Home Newswire Television and video industry will make more money when the OTT transition...

Television and video industry will make more money when the OTT transition is finished

Share on

The television/video entertainment industry is going to generate more money in total when the OTT/streaming/SVOD/AVOD transition has played itself out than before it started, according to Matthew Hooper, CEO for the UK at Nordic Entertainment Group, the part of MTG that covers the distribution platforms Viafree (free streaming), Viaplay (SVOD) and Viasat (‘traditional’ Pay TV) and free-to-air channels (plus commercial radio). Overall video consumption is growing, partly thanks to on-demand viewing, and revenues will reflect this, he reckons.

Hooper was speaking at an event organised by the research/analysis group, Ampere Analysis, and their Executive Director Richard Broughton provided an example of where some of the extra money might come from – direct-to-consumer services. He has run the figures on what revenue impact the new Formula One app (a direct-to-consumer offering from the sports rights owner) could have in the U.S., where the sport is less popular than in many other major markets.

In the most recent Ampere Analysis survey that tracks consumer attitudes to entertainment and content, only 2% of Americans said they are interested in watching F1. But that apparently low figure should not (and clearly did not) put anyone off. Broughton pointed out:

  • There are 127million households in the U.S.
  • 107 million of them have broadband
  • Within these, there should be 2.1 million people interested in F1
  • Of these, 1.8 million subscribe to an SVOD service and so are potentially open to paid OTT
  • Broughton assumed F1 could sign up half that figure and, taking discounts into account, raise $70 per sub, per year (around $6 a month)
  • The total annual revenue from the direct-to-consumer service based on this analysis would be $63 million
  • Broughton said it is believed that F1 makes $4 million in traditional distribution rights deals in the U.S. today
  • Thus, even if sign-up figures were one-tenth of the 900,000 (so 90,000) the DTC (direct-to-consumer) revenues comfortably exceed what F1 makes today.

Broughton concluded that direct-to-consumer represents a significant revenue boosting opportunity for some sports, and especially niche sports. He also pointed out that while the average SVOD service might only raise $7 a month from a consumer, multi-SVOD stacking is quickly driving total household OTT subscriptions to significant levels. The average OTT home in the U.S. is now spending $35 per month on OTT subscriptions (Ampere Consumer figures for Q1 2018, using a sample of 33,000 respondents – prices include sales tax).

The average OTT spend per month for homes with more than one OTT service is just under $19 in the UK. “There are some territories where OTT spend is closing in on [traditional] Pay TV,” Broughton added at the London event. “In Sweden OTT spend has passed Pay TV.” The OTT spend/month average in Sweden reached $21.50 in Q1 2018, compared to $17.50 for [traditional] Pay TV. In Germany the OTT figure is $15 compared to $20.40 for Pay TV.

The total effect on overall industry revenue depends what happens to Pay TV of course, with various researchers lately pointing to falling revenues in future. Broughton thinks the net result is positive for the video industry. “Rather than devaluing the market, this is adding funds on top of existing revenue streams,” he said.


Share on