GERMANY DIGITAL VIDEO 2019 - Global Services Lead the Market as Broadcasters Adapt - TVSquared
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GERMANY DIGITAL VIDEO 2019 Global Services Lead the Market as Broadcasters Adapt SEPTEMBER 2019 Bill Fisher & Alina Brentnall Contributors: Ross Benes, Paul Verna, Karin von Abrams, Angela Kim, Jennifer Jhun
GERMANY DIGITAL VIDEO 2019: GLOBAL SERVICES LEAD THE MARKET AS BROADCASTERS ADAPT Germany’s digital video market is growing. We forecast that 58.1% of the population will watch digital video in 2019. While Germany has slightly higher digital video viewer penetration than France, it is still behind the Western European average, and far behind the UK. How many digital video viewers are there in Germany? In Germany, there will be more than 47 million digital video viewers in 2019. This number will climb to close to 50 million by 2022, resulting in over 60% of the population watching digital video. Which devices are video viewers in Germany using? While TV is still one of the most popular devices, the number of mobile phone video viewers is increasing. Germany will have more than 29 million mobile phone video viewers in 2019, and that figure is expected to increase by 1.3 million in 2022. Other devices such as connected TV devices and smart TVs are also used increasingly. How many subscription OTT video viewers does Germany have? Close to 26 million people in Germany use subscription over-the-top (OTT) video services in 2019. This number KEY STAT: This year, 58.1% of the population in Germany is expected to increase to more than 30 million by 2022, will watch digital video, or 47.6 million viewers. By 2022, resulting in more than one-third of the population using there will be 49.7 million digital video viewers, which is subscription OTT video services. 60.7% of the population or 72.8% of internet users. What’s driving video growth in Germany? Digital video is driven by global services, such as YouTube, Netflix and Amazon Prime Video. But local broadcasters CONTENTS introducing OTT services are gaining importance in the market. While consumers for a large part still watch 2 Germany Digital Video 2019: Global Services Lead the free-to-air TV, pay TV and other digital video services are Market as Broadcasters Adapt increasingly used as well. 4 Overview of Our Video Viewer Numbers for Germany WHAT’S IN THIS REPORT? This report examines the digital 6 What’s Driving Digital Video Trends in Germany? video and TV market in Germany, based on our most 16 Key Takeaways recent digital video viewer forecasts. It looks at who’s 16 eMarketer Interviews watching, how and where they’re watching, the major players and what it all means for marketers. 16 Read Next 17 Sources 17 Editorial and Production Contributors GERMANY DIGITAL VIDEO 2019: GLOBAL SERVICES LEAD THE MARKET AS BROADCASTERS ADAPT ©2019 EMARKETER INC. ALL RIGHTS RESERVED 2
Behind the Numbers Linear OTT: An OTT service that delivers content from multiple TV, cable or satellite channels in real time. Also The methodology for our Germany digital video viewer referred to as a virtual multichannel video programming and over-the-top (OTT) subscription video user forecast is distributor (vMVPD) or skinny bundle. based on an analysis of 544 metrics from 65 sources. This analysis involves the collection of data from third-party Linear TV: Television programming distributed through research sources, online and mobile video activity tracking cable, satellite or broadcast networks; includes VOD. services, data as reported by major digital video and OTT Multichannel video programming distributor (MVPD): A video companies, and industry sources. service provider that delivers programming over cable, We also incorporate relevant consumer viewing trends and satellite, or wireline or wireless networks. device adoption, which play a large role in the uptake of Over-the-top (OTT): Any app or website that provides digital video and OTT video subscriptions. These forecasts streaming video content over the internet and bypasses are updated on an annual basis in order to continually traditional distribution; examples include HBO Now, Hulu, incorporate the latest changes and developments in Netflix and YouTube. Traditional distribution includes the market. internet protocol TV (IPTV), cable, satellite, wireless carriers and fiber operators, multiple system operators (MSOs), MVPDs, and major TV broadcast and cable networks. Our complete estimates for digital video in Germany can be found in this report’s accompanying spreadsheet. Pay TV: A service that requires a subscription to a traditional pay TV provider; excludes IPTV and pure-play digital video services (e.g., Hulu, Netflix, YouTube, Sling TV, Glossary etc.). Traditional pay TV providers include cable, satellite, Addressable TV: Targeted TV ads delivered on a telco and fiber operators, MSOs, MVPDs, and major TV home-by-home basis via cable, satellite and telco boxes. broadcast and cable networks. It includes both linear and video-on-demand (VOD) Programmatic: Ads transacted via an application delivered in this way, but excludes connected TV, smart TV program interface (API), including everything from and OTT. publisher-erected APIs to more standardized real-time Ad-supported video-on-demand (AVOD): These services bidding (RTB) technology. include free platforms like YouTube as well as those, Programmatic TV: The use of software platforms to like Hulu, that charge a subscription fee in addition to automate the buying or selling of TV advertising distributed serving ads. through cable, satellite or broadcast networks Advanced TV: Television paired with technology that allows Smart TV: A TV with built-in internet capability. for new features, components or uses. Addressable, Subscription video-on-demand (SVOD): Defined by programmatic, OTT and interactive are all subsets of Technopedia as “a service that gives users unlimited advanced TV. access to a wide range of programs for a monthly flat rate.” Connected TV: A TV set connected to the internet through TV Everywhere (TVE): A streaming service operated by built-in internet capability or through another device such a TV, cable or satellite network—or by an MVPD—that as a Blu-ray player, game console or set-top box (e.g., requires users to authenticate their pay TV subscriptions in Apple TV, Google Chromecast, Roku). order to access the content. Cord-cutter: Someone who once had but then canceled a Upfront: Digital video ad spending committed in advance, pay TV service. including spending resulting from the TV upfronts events, Cord-never: Someone who never subscribed to pay TV in the Interactive Advertising Bureau (IAB) Digital Content the first place. NewFronts, and other meetings throughout the year. Cord-trimmer: Someone who cut back on their pay TV Virtual multichannel video programming distributor service level but still subscribes. (vMVPD): An MVPD that delivers service via the internet; Esports: Organized gaming competitions among interchangeable with “linear OTT.” professional players and teams. GERMANY DIGITAL VIDEO 2019: GLOBAL SERVICES LEAD THE MARKET AS BROADCASTERS ADAPT ©2019 EMARKETER INC. ALL RIGHTS RESERVED 3
