasingly saturated market.

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What Exactly is VOD? Video on Demand (VoD) is a system in which viewers choose their own filmed entertainment, by means of a PC, an interactive TV system, or other digital platforms such as a phone, tablet, or gaming console. VoD can be used for entertainment (ordering movies transmitted digitally), education (viewing training videos), and videoconferencing (enhancing presentations with video clips). Although VoD is being used somewhat in all these areas, it is not yet widely implemented. VoD's biggest obstacle is the lack of a network infrastructure that can handle the large amounts of data required by video.

Given the success of this recent trend, television networks are placing more content on video on demand platforms. The shows on VOD either have the same commercials that are there in the broadcasted version throughout or at slightly fewer spots. The industries are offered a way to put larger percentage of content on-demand, with targeted advertising and lower ad load. Thus, the main driver for this market is convenience such as one account registration, one subscription, and one user interface.

The technology in the video on demand market is designed in such a manner that it meets the needs of hotels, hospitals, residential areas, aviation sector and also cruise ships. A large number of enterprise applications such as video libraries, employee training and in store digital signage are served to these sectors. In most countries, internet video on demand is used by larger number of VOD service providers. The main reason for this is that the market entrance on the internet is much easier than any other platform.

History

From September 1994, a VOD service formed a major part of the Cambridge Digital Interactive Television Trial in England. This provided video and data to 250 homes and a number of schools connected to the Cambridge Cable network (later part of NTL, now Virgin Media). The MPEG-1 encoded video was streamed over an ATM network from an ICL media server to set top boxes designed by Acorn Online Media. The trial commenced at a speed of 2 Mbit/s to the home, subsequently increased to 25 Mbit/s. The content was provided by the BBC and Anglia Television. Although a technical success, difficulty in sourcing content was a major issue, and the project closed in 1996.

In 1998, Kingston Communications became the first UK company to launch a fully commercial VOD service and the first to integrate broadcast TV and Internet access through a single set-top box using IP delivery over ADSL. By 2001, Kingston Interactive TV had attracted 15,000 subscribers. After a number of trials, HomeChoice followed in 1999, but were restricted to

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In a Nutshell:!❖ Video on Demand (VOD) has become the

catch-all term for watching movies, television programs and other digital content online – via the internet – an increasingly available alternative to DVDs in allowing the viewer to watch what they want, when they want. Online viewing can be via a temporary or permanent download or streamed. #

London. After attracting 40,000 customers, they were bought by Tiscali in 2006 who were in turn bought by Talk Talk in 2009. Cable TV providers Telewest and NTL (now Virgin Media) launched their VOD services in the United Kingdom in 2005, competing with the leading traditional pay TV distributor BSkyB. BSkyB responded by launching Sky by broadband, later renamed Sky Anytime on PC. The service went live on 2 January 2006. Sky Anytime on PC uses a legal peer-to-peer approach, based on Kontiki technology, to provide very high capacity multi-point downloads of the video content. Instead of the video content all being downloaded from Sky's servers, the content comes from multiple users of the system who have already downloaded the same content.

Other UK TV broadcasters have implemented their own versions of the same technology, such as the BBC's iPlayer, which launched on 25 December 2007, and Channel 4's 4oD (4 On Demand) which launched in late 2006. Another example of online video publishers using legal peer-to-peer technology is based on Giraffic technology which was launched in early 2011 with large Online Video-on-Demand publishers such as US based VEOH and UK based Craze's OnlineMoviesBox movie rental service. The BBC, ITV and Channel 4 planned to launch a joint platform provisionally called Kangaroo in 2008. This was abandoned in 2009 following complaints investigated by the Competition Commission. That same year, the assets of the defunct Kangaroo project were bought by Arqiva, who used the technology behind Kangaroo to launch the SeeSaw service in February 2010. A year later, however, See Saw was shut down from lack of funding.

VOD services are now available in all parts of the United States, which has the highest global take-up rate of VOD. In 2010, 80% of American Internet users had watched video online, and 42% of mobile users who downloaded video preferred apps to a normal browser. Streaming VOD systems are available on desktop and mobile platforms from cable providers (in tandem with cable modem technology) who use the large downstream bandwidth present on cable systems to deliver movies and television shows to end users, who can typically pause, fast-forward, and rewind VOD movies due to the low latency and random-access nature of cable technology. The large distribution of a single signal makes streaming VOD impractical for most satellite TV systems. Both EchoStar/Dish Network and DirecTV offer video on demand programming to PVR-owning subscribers of their satellite TV service. Once the programs have been downloaded onto a user's PVR, he or she can watch, play, pause, and seek at their convenience. VOD is also quite common in more expensive hotels. VOD systems that store and provide a user interface for content downloaded directly from the Internet are widely available.

At the January 2010 Consumer Electronic Show in Las Vegas, Sezmi CEO Buno Pati and president Phil Wiser showed a set-top box with a one-terabyte hard drive which could be used for video on demand services previously offered through cable TV or broadband. A movie, for

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example, could be sent out once using a broadcast signal, rather than numerous times over cable or fiber-optic lines, and this would not involve the expense of adding many miles of lines. Sezmi planned to lease broadcast spectrum to offer a subscription service which National Association of Broadcasters president Gordon H. Smith said would provide a superior picture to that of cable or satellite, at a lower cost.

Developing VOD required extensive negotiations to identify a financial model that would serve both content creators and cable providers while providing desirable content for viewers. Key factors identified for determining the economic viability of the VOD model included VOD movie buy rates, Hollywood and cable operator revenue splits.

Cable providers offered VOD as part of digital subscription packages, which by 2005, primarily allowed cable subscribers to only access an on-demand version of content that was already provided in linear distribution. Included in these packages were "extras" and "bonus footage" rather than full episodes of television shows. (Wikipedia)

Video on Demand Delineations OTT (Over the Top Technology) and IPTV (Internet Protocol Television) are two growing technology mediums in the media distribution industry that are in place in the market. Both are systems through which television services are delivered using the Internet, instead of the traditional terrestrial, satellite signal and cable television formats. However there are several differences between the two, mainly that IPTV is delivered over a service provider’s own infrastructure, while OTT comes over the public Internet. This next section will outline what exactly both of these Video on Demand platforms are #OTT

Over-the-top - (OTT, Over-the-top Video, Over-the-Internet Video) - Over-the-top is a general term for service that you utilize over a network that is not offered by that network  operator. It's often referred to as "over-the-top" because these services ride on top of the service you already get and don't require any business or technology affiliations with your network   operator. Sprint is an "over-the-top long distance service as they primarily offer long distance over other phone company's phone lines. Often there are similarities to the service your network operator offers and the over-the-top provider offers.

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#Over-the-top services play a significant role in the proliferation of Internet television. OTT devices piggy back on an existing wireless network, pull content from the Internet and deliver it to the TV set. Typically these devices need no additional wires, hardware or advanced knowledge on how to operate. Content suited for TV can be delivered via the Internet. These OTT applications include Facebook and YouTube. Also see Internet-­‐connected  TVs.

Free-to-view models:

Ad-supported services (AVOD). Ad-supported services carry advertising and are free to access. Viewers are allowed to watch content for free, however they must watch advertisements at various points throughout the film. A portion of the ad revenue is then returned to the content provider.

o Examples: Youtube, Hulu, #Paid models:

Subscription Video on Demand (SVoD) refers to a service that gives users unlimited access to a wide range of programs for a monthly flat rate. The users have full control over the subscription, and can decide when to start the program. They can also pause, fast forward, rewind and stop the show as preferred. It is pay TV programming, and includes TV series and block-buster movies, but with no programming schedule. Top-quality content is available anytime, on demand, directly on the user's TV set. Content is also frequently updated. This allows for a digital access of the content in which consumers are charged monthly fees in return for accessing the platforms full library

o Examples: Netflix, Lovefilm

Transactional Video on Demand (TVOD) also known as Pay Per View VOD, is the opposite of Subscription Video on Demand (SVOD). With Transactional VOD the customer pays for each individual video on demand program. Transactional video-on-demand incorporates both online rental, whereby the consumer pays for access to content for a limited period like a rental generally 48 hours for a new-release film (Foxtel On Demand ) and download-to-own (iTunes).

o Electronic Sell Through (EST) (sometimes known as “Download to Own” or DTO) is the digital sale of the film for unlimited viewing accessed on demand via the Internet, mobile and cable in perpetuity for unlimited viewing in exchange for a transactional fee. It can be described as an extension of the home video market EST businesses offering these services, such as iTunes and Google Play, offer content either to rent and/or to buy, depending on the rights deal.

o Download to Rent (DTR) is the digital rental of a program that can be accessed via the Internet, mobile and cable on demand for a limited period of time in exchange for a transactional fee #

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#Trends Amongst Different OTT Models

The popularity of Netflix has anchored much of the video on demand discussion around subscription-based VoD platforms. Many companies have sought to emulate Netflix's model by using a robust content delivery schedule to attract a profitable base of subscribers. However, consumers have been, on average, ambivalent toward the prospect of signing up for other VoD subscriptions. VoD customers are so selective that competitor Redbox Instant floundered and failed in less than a year. Amazon has had great success entering the VoD game, but not by completely emulating Netflix's strategies. The rise of Amazon's VoD service hints at the possibility of a healthy market for transactional content to coexist with monthly subscriptions. #A short-term turnaround has occurred though. Transactional video on demand has made considerable progress in less than two years. Survey data collected by Digitalsmiths reflects that consumers in the third quarter of 2013 largely ignored transactional VoD services, according to Home Media Magazine. Only 27 percent of participants confirmed purchasing one or more movie via VoD per month. This number is much different than the VoD adoption rate reported by Digital TV Europe in October of 2014. A survey performed by Parks Associates shows that nearly 40 percent of American consumers are now taking advantage of transactional services to purchase content a la carte.

#It's likely not a coincidence that increased interest in transactional VoD purchases coincides with the rollout of Amazon Video Prime. The platform functions both as a subscription and as a transactional VoD service, and this convenience has encouraged customers to make a la carte purchases, notes Rapid TV News. Transactional media also provides users with the ability to download the latest releases as soon as they become available in digital form. One major weakness of Netflix is the site's inability to stream current or recent seasons of hit television

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programs. Consumers, especially cable cutters, in search for something else to watch are now able to expand their content library with a few clicks and a credit card number. The ostensible competition between Amazon and Netflix for VoD customers belies the opportunity for transactional and subscription services to work in tandem. After all, the Parks Associates research notes that nearly a third of customers with VoD subscriptions also spend money on transactional content each month as well, according to Digital TV Europe. This purchasing behavior beyond the subscription is driven by content availability, and this trend may be the key to preventing the two services from cannibalizing one another.

The failure of Redbox Instant shows that subscription VoD platforms are under heavy pressure to constantly update the service with new and popular content. The market for a la carte VoD relieves the pressure on subscription services to target nearly every costly licensing agreement on the table. At the same time, the popularity of Netflix helps to sustain the video on demand platform so that it remains viable for companies like Amazon to continue producing a la carte content.

IPTV

Internet Protocol television (IPTV) is a system through which television services are delivered using the Internet protocol suite over a packet-switched network such as a LAN or the Internet, instead of being delivered through traditional terrestrial, satellite signal, and cable television formats. Unlike downloaded media, IPTV offers the ability to stream the media in smaller batches, directly from the source. As a result, a client media player can begin playing the data (such as a movie) before the entire file has been transmitted. This is known as streaming media.

IPTV services may be classified into three main groups:Live television, with or without interactivity related to the current TV show; Time-shifted television: catch-up TV (replays a TV show that was broadcast hours or days ago), start-over TV (replays the current TV show from its beginning). IPTV is distinguished from Internet television by its ongoing standardization process (e.g., European Telecommunications Standards Institute) and preferential deployment scenarios in subscriber-based telecommunications networks with high-speed access channels into end-user premises via set-top boxes or other customer-premises equipment.

IPTV Formats:

Catch-up television The content on the free-to-air catch-up television services mainly comprises recently broadcast new and repeat programming. Recently broadcast content is available to view for between one and four weeks, while some content from each station’s back catalogue is available indefinitely.

o Examples: PLUS 7, such as ABC iview, sBs on Demand, PLUs 7

On-demand: In comparison to catch-up, the number of video-on-demand services is much fewer, with the standout being the BigPond Movies portal. At present the BigPond service is available on the web, the Telstra T-Box and through a select number of LG devices, but Telstra

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has plans to expand this in the future. On-demand services usually attract a fee, but the upside is that content is available for a much longer period than on catch-up.

○ Examples: BigPond Movies, Sony PlayStation Network, AT&T U-verse, Verizon

Streaming: This category is rather broad but can be loosely used to describe the rest of internet-based content. It's video that is kept on the remote computer and isn't downloaded to your TV or computer. It may include freely available content on traditional video sites like YouTube or contain "streaming" channels from a subscription service like FetchTV..

