By Ben Schwarz and Ian Nock
Last month, we hosted a round table at the Connected TV Summit in London. We both represent the Ultra HD forum and so agreed with the organisers to address the question of what Premium content is in 2019. Attendees from a variety of companies including Ampere Analysis, Verimatrix and Synamedia joined us.
For decades, going to the cinema was the most common way to access the latest premium content. Then Pay TV came along, and through a complex windowing system recreated some of that premium feeling for subscribers.
Obvious things come to mind first like the idea that ‘premium-ness’ is associated with exclusivity. That in-turn poses questions about windowing. Netflix has turned many things on their head in the content distribution world, and windowing is undoubtedly one of them. Cast your mind back just a decade and imagine watching a star-studded feature film for the first time, though a subscription service on your TV, or even on your mobile device.
Windowing has become more complex as SVOD has transformed from being the last window after broadcast (for cinema movies in the French market, SVoD platforms still have to wait three years after theatrical release) to being somewhere between the first post theatre/2nd or 3rd. There have been experiments in the US for parallel release in theatre and on premium TVOD for a $20 to $40 price.
Our round-table discussion refused to draw a conclusion on windowing, but agreed that windowing is no longer clear.
So, what could Ultra HD bring to the table? Can the content’s format influence its perceived value?
We looked back 20-odd years to the advent of HDTV. After some trial and error from broadcasters, the market seemed to stabilise on a premium of approximately 20% for HD content over SD. Typically SD movies would be rented on VoD platforms for 4 ($/£/€) and their HD counterpart for ($/£/€) 5. This model is fading in the SD vs. HD world but is still present on some VoD platforms.
When UHD content first started hitting the On-Demand platforms in 2014 prices went all over the place.
Netflix reserved UHD content to its top tier, but that is the only price plan with multiple streams allowed. 20% of Netflix’ subs are estimated to take the premium pack, and about 20% of those premium subs do it to access UHD Content. 20% of 20% of over 150M subs is still a healthy 6M+ households, and we’re only at the beginning. In the summer of 2018, Netflix tested a pricier ‘Ultra’ plan using HDR as a premium tier but has not communicated on the subject since.
The pricing of plastic discs does show a “premium-ness” of UHD with the good old DVD usually retailing at or under 10 ($/£/€), the Blu-ray version at or under 20 ($/£/€) and the UHD version at around 30 ($/£/€). The fact that over 50% of the material sold is still DVD is probably because of pricing, and if you’re a glass-half-full kind of person, you’ll see some positives like the fact that over 13% of Blu-ray’s sold in Britain are now UHD versions.
Apple, as usual, is doing its own thing, introducing single pricing for HD and UHD, which can be read two ways. The pessimists see this destroying the value of UHD while the optimists see it as a way of making UHD into the new gold (read Apple) standard.
Although more and more content is released in UHD, the economic tension between content owners and distributors has prevented the floodgates from being fully opened. Content owners are still keeping some premium UHD content unreleased rather than price it down. This doesn’t seem like a tenable position in the long term – remember the music industry trying to hold back on streaming – and the market penetration of smart 4K HDR devices and TVs is now growing so that if the content isn’t made available legally, this gives incentive to illegal content distribution.
So as a wrap-up, we can see UHD, which today means 4K resolution and High Dynamic Range (HDR) and will soon also mean High Frame Rate (HFR) and Next Generation Audio (NGA), and maybe 8K resolution, being part of the premium TV experience. There is a window of opportunity to market a premium tier from UHD, but new technology is arriving so fast that UHD may become a must-have feature by the time most operators are ready to provide it.