OVERVIEW OF OUR VIDEO VIEWER Breaking down digital video viewers by age puts this trend in stark contrast. The majority of digital video NUMBERS FOR GERMANY viewers this year will, unsurprisingly, be teens and millennials. However, penetration rates remain lower Germany, like France, has lagged behind some of among consumers ages 45 and older. Just 58.6% of its neighbors in digital video viewership. A more people ages 45 to 54 will watch digital video this year, conservative audience that skews slightly older and with that proportion dropping to well below half among is more wedded to traditional media is largely behind 55- to 64-year-olds and less than 30% for those 65 and older. this lag. However, digital video is beginning to get a foothold, particularly among younger age groups. DIGITAL VIDEO VIEWERS There will be 47.6 million digital video viewers in Germany in 2019, representing 58.1% of the population. This figure places Germany on par with France (57.4%), but below Western Europe as a whole (59.2%) and well behind the UK (68.3%). MOBILE VIDEO VIEWERS Similar to the digital video totals, mobile phone video viewership in Germany lags behind some of the more digitally developed countries we track, with 35.3% of the population—29.0 million people—tuning in to such content monthly this year. Even among digital video viewers, fewer than two-thirds will be mobile phone video viewers throughout our forecast period. This is a nation of video viewers who are wedded to traditional forms of consumption, with broadcast TV still accounting for the majority share of viewership among certain demographics. GERMANY DIGITAL VIDEO 2019: GLOBAL SERVICES LEAD THE MARKET AS BROADCASTERS ADAPT ©2019 EMARKETER INC. ALL RIGHTS RESERVED 4
Younger consumers are driving much of the growth in mobile video viewership in Germany, something that we’ll explore in more detail later in this report. TV still remains an important medium for digital video consumption for the population of Germany. SUBSCRIPTION OVER-THE-TOP (OTT) VIDEO VIEWERS Germany is seeing strong growth in subscription OTT video viewers. This year, the amount of subscription viewers will grow 15.4% to reach 25.9 million. By 2022, that figure will climb further to 30.7 million only slightly What’s causing this decline? Strong growth in the number less than the total number of mobile video viewers. of Netflix users: This year, the number of viewers will grow 17.6% to reach 18.9 million, in Germany. By 2022, that figure is projected to reach 22.6 million. Select OTT Platform Forecasts Combined, Prime Video and Netflix will have 40.6 million viewers this year and 47.6 million by 2022 (of course, Thanks to its early-mover advantage, Amazon dominates many consumers will subscribe to both services, which Germany’s subscription OTT landscape. This year, the explains why the subscription OTT viewer total is lower). service will have 21.7 million viewers with strong When compared with the near-ubiquity and largely free year-over-year growth of 10.7%. And that growth will nature of YouTube, these are impressive user numbers. continue throughout the forecast period. However, Amazon’s share of the subscription OTT market will decline slightly—from 83.8% this year to 81.5% in 2022. GERMANY DIGITAL VIDEO 2019: GLOBAL SERVICES LEAD THE MARKET AS BROADCASTERS ADAPT ©2019 EMARKETER INC. ALL RIGHTS RESERVED 5
This year, YouTube will have 43.5 million users, accounting for 91.4% of digital video viewers. Marginal growth will continue through the forecast, but total viewership of 45.2 million in 2022 will be overtaken by the combined Netflix/Prime Video total. TIME SPENT WITH DIGITAL VIDEO In terms of how much time adults in Germany spend with traditional TV vs. digital video, the trend is for slight changes, but nothing particularly substantial. Between 2017 and 2021, time spent with TV will WHAT’S DRIVING DIGITAL VIDEO have fallen only slightly from 3 hours, 41 minutes to 3 TRENDS IN GERMANY? hours, 29 minutes—a loss of just 22 minutes. Digital video gains, meanwhile, will also be relatively small, albeit proportionally large given they’re coming from a small base. In 2017, adults in Germany consumed just MARKET OVERVIEW 29 minutes of digital video. By 2021, that will reach A variety of services and providers, ranging from global 52 minutes. players such as Netflix and Prime Video to small local players and pay TV providers such as Sky or Magenta TV, have shaped Germany’s digital video market. While new global players have been and are planning to enter the market, pay TV providers are offering their own on-demand and streaming services. In addition, smaller local players are also introducing their own services. GERMANY DIGITAL VIDEO 2019: GLOBAL SERVICES LEAD THE MARKET AS BROADCASTERS ADAPT ©2019 EMARKETER INC. ALL RIGHTS RESERVED 6