○ Examples: YouTube (FetchTV), VidZone (PS3)

Comparison of OTT and IPTV

The main difference between OTT and IPTV is that though both use internets, OTT streaming is delivered through open unmanaged internet, while IPTV use a dedicated, managed network. OTT has been gaining widespread popularity over the past two years with relatively low cost service providers like Netflix, Hulu, myTV and many more, and provides more freedom, convenience and empowerment to users which gives a greater role for content providers to have a direct relationship with viewers.

Although IPTV is currently more widespread than OTT, tech analysts speculate OTT to take over IPTV in a few years time. This has already happened in the UK, however it is not likely in France where IPTV is very popular and subscribers account for around 25% of the population (10.25 million people). However, differences between the two are said to eventually fade in a few years as OTT's development will eventually be replaced by a high-quality public service, rather than the 'walled garden' it is in now, supported by "successful low-subscription operators such as Netflix or free content services, such as BBC iPlayer in the UK".

Studies show that in Western Europe, the number of households "cutting the cord" to use IPTV will increase from 9.2 million to 11.33 million (8.9% growth) between 2013 and 2018, while OTT will just account for 5.6 million pay-TV services. Some companies such as Informa Telecoms and Media claimed that by 2015 the number of people watching online videos through devices such as TVs, game stations and set-top boxes will be more than double the number of IPTV subscribers. Based on their forecast of the UK market, IPTV is said to be reduced to being used by 3.6 million as, OTT will rise to nearly $3 billion in 2014.

The Broadband World Forum based their research worldwide. In Europe, France and Belgium already have maturing IPTV territories. Asia improved at 50% growth rate in 2011, and in the Middle East and Africa there was a 63.5% percentage growth. SNL Kagan estimated that between 2010 and 2013, there will be a jump from 46.2 million to almost 60 million people who will be using IPTV worldwide.

Below is a chart that outline the differences between these two formats:

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Comparison Category IPTV OTT

Content Delivery Uses open internet, un-managed network. Open ecosystem

Uses dedicated, managed network. Walled garden ecosystem

Network Type Delivered from content provider / aggregator to the viewer using open network. Usage of CDN

Closed, proprietary network, accessed via a specific internet service provider

Network Relationship Without the need for intervening carriage negotiations, or infrastructure investments

Services are delivered on optimized and custom high bandwidth network

Quality of Service (QOS) Not guaranteed, works under best effort conditions

High quality, reliable network with control over quality of services

Service Examples Popular Video on Demand services like YouTube, Netflix, Amazon LoveFilm, Hulu, Sky Go, BBC iPlayer etc.

IPTV services like U-Verse (AT&T), Prism TV (CenturyLink)

Delivery Protocol Delivered over HTTP / TCP, a connected transport protocol. Movement towards adaptive streaming technologies HLS (Apple), Smooth Streaming (MS) and HDS (Adobe)

IPTV uses Transport Stream (TS) transmission technology. Uses RTP (Real time protocol) over UDP, a connectionless protocol

Content Catalog Widely used for freemium and economical subscription VOD

Used primarily for premium VOD and real time content delivery like broadcast TV

Content Type Typically not premium in nature due to security, absence of DRM

Premium content

Routing Topology Unicast (HTTP), Simulated Multicast (UDP/TCP)

Multicast. Initial unicast burst during channel change leading to Multicast join

Service Category Complementary Service Main service, similar to Satellite/Cable TV services

Major Platform Players OVP (Online Video Platforms) like Kaltura, Brightcove, CDN Players like Akamai, L3, Limelight, Cloud Service Providers like Amazon

TSP ( Telecom Service Providers) and IPTV platform vendors - Microsoft Mediaroom ( now Ericsson) , ALU, Cisco

Key Challenges Low quality of service, absence of live broadcast, non premium content, unicast delivery model

Expensive, Heavy investment in Bandwidth and infrastructure

Key Benefits Low cost, flexible model, Easy to manage and operate

High quality of service and quality of experience. Monitoring and control, interactive service

Content Delivery Uses open internet, un-managed network. Open ecosystem

Uses dedicated, managed network. Walled garden ecosystem

Network Type Delivered from content provider / aggregator to the viewer using open network. Usage of CDN

Closed, proprietary network, accessed via a specific internet service provider

Network Relationship Without the need for intervening carriage negotiations, or infrastructure investments

Services are delivered on optimized and custom high bandwidth network

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Trends!The VOD market (both OTT and IPTV) is driven primarily by growing demand to view

movies and television (TV) shows at a time convenient for the viewer rather than during the scheduled broadcast time. It is further, and more emphatically, driven by the growing demand to view desired video content at any time and on devices other than televisions, such personal computers (PCs), mobile phones, and tablets. With rising demand for video-on-demand (VOD) content on multiple devices and made accessible at any time, the VOD industry has grown exponentially in the last 3 years

Demographic Background!Video-on-demand (VOD) users tend to be younger than traditional TV users and more likely to live in families with kids, says Nielsen in its latest cross-platform report, which takes an in-depth look at the demographics of VOD users. The findings indicate that VOD’s audience is heavily skewed towards the under-50 crowd, with a plurality 31% of users aged 18-34. By comparison, 48% of TV users are aged 50 and up, while just 17% are in the 18-34 bracket. According to recent Census figures, roughly 23.5% of the US population was in the 18-34 bracket last year, suggesting that people of this age under-index as TV users, while over-indexing as VOD users

While TV and VOD users don’t differ much in their ethnic distribution, the Nielsen report does indicate that there’s a substantial difference when it comes to high-income households. Indeed, fully 31% of VOD users earn more than $100,000 per year, compared to 21% of the TV audience. Additionally, while both groups are equally as likely to own a DVR (50% of each audience), the VOD audience is more likely to have high speed internet (88% vs. 75%) and to own a tablet (34% vs. 26%).

VOD subscribers are more likely to have children, more likely to be educated and more likely to have a higher income—all very coveted demos. Millennials are selective and currently have more options than any other time in history. At the end of the day, content continues to be king and viewers make more and more time to view what matters to them. ####

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#Device Proliferation Yields Less Linear Lifestyles

The biggest trend, particularly amongst younger people, is the willingness to watch movies on platforms other than TV, such as computers, tablets or mobile devices. The main reason is the convenience of watching movies wherever the viewer happens to be. As device penetration grows and content reaches people in ways it never could before, the appetite to engage with video increases as well. Rising numbers of consumers owning several video screening devices, both in at home and mobile formats, are causing people to demand greater content convergence to benefit from a unified experience. Now more than ever, viewers are less and less in the habit of watching TV with programming dictated by broadcasters, and increasingly accustomed to deciding what to watch and where to watch it for themselves. With only 24 hours in a day, it becomes difficult to work, study, spend quality time with family, and catch one’s favorite shows. People are condensing more information into a finite amount of time. To strike a closer balance to the intensity of the millennial lifestyle, video on demand has matured as a significant platform for content delivery and discovery.

Available in over 60% of households video on demand (VOD) is increasingly contributing to the viewing potential. While on average VOD contributes 4-5 percent in the coveted 18-49 demo, individual shows have seen upward of 15- 20% increase in viewership from VOD. It’s also a platform that is appealing to younger demos as well as Asian-American whose overall contribution through VOD is 8%. Add to the opportunity for discovery and catch-up viewing VOD provides, subscription VOD has capitalized on another desire for content. With over 40% of US TV households currently subscribing to at least one SVOD service and the opportunity to use these platforms has grown among younger segments. .

On-demand viewing on multiple devices affording viewers multi-channel consumption will shape video content publishing and monetization in the years to come. Thanks to over-the-top TV, viewers have the power to do away with TV platform control to choose individual video programming from the internet

According to Nielsen, the average US consumer spends 60 hours viewing content across multiple devices every week, with 84 per cent of people using smartphones and tablets as second screens while watching TV at the same time1. This means the dynamic of the traditional

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family living room - where everybody was once 100 per cent focused on the TV - has changed drastically.

The incredible popularity of YouTube underlines the soaring demand for instant video. It attracts more than one billion unique users a month and 100 hours of footage is uploaded every minute2. YouTube also sets a good example for media and entertainment companies that are looking for the best ways to monetize their digital content. Although the platform is free to use, thousands of advertisers are using TrueView in-stream, while more than a million advertisers use Google Ad platforms.

VOD is expected to evolve further in 2015, with more emphasis being placed on social sign-in, mobile applications and advanced browsing. Media and entertainment companies will continue to launch next generation offerings and will take major strides towards improving the media and entertainment industry.

Sales of smart TVs, internet-enabled games consoles, smartphones and tablets continued to rise in 2013 and this has contributed to the ongoing video-on-demand (VOD) boom. The days when consumers were forced to follow rigid TV broadcasting schedules in order to see their favourite programmes appear to be coming to an end, as the emergence of services such as BBC iPlayer and Sky's On Demand has given viewers more freedom to watch what they want, when they want. e overall customer experience.

#Cord Cutting

Cord cutting refers to the process of cutting expensive cable connections in order to change to a low-cost TV channel subscription through over-the-air (OTT) free broadcast through antenna, or over-the-top (OTT) broadcast over the Internet.

As a market trend, a small but growing number of cord cutters tune out from subscription television in favor of some combination of broadband Internet and IPTV, digital video recorders, digital terrestrial television broadcasts (such as "Freeview" in the UK, Australia and New Zealand) or free-to-air satellite television.

Audiences cite higher costs due to deregulation of cable television as the reason for “cutting their cord”. The deregulation of cable television forces subscribers to pay a monthly fee for a large bundle of unwanted channels to receive only a few desired programs. Cord cutting fits a specific viewing pattern, such as video on demand or easy access from mobile devices.

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Additionally, fee-for-carriage arrangements force cable providers to pay for network programming available free-to-air using conventional television antennas; the costs are passed on to viewers, and fee disputes often lead to channel blackouts.

2010 was the first year that pay television saw quarterly subscriber declines. In the second quarter of 2012, Sanford Bernstein determined that losses took place in five quarters. Leichtman found that the decrease in pay subscriptions was not happening in large numbers. One reason was that some sports events, as well as other types of television (such as series airing on cable-originated networks), could not be seen online. Sanford Bernstein said the number of pay television subscribers increased by 677,000 during the first quarter of 2010, and a poll conducted by The New York Times and CBS News showed that 88% of people surveyed had such a service, and only 15% had considered going exclusively to web services. People under the age of 45, the survey said, were four times more likely to use the Internet only. To combat the trend, pay television providers were allowing people to stream television programs on desktop, laptop and tablet computers. Craig Moffett of Sanford C. Bernstein still stated that high prices and other methods would eventually drive customers away, calling cord cutting "perhaps the most overhyped and overanticipated phenomenon in tech history.

A 2012 Deloitte report said 9% of television households dropped cable service during 2011 and an additional 11% planned to cancel their service. Sanford Bernstein estimates 400,000 dropped pay video services during the second quarter of 2012, up from 340,000 in 2011. One reason for the drop was due to college students returning home for the summer, while the companies made up for the loss in other quarters. However, the number of new homes paying for television service is less than the total number of new homes. Another possible reason is services, such as time shifting and live recording capabilities, that were once exclusive to pay television services are now being offered to cord cutters.

A 2013 Leichtman survey showed that the 13 largest MVPD companies, covering 94 percent of the country, experienced their first year-to-year subscriber losses. 80,000 subscribers dropped their service in the year ending March 31, 2013. 1.5 million cable customers dropped their service, with Time Warner Cable losing 553,000 and Comcast losing 359,000 subscribers.

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AT&T and Verizon added 1.32 million subscribers; DirecTV and Dish added 160,000 subscribers, compared to 439,000 the previous year. Before 2013, only quarter-to-quarter losses had been recorded industrywide. Internet video and switching to receiving television programming by antenna were reasons. Bruce Leichtman described the subscription television industry as “saturated".

#Rise of Binge Watching

Netflix’s defines binge watching as “watching between 2-6 episodes of the same TV show in one sitting.” During a survey conducted by Netflix, 61% of the people said they binge watch regularly. Netflix and other VOD players entered the national conversation at a time when many people were looking for ways to enjoy normal everyday vices (such as cable) through less expensive means. This technological shift has had widespread impact on television program production decisions, distribution deals, and promotional strategies. The growing consumer preference for over-the-top (OTT) streaming services is having a disruptive effect on traditional television scheduling, ratings, advertising, and cable subscriptions. As a larger share of the TV audience consumes more TV shows via Netflix and other OTT services, some critics argue that such consumption practices interfere with the cultural unification effects (or “water cooler talk”) that bond people through shared, mass-mediated experiences.

What Are The Top Program Genres?

When it comes to VOD usage, the top genre by a clear margin is the feature film: 52% of the top 100 programs viewed on VOD are feature films, according to the report, with general drama (29%) the next-most popular and the only other to break the double-digit mark in this measure. By contrast, time-shifted viewing skews heavily towards general drama (48%), with feature films (3%) far less popular.

Sorting those responses by age group, the study reveals that feature films are more popular among the 18-34-year-old VOD audience than the 50+ audience, while the opposite is true for general drama.