SELECT OTT SERVICES IN GERMANY, AUGUST 2019 Service Owner Monthly Cost (1) Revenue Model Subscribers Content/Description Netflix Netflix €7.99-€15.99 Subscription video-on-demand Subscribers: 5.1 million Movies and TV series, including original content ($9.43-$18.87) (SVOD) (Q3 2018); estimated monthly viewers in 2019: 18.9 million Amazon Amazon No additional cost with SVOD Subscribers: 9.9 million Movies and TV series, including original content Prime Video Prime membership, (Q3 2018); estimated which is €7.99 ($9.43) monthly viewers in 2019: 21.7 million Sky Sky Streaming only (Sky SVOD with ads depending 5.2 million (2018) (2) Varies by subscription; movies and TV series, Ticket): €9.99-€29.99 on subscription including original content, live TV, sports ($11.79-$35.39); pay TV (e.g., soccer, golf, handball, and more) package (Sky Q): €57.99- €79.99 ($68.43-$94.39) Joyn ProSiebenSat.1 Free Ad-based video-on-demand 3.8 million users Live stream content from more than 50 channels, and Discovery (AVOD) (Aug 2019) on-demand series and original content YouTube Google Free or €11.99 ($14.15) AVOD/SVOD Estimated monthly viewers Live TV, original content, TV shows and series, in 2019: 43.5 million movies, sports and more Magenta TV Deutsche Streaming: €7.95 ($9.38); SVOD with ads 3.4 million (Q1 2019) Varies by subscription; content from over Telekom pay TV package: €39.95- 75 channels, movies and TV series, live TV, €64.95 ($47.14-$76.64) originals and exclusives, international series and live concerts TVNow Mediengruppe Free to €4.99 ($5.89) AVOD, SVOD with limited Unique users: 4.53 million Live stream RTL Mediengruppe channels; RTL pre-roll ads (July 2019) on-demand movies and series, original content Note: All services are available on iOS, Android and other connected devices; cost conversions calculated using $1=€0.847471 exchange rate; (1) cost does not take into account trial periods, introductory offers, special promotions, or pricing plans for longer than one month; (2) includes pay TV and OTT users. Source: Netflix, Amazon Prime Video and YouTube viewers based on eMarketer forecast, Aug 2019; Amazon Prime Video and Netflix subscriber information from Cirkus and Ampere Analysis as cited by Broadband TV News, Oct 15, 2018; Sky subscriber information from Sky as cited by DWDL, July 26, 2018; Joyn viewer information from Joyn as cited by Broadband TV News, Aug 6, 2019; Magenta TV subscriber information based on Deutsche Telekom as cited by Digital TV Europe, May 9, 2019; TVNow user information from AGOF, Aug 1, 2019; Pricing information for Amazon Prime Video, Sky, Joyn, YouTube, Magenta TV and TVNow as cited on respective company websites; pricing information for Netflix as cited by kino.de. Global Streaming Services Are the Market Leaders YouTube launched in Germany in 2007. Originally, the video sharing platform offered free short-form content from content creators, but it now offers live TV, original content, TV series, movies and sports depending on the subscription. In that respect, YouTube is different from the other platforms which are not content sharing platforms focused on short-form content. Amazon’s SVOD service Prime Video launched in Germany in 2014. Included as part of a Prime membership, the service now offers more than 15,000 movies and series including original content. Netflix was introduced in Germany about seven months after Prime Video. After having huge success with some of its local German language productions, Netflix has been investing heavily in local content and productions, which will be a valuable step toward complying with the soon-to-be-introduced European Commission Content Quota. This quota, taking effect in September 2020, requires video-streaming companies in the EU to ensure that 30% of their offering is made up of European content. While clarifications on that are still to come, many providers, including Netflix and Amazon, along with other local providers, have already started to invest in creating local and original content. GERMANY DIGITAL VIDEO 2019: GLOBAL SERVICES LEAD THE MARKET AS BROADCASTERS ADAPT ©2019 EMARKETER INC. ALL RIGHTS RESERVED 7
Several local players now offer streaming services as well. Users of Digital TV*, Free-to-Air and Pay TV Among TV Founded in 2007 by German broadcaster Mediengruppe Viewers in Germany, Sweden and the UK, March 2019 % of respondents RTL Deutschland, TV Now is an SVOD service offering live and on-demand content of several of RTL group’s Germany channels, as well as original content. 79% 39% 35% Joyn, a joint venture by ProSiebenSat.1 and Discovery, Sweden launched in Germany in June 2019. By August 2019, it 47% was reported to have 3.8 million users taking advantage 54% of its offerings consisting of live streams of more than 65% 55 free-to-air channels as well as on-demand content, UK including originals. This service is currently free to users 47% and financed by advertising, with paid premium options 52% planned for the end of 2019. According to Joyn as cited 65% by Broadband TV News, Joyn’s user numbers are already Free-to-air Digital TV* Pay TV 380% higher than those from its predecessor platform Note: n=500 in each country; ages 18+; *free and paid digital video 7TV, with over 61% of Joyn’s content being watched services on mobile. Source: nScreen Media, "TV Universe—UK, Germany, Sweden: How People Watch Television Today" sponsored by Gracenote, May 15, 2019 247451 www.eMarketer.com Other global players are planning to make in-roads in Germany’s streaming market as well. While Apple TV+ Among younger age groups however, the shift toward and IMDb TV, Amazon’s free streaming service, are digital TV is more prevalent. Almost half of respondents planning to enter the market in 2019, Disney’s streaming ages 18 to 24 in Germany use digital TV as their primary service Disney+ will launch in 2020. way to watch TV. One-quarter watched free-to-air and pay TV, per nScreen Media and Gracenote. Smaller local players in Germany are Maxdome (which will eventually be replaced by Joyn), Zattoo, the media Looking at digital video, global players such as Prime libraries of local channels (such as ARD/ZDF), DAZN and Video and Netflix dominate the streaming market Eurosport, as well as telecoms and pay TV providers in Germany. According to a Q4 2018 survey by Vodafone with GigaTV and Unitymedia. AudienceProject, most digital video viewers in Germany ages 15 and older use Netflix (57%), Prime Video (55%) and YouTube (53%) to download or stream video. Broadcasters Are Adapting to Digital Video While Germany’s TV consumption is still driven by In response to increased competition from these global free-to-air TV, pay TV and digital TV have become popular and local players, many of the pay TV providers, such as well. Nearly eight in 10 TV viewers in Germany, as telecom company Deutsche Telekom with Magenta Sweden and the UK watched TV via free-to-air services, TV, and Sky, now also offer additional streaming or according to March 2019 research from nScreen Media on-demand services. For example, both offer users the and Gracenote. The use of digital TV, including free and option to watch their pay TV programs online or through paid video services, was slightly ahead of pay TV, at 39% an app, as well as via standalone subscription services. and 35%, respectively. Vodafone and 1&1 have similar models as well. Pay TV providers have adjusted to the point of developing their own, sometimes standalone, VOD/OTT services. GERMANY DIGITAL VIDEO 2019: GLOBAL SERVICES LEAD THE MARKET AS BROADCASTERS ADAPT ©2019 EMARKETER INC. ALL RIGHTS RESERVED 8
“TV is now a connected platform that is frequently Nearly eight in 10 internet users in Germany watched watched on the move,” said Blair Robertson, CTO of videos online, an increase of 3 percentage points from TVSquared. “Broadcasters are adapting to this behaviour 2018, according to a July 2019 Bitkom study. Nearly and considering how to develop their own BVOD offering. two-thirds of respondents watched videos using sites In France, this is already a reality. For Germany, the such as YouTube or Vimeo, while 42% watched movies majority of households use BVOD or SVOD services.” and TV shows via on-demand services such as Netflix, Prime Video and Joyn. “Pay TV providers have further expanded their offerings and are focusing more than ever on linear and nonlinear In 2018, 65% of internet users in Germany ages 16 availability,” said Katharina Behrends, managing director of to 74 watched digital video content from sharing sites central and eastern Europe at NBCUniversal International such as YouTube, according to a Eurostat survey. And Networks and chairwoman of the VAUNET Pay-TV 48% of respondents viewed internet-streamed TV from Working Group as cited by Verband Privater Medien broadcasters, and 31% used commercial VOD services. (VAUNET). Outstanding video content thus reaches more By that last measure, Germany was substantially ahead of and more people on all platforms.” This allows consumers most other EU-5 countries, including Italy and France. to switch seamlessly between linear and nonlinear content. The variety of programs and the number of pay Digital Video Viewer Penetration in the EU-5, by TV channels available in Germany has never been this Country and Service Type, 2018 large, Behrends said in a comment cited by Frankfurter % of internet users Allgemeine Zeitung (FAZ). Internet- Video-on-demand Content from streamed TV (live or (VOD) from sharing services catch-up) from commercial services (e.g., YouTube) The smaller and local pay TV, broadcaster and streaming broadcasters (e.g., Netflix, HBO) services are aiming to compete with the global players, UK 64% 53% 71% Germany 48% 31% 65% some even by working together. “There has to be that Spain 45% 39% 76% level of consolidation between content holders,” said France 36% 23% 51% Thomas Bremond, general manager international at Italy 28% 23% 68% FreeWheel, a Comcast Company. “By now you have Note: ages 16-74 who used the internet in the past 3 months ProSieben and Discovery that have joined forces. Source: Eurostat, "ICT Usage in Households and by Individuals 2018," Dec 20, 2018 The future—it’s clearly one of consolidation of various 249429 www.eMarketer.com premium broadcaster platforms because they know they need scale in order to compete with some of these other Despite increasing digital video and OTT uptake, subscriber-funded platforms.” Germany’s TV landscape is not expected to be disrupted in the short term. Linear TV and digital video are typically used together, according to a July 2019 Deloitte survey. CONSUMER HABITS The importance of SVOD within the market can also be seen when looking at video revenues. While pay What Consumers Are Watching: Traditional TV revenues in Germany have been relatively constant Consumption Remains Strong between 2015 and 2019—growing by 4.4%—SVOD will drive these revenue gains, with an estimated Consumers in Germany still spend most of their time 22% increase in 2019, according to VAUNET, GfK and watching TV. They spent 218 minutes per day watching Filmförderungsanstalt (FFA). TVOD and EST revenues will broadcast TV in Q2 2019, compared with 25 minutes of remain small compared with pay TV and SVOD. SVOD’s free online video and 19 minutes of pay VOD, according to share of the VOD market in Germany grew from 22% in a report from SevenOne Media and forsa. However, time 2013 to 74% in 2018, per Goldmedia. spent with TV has been slowly decreasing over the years (from 228 minutes/day in Q1 2017), while time spent with free online video and pay VOD has been increasing. GERMANY DIGITAL VIDEO 2019: GLOBAL SERVICES LEAD THE MARKET AS BROADCASTERS ADAPT ©2019 EMARKETER INC. ALL RIGHTS RESERVED 9
Pay TV* and Video-on-Demand (VOD)** Revenues in How Do Households in Select Countries Watch Paid Germany, 2015-2019 TV Content? billions of € % of respondents, Q1 2017-Q3 2018 €4.0 Q1 2017 Q3 2017 Q1 2018 Q3 2018 €0.3 €3.5 €0.2 US €0.1 €0.2 Pay TV only 20% 22% 22% 16% €3.0 €0.2 €0.1 €1.1 SVOD only 16% 22% 23% 25% €2.7 €0.1 €0.9 €2.5 €0.1 Pay TV & SVOD 64% 56% 55% 59% €0.5 €0.3 €0.1 UK €0.2 €0.1 Pay TV only 31% 31% 27% 21% SVOD only 21% 20% 22% 24% Pay TV & SVOD 48% 49% 51% 55% €2.2 €2.3 €2.3 €2.4 €2.1 Spain Pay TV only 37% 31% 26% 21% SVOD only 14% 16% 23% 25% Pay TV & SVOD 49% 53% 50% 54% 2015 2016 2017 2018 2019 Pay TV and pay TV-on-demand Germany Subscription video-on-demand (SVOD) Pay TV only 35% 34% 34% 26% Transactional video-on-demand (TVOD) SVOD only 23% 21% 23% 28% Electronic sell-through (EST) Pay TV & SVOD 42% 45% 43% 46% Note: *pay TV and pay TV-on-demand is from VAUNET; **EST, TVoD and Denmark SVoD is from GfK/FFA Source: Verband Privater Medien (VAUNET), GfK and Filmförderungsanstalt Pay TV only 29% 23% 21% 24% (FFA) as cited in Verband Privater Medien (VAUNET) "Pay-TV in Deutschland SVOD only 22% 24% 25% 23% 2019," July 25, 2019 248803 www.eMarketer.com Pay TV & SVOD 48% 54% 54% 53% Worldwide* With the increase in available content, consumer Pay TV only 32% 30% 26% 21% willingness to pay for on-demand content is increasing as SVOD only 18% 21% 24% 26% well. “Total video usage is rising and people are willing Pay TV & SVOD 49% 49% 50% 53% to pay for high-quality programs. We therefore expect Note: *Australia, Brazil, Denmark, France, Germany, Italy, Japan, Mexico, Netherlands, Poland, Saudi Arabia, Spain, Sweden, Turkey, UK and US further growth for Pay TV and streaming.,” said Frank Source: Ampere Analysis as cited in company blog, Oct 24, 2018 Giersberg, member of the board of directors of VAUNET, 242824 www.eMarketer.com in a press release. Netflix is the market leader in the UK, France and Sweden, according to a survey by nScreen Media. But The VOD market is already near saturation in Germany, in Germany, Prime Video is slightly ahead with 56% of according to Deloitte and FAZ. Between 2015 and 2017, respondents subscribing to the service, while 51% said annual VOD user penetration increased by more than they subscribe to Netflix. 