However, VOD, like DVD, has a role in enabling niche content to reach audiences: science fiction and horror are both over-represented on VOD and DVD. That is, although they are not the most popular genres overall, their popularity on VOD and DVD is closer to that of the top genres than is the case for cinema and television. TV series are more commonly viewed on VoD than DVD/Blu-ray, especially foreign drama, comedy and thriller/mystery/crime

#

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Market Outlook!In coming years, competition in the global VOD industry will intensify, with service

providers trying to attract consumers with lower prices, and better viewing choices both in terms of content and access. Technology will continue to play a central role as consumers continue to demand content on different mobile devices in various formats to be able to watch what they like anywhere, at any time. Direct access to third-party streaming video services will likely be a priority for pay TV providers in 2012. The VOD market will continue recording growth, with bandwidth caps the only obstacle to future expansion.

The global video on demand (VOD) industry involves service providers making content available to consumers including TV providers such as Verizon FIOS and Comcast, movie studios, retailers and technological outfits. The latter is made up of companies such as Google and Apple expanding their downloading services to offer streaming options.

In terms of subscribers, cable is the greatest contributor to revenue. In terms of titles, the Internet segment was the largest contributor. Some of the biggest providers of VOD are Comcast, the Time Warner Company (TWC), Virgin Media, Orange TV, DirecTV, BSkyB, Netflix, Hulu, and Apple. North America is the largest region for the VOD market; it is followed by Europe, the Middle East, and Africa (EMEA) and Asia-Pacific (APAC). Based on overall VOD consumption, the United States, France, and the United Kingdom are the largest countries for this market

Cable Segment The largest advanced market for cable Pay TV providers is the United States. Comcast

is the leading provider and offers VOD through both its set-top boxes and its online offering, Xfinity; TWC is the second-largest provider of cable services. Other salient VOD providers in the cable segment include Kabel Deutschland, the biggest cable provider in Germany, and Numericable of France. Other vendors in this space include cable providers such as Cablevision Argentina and Net Servicos in Latin America, Canadian provider Rogers, and various other Eastern European providers as well as Chinese cable operators.

IPTV Segment

An early innovator market, France remains one of the biggest global markets for VOD in the IPTV segment, with stalwarts Free and Orange TV (by France Telecom) accounting for nearly all IPTV subscribers in France and a sizeable chunk of the global market. The UK market, in which cable is relatively weak, is also seeing tremendous growth in IPTV, with providers such as Virgin, Sky, and British Telecom—as well as the YouView service—contributing to this growth. #Internet Segment (OTT)

VOD content streamed over the Internet has experienced explosive growth, and, indeed, the Internet is the primary source of VOD content. Together, Netflix, which offers VOD subscriptions, and Apple, with VOD offered by title, have fundamentally disrupted how content

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is found, acquired, and experienced. Increases in the use of handheld devices, such as tablets and smart phones, and in the video capabilities of gaming consoles have created an environment for VOD accessed via the Internet to flourish. Owing to content licensing considerations, North America accounts for the majority of VOD in the Internet segment, but broadband-intensive countries, such as Japan, are significant consumers as well.Among vendors, in the United States, Amazon and Hulu are seeing their shares grow for VOD. Moreover, Amazon's recently acquired LoveFilm is gaining ground in Europe. #

Main Territories Based on overall VOD consumption, the United States, France, and the United

Kingdom are the largest countries for this market. The following research concerns markets most relevant to MediaXchange’s reach- markets that are easy to work with and pose potential for growth.

Australia The VOD market in Australia encompasses a variety of business models, content offerings and modes of access. The market continues to evolve. More long-form video is now available and, in line with international trends, film and television content that premieres on other platforms such as cinema or broadcast television is being released through VOD sooner.

Trends

Local series shine on catch up television services: Television series drive VOD viewing across all online platforms. The catch-up TV services have the strongest audience for Australian series, where they are neck-and-neck with foreign series. Foreign series are strongest on all other VOD platforms but Australian programs are not too far behind. The appetite for Australian content is strong, with 96 per cent of VOD viewers watching it across various platforms and around half are watching it online. The survey results reaffirm the role of the broadcast television industry in bringing local content (including Australian films) to Australian audiences both as programmed television and the broadcasters’ own catch-up services. Although audiences generally don’t want to pay much, more than half see Australian content being of equal value to foreign content. There is an opportunity for distributors and producers to connect with existing audiences for Australian content on VOD platforms. Australian broadcasters and their programming decisions will, however, remain very important for access to Australian content for the foreseeable future. ### ##

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Niche content can find bigger audiences: Foreign drama series drive online viewing, and Hollywood dominates movie choices. However, this doesn’t mean audiences aren’t also watching other types of content. Movie tastes are more diverse on VOD and on other ‘small screens’ than at the cinema. VOD, like DVD, has a role in enabling niche content to reach audiences: science fiction and horror both ‘over indexed’ on VOD and DVD. That is, although they were not the most popular genres overall, their popularity was closer to that of the top genres on VOD and DVD than was the case for cinema and television.

Specific types of factual content also find audiences online. Although they account for a low proportion overall, those who watch documentaries on VOD services are tending to choose different genres than on other platforms, with science and natural history documentaries in particular having a strong showing relative to other genres. As online shelf space is ‘unlimited’, there is plenty of room for niche content that may otherwise be in short supply on mainstream platforms. There is potential to tap into specialized audience demand, target key demographics and use

communities of interest to make sure they can find the content they like. #Growth Potential: The online video market in Australia is still fragmented. Although VOD viewers have a good awareness of some of the available services they don’t know about all of them. For example, Australians may know of and use one catch-up television service but do not know about the others. As more Australians start watching VOD, expect to see the different services sought to expand their reach and capture new users. The market is set to undergo a shake-up in 2015 with several key changes about to influence the playing field: Foxtel’s new subscription offers at lower price points, the impending arrival of Netflix, and the entrance of new providers like the subscription VOD service Stan, a partnership between Fairfax and nine. #There is an opportunity for both new and established service providers and producers to target those who would consider subscription VOD services in the future. A real opening exists to capitalize on the 1 in 5 VOD viewers with a high-speed internet connection who said they would consider signing up to an subscription VOD service. However, in order to convert considerers to subscribers, the offer needs to be compelling, with quality content, at a reasonable pay point and provide a superior viewing experience, thus the challenge. Developing quality screen content is a costly business. There is a tension between the interests of producers in monetizing their content and the interests of platforms in creating

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a compelling and commercial offer at the right price point. A further tension emerges for both in combining these interests with audience expectations of this viewing experience #Demographic Information Online viewing is particularly pronounced amongst the younger demographic of 16–24 year olds. Two-thirds watch television content online, only just behind the 75 per cent that watch broadcast television. They are more likely to have a television connected to the internet via a separate device such as Apple TV, or via an HDMI cord. They are also more likely to have a Netflix connection, which they access via a VPN (virtual private network) to circumvent geo-blocking. Another trend has seen older users starting to watch online. In contrast to younger viewers, however, they are more

likely to watch television than movies, having discovered catch-up television services as well as YouTube. #Online viewing shares primetime with television, a sign of online’s growing dominance in the home and as an integral part of our screen media diet. Exemplifying how online viewing is complementing other viewing, online audiences peak later in the evening than broadcast television. This suggests that people are still watching programs such as news, current affairs and reality programs which are generally scheduled earlier in the evening, but follow this up with online viewing. VOD is also providing an alternative to viewers who may have previously had to ‘share a screen’ in a household and as a result couldn’t watch as much content as they wanted to.

############

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What Attracts Australian Audiences to VOD

The top reasons cited for watching VOD relate to the convenience associated with online viewing: watching programs at a time suitable to the viewer was the most common response (73 per cent). Over half (56 per cent) of VOD viewers were attracted by the lack of advertisements or the ability to skip them – and these reasons resonated most with viewers of subscription VOD services. Cost was also a factor, with 53 percent (predominantly viewers of ad-supported VOD) drawn by free content online, and around a third by VOD’s affordability compared to both cinema and subscription television. Over all, reasons related to catching up on broadcast TV were cited by 81 percent (predictably, these were predominantly viewers of catch-up TV services). Reasons related to content unavailable or not yet available in Australia were cited by 47 percent of the participants. And all the factors associated with content (choice, variety, the ability to binge) were strongest for people using paid VOD models (subscription VOD and transactional).When asked for the single most important driver to watching VOD, the top response by far (at 33 percent) was the freedom afforded to watch at a suitable time. #What Holds Them Back

Nearly all VOD viewers (97 percent) were able to nominate barriers to watching more content online, and a wide variety of obstacles were reported. Viewers of transactional and subscription VOD services were more likely to mention almost all barriers. Connection speed was the most common, affecting 51 per cent of people, while 44 per cent would watch more if a wider variety of content was available,and 43 per cent if they simply had more time.When responses relating to a lack of technical knowledge required to set up VOD or connect the smart TV to the internet were combined, this was mentioned by 47 percent. It was also the most common barrier for those with the fastest internet speed (over 8mbps). When asked to nominate the single most important barrier, internet speed topped the list, followed by needing ‘more available time’ to watch. #The content – what’s watched where TV drama series, both Australian and foreign, account for the highest proportion of viewers across all VOD service types. Hollywood still dominates online movie viewing, but VOD (like DVD) has a role in enabling more niche content to reach audiences. While documentary viewing on VOD is still at a fairly low level, different genres tend to be watched on VOD compared to other platforms such broadcast TV #Concentrating on transactional VOD (online rental and download-to-own), and it’s traditional equivalents – cinema and DVD viewing – VOD viewers still go to the cinema and watch DVDs a lot more regularly than they rent or download online content. half of the VOD viewer group as a whole goes to the cinema at least once every two months – more than double the proportion that rents or downloads via VOD every two months. And more people (38 per cent) are watching content they’ve borrowed from other people (whether on DVD, USB stick or through file sharing) at least once every two months.

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##Broadcast television is the most popular platform for watching Australian films (with 43 per cent of VOD viewers saying they do this, very close to the 45 per cent watching hollywood films on TV), and cinema is most popular for hollywood films. Independent/art-house films were the most ‘platform-agnostic’,with cinema, television and the internet equally popular ways of viewing these films #Television series tend to drive viewings on VOD. While Australian series are slightly ahead of foreign series on live television (in terms of the proportion watching), foreign are slightly ahead of Australian on VOD. Both account for higher proportions of viewings on VOD than on DVD. This was the case across all VOD services, not just catch-up television with its strong connection to TV programming through the broadcast schedule. Viewing of documentaries and children’s programs still sits strongly with broadcast television. Both are currently driving fairly small proportions of VOD viewing, although for children’s programs this is obviously impacted by the 14+ survey sample. And like drama series (and unlike Australian and Hollywood films), VOD viewers are watching these programs at higher rates on VOD than they are on DVD. #For TV series, genre data is available for both foreign and Australian content, with foreign drama and comedy the most popular genres across all platforms, closely followed by foreign thriller/crime/mystery. When it comes to Australian programs, VOD viewers are much more likely to be watching them on broadcast television than on other platforms, in fact for most genres on television, viewers are just as likely to be watching Australian series as foreign. In all cases, a higher proportion of people are watching TV series on VOD than on DVD/Blu-ray, with Australian drama slightly more popular than Australian comedy. ############

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Major Players in Australia

There is a battle going on in the video on demand market in Australia. As users demand movies and television shows faster and cheaper than ever before, while expecting the same quality as U.S. consumers, local companies are trying to corner the market. .Foxtel Presto

Pay-tv subscription service Foxtel, slashed their on demand subscription price from an out-of-market $19.99 per month to a standard $9.99. The service, allows you to access all the movies licensed to Foxtel. New releases are available on a pay-per-view system.

Given the way that the market is moving there is no doubt that Foxtel is deadly serious about succeeding in the over-the-top (OTT) video space, they need this as an avenue for growth and to stop other OTT players from coming into the

market and maybe eating away at Foxtel's core pay TV business.

Streaming service Quickflix is the Australian answer to Netflix. It provides a variety of premium HBO shows along with blockbuster movies across multiple devices for a monthly fee of $9.99.

Premium content such as new release television shows and movies will cost you extra.

Netflix (OTT)

Netflix hasn’t launched in Australia yet, but it is making waves in the local

market due to an ISP workaround. It is ranked the second most popular paid content media company in Australia, according to a recent report.

Netflix will set a customer back $US8.99 subscription cost, plus the cost of an unblocker which is around $US5. There is talk concerning how the cost structure will change and the service will be vastly different to the U.S. model due to other players like Foxtel already having digitalcontent rights for popular shows.

######

In addition there would also have to be some concern about whether or not they would need to spend more than they are comfortable with in terms of content rights in order to get established in Australia.

Google Play

At a much higher price point, the Google store lets you buy HD new movies for $25 or rent them for $7 and HD television shows are available for $3.50 an episode or $32.50 a season. There is no all-you-can eat subscription service.

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Major Player Description Price Origin

Foxtel Presto OTT $9.99 Australia

NetFlix OTT (Subcription ) $8.99 USA

Google Play OTT (Transactional) $32.50 USA

Apple TV OTT (Transactional) $33.00 USA

FreeviewPlus IPTV TBD USA

Chromecast by Google, which launched in Australia this year to rival Apple TV, allows the consumer to watch their downloaded content on their television. The beauty of this new product? For $AUD49 you can watch movies not only purchased from Play, but from sources such as Foxtel's Presto, Quickflix and the ABC's iView.