20 percentage points, while in 2019, growth was only 5 percentage points, per Deloitte. “After a few turbulent Amazon did have first-mover advantage when it launched years, our data suggest a certain amount of calm in the in Germany, in addition to taking over and rebranding moving-image market,” said Klaus Böhm, head of media Lovefilm, which had been in Germany since 2010. and entertainment at Deloitte, in a company statement. Moreover, Amazon Channels (enabling users to book other third-party streaming services through Amazon Between Q1 2017 and Q3 2018, the number of Prime) has been available in Germany since May 2017, households in Germany using only pay TV decreased with Germany being one of only a few markets besides from 35% to 26%, according to research from Ampere the US with this offering. Netflix, however, is slowly Analysis. The number using only SVOD increased to 28%, gaining market share, thanks to successful local content. surpassing pay TV. However, more than 46% claimed to use both pay TV and SVOD, showing the trend of using several services. GERMANY DIGITAL VIDEO 2019: GLOBAL SERVICES LEAD THE MARKET AS BROADCASTERS ADAPT ©2019 EMARKETER INC. ALL RIGHTS RESERVED 10
To Which Subscription Video-on-Demand (SVOD) According to AudienceProject, desktops/laptops and Services and Broadcaster Apps Do TV Viewers in TVs were used most often by internet users in Germany Germany Subscribe? to download/stream digital video in Q4 2018, closely % of respondents, March 2019 followed by smartphones, used by more than a third of SVOD services Amazon Prime Video 56% internet users. About one-quarter of respondents used connected TV devices. Netflix 51% Sky Ticket 12% What Devices Do Internet Users in Select Countries DAZN 6% Use to Download/Stream Digital Video*? 2% Eurosport % of respondents, Q4 2018 Desktop/ TV Mobile Tablet Connected Video game Broadcaster apps laptop TV devices** console ZDF 41% Finland 49% 45% 34% 26% 20% 9% ARD 37% Sweden 46% 38% 38% 28% 31% 7% RTL TV Now 18% Norway 46% 47% 35% 26% 34% 9% US 44% 46% 39% 30% 37% 17% 7TV 10% Germany 43% 42% 36% 33% 25% 10% 1% Other Denmark 42% 45% 30% 31% 21% 7% Note: n=198 ages 18+; top 5 SVOD services and broadcaster apps UK 39% 42% 35% 32% 28% 17% Source: nScreen Media, "TV Universe—UK, Germany, Sweden: How People Note: ages 15+; *includes TV series or movies; **e.g., Amazon Fire TV, Watch Television Today" sponsored by Gracenote, May 15, 2019 Apple TV, Google Chromecast 249435 www.eMarketer.com Source: AudienceProject, "Insights 2019: Traditional TV, online video & streaming," Jan 17, 2019 Besides SVOD services, broadcaster apps are also 245385 www.eMarketer.com popular among TV viewers in Germany. These include Looking at connected TV devices, it’s worth noting media library apps of free-to-air broadcasters such as that the Amazon Fire TV dominated Germany’s market ZDF and ARD, as well as paid streaming services from in March 2019, with a share of 61%, followed by broadcasters such as RTL TV Now. Among these, ZDF Apple TV (17%) and Google Chromecast (14%), per and ARD are the top applications, per nScreen Media; nScreen Media. 41% and 37%, respectively, use these to watch TV in March 2019. Connected TV Devices Used by TV Viewers in Germany, Sweden and the UK to Watch Streaming Device Trends: TV Is Still Strong, but Mobile Is Digital Video, March 2019 % of respondents Catching Up Germany 61% 17% 14% 8% In Germany, the devices used for watching video vary to some degree by the type of content viewed. According to UK 39% 18% 17% 20% 6% May 2019 survey by Gesellschaft für Unterhaltungs- und Sweden Kommunikationselektronik (gfu), content accessed via 34% 60% 5% VOD and broadcasters’ media libraries is primarily viewed Amazon Fire TV Google Chromecast Other on a TV, whereas content from video portals is primarily Apple TV Now TV viewed on a smartphone. Note: Germany n=303; Sweden n=429; UK n=411; ages 18+; numbers may not add up to 100% due to rounding This is in line with findings from SevenOne Media and Source: nScreen Media, "TV Universe—UK, Germany, Sweden: How People Watch Television Today" sponsored by Gracenote, May 15, 2019 forsa. For paid content, consumers tend to prefer a larger 247453 www.eMarketer.com screen. For example, more than half of the time spent viewing paid VOD services in Q2 2019 was with TV. Smart TV ownership and usage is increasing in Germany, Almost half (47%) of the time devoted to media library as well. Some 51% of households in Germany will own a content was spent on TV as well. smart TV this year, up from 42% in 2017, per gfu. Usage itself has increased steadily over the past two years, reaching penetration of over 67% (80% of those ages 16 to 39 and 56% of those ages 60 and older). GERMANY DIGITAL VIDEO 2019: GLOBAL SERVICES LEAD THE MARKET AS BROADCASTERS ADAPT ©2019 EMARKETER INC. ALL RIGHTS RESERVED 11
Despite the continued prevalence of the TV set and larger How Often Do Internet Users in Select Countries in PC screens, the smartphone is becoming increasingly Europe Stream TV Shows/Movies on Their Mobile Devices? important for digital video. Among devices other than TV % of respondents, by country, Oct 2018 used for watching video, the smartphone has continually Daily Weekly Monthly Occasionally Don't use increased its share among internet users ages 14 to 69, France 31.0% 30.0% 4.3% 12.7% 22.0% from 26% in Q2 2018 to 33% in Q2 2019, according to Germany 33.0% 27.3% 8.0% 11.3% 20.3% SevenOne Media and forsa. During the same period, Italy 46.7% 27.7% 1.7% 11.3% 12.7% the laptop’s share dropped from 30% to 23%. The tablet Netherlands 34.3% 26.3% 7.0% 15.3% 17.0% viewing share has remained relatively constant. Desktops Spain 51.0% 23.3% 2.7% 11.3% 11.7% gained a 1 percentage point share, but remained UK 36.7% 35.0% 6.3% 11.0% 11.0% below smartphones. Total 38.8% 28.3% 5.0% 12.2% 15.8% Note: n=1,800 ages 18-50; numbers may not add up to 100% due to rounding According to gfu, video portals like YouTube, which Source: Penthera, "International Mobile Streaming Behavior Survey: Q4 offer primarily short-form video, are most often used 2018" conducted by EMI Research Solutions, Dec 6, 2018 244383 www.eMarketer.com on smartphone. Among the paid subscription services internet users