Apple TV

Apple, offers movies and television shows at the click of the button. Each HD television show costs $3.50 and an entire season is listed at $33 with the delay from U.S. release date is minimal. New HD movies are around the $7 mark for rentals and $25 for purchase. There is no all-you-can-eat service from Apple and it draws pretty close comparisons price-wise to Google.

You can use Airplay to connect your devices to your television, or for an experience with some cool extras — podcasts, Red Bull videos and Vevo's music videos — hook up an Apple TV. Apple is focussed on expanding their breadth of content in the Australian market, while being first with new content.

Catch-up television

It took a while for the free-to-air TV networks to catch on and realize the consumer wanted on-demand television. Now channels 7, 9 and 10 plus ABC and SBS all have decent offerings in the catch-up TV space, as they try to remain relevant with consumers. Brown believes the real issue for the commercial networks is the dramatic change in business model for online video.Their

current model is based around mass consumption and then selling advertising around that but this is not easily transferable to the online world. In addition, much of the best content they screen is actually purchased from the US content producers so may not be available to them in the online environment.

Nine Network and Fairfax Media have partnered in a streaming service called StreamCo. Both companies are investing $50 million and after initial delays, it is expected to launch in 2015. FreeviewPlus, which is a collection of catch-up free-to-air television in one place is set to launch on September 3. To use the service you will need a Hybrid Broadcast Broadband TV (HbbTV) which is only available through a select number of brands in Australia. In its present state, it doesn’t look like FreeviewPlus will disrupt the market much at all.

The Real Battle - Content

In Australia, the real battle will be with content rights. Foxtel, due to its wealth of content deals with U.S. companies, is in a very powerful position in the content market. The only way a smaller player could compete is by spending up big on content.

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“The reality is that whether the content providers like it or not people want to watch what they want

and when they want it, if they see Game of Thrones has been screened in the US then they want it at the same time,” Brown said.“The content providers may

not like it but we look likely to keep on moving towards more of a global ‘Content Village’ where the old territory-by-territory model becomes very

hard to maintain.”"

"Europe

The mission of video-on-demand (VOD) services like Netflix, HBO, and Hulu so far has been pretty successful in shaking up how the average consumer watches TV and movies. Most reports on Netflix, Amazon, and other VOD platforms are seen in the context of North America. However, over the next couple of years, online TV and video-on-demand services will begin to see their biggest gains in Europe. According to a report from Digital TV Research, European online video subscriptions and revenue will outright soar by 2020.

The report, entitled ‘European Online TV & Video Forecasts’, says television and video-on-demand services will hit $1,633 million (1,266 million euros) by the end of the year and eventually $5,502 million (4,266 million euros) by 2020, with the UK leading the market and Germany not too far behind.

The number of European homes paying a monthly subscription to receive SVOD [subscription video on demand] packages will climb from 1.78 million in 2010 (0.6% of TV households) to 17.99 million by end-2014 (6.4%) and onto 59.41 million in 2020 (20.7%)” "How VOD has taken shape in Europe?

The VOD business in Europe is unique, owing the various different markets within it, which separates it from its current status in the United States on multiple levels. Also, Europe’s TV viewing habits are much less intensive than those of American counterparts (roughly eight hours a day on average), according to stats from OECD, which charted viewing habits in 2011. In the study, most Europeans watched about four hours of TV a day, while Swedes only watched roughly two hours per day.

In terms of the European market, Digital TV Research points out that the UK will remain the stronghold for online video and on-demand revenue. The number of Netflix users in the country has consistently risen over the past few years, which is all part of the wider picture. ""

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"On-Demand Fragmentation

The European Commission’s Fragmentation of the Single Market for On-line Video-on-Demand Services study (published in July) says that it’s unlikely that most European VOD providers are profitable, but suggests many are on the right path.

In all EU countries, the VOD market is developing rapidly says; however, the market is not mature enough yet to allow VOD services to be profitable. The video-on-demand business in Europe has not been without its failures, or even closures. Swiss streaming service Acetrax was shut down in June 2013 after it was acquired by Sky while Sony shuttered Crackle UK earlier this year. There are more examples to be found.

The arrival of bigger (usually American) streaming platforms is, unsurprisingly, augmenting this growth in the continent. Netflix, for example, is available in Scandinavia and as the ‘Fragmentation of the Single Market’ study points out, of many of the countries surveyed, those in Scandinavia have a strong uptake of streaming services.

Users in the Nordics have robust online habits, says one interviewee quoted in the study, which makes accessing VOD content a more natural step – and Netflix and HBO Nordics has pushed this even further. Officials believe that the launch of large brands (originating in the US) will influence the mass-market take-up of VOD. Even if these players are potential competitors, some see their entrance as potentially beneficial for the market as a whole.

This paints a positive image of the business for the likes of the UK, Sweden, and Norway but the researchers from Digital TV Research note that Germany will be close behind the UK by the time 2020 rolls around, while other large markets such as Italy and Russia will grow substantially as well.

Italy is one of the markets that Netflix will most likely be entering at some point in the future but the country has seen an impressive rise in VOD companies since last year, especially with Sky Italia, which opened up its on-demand platform back in 2012.

The Challenges of a Fragmented Market

Fragmentation isn’t stopping the spread of companies such as HBO and Netflix, each offering its own unique service from the other. Netflix is to make its debut in Germany, Belgium, France, Luxembourg, Austria, and Switzerland later this year, while HBO is available in several countries too. Germany and France in particular will provide a potentially huge customer base.

“If I was a VOD provider in the country where Netflix is entering, I would be frightened,” says Peter Csikos, VP of personalized recommendations and targeted ads firm ImpressTV. “They can purchase the same amount of content for a much lower price – and with much better terms.” “The way these companies can be a good competition to Netflix is the fact that they are providing either better personalization or better local content,” Csikos posits.

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Netflix appears to be aware of this. Ahead of its German launch this month, CEO Reed Hastings expressed interest in creating German-language content for customers and a Wall Street Journal report this week also makes mention of the company discussing French content.

These moves would place Netflix in a prime position to address the fragmented nature of the European market but also deliver English-language programming across the board.

Securing local language content for their customers to maintain a grip on their market share should the likes of Amazon Prime come knocking.

Local as Differentiator

First things first though. Netflix will be analyzing the waves of data in the market before venturing into more local content production, but it appears the interest is certainly there at this early stage.

“Any operator with a limited license catalogue should of course be worried that the international players come in because they have much more money for buying content,” says Frode, who is based in Norway, where Netflix has been active since October 2012.

“That said, Netflix is not the most direct competitor because mainly it’s their own content like House of Cards and older content. Whereas iTunes and Amazon Prime go directly in competition with the local operators here in Norway, the focus is on new releases and box office hits.”

Local providers may need to increase their focus even more on securing local language content for their customers to maintain a grip on their market share should the likes of Amazon Prime come knocking.

As the market for VOD grows across the continent and with it, the growth of different devices and avenues to access content, Europe regardless of its fragmented nature looks primed and ready for a busy couple of years.

European online TV and video revenues (over fixed broadband networks) will reach $12,872 million in 2020; up from only $923 million in 2010 and the $4,804 million expected in 2015. The UK will remain the dominant territory for online TV and video revenues. However, its share of regional revenues will drop from 30% in 2010 to 20% in 2020. Italy will climb from only $66 million in 2010 to $1,237 million by 2020. Russia will grow from $20 million in 2010 to $874 million by 2020. Online TV and video rental/pay-per-view revenues will still expand rapidly, climbing from $55 million in 2010 to $858 million in 2020. Download-to-own revenues are forecast to be $1,395 million in 2020, up from $89 million in 2010.

""

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“The fact of the matter is: everyone wants to watch content in their local language and having that local content is a very important thing for all VOD providers. Furthermore, if you can have an exclusivity to local content, that can be a bigger advantage.”"

"Germany  VOD  Market  

Germany and France will prove to be the toughest competition for the American SVOD giant. The German VOD market is growing fast according to a Goldmedia report. With an estimated growth in revenue rising from €273m in 2014 to around €750m in 2019, the country saw an estimated four million active VOD users in 2013.

The VOD market in Germany is in transition in 2015. The basic conditions for mass market are now in place: connected devices are in the market, the bandwidth is available, the users have now experienced and the number of VOD providers is growing continuously. Currently AVOD services have proven to be the most popular in Germany, with a 28% market share, though this is expected to change over the coming years. Goldmedia has predicted subscription offerings will experience yearly growth of 50% over the next five, with SVOD services reaching a market share of 26% by 2019.

"Major Players in German Market

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Brand Pay Model Content Interfaces Devices

Watchever SVOD €8.99/a month

Breaking Bad, Mad Men, The Sopranos and Grey's Anatomy

standard Web, Smart TVs, iOS and Android devices, Apple TV, PS4, Xbox and Google Chromecast

Snap by Sky SVOD: €9.90month;

€4.90 for Sky cust.

Similar to Watchever. It has a range of HBO series, including The Wire, Carnivaleand The Sopranos.

Sub-standard

limited range of devices including web, iOS and Samsung mobiles and Smart TVs.

Maxdome Rent: €3.99 -€4.99;

Buy: €7.99 -€11.99

VOD service has a wide range of feature films and TV series. It includes popular genre films (The Raid, The Dark Knight), acclaimed dramas (Moneyball, Into the Wild, Babel) and a wide selection of TV (Breaking Bad, The Good Wife, Hannibal)

Superior wide range of devices including web, Android, iOS, Windows and on Smart TVs.

MyVideo AVOD premium content such as Orphan Black, Hannibal, Doctor Who and Homeland as well as children's shows and a range of anime series

Fairly Standard only available on web

Videoload TVOD (standard prices): Rent: €3.99 - €4.99; Buy: €11.99 - €13.99

most comprehensive TVOD services in Germany, Videoload has most of the latest releases in its library. In terms of TV it has secured the rights to House of Cards, Suits, The Americans and The Walking Dead. It doesn't have any content from HBO

Standard Smart TVs, web and on STBs

"France  VOD  MarketThe French on-demand market, alongside other European countries, poses some unique challenges to Netflix that could hinder its path for global domination. The country seems opposed to allowing US company's like Netflix to come in and take customers away from native corporations - as seen when French minister Arnaud Montebourg reportedly blocked Yahoo! from buying a majority stake in Dailymotion, claiming he didn't want the successful French company to be 75% owned by an American firm. The French market has grown exponentially in the last couple of years, with VOD consumer expenditure growing by 23% in 2012 to EUR 200 million according to estimates from market research firm GfK, yet the country has seen slow development in subscription on-demand services. This comes down in part to strict windowing regulations for SVOD services, which require companies like Canalplay and Orange to wait 36 months following a theatrical release before they are able to offer a movie to their customers.

In relatively strong OTT markets like North America, SVOD services like Netflix are significant revenue contributors to the overall market segment. France's strict content windowing for SVOD, however, creates a challenging environment to replicate similar successes. Following Netflix's announcement of its expansion earlier this , France's culture minister Aurelie Filippetti announced that she would seek to shorten this distribution window to 24 months for the French VOD services. The idea behind this change is to promote 'home-grown' competition for Netflix, and also to combat piracy which has seen almost 9% of all internet users in France receive a warning notice for accessing content illegally since 2009.

Whilst some French media outlets are describing Netflix's expansion as an 'invasion,' findings from Symanto Research show that the prospect of an alternative and competitively priced VOD service is causing excitement in France, as customers perceive the US based company to offer greater value for money over company's like Canalplay. Notable points from the study show that the top driver for French customers to sign up with Netflix is variety of content, however, over 25% of participants expressed a worry that the streaming service will only offer 'a disinteresting collection of direct-to-video productions,' which ultimately will act as a barrier for Netflix in attracting more customers.

""""

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Pascal Lechevallier, founder of TF1 Vision: “The French VOD market is not a no-man's land. There are already several local services currently in operation. But there is a gap between Netflix's publicity ahead of the launch, and how the much-

regulated French market works.

"Major Players in France

""""

"""""""

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Brand Pay Model Content Interfaces Devices

Canalplay SVOD, €7.99 per month with the option to purchase more recent titles individually

offers 9,000 titles, including 1,500 feature films, and has over 500,000 subscribers on its books. kid-specific content

standard Web, Mobile, Tablet, Connected TV, Apple TV, Xbox 360 and Chromecast

MYTF1 TVOD, with rental prices ranging from €1.99 - €4.99

90% of the US box office hits through agreements with all the major studios, MYTF1 includes both film and television content that are available both in original language and with French subtitles

Superior Web, iPad, Android Tablet, Smart TV, HbbTV

6play AVOD French equivalent of BBC iPlayer, 6play offers content which has been broadcast across the many channels that appear under the M6 Group banner such as M6, W9, 6ter and Comic amongst others. Compared to Canalplay and MYTF1 there is a stronger emphasis on native content found on 6play, however shows such asHawaii 5-0 and Glee make an appearance.

Standard Web, Mobile, Tablet, Connected TV, STB and Xbox 360

Orangecast IPTV TBA TBA TBA

United  Kingdom    Since the launch of 4oD in November 2006, the UK television industry has experienced tremendous change. Device proliferation and the adoption of online video services, both foreign and domestic, has exploded, causing traditional broadcasters to rethink their strategies on how to retain and, crucially, grow their market share in an increasingly internet-savvy world. Looking forward, the future is set to be equally dynamic. As the lines between online and offline viewing begin to blur, we expect linear television consumption to decline at the expense of on-demand video.

Whilst OTT services such as Netflix and Amazon are growing rapidly - and will certainly contribute to the fall in live TV viewing - we foresee more premium pay-TV channels and production companies going directly to the consumer with their own video platforms. This is evidenced, for example, by the recent announcement of a standalone HBO streaming service set to launch this year. We believe that screens will continue to become increasingly ubiquitous in our lives – both satisfying and stoking demand for online video. There will also be a greater emphasis placed on personalized recommendations and content discovery, the benefits of which include greater viewing numbers, higher engagement levels and increased ad revenue potential. The future of the television industry promises to be an omniscreen experience with the consumer firmly in the driving seat. Broadcasters and content-providers are now at the mercy of their viewers, who have more choices for where to find video programming than ever before, and must adapt their strategies in order to evolve with shifting viewer needs.

The rise of Video-on-Demand services in the UK has been a slow, consistent one. Despite Britain being the first country to operate trials of the concept way back in 1994, the overall popularity of the concept is greater in the USA than in Britain. Still, the past decade has seen the concept emerge from niche markets and rise to popularity at an impressive rate.

"Major Players in the UK VoD market are: Acetrax, Global BBC iPlayer, Canal Play, Cinecliq, Curzon on Demand, DAFilms, Filmin, Filmotech, Heimseh TV, medici.tv, Moviepeak, Mubi, Realeyz, Seenow, Universciné, Voddler, Volta, RTL Interactive’s 6 on-demand services (RTL Now, Vox Now, RTL II Now, RTL Nitro Now, Super RTL Now, n-TV Now), Voyo and Youzee

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Summary of Netflix Penetration in Europe "

"

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Country Description

UK and Ireland Launched in January 2012, it faced fierce competition from BBC iPlayer and from Lovefilm. Netflix has gained much territory in the UK since then partly due to Lovefilm financial issues.

Netherlands Launched in September 2013, the choice of the Netherlands points towards a more focused approach, with Netflix looking for markets that offer the best opportunities for growth. Reed Hastings (CEO) identified perceived market demand for the choice of the Netherlands in the company’s launch press release, which quotes him saying: “The Dutch have incredible broadband, but until today have not been able to take full advantage of their fast connections

Scandinavia: Denmark, Sweden, Norway and Finland

Launched in April-May 2012, Netflix had direct competition from Lovefilm. Lovefilm operates streaming-only movie subscription in Sweden, Denmark and Norway.There has long been social and enterprise debate on the role of content delivery networks as telecommunication network components. The incumbent in Norway, Telenor, was vocal about the impact on services and business models and mounted competition arguments in relation to Netflix

Italy Netflix has been slow to launch due to shortcomings in the infrastructure for broadband. Netflix is not the only company at least partially on the sidelines due to the country’s Internet infrastructure problems: streaming services from Amazon and 21subsidiary, Sky-Italia, have run into similar limits.

Austria Big foreign players such as News Corp.’s Sky and German media giant ProSiebenSat.1, which both offer SVOD services, are already carving up Austria’s modest market. In 2012, the nation’s online movie sector was valued at more than $9.6 million, although more than 99% of digital movie revenues stemmed from transactional, or pay-per-view, services rather than subscription; in 2013, those revenues hit $15.1 million

Russia No launch date. Russia suffers from rampant piracy and only 11% of its Internet users are willing to pay for online video content, according to the Russian Public Opinion Research Center. But there are Russian services with an SVOD business model, including the leading premium SVOD service, Modern Times Group’s Viaplay, and Amedia’s Amediateka

Spain Spain has piracy problems but the legal video-on-demand market is growing. Netflix is highly unlikely to launch in Spain and Portugal in 2014, according to multiple industry sources, who don’t foresee the service entering any part of the Southern European market for a few years. Some 87% of Spanish Internet users still access unauthorized content or download files from illegal sites such as Mega and Rapidshare.

Conclusions

1. Netflix is obliged to explore multiple strategies for the highly diversified markets in Europe.

2. Early introduction in Scandinavia has not been quickly followed or found the same level of success in more mature markets where strong competition has been faced.

3. Expansion has been hampered by conflict with powerful incumbents and other players. This situation is similar for Netflix in Latin America (especially in Mexico and Brazil).

4. Netflix has been welcomed by countries with a policy of increasing competition in the VOD market, although it is not clear how it will provide returns in markets that demand financial contributions to the national film industry (e.g. France).

"United States Market "“Internet  TV  is  replacing  linear  TV.  Apps  are  replacing  channels,  remote  controls  are  disappearing,  and  screens  are  prolifera8ng.  As  Internet  TV  grows  from  millions  to  billions,  Ne<lix  is  leading  the  way  around  the  world.”  Neflix,  2015

Synopsis of US VOD Market

According to Nielsen’s findings, 40.3% of homes in the United States have access to an SVOD service as of Q4 of 2014, which is an increase from the 36% reported in Q4 of 2013.

Over the same period, the average adult over 18 years old watched 4 hours and 51 minutes of live TV, down from 5 hours and 4 minutes in the same time frame in 2013, and 5 hours and 10 minutes in Q4 of 2012.

Live TV could stand to lose even more ground to Netflix and its main SVOD rivals, Amazon Prime and Hulu Plus given indications they have plenty of room for more growth. Nielsen reported 35.2% of U.S. homes subscribing to broadband service but not SVOD, and the remaining 24.5% of homes with neither broadband nor SVOD. Companies such as Netflix are likely well underway with plans to target those demographics.

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The report also revealed that Netflix dominates the SVOD business, with 36% market share. That would represent nearly three times the number of subscribers that the survey determined Amazon Prime might have (13%), and about six times as many subscribers as Hulu Plus (6.5%).

While Netflix made public in January that the service finished 2014 with 39.1 million subscribers in the U.S., Nielsen’s calculations shed light on market share Amazon has never reported for its own SVOD service. Hulu has not shared its own SVOD numbers since last April, when it reported 6 million subs.Also noteworthy is the revelation that about 13% of U.S. homes subscribe to more than one streaming service. Homes with SVOD subscriptions log more time spent consuming video on TV-connected devices than non-SVOD TV homes by nearly 50 minutes. Households with SVOD spend an average of 2 hours and 45 minutes watching screens on those devices, trumping traditional TV homes’ average of one hour and 57 minutes.

Another predictable trend confirmed by Nielsen’s findings is that SVOD users skew younger, with 25% of SVOD subscribers under the age of 35 (compared to only 19% of TV-only homes under 35). On the other side of the age spectrum, only 11% of SVOD’s users are over age 65. And the age factor doesn’t stop there. SVOD homes are more likely than standard TV homes to belong to families with children, with children present in 45% of SVOD homes compared to 35% of traditional TV homes.

Challenges Facing VOD The following challenges were derived from study conducted by the European Commission. This study surveyed 20 of the major players within the VOD market to determine what they saw as the biggest challenges for this industry moving forward. Here is what they said. " " "Monetization

Video-On-Demand (VOD) providers and broadcasters believe the monetization of digital media is the biggest challenge facing their business.A survey conducted by MPP Global found that finding new ways to make money from online video content would be the most pressing concern this year. Meanwhile, more than one in four companies suggested that increasing engagement and interaction levels would be their biggest challenge in the coming months.

As explained in the webinar, entitled VOD: Challenges, Concepts and Opportunities, the demand for online

video has soared in the past few years, with more than six billion hours of footage being watched every single month via YouTube. This represented a 50 per cent increase from the previous year, which is a clear indication that consumer appetite for VOD is growing at a rapid rate.

Mobile devices make up around 40 per cent of YouTube’s global watch time, which is a telling statistic. BBC iPlayer views on smartphones and tablets also surpassed the web for the first time on New Year’s Day.

""

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In 2015, VOD providers and broadcasters will need to review their business models in order to improve user experience and increase revenues. They must also find new ways to take advantage of the explosion of customer data that has been brought about by the growing demand for VOD services.

Paul Johnson, Chief Executive Officer at MPP Global, commented: “The issue of opening up new revenue streams has been a major hang up for VOD providers and broadcasters for some time and our poll shows this will be their primary concern in 2015.

Many firms fail to realize it is more cost-effective to work on retaining existing customers than attracting new ones, which is why it is so important to ensure the user experience is as enjoyable as possible. Consumers are far more likely to pay for additional video content if they only have to click one button, rather than wading through page after page of data entry fields. Below are some of the challenges different executives around the industry highlighted from an MPP Global Survey.

Fragmentation

The VoD market is developing rapidly; however, the market is not mature enough yet to allow VoD services to be profitable. Many companies still expect

their services to be profitable in the coming years. According to the MPP survey, VoD poses an educational challenge for some parts of the population, especially the non-digital natives. Growth in VoD markets, they continue, is explicitly connected to the adoption of new technologies and new consumption modes by audiences. One reason often evoked to hamper VoD take-up is piracy and the observation that those users that are willing (or used) to access content online, are not willing (or used) to pay for this type of content.

Many interviewees identify broadband and device penetrations as important enabling factors for the set-up of successful VoD services. In this regard there continue to be differences between the EU countries.

The development of VoD causes substantial changes in the organization of audiovisual industries across the market. This affects the relations between the VoD players with other players, notably right holders, incumbent players (e.g. theatrical operators, broadcasters) and new entrants. Some interviewees have stated that the position of incumbent players reduces their decision-making power concerning the modalities of their VoD offers. Several interviewees identified large players that are directly or indirectly linked to US companies (e.g. Google, Apple and Netflix) as potential competitors and even game changers in VoD.

Audience uptake of VoD

Some of the interviewed providers have even experienced failures, i.e. services that have shut down (thus Acetrax has shut down on June, 21, 2013). Many

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interviewees however expect their service to be profitable in the coming years. Those that benefit from MEDIA or other funding express their dependency on such schemes.

There is already some regional integration and, as the interviewee explains, audiences have developed strong online habits, which makes the step to accessing content online smaller. He also argues that the arrival of Netflix is further pushing video consumers online. The idea that the launch of large brands (originating in the US) influences the mass-market take-up of VoD was voiced in other interviews as well. Even if these players are potential competitors, some of the interviewees saw their entrance as potentially beneficial for the market as a whole.

Players in the industry put forward the need of a mentality shift at audience level. Others take piracy as a given fact, which VoD services ought to adapt to. By providing better quality they may even overcome it to some extent. Nevertheless most interviewees think that piracy is not likely to decrease in the short term. In the same way, some interviewees explain how they tap into the Internet users’ taste for free content in order to induce them to register on their service.

Some interviewees also point out the fact that, faced with the abundance of content online (and ways to access it), the audience needs to develop its own curating skills. According to some, technology will assist this (search algorithms). Others identify an important editing role in this respect for the VoD platforms themselves.

An insufficient – or ill-known – level of cross-border demand

They point out the lack of audience demand for cross-border services and content in Europe as challenge to Video on Demand. Interviewees active in one country (i.e. either available in only one country or targeting their marketing effort only toward one country, usually their home country) often use it as an argument to explain why they are not developing cross-border activities. Interviewees active in more than one country notice that demand for certain titles is very fragmented, usually along territorial borders. This makes it necessary for them to develop very specific content offers and associated marketing efforts on such a territorial basis. However, the biggest (US) titles seem to have sufficient cross-border attraction towards mainstream audiences. As a result players will often not gear investments and promotion efforts towards non-local, non-US content – except for those specialized in non-mainstream offers (e.g. art house fiction, documentaries, music).

Yet all in all, the on-demand market is perceived as similar (in terms of fragmentation) to other windows (television, home video), with players applying similar rules as were established in the analogue world. The interviewees moreover believe that this fragmentation of audience preferences is likely to remain in the coming years.

Therefore, when expanding to new markets, language and culture considerations play a role for the interviewees. The BBC for instance

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chose to launch its iPlayer abroad first in those countries with a high concentration of English speakers. Likewise, a few of the selected players that are considering other countries to expand to, look first of all towards neighboring countries and/or countries with the same language. Medicitv, which provides access to classical music, is an exception in this regard due to its specific type of content and audience. Yet even if language diversity plays less of a hampering role for this service, still one fourth of its subscribers is based in its home market, France.

Despite the fact that they downplay the potential audience demand for local and non-local titles across borders, many interviewees (and sometimes the same as those mentioned in the previous paragraphs) affirm that there is in fact insufficient knowledge about audience preferences. As such the potential of smaller or non-national European titles can for instance be difficult to ascertain. Some recognize that this sometimes leads to surprises in terms of the performance of particular titles in a certain territory.