in “Short-form content is accessible and social,” said Brian Germany accessed, 17% used Netflix on their phone Kline, chief product officer at Penthera. “But as you’re and 14% used Prime Video, according to a Q3 2018 thinking about making premium content more accessible Deloitte survey. on mobile devices, which is what all the major companies are doing … long-form is probably going to take a larger However, internet users have some problems with role overall in the marketplace than it used to.” mobile streaming. According to Penthera and EMI Research Solutions, the main frustrations when streaming SevenOne Media and forsa data tends to confirm that from a mobile device were buffering issues (41.0%) mobile video viewing is driven by free online video and videos that took too long to start up (38.0%). because most of these videos are short and easily Annoying advertising was also a major issue for four in accessible. Their study found that internet users watched 10 respondents. an average of 14 minutes of video on a smartphone per day in Q3 2018. Of those, 7.5 minutes were attributed What Frustrations Do Internet Users in France and to free online video, 3.9 to live streaming and 2.6 to Germany Experience When Streaming Mobile Video? pay VOD; just 0.1 minutes were spent on recorded % of respondents, Oct 2018 TV programs. Germany France The video buffered, making it hard to enjoy 41.0% 47.3% According to the same study, smartphones accounted The advertisements were annoying 40.0% 42.0% for 14% of time spent with paid VOD services, as well as The video took too long to start up 38.0% 46.3% over 23% of media library usage in Q2 2019. It increased my monthly data costs 12.3% 8.0% When I use public Wi-Fi 7.7% 6.0% Mobile video viewers use their devices frequently. I have never experienced frustrations when 19.0% 17.0% streaming video According to Penthera and EMI Research Solutions, Other 2.7% 2.0% one-third of internet users in Germany ages 18 to 50 Note: n=600 ages 18-50 streamed movies and TV shows via mobile daily in Source: Penthera, "International Mobile Streaming Behavior Survey: Q4 2018" conducted by EMI Research Solutions, Dec 6, 2018 October 2018. Another 27.3% did so weekly, meaning 249104 www.eMarketer.com that more than six in 10 internet users in Germany used their mobile device for video streaming at least weekly. GERMANY DIGITAL VIDEO 2019: GLOBAL SERVICES LEAD THE MARKET AS BROADCASTERS ADAPT ©2019 EMARKETER INC. ALL RIGHTS RESERVED 12
When experiencing frustrations with streaming mobile There’s no real debate about these key requirements video, 31.7% of internet users in Germany gave up and for efficient video delivery, especially to mobile phones. tried again later, according to an October 2018 survey The SevenOne Media and forsa study also pointed to from Penthera and EMI Research Solutions. However, unlimited mobile data plans, stream-on options and most (32.7%) respondents accepted that streaming can public Wi-Fi as crucial mobile video drivers from a user be a frustrating activity. The top reasons for downloading perspective in Q3 2018. from a streaming service are the ability to watch whenever and wherever they want (43.3%), not having Looking at internet speeds and connections, 5G is to worry about using Wi-Fi (30.3%) and to avoid buffering “certainly going to increase the adoption of video (23%). In fact, 57% of respondents said they are willing content and consumption across different devices and to pay for the ability to download. Close to one-quarter the accessibility to it,” said Bill Swanson, vice president of respondents said they would be willing to pay $3 to of EMEA at Telaria. “France and Germany, and … other $4 a month, while close to 20% would pay $1 to $2 a regions, [will] be dependent also on the type of streaming month, giving video providers an indication of how much speeds outside of someone’s own home and their smart consumers in Germany would be willing to pay for an TV and capabilities they have there. But the adoption will enhanced mobile viewing experience. continue to grow at a faster and faster rate.” Internet connections are a major factor for mobile video viewing. Coming at this trend from a different Demographic Differences: Among an Aging perspective, a May 2019 survey from Goldmedia, Population, Teens Drive Digital Video Use Bayerische Landeszentrale für neue Medien (BLM) and Within Germany’s video landscape, there are differences Landesanstalt für Kommunikation Baden-Württemberg in the types of content that different age groups watch (LFK) found that video creators were equally reliant and also in the ways they watch. Among younger viewers, on mobile connections. Some 59% of respondents the shift from linear TV to digital content, especially said it was important for consumers to have higher short-form and on-demand video, is more prevalent. bandwidth/gigabit internet at home. Almost as many (57%) cited flat rate pricing for video viewed on mobile “Germany has a vast aging population that is less inclined devices as a key driver, and 45% of respondents to move away from more traditional viewing on the TV mentioned the availability of public Wi-Fi. set in the living room,” said Lisa Menaldo, co-founder of The Advisory Collective. “Even though the younger Top 5 Digital Video Drivers According to Digital Video generation are avid consumers of video providers such Content Creators in Germany, May 2019 as YouTube, proportionally as a market, they are behind in % of respondents terms of adoption rates for SVOD services, with growth 1. Higher bandwidth/gigabit internet at home 59% opportunities for providers remaining high.” 2. Interactivity with users 59% Watching video is among the top media activities 3. Mobile flatrates for videos (zero rating*) 57% of teens, only surpassed by using the internet, their 4. Innovative formats 51% smartphone and listening to music. According to 5. Public Wi-Fi 45% an August 2018 survey by Medienpädagogischer Note: n=134; *offers of mobile network operators where specific services Forschungsverbund Südwest (MPFS) and GfK, 65% of are not counted against customer's data volume teens ages 12 to 19 said they watched digital videos Source: Goldmedia, "Web-TV-Monitor 2019" commissioned by Bayerische Landeszentrale für Neue Medien (BLM) and Landesanstalt für daily, 42% watched TV daily and 28% used a streaming Kommunikation Baden-Württemberg (LFK) , June 24, 2019 service every day. While more teens tended to watch 248661 www.eMarketer.com digital video and TV daily than weekly, more teens used a streaming service several times a week (34%) than every day (28%). GERMANY DIGITAL VIDEO 2019: GLOBAL SERVICES LEAD THE MARKET AS BROADCASTERS ADAPT ©2019 EMARKETER INC. ALL RIGHTS RESERVED 13