Instead of there not being a cross-border potential for VoD content circulation, the real problem seems to be that the risk levels - inherent to the movie business - are perceived to be too high. Making titles available in other territories indeed entails additional costs, in particular in terms of licensing, which many interviewees consider as too high compared to the expected revenues. Next to that e.g. the costs of acquiring different language licenses, there are also, more generally, additional costs

related to language adaptation. For example, dubbing and subtitling costs can run up very high. Many interviewees have thus concluded that the costs of setting up an offer in multiple languages forms an obstacle for their expansion. Thus one interviewee even says that this is the establishment of services in multiple languages that forms a key challenge, rather than the establishment in multiple territories. As a result, most interviewees’ services are available in more than one country but their marketing efforts (language, adapted offer, localized marketing tools, etc.) focus on their home country.

Infrastructure

Many interviewees identify broadband and device penetrations (e.g. the adoption of smartphones, Smart TVs and tablets) as important enabling factors for the set-up of successful VoD services, as they foster the evolution of consumption habits. In this regard there continue to be differences between the EU countries. For example, one interviewee stated that Nordic countries have a good broadband connection compared to Spain. Another interviewee mentioned the fact that broadband is not well developed in Ireland.

It appears from the interviews that while some countries are lagging behind in infrastructure development, infrastructural progress is also identified as an opportunity by some of the interviewees, who explicitly mentioned the positive impact of recent advances of the state of (broadband) infrastructure in e.g. Romania. Also some interviewees have developed technologies to

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circumvent such infrastructural issues. Moviepeak for instance puts forward its development of a specific technological solution built on digital satellite and DTT as a unique selling point, as it permits the roll-out of their offer even in countries where high-speed Internet is not fully rolled out yet.

Legislative harmonisation

For VoD providers, in particular those with a cross-border presence and/or those faced with competition from non-national players in their home markets, it is important that there is a certain level of harmonization across the EU. The EU's Audiovisual Media Services Directive plays an important role in this regard.

Nevertheless, some of the interviewees pointed towards remaining problems in this area. First of all, there are still areas in which different regulations apply

according to the Member State. Varying age ratings (systems) form one issue that is mentioned as problematic by a number of players. The problem in this regard lies in the differences between the system, not in the characteristics of particular systems. Thus one interviewee explains that Germany has the toughest youth protection law but does not necessarily see it as a problem.

In the same vein, differing tax systems applied to VoD across Europe were also identified by the interviewees as an issue from two different perspectives. Firstly, (restrictive) local tax requirements may play a significant role in the decision where (not) to establish a service. Secondly, the existence of different fiscal

systems in the Member States currently poses a problem of competitiveness between local and foreign-based services. Yet with VAT reforms at the EU level to be implemented from 2015 on, an interviewee notes that this should then become less of a problem.

Also, member states vary in their transposition of Directives. As such, different compliance regulations can form a potential threat for cross-border presence, mentioned by one interviewee. The resulting implementation of stricter regulations in some EU countries compared to others, could be a potential future challenge, the same interviewee continues.

Release windows form one particular area that is the subject of differing regulations and/or legislations.

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Competition issues

Moving from the macro- to the industry-level, the development of VoD causes huge changes in the organization of audiovisual industries across the EU. This affects the relations between the VoD players with other players, notably right holders, incumbent players (e.g. theatre operators, broadcasters) and new entrants.

The convergence between television and online markets through e.g. Connected TV is firstly identified as a particular challenge that will result in new competitive environments, including both global and national or regional players present on the same connected platforms.

Secondly, some companies have stated that the position of incumbent players hampers their leeway in establishing the modalities of their VoD offers. This is apparent for instance in the discussions on Pay TV's position in media chronology discussions. For a few executives, public service broadcasters should not be active as competitors in the VoD market. A few interviewees also recognized that the choice of where to make their VoD service available was dependent on the content providers’ conditions. Such conditions can also sometimes have an impact on the different prices asked from consumers across different EU countries.

Thirdly, competition issues may arise with regard to new entrants to the market. In particular, several interviewees identified large players that are directly or indirectly linked to US companies (e.g. Google, Apple and

Netflix) as potential competitors and even game changers in VoD. While, as noted, their further expansion in Europe is seen as a potential driver for VoD adoption, it is clear that their market power may impact the potential room for other (European) players, who are not building their VoD offer on top of a strong presence in other territories (the US) and/or other industries (e.g. hardware). Related to this, the strong position of players like Apple or Google in the mobile market may prove problematic as other VoD offers are dependent on their dominant iOS and Android platforms to build up a mobile presence.

Release windows

Release windows (or media chronology) is a domain in which competitive forces are currently very much felt, as new balances are being sought between new and old stakeholders, new and old "windows". This is notably the case since, as shows also our sample of interviewees, VoD services differ greatly one from another. In addition, several interviewees confirmed that in the EU countries, a distinction is drawn between different VoD windows (notably Rental / DTO / SVoD / FVoD).

The organization of film exhibition in a sequential way, with the titles first released in theaters, followed by distinct (and mostly exclusive) releases in subsequent markets or windows is seen by some interviewees as a way to maximize return on investment. Most players agreed upon the fact that existing release windows system should not be attacked radically, nor did they express

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the wish to see release windows systems entirely abolished. One interviewee even identified release windows systems as an organizing principle that is vital to the functioning of some cross-border services' business models.

A few interviewees are opposed to changes in release windows because release windows are part of an audiovisual ecosystem in which the investments of various market players (e.g. pay TV channels) in content production play an important role. Such interviewees fear changes of release windows might have an impact on the whole audiovisual ecosystem in Europe, ultimately affecting the strength of the industry. This would, in turn, impact the ability of European players to compete with non-European players.

At the same time, some interviewees would prefer a relaxation of the current system, introducing flexibility especially when it concerns small films’ release schemes. This is particularly the point of view of those players that have been experimenting with shortened windows

and/or day-and-date releases. Moreover, some interviewees point out that some sector stakeholders, in particular pay TV channels, use release windows as a means to hamper the VoD market's development. By imposing 'unreasonable' holdback periods, these pay TV players negatively impact the attractiveness of legal VoD offers.

Nevertheless, most expect the relation and timing of the different windows to evolve gradually as the VoD market takes further shape.

From a cross-border perspective, some interviewees see the influence of release windows as an additional element that influences the shape of the content catalogue in different markets.

Licensing

Acquiring content licenses is an important aspect of any VoD service’s activity, which depends on a few factors. These include the relations with other players in the industry (right holders but also other media, since these media may

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Questions to be Answered Moving Forward European Market!1. Will the companies offering successful VoD services in Europe have their origin in Europe or will strong non-EU players that dominate the traditional global film market (i.e. the Hollywood majors) or the digital technology market (i.e. Apple, Google, Facebook, Microsoft) duplicate their success in this market as well? ""2. Will these services be able and/or willing to go beyond the traditional territorial and language borders? The underlying issue is the one of realizing a digital single market for the VoD services. ""3. Will these services offer content that is diverse in terms of its origin, thus fostering the circulation of European audiovisual works across the countries? Linked to this, will the consumption patterns of European audiences become more diverse and pan-European? This relates to the realization of a digital single market from a content angle?!

want an exclusivity on their content, which limits the VoD services’ access to such content) and the countries in which the service is available.

First of all, some licensing issues are related to the availability and identification of content. The lack of availability of content in digital formats, in particular archive content, was mentioned as an obstacle by one interviewee. There can be different versions or files for one title but one interviewee said that there is not enough information allowing to identify those different versions, due to the lack of common metadata systems. The same interviewee mentions the ISAN (International XYZ) system as an important – but still insufficient – contribution to the improvement of this situation. Another interviewee mentioned that identifying right holders could be a costly process.

Second, once licensing rights are being negotiated, further issues arise, which are inherently tied to the still limited size of the emerging VoD market in Europe. Television licensing revenues are for instance seen as significantly more valuable to rights holders than VoD licensing revenue. Some interviewed players noted that, as a result, the prices for VoD licenses are set too high by content owners, which makes it impossible to generate a return on investment. One interviewee complained about the length of negotiations involved in acquiring content licenses. In the end, licensing negotiations are often different on a title-by-title basis, which makes it difficult to set ground rules.

Third, the varying availability of content across borders is seen as a problem by some cross-border services, especially those that have a global scale and work with one common catalogue. In particular, the "not available in your country" message can be frustrating for their customers.The interviewees have also identified obstacles that relate more to their strategy, in particular in terms of technology and marketing.

Technical issues: costs, standards and portability

Providing a VoD service may entail significant costs to set-up and operate the service from a technological standpoint. Stand-alone VoD services do not make sense since it is a struggle to cover all costs. Players around the VOD market have mentioned economies of scale as a way to reduce such costs, for example by sharing the same technical infrastructure between different services. Such economies of scale exist within RTL Interactive that groups 6 VoD/catch-up services in Germany.

Some members of the EuroVoD network increased efficiency by pooling technological resources. It is a luxury to remain in one (home) country, except maybe for countries where VOD is already well developed. There are limits to the economies of scale that can be realized at the technological level by crossing borders. In each market there needs to be sufficient server capacity, which comes at a huge cost.

There are various standards concerning notably the different devices but also the different formats for the audio-visual files that are made available on different

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platforms (e.g. Android and iOS in the mobile market). The necessity to provide content on different devices as well as in different formats further increases costs for VoD services. A partial solution to that problem is, according to a few interviewees, to have an in-house department directly dealing with technical matters, rather than outsourcing this externally.

Portability of content is an important challenge. Some companies have found that there are limited possibilities to transfer content across multiple devices. Also some interviewees find the costs of licensing DRM (and other technologies) too expensive to allow a launch a service on multiple platforms. At the same time, DRM solutions are crucial to get access to Hollywood studio content. In this regard, some players mentioned that solutions are

Marketing issues: localized marketing, pricing and branding

Linking back to the identified differences in audience demand, related to the diversity of cultures and languages in Europe, VoD offers need to develop specific content offers. Yet developing an offer goes hand in hand with its marketing and promotion.

Such marketing is considered an important cost element by some of the services. Some interviewees try to scale down such costs by using the same tools, the same campaign across different territories. n general, localising offers and associated marketing comes at a cost, for instance when an additional navigation language is added to the

service’s site, or in order to set up adapted technical support in different language versions.

Pricing strategies form a specific aspect of the marketing mix brought forward by a few interviewees. Importantly, such pricing modalities are to some extent influenced by the business relationships struck by the VoD offers, as a few interviewees emphasized. For instance, the BBC iPlayer service is currently offered at the same prices across the Eurozone because of an exclusive partnership with Apple. As the service will expand to a multi platform service, it expects to build a more flexible pricing strategy, which it expects will better reflect market norms. Also the payment systems themselves have to take into account possibly differing audience habits. As such, the current lack of a common online payment system in place all across the EU (with the exception of Paypal), is seen as an obstacle.

Finally, branding is very important for the take-off of the VoD service itself. Especially to built up a cross-border presence, a strong brand identity is crucial. For example, one factor in the choice by the BBC of where to launch its global iPlayer, is the established presence of the BBC brand in the chosen countries. Branding considerations also played an important role behind CME's strategy to set up distinct VoD services in different Central and Eastern European countries, under one common "Voyo" brand.

""

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How Can These Challenges Be Overcome?

Companies must ensure they are catering for the "always connected audience" in 2015. This means moving away from legacy systems and adopting cutting-edge solutions that provide the flexibility required to deliver engaging video content to increasingly mobile subscribers. More businesses are using sophisticated CRM systems, as these provide advanced functionality and enable businesses to keep all of their subscription data under control.

Tracking users' behavior, habits, preferences, orders and so on is the single best way of understanding your audience and being able to engage, retain and up sell to those individuals and groups. Aside from using a holistic and adaptable CRM system, firms must overcome the notion that TV is a "push industry". Only a few years ago, TV broadcasters were able to push content whenever they liked, as consumers were constrained by linear program schedules.

The emergence of VOD means this is no longer the case and viewers are now able to "pull" the content they want to watch whenever they wish. The sooner entertainment providers revert from pushing to pulling, and the sooner they adapt to the growing multiscreen trend, the easier they will find it to monetize digital media.

Providing TV services anywhere and everywhere gives companies a unique opportunity to open up new revenue streams, with targeted advertisements, branded entertainment and fresh subscriptions all adding to their bottom lines. The best way to do this is to maintain a strong brand.

Summary: What are the Keys to Success? MPP Global January 2015

1. Produce quality content: It sounds obvious, but the first thing you need to do to ensure people are paying for your content is to produce footage that is truly fresh and engaging. The likes of Sky and Netflix have demonstrated how important this is.

2. Embrace multi-screening: Consumers want to view video content on the move, which means companies must produce material that can be accessed from a range of mobile devices.

3. Use a CRM system: These systems are proven to give companies a stronger chance of overcoming the challenges presented by VOD.

4. Improve the customer experience: The online entertainment industry is fast paced and competitive, so once you have attracted new subscribers, make sure you keep them. Slick payment processes, advanced customer management services and targeted marketing campaigns

5. Accommodate foreign audiences: Localization is a big sticking point for many entertainment companies. To maximise revenues from your VOD content, you should tailor your services to accommodate viewers who speak different languages and come from different cultures.

6. Increase customer interaction: Social media is immensely popular and firms should use this to their advantage. Enabling people to sign up for subscriptions via their Facebook, Twitter or Google+ account is a very shrewd move.

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Education Into Action!The VoD sessions conducted by MediaXchange will be a separate event where executives come to understand VOD locally and internationally and the impact it is having on traditional TV. Furthermore, it will explain how they can incorporate Video on Demand in their strategies moving forward. These sessions will be informational for the most part, so audiences would be TV Channels, production companies, sales agents, distributors, and lawyers around the globe. The challenges and opportunities identified earlier in this proposal are the topics that will be specifically addressed in these sessions. Below, I have listed the conferences surrounding VoD that tackle the specific challenges identified earlier. Some of the conferences highlight how to monetize VoD, some of the conferences outline how to produce successful content, others speak on the specific digital platforms that audiences are currently employing the most.

Additionally, I have researched the most respected experts in the VOD field. The information that isn’t obtained from the conferences can be attained through the speakers I have identified. At these conferences, MediaXchange employees will need to take notes on sessions in preparation for delivering their own sessions. They will also need to form relationships with the speakers and panellists in order to leverage their expertise later down the road

"Conferences to be Attended

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Company Name Name of Conference

Specific Focus of conference

Date Location Price

American Business

Conferences!

Multiplatform VOD: Monetization & Consumer Habit

Monetization Strategies, OTT platforms

January 2016 Los Angeles, California

IBC IBC Conferences Disruptive technologies in Media, VoD strategies

September 10th, 2015

Amsterdam

Kaltura Kaltura Connect future of online video, content generation

June 24th, 2015 London

Informa TV Connect Monetizing VoD, licensing

April 28th, 2015 London

The American Film Market

Distribution Conference sponsored by iQIYI

VOD future implications

November 4th 2015

Santa Monica

Multichannel News

NextTV Summitt impact of new devices, new delivery systems and new consumer expectations.

June 18th, 2015 Los Angeles, California

""

Most Influential People in VOD The following people are the most influential people in the field of VOD. A panel of judges from VoDProfessional voted on these experts based on nominations from officials around the European market.

"Holly Knill Product Development Director, Sky Go, BSkyB "Knill is recognised both for Sky's collective success in video on demand and her own individual contribution to the cause. Slick core products, a subscription offering for non-satellite customers (NOW TV), the purchase (and expected integration) of transactional VOD service, Acetrax, and great viewing stats (including over 3.3 million Sky Go users) makes Knill - and Sky overall - a worthy #1 on our list. "" Marc Watson CEO, BT Vision "Following Sky's customer acquisition strategy? Whilst BT Vision hadn't quite reached a million subscribers in its last set of reports, it's the company's massive play on procuring rights to broadcast live English Premier League football matches from next season that gets Marc Watson his prominence in our list. Watson, a trained barrister, is also a non-executive director of YouView and previously held a similar position at Shed Media, an independent production company now owned by Warner Bros.

"Dan Taylor Head of the BBC iPlayer "New leader at the UK's biggest broadcaster VOD service The BBC iPlayer continues to post superb usage figures: 1.77 billion TV requests in 2012, 212 million in January 2013 alone and 5.4 million average daily TV requests in April. Now the product faces the BBC's internal targets of getting on to as many platforms as possible and increasing its current 25% share of audience penetration. Taylor, the new acting head of the iPlayer, has already been at the BBC for thirteen years and takes over the role from Dave Price in July

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"Helen Walker 4oD Product Manager ""She doesn't sleep, that's how much she loves 4oD!" So said one of our judging panel of Helen Walker when they convened to decide which VOD professionals would make it on to this list. Walker lives and breathes 4oD and looks after the definition of the product experience across devices including Android, the new PS3 and Freesat. 4oD itself is now available on a wide range of platforms and recorded 450 million full length programme views in 2012 – a 5% increase on 2011.

" ""Scott Kewley Director, Multiscreen Product, Virgin Media "TV Anywhere, TV Everywhere Kewley is Virgin Media’s multi-screen product director, responsible for developing the company’s digital entertainment proposition across online and connected devices. He played a key role in launching Virgin Media TV Anywhere - a new ‘cloud-based’ entertainment service exclusively for Virgin TV customers - and has previously worked at Disney. Success metrics? 75-80% of subscribers watch an average 30 VOD programmes each on the platform every month. """ "Richard Halton CEO, YouView "Main man at the fastest growing TV service in the UK YouView aggregates linear and VOD content from all of the major UK broadcasters plus Sky's NOW TV and visually, it's a beautiful service with a great UI. The set-top box is on its way to reaching 400,000 homes just 8 months after launch albeit with a little help from BT and Talk Talk which now offer it as part of their bundled services. Halton's next job is maintain this growth and launch versions across more platforms. """""""

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"Kevin Mathers Managing Director, YouTube UK "Leading YouTube's UK sales and operations YouTube continues to go from strength to strength with more than one billion users and over six billion hours of video watched each month. In the UK, the minutes watched on YouTube now exceed more than fifteen times those of the three next largest VOD platforms combined. Mathers leads the company's UK sales and operations with responsibility for the introduction and growth of all advertising products. " "James Micklethwait Online Product Director, ITV "Strategic thinker and developer The numbers are all trending upwards for ITV Player: a 22% rise in long-form video views in 2012 (to 458 million), 'Online, Pay & Interactive' revenues of £102 million and well over one million registered users. Micklethwait is crucial to this effort. He is responsible for product management, user experience & design, strategic partnerships and customer engagement for all of ITV’s digital products including ITV Player. ""

"Dave Colfer SVP Technology - MTV International "Viacom's Wizard of Oz Viacom is the global entertainment content compan y which owns brands like MTV, VH1 and Nickelodeon. Colfer is the technology man behind the scenes. With over 20 years industry experience, he manages and directs strategy, projects and programmes, technical infrastructure, operations and business relationships for Viacom International Media Networks. Colfer's areas of expertise and ownership include broadcasting, Web, VOD and mobile.

"""""

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Tony Wang UK General Manager, Twitter "Profoundly influencing TV viewing in 140 characters or less Was there ever a doubt that Twitter and TV would become powerful allies? Hashtags are a common sight on TV shows, social TV services like zeebox and Channel 4's upcoming second-screen app '4Now' incorporate Twitter feeds and the company itself has published a Producer's Guide which features best practices for engaging and growing audiences on Twitter. Wang is the UK division's main man. "

"Stephen Petheram Director, Operator Accounts, EMEA at Microsoft "Driving next-gen entertainment experiences A lot of the excitement about the upcoming release of Microsoft's Xbox One was the way the product was evolving from being primarily a games console to a one-stop entertainment solution for your living room integrating, as it will, live TV and video on demand. Operators and content providers are crucial partners then in driving its success. Petheram manages these relationships in Europe and has over 20 years experience in the broadcast and video space. """

"Dan Saunders Head of Google TV, UK "Is Google TV about to get serious? Google TV has taken only baby steps in the UK so far. There was the release of a Sony set-top box last year which incorporated the service and a slightly upgraded version of the hardware has lately been announced. Why then do they appear in this list at all? Two reasons: 1) it's Google - they'll surely get this right if they really want to and 2) Dan Saunders. By bringing in such an industry heavyweight - Saunders' last job was at Samsung - Google may be signalling that it's about to get serious with its TV proposition. """""

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Oli Slipper Joint CEO, Perform Group "Head of one of the world's largest digital sports rights portfolios Slipper also made our list last year being, as he is, the joint CEO of one of the world's largest digital sports rights portfolios through ownership of contracts covering more than 200 sports and their associated leagues, tournaments and events. In the past 12 months, the Perform Group has grown revenues by 47%, made a range of international acquisitions and is now in 23 global markets and employs over 1,000 staff. Perform streamed over 3 billion videos and 25,000 live events in 2011 "

"Michael Comish Group Digital Officer, Tesco "TVOD with Tesco Michael Comish looks after movie and TV streaming service 'blinkbox', music service 'blinkbox music', free movie and TV service 'Clubcard TV' and eBook venture 'blinkbox books', which launches later this year. Comish co-founded blinkbox in 2006 before selling the business to Tesco in May 2011. He also co-founded AtomFilms, a pioneer in the online entertainment space, which was sold to Viacom for $200m in 2006. Between 2002 and 2005, Comish was Managing Director of 4 Services at Channel 4

""

"Ryan Jamboretz International Managing Director & Chief Development Officer, Videology "Monetizing content across all video screens Videology, the video ad technology company, has retained its leadership of the UK VOD market, with an estimated 35% share of the in-stream video market. Its international businesses (including the UK) have grown by 250% thanks to Jamboretz's role in ensuring that both buyers and clients now have the tools, metrics and confidence to treat video on demand as a legitimate part of the broadcast plan. """"

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"Anthony Rose CTO & co-founder of zeebox "Co-creator of two revolutionary products: zeebox and the BBC iPlayer After becoming the driving force behind the development and launch of the BBC iPlayer in 2007, Rose went on to create the social TV, zeebox with Sky as a 10% investment partner. So, how's zeebox been doing in the past twelve months? Well, it was successfully released in the US and Australia, gained further investment from Comcast, NBC Universal and Viacom and was lauded as the 'Best iPad App of 2012' by Mashable and 'App of the Year 2012' by T3 " "Jody Allen Managing Director, Ostmodern "Committed to VOD with innovation and brilliant design Allen, along with Ostmodern co- founders Tom Williams and Tim Bleasdale, continues to create pioneering digital products for leading VOD, broadcast, media and sports brands. Since founding the company in 2007, Allen has helped develop outstanding products for the BBC, Channel 4, Channel 5, ITV, News International, News Corp, Arsenal FC, YouView, and EE. He is also a former Art Director at Channel 4 and Creative & User Experience Lead at Project Kangaroo. ""

"David Karlsson Development Manager, Streaming, SVT "Although Karlsson hasn’t been at SVT for very long, his strong background in the OTT industry is what impressed our judges most and secured his place in the top 10. Described by his colleagues as a “guru” and as having a “high reputation amongst several streaming services”, Karlsson has held senior positions at both Millicom International Cellular and Qbrick and is an expert in online video technologies. Whilst working for Millicom, Karlsson was on the team responsible for building Mirado, an SVOD OTT service aimed at the

"""""

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"Matti Zemack Chief Digital Officer, Bonnier Growth Media "Zemack is a true veteran of the television industry, having worked in the field for the entirety of his professional career. An expert in both linear and online broadcast, he has held roles at Swedish Radio, BBC R&D, Viaplay, TV4 and, most recently, C More Entertainment where he managed all digital products. Zemack has now moved to Bonnier Growth Media and taken up the newly minted role of Chief Digital Officer, where he leads his team in making innovative investments within the media industry. """ "Tor-Einar Eriksen Future Media Strategist, TV 2 "Having placed #30 in last year’s list, Eriksen is back again with a new position and new title. As Future Media Strategist for TV 2, he has been responsible for getting the commercial television station onto Apple TV, making history in the process – TV 2 was the first Norwegian content partner to be available on the device. With over 20 years network and online industry experience, Eriksen is in charge of TV 2’s online distribution strategy, operations and business relationships, and is a specialist in multi-CDN distribution. "" "Johanna Berlinde VP and Head of Media, TV, TeliaSonera "Berlinde leads the global TV business at TeliaSonera and is responsible for strategy and development of the company´s different TV and video services. She seems to be doing a great job – in 2014 TeliaSonera added around 697,000 TV customers in Sweden, up 8.7% year-on-year. She is also responsible for content on all platforms including computers, smartphones, tablets and smart-TVs. Berlinde, we’re told by her press colleagues, has been a key player in driving the introduction and launch of OTT products in several markets. """"""""

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Monika Hanson Head of Innovation, Viaplay "As the second most popular VOD service in the entire Nordic region (we understand that 19% of all streaming customers have used it as least once in the last six months), Viaplay is hot! Given its past success, how does it look ahead and plan to maintain its OTT user base? Cue Hanson. As Head of Innovation, she is responsible for setting the company's annual roadmap. Hanson previously managed connected TVs and games consoles at Viaplay and focused on maximising profits on these new devices. Hanson holds a Master of Science in Media Technology from Sweden's Royal Institute of Technology. "" "Casper Hald Head of Blockbuster, TDC Group ""Hald leads TDC Group’s new digital venture BLOCKBUSTER, which offers a premium proposition of current films and series available for rental and ownership on multiple platforms. The BLOCKBUSTER service has also been launched on TDC Group TV platforms such as YouSee Cable and TDC IPTV. Responsible for the market leading TVOD proposition, new and extensive platform availability and the online re-launch of the BLOCKBUSTER brand, Hald and his VOD team are expected to lead new digital growth in home entertainment. TDC Group recently acquired the Norwegian cable company, GET. ""

"Michael Lantz Chief Executive Officer, Accedo ""Lantz is the CEO and co-founder of Accedo, a global market leader in TV application solutions. Since starting Accedo, Lantz has been instrumental in driving the industry forward, offering innovative solutions for the delivery of future consumer experiences. Over the past year, Lantz has spearheaded the launch of a new application-centric multiscreen solution, Accedo VIA, and the cloud-based application management solution Accedo AppGrid, which already controls the TV application experience for more than 5 million consumers around the world. """

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Jari Lahti Chief Strategy Officer, Yle Media Strategic Thinker Responsible for Audience Insight "With a career at the Finnish national broadcasting company spanning almost 20 years, and as a regular speaker at industry trade shows, Lahti has worked his way up to Chief Strategy Officer of Yle Media and is responsible for audience insight and media planning. Collectively, Yle’s TV, radio and internet programmes reach almost 85% of the Finnish population, and a whopping 99% of that number are said to be satisfied with the content they consume.