Media Activities of Teens in Germany, by Frequency, Which Digital Video Platforms Do Teens in Germany August 2018 Use*? % of respondents % of respondents, 2016-2018 Every day Several times 2016 2017 2018 per week YouTube 42% 52% 60% Access the internet 91% 6% Netflix 16% 26% 47% Use smartphone 94% 3% Amazon Prime Video 7% 15% 22% Listen to music 84% 11% Media libraries 7% 8% 8% Watch digital videos 65% 25% Sky - - 7% Watch TV 42% 31% Telekom Entertain 2% 2% 2% Listen to the radio 48% 22% maxdome 2% 2% 1% Use a streaming service 28% 34% iTunes 1% 2% 1% Digital games 30% 28% Vimeo 1% 1% 1% Books 19% 20% Note: n=1,200 ages 12-19; *daily/several times a week Watch DVDs/Blu-rays/videos 6% 20% Source: Medienpädagogischer Forschungsverbund Südwest (MPFS), "JIM-Studie 2018: Jugend, Information, Medien" conducted by GfK, Nov 28, Tablets 13% 11% 2018 Read daily newspapers 10% 11% 243628 www.eMarketer.com Magazines 4% 10% Audiobooks 8% 6% Among children, the use of digital video and streaming Read daily newspapers digitally 5% 8% services is also on the rise. According to the Magazines (online) 5% 6% Kindermedienstudie by Blue Ocean Entertainment AG, Read ebooks 3% 4% Egmont Ehapa Media GmbH, Gruner+Jahr, Panini Verlags Note: n=1,200 ages 12-19 GmbH, Spiegel, Die Zeit, Krämer Marktforschung and Source: Medienpädagogischer Forschungsverbund Südwest (MPFS), "JIM-Studie 2018: Jugend, Information, Medien" conducted by GfK, Nov 28, forsa, 36% of children ages 4 to 13 in Germany watched 2018 YouTube at least several times a week in April 2018. That 243600 www.eMarketer.com figure climbed to 44% in April 2019. Among teens in Germany, short-form video content and VOD are driving usage. Six in 10 teens ages 14 to 18 in The use of video streaming services has increased across Germany watched short-form content, according to a all younger age groups as well, the same study reported. summer 2018 Deloitte survey. In 2019, 15% of 4- to 5-year-olds use video streaming services as well as 24% of 6- to 9-year-olds. Among 10- to YouTube remained the most used video platform among 13-year-olds, over 50% will use video streaming services teens in Germany, with penetration steadily increasing in 2019. between 2016 and 2018, per MPFS and GfK. Interestingly, among this age group, Netflix seems to always have been more popular than Prime Video. While both grew steadily, Netflix registered user growth of more than 20 OPPORTUNITIES FOR MARKETERS percentage points last year. In 2017, barely one-quarter of With the variety of OTT services available in Germany, teens in Germany used Netflix, but that number reached many offer marketers the opportunity to place close to half in 2018. advertising. In particular, some on-demand services from broadcasters include advertising with a basic subscription; only viewers with a premium subscription won’t see ads when viewing certain content. Additionally, ad- supported video-on-demand (AVOD) services are very popular among consumers in Germany and will provide advertising opportunities. GERMANY DIGITAL VIDEO 2019: GLOBAL SERVICES LEAD THE MARKET AS BROADCASTERS ADAPT ©2019 EMARKETER INC. ALL RIGHTS RESERVED 14
This trend will be clearly reflected in the digital video Yet, some streaming services are starting to allow ads advertising market. This year, digital video ad spending in on their platforms; boosting revenues via ads is hard to Germany will increase 17.2% year over year, according to resist. One example is sports streaming service DAZN, Netzwerk Reklame. which decided after years of providing ad-free content to introduce ads in early 2019—in the form of clips before Not only is digital video ad spending overall expected to and after content, so as to not interrupt live events. increase, but in-stream ad revenues are projected to jump While consumers were not happy about this at first, they 20.0% in 2019, per VAUNET. accepted it as long as it did not interrupt live content. In Germany, video ads “remain a particularly attention- According to several industry observers, it’s inevitable grabbing format,” according to Integral Ad Science’s that other streaming services will follow the same route. Media Quality Report. Not only is video ad spending “We expect these channels to open up to advertising expected to grow, but so is video traffic in general. over the next few years to reach the appropriate According to Cisco, global internet video traffic was audiences,” said Klaus-Peter Schulz from Organisation der expected to grow fourfold between 2017 and 2022 and Mediaagenturen (OMG) as cited by Deutschlandrundfunk. live video 15-fold in that same time period, with live “Of course, one thing is important from our point of view: digital video accounting for 17% of all internet video that not too much advertising is broadcast here—but traffic in 2022. In countries with a better-developed always to a degree that the viewer also accepts.” communications infrastructure (like Germany), one can expect this share to be even higher. Additionally, the Another important aspect is relevancy, and ad content introduction of 5G and improved internet connectivity that is appealing to consumers. Blocking ads is already is expected to increase the digital video audience even widespread in Germany; 34% of internet users ages 16 further, increasing the potential for video advertising. to 24 and more than 31% of those ages 35 to 64 used an ad blocker to avoid having to see ads before watching a While the digital video market is growing along with its digital video or show, according to a 2019 GlobalWebIndex advertising opportunities, most internet users in Germany study. More than half of all respondents ages 16 to 64 are not well-disposed to video advertising. Four in 10 said they used an ad blocker because too many ads were internet users in Germany ages 18 to 50 found ads annoying or irrelevant. annoying when streaming mobile video, according to an October 2018 survey by Penthera. Reasons that Ad Blocking Users in Germany Use an Ad Blocker, by Age, Q1 2019 One reason for this irritation is that many newer options % of respondents in each group for watching TV and video content enable viewers