"Jenny Englund Product Manager VOD, Product TV, Com Hem Key Player at Com Hem "Around 40%, or 1.8 million, of Sweden’s households are connected to Com Hem’s network, which gives access to a broad range of television services. Englund, who joined the triple-play provider in 2010, is right at the heart of VOD operations and is highly regarded by colleagues. We’re told that she influenced the UX (User Experience) on Com Hem’s TV products on all platforms through her creativity and knowledge of content management and customer insights, which brings value to both audiences and the company.

"

"Morten Berge Director of On-Demand Operations, Canal Digital ""Berge has been working with on-demand products since 2002, cementing himself as a true veteran of the TV industry. Having joined Canal Digital in 2006, he is responsible for launching the company’s VOD service Canal Digital GO and, for the last two years, has been focused on ensuring that the content available from the platform is being streamed in the highest quality. With nearly 20,000 titles and over 60 live channels this is some achievement and with over 920,000 customers from all over the Nordics, Berge is definitely on the right track.

"""""

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"Clara Mai Kunstmann Head of TV and OTT Solutions, TDC ""Kunstmann joined TDC Group almost three years ago and hit the ground running – she has been responsible for all major OTT and VOD launches at both TDC and subsidiary YouSee in that time, including the latest launch of the digital BLOCKBUSTER brand in December 2014 alongside Casper Hald (see #9 in our list). Under Kunstmann’s care, the development department for TV and OTT Solutions has more than doubled in size and newly released video apps for cable and broadband customers built by her team have been downloaded over one million times.

"Mattias Hjelmstedt Chief Executive Officer, Magine Innovating in the OTT Cloud "Magine, a cloud-based service which lets users watch live and on-demand TV whenever and wherever they are, was founded in 2010 by Hjelmstedt who has gone on to achieve international recognition from media outlets such as The Guardian and Bloomberg. Having launched commercially in 2013 in its native Sweden, Magine arrived to great enthusiasm in Germany in April last year and has hinted that the UK is a “very interesting market” for potential future expansion. That said, Magine recently pulled out of Spain which perhaps explains Hjelmstedt's fall in ranking in our list.

"

"Thomas Elton Jensen Streaming Manager, DR Ensuring Smooth Delivery of Video "As Streaming Manager, Jensen has the important role of ensuring video content from DR, the Danish public broadcaster, successfully makes it on to the many devices consumers now expect to be able to watch content on, including web, mobile, smart-TV and other connected platforms. In June 2014, DR launched a new version of its catch-up service DRTV that was, we’re told, a resounding success with customers. Currently DR is working on bringing the service to games consoles and implementing personalisation functionality across all applications.

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Marta Jarzabek Hulthén Head of Marketing, SF Anytime ""As Head of Marketing, Hulthén has complete control over the strategic development of the SF Anytime brand. With broad experience and deep knowledge of the broadcast industry, Hulthén has held several leadership positions throughout her career and is an expert in all aspects of B2B and B2C marketing, communication and related sales areas. Founded in 2002, SF Anytime has cemented itself as one of the leading on-demand services in the Nordic and Baltic regions, offering TVOD content through TV operators such as TeliaSonera Group, Telenor Group, Get, Com Hem as well as several OTT partners. " "Vasilios Hatciliamis Head of TV Operations, Aftonbladet "Aftonbladet is a major Swedish tabloid which, we’re told, is the largest online newspaper in Scandinavia. With its web TV service, called Aftonbladet TV, it delivers news, sports, politics and entertainment programming to its users, and currently delivers an impressive one million video streams per day. Interestingly, Aftonbladet has designed a platform where viewers can film live events via an app and send clips directly to a newly-built studio, on-site, for broadcast, the construction of which was led by Hatciliamis. This enables a speed and urgency to live news reporting that traditional TV channels have, thus far, struggled to match. ""

"

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Phase 2: Eliminate

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Elimination  Phase  This part of the proposal is meant to highlight how MediaXchange can take contacts obtained throughout the industry and distill the information into actionable steps. The spreadsheet that I have created utilizes the acronym “P.I.C.K.” This acronym represents the difficulty and feasibility of picking an expert. With this spreadsheet, MediaXchange employees will all be on the same page of who to pursue with the most force. Below is a breakdown of the categories speakers will be separated in to. On the spreadsheet, contacts will be listed on the left side. From there a “P”, “I”, “C”, or “K” will be given to all of the contacts to determine how the office should proceed with research.

“P”(Possible)- Easy, low value: These are contacts that MediaXchange already has information for. These contacts have spoken at past events and received mediocre reviews. These contacts are “possible”, but not necessarily imperative. They can be easily landed, but do not necessarily offer substantial value to MediaXchange’s objectives. Little risk, Little reward.

“I” (Implement) Easy, High Value: These are contacts that MediaXchange already has information for. These contacts have spoken at past events and received highly favorable reviews. Mediaxchange wouldn’t have to work hard to land experts in this category, but the payoff is tremendous. Little risk, high reward. Examples: Danny Cohen, Dan’l Hewitt, etc.

“C” (Challenge)- Hard, High Value: These contacts are rather challenging to land, but offer substantial value. Contact information doesn’t exist beyond the “info@company”. These

contacts need further digging to determine assistant information and personal emails. The time spent making actual contact with these experts is well worth MediaXchange’s efforts. They are big names in the industry and would attract clients with their name alone. These experts are knowledgeable, approachable, and sure to receive positive reviews from the event’s attendees. High risk, high reward. Examples: The experts referenced earlier in this document. These experts were voted the “Top 50 VoD professionals” in the industry. Contact information does not already exist for these professionals, but pursuing them is worth the challenge. Having their names attached to an event will attract clients from across the world.

“K” (Kill)- Hard, Low Value: These are the contacts who are not already in the database. They are experts that will take quite a lot of digging to determine personal contact information. Effort spent on these contacts is not worth it in the long run for they provide limited potential value. These are contacts with smaller names who clients wouldn’t recognize (name or company) and wouldn’t really contribute to the attractiveness of the event. Efforts to land these contacts should be “killed”. Low risk, low reward. Examples: a professor from one of the fim schools around London.

"

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At the end of the week, data can be sorted or filtered to only include the middle two columns- “Implement and Challenge”, since these offer the most value. This way time isn’t wasted determining who exactly to pursue. There will be a column that denotes who is responsible for finding and landing the contact. So the data could be further filtered to only show which expert is worth is pursuing AND which employee is supposed to pursue the particular expert. From this step, contacts can then be officially added to the database, which will reduce the number of unneeded contacts people have to muddle through when it comes time to invite to an event.

"Example of Spreadsheet  

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"Embed Phase:!

The final phase of my proposal is the Embed phase. This phase is simply going to market with the newly acquired knowledge and experts identified through the conferences and events that MediaXchange is set to attend. The majority of the work will have been done by beginning of this stage. For example, knowledge of VoD will have already been solidified by the office. The research outlined in my proposal on top of the conferences attended throughout the year will yield this knowledge. Additionally, experts to supplement MediaXchange’s knowledge will have already been landed. After reaching out to the experts I have highlighted in this document and forming relationships with panelists and experts at the conferences, MediaXchange will have the necessary foundation to move forward into making consultation on VoD an actual service offering. This process should take the rest of 2015 to complete. I foresee MediaXchange rolling out the service in the Spring of 2016.!"The Embed phase involves more administrative tasks. After MediaXchange has determined which companies would be interested in their new service, the office will have to then put finite dates on the event. From there, an agenda must be constructed that will be used consistently across all of the companies who attend the consultation. Depending on the audience.This agenda will tackle the themes highlighted above. For TV channels, MediaXchange will cater the agenda to explaining what types of content are most successful over VoD platforms. Katrina will bring in experts in this field for one on one meetings and panel discussions to discuss the intricacies of localized content. For production and distribution companies, Katrina will be able to bring in executives from the company for exchanges with representatives from Netflix, Amazon, and Hulu (see snapshot of database above).!"""""

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"

VOD Timeline

"

Above is a progression timeline of VOD becoming fully embedded within MediaXchange’s services. I have divided the sections into “Initial”, “Secondary

Follow-up”, and “Objective/Checkpoint”. The “initial" section is meant to highlight the catalyst to the rest of the phase. The Education phase cannot be started until the proposal has been circulated around the office. The Elimination phase cannot move forward until the spreadsheet has been tailored to align to MediaXchange’s specific searches and so forth. The second section is the meat of the phase, which is why it is the deepest. The majority of the work is done in the Secondary section of the phase. To cap off the phase before moving on to the next stage, an objective/checkpoint must be fulfilled. The conferences have to be attended before phase 2 can begin. Contacts cannot be filtered through the excel spreadsheet if the office hasn't attended conference to obtain contacts in the first place. Workshops cannot be scheduled if the strategic partnerships haven't been formed.

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•

Breakdown MediaXchange is at a crucial point in its development. It is currently being pulled by two opposing forces- focusing vs expanding. The first direction is the imperative to specialize or “focus” (X-axis) in on the success of the core services that have kept MediaXchange alive over the past 24 years. Focusing entails working to make successful practices even more successful by investing the time and energy into improving them further. MediaXchange’s successful practices include events like the show runner exchange in LA, the Berlinale lab in Germany, and other various creative workshops held throughout Europe. Given the recent success of services like the exchange held in Los Angeles, MediaXchange is pressured to specialize this service offering even further. However, solely specializing in on one dimension (and ignoring other opportunities that surface), MediaXchange could potentially hinder its ability to offer new services (Quadrant 1). Becoming too entrenched in current success eventually leads to decreased overall organizational effectiveness. !"The second direction is the imperative to “expand” (y-axis) and diversify services to include consultation on the recent shifts in the entertainment industry. MediaXchange is feeling heavy pressure to adapt its value proposition to align with this recent shift to Video on Demand. Adapting to this shift would increase the overall client base as entertainment companies across the globe are struggling to adapt. However, MediaXchange has to be careful not to expand too rapidly (Quadrant3). !

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Focus solely on penetrating VOD

market !

Do nothing Focus in on core competencies,

untouched by VOD !

Build on strength in focus areas and

expand to diversify service

!

High

The expansion imperative

The focus imperative

Low

Low High

Current state Short term goal

Short term plan

Where MediaXchange Finds Balance: Focus vs. Expansion

Long term plan

Pursuing VOD full force while discounting the services that made MediaXchange unique in the first place would lead to an unsustainable trajectory given the size and resources of the organization.!"MediaXchange is right in middle of this crossroad and cannot afford to do nothing (Quadrant 4). Ultimately, successful navigation of these two imperatives involves a strategic pursuit. My proposal would be to break the imperatives down into short and long term goals. The yellow arrow represents the short term plan for MediaXchange. Over the next year or so, MediaXchange will continue to focus in on the services that have made it successful over the past few years without becoming too entrenched in their current success (i.e. “entrenched” simply meaning honing in on one dimension and losing sight of other key departments). MediaXchange will avoid becoming “entrenched" by slowly making the transition to Quadrant 2, where “focus” and “expansion” are both high. The slow transition is through attending VOD conferences on the side and networking with VOD experts when possible. In about a year, after the short term goal (the yellow “x”) has been achieved, it will be time to shift towards the long term goal (Quadrant 2). MediaXchange will take the success of its core services along with the newly acquired expertise on VOD and will be ready to roll out consultation on VOD by Spring of 2016. This plan ensures that MediaXchange diversifies at a sustainable pace and remains true to the service offerings that have allowed it to thrive. Below is a summary of my proposal and the major impact it will have on MediaXchange.

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Major Impact

With these recommendations, MediaXchange will be able to:

!  Attract clients from across the globe

!  Boost its brand, especially from a European perspective

!  Increase overall annual revenue

!  Meetings with Trey to confirm action plan and any grey areas

!  Solidify timeline

Preliminary

Phase 1: Educate !  Attend VOD conferences to further understanding !  Extract contact information from panelists and experts

!  Go to market with recently acquired expertise, knowledge, and experts

!  Garner feedback, testimonials, embed fully

Phase 3: Embed

Phase 2: Eliminate !  Distill most relevant speakers, panelists, and experts

through “P.I.C.K” spreadsheet