to 16-24 25-34 35-44 45-54 55-64 see that content ad-free, or to skip ads. “People got Too many ads are annoying or irrelevant 56% 56% 54% 69% 76% used to being able to watch TV without advertising,” said There are too many ads on the internet 53% 53% 57% 60% 66% Florian Kerkau, Goldmedia Custom Research as cited by Ads are too intrusive 52% 51% 46% 56% 65% Deutschlandfunk. “And even today, you can see that in Ads take up too much screen space 41% 38% 32% 35% 41% I try to avoid all ads wherever, whether 34% 31% 37% 48% 50% the media libraries of private TV broadcasters, there is on TV or online less advertising than on linear TV.” To avoid having to see video ads before 34% 31% 22% 24% 23% watching clips/shows A Q4 2019 survey by AudienceProject asked Netflix users To speed up page loading times 33% 25% 23% 22% 20% Ads sometimes contain viruses or bugs 32% 31% 29% 28% 31% in Germany about what they would do if Netflix started to To stop ads being personalized based 27% 20% 20% 30% 33% introduce ads. More than half (58%) of respondents said on my browsing history they would stop watching Netflix if commercials were I want to stop my data allowance from 23% 26% 20% 17% 18% introduced. Even if Netflix lowered their subscription being used up To stop my device's battery life being 19% 22% 18% 21% 21% prices in conjunction with rolling out ads, 41% of drained respondents said they would still stop watching Netflix. Ads might compromise my online privacy 17% 18% 17% 18% 17% This will continue to be a major issue for many advertisers Other 8% 2% 4% 4% 2% and media owners: If consumers are paying for premium Note: n=1,920 Source: GlobalWebIndex, June 25, 2019 content, they generally don’t want ads. 248201 www.eMarketer.com GERMANY DIGITAL VIDEO 2019: GLOBAL SERVICES LEAD THE MARKET AS BROADCASTERS ADAPT ©2019 EMARKETER INC. ALL RIGHTS RESERVED 15
Connected TV—also known as advanced TV—will likely be ■■ Local competitors in Germany are adjusting to key to improving video ad response rates. “Consumers compete with global rivals. Subscription OTT is are tolerant of advertising when it’s relevant, which is becoming increasingly popular, and Prime Video, Netflix where advanced TV is particularly useful for brands,” and YouTube are the top services. Other global and TVSquared’s Robertson said. “The real-time insights especially national competitors including providers of now available enable advertisers to execute campaigns SVOD, BVOD and AVOD are trying to enter the market. effectively, by making the ad experience both personal and creative.” ■■ Consumers are not keen on video advertising, but new digital devices and types of content provide Broadcasters have also begun to develop platforms that new advertising opportunities. The increasing will allow for automatization for addressable TV and online popularity of smart TVs and other connected TV devices video, such as d-force by Mediengruppe RTL Deutschland will also provide further opportunities for marketers and and ProSiebenSat.1. targeted advertising to provide relevant ads, of which consumers seem to be more accepting. “The data exists for advertisers to make informed creative decisions based on these business objectives,” Robertson said. “Whether boosting brand awareness over time EMARKETER INTERVIEWS through 6-second video ads, or maximizing engagement through 30-second spots, brands can create tailored ad Thomas Bremond campaigns to meet the needs of their business. Despite General Manager International the growing opportunities, advertisers should adopt the FreeWheel same approach to all new developments—look at the Interviewed July 23, 2019 results, the consumer data and utilize these insights at the media-planning stage to ensure ads create the Brian Kline desired impact.” Chief Product Officer Penthera More than half of consumers in Germany ages 14 Interviewed August 22, 2019 to 69 used a connected TV in 2018, according to SevenOne Media and forsa. Connected TV usage has Lisa Menaldo been continually increasing since 2015 across all age Co-Founder groups, which gives ample opportunity for personalized The Advisory Collective advertising in the near future. Interviewed August 21, 2019 Blair Robertson KEY TAKEAWAYS CTO TVSquared Interviewed August 21, 2019 ■■ Traditional TV consumption remains strong, but digital video is increasing. TV viewing, especially free-to-air TV, is still very popular, but consumers in Bill Swanson Germany are increasingly interested in digital video, Vice President, EMEA Telaria too. They’re also becoming more comfortable with Interviewed July 21, 2019 video subscription services and are willing to pay for premium content. ■■ A traditional TV is still the most used device for watching video, but mobile devices are catching up. READ NEXT TV is especially popular for long-form content, whereas Germany Time Spent with Media 2019: Plateau in mobile devices are becoming the device of choice for Sight as Daily Total Nears 10 Hours short-form video. Short-form content is especially driven by younger generations, but older generations are also warming to new services and devices. GERMANY DIGITAL VIDEO 2019: GLOBAL SERVICES LEAD THE MARKET AS BROADCASTERS ADAPT ©2019 EMARKETER INC. ALL RIGHTS RESERVED 16
SOURCES EDITORIAL AND PRODUCTION CONTRIBUTORS Ampere Analysis AudienceProject Anam Baig Senior Editor Joanne DiCamillo Senior Production Artist Bayerische Landeszentrale für neue Medien (BLM) Donte Gibson Chart Editor Bitkom Research Katie Hamblin Chart Editorial Manager Blue Ocean Entertainment AG Dana Hill Director of Production Broadband TV News Erika Huber Copy Editor Ann Marie Kerwin Executive Editor, Content Strategy Cisco Systems Stephanie Meyer Senior Production Artist Deloitte Heather Price Deputy Editor Deutschlandfunk Magenta Ranero Senior Chart Editor Amanda Silvestri Senior Copy Editor Die Zeit Egmont Ehapa Media GmbH EMI Research Solutions Eurostat FAZ Filmförderungsanstalt (FFA) forsa Gfk gfu GlobalWebIndex Goldmedia Gracenote Gruner+Jahr Integral Ad Science Krämer Marktforschung Landesanstalt für Kommunikation Baden-Württemberg (LFK) Medienpädagogischer Forschungsverbund Südwest (mpfs) Netzwerk Reklame nScreen Media Panini Publishing GmbH Penthera SevenOne Media Spiegel-Verlag Verband Privater Medien (VAUNET) GERMANY DIGITAL VIDEO 2019: GLOBAL SERVICES LEAD THE MARKET AS BROADCASTERS ADAPT ©2019 EMARKETER INC. ALL RIGHTS RESERVED 17
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