The Changing Landscape of European TV - ITU Workshop The Future of TV for Europe 7 June 2019 Geneva, Switzerland
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The Changing Landscape of European TV ITU Workshop The Future of TV for Europe 7 June 2019 Geneva, Switzerland Tom Morrod Chief of Research, Consumer Techologies tom.morrod@ihsmarkit.com Confidential. © 2019 IHS MarkitTM. All Rights Reserved.
I’d like to discuss 3 big trends… very briefly 1.The rise of online video platforms 2.Consolidation of telecoms and media 3.The economics of platform companies Confidential. © 2019 IHS MarkitTM. All Rights Reserved. 2
The world 5 years ago…
Connected devices were Online video was 3% of
Linear viewing
just reaching parity with viewing and 3% of
was growing
‘dumb’ TVs entertainment spend
250 2000
200 0
2005 2006 2007 2008 2009 2010 2011 2012 Non-connectable TVs Connectable devices TV spend Other spend Online spend
Confidential. © 2019 IHS MarkitTM. All Rights Reserved. 3What about the world today…
There were slightly Online and VOD was
Linear viewing
more connected around 3% of viewing and
was growing
devices than ‘dumb’ 3% of entertainment
TVs spend
OTT is 20% of Most consumer Online is capturing all
viewing, growing devices are viewing growth and
2% per year, and connected and almost all subscriber and
accelerating media-capable revenue growth
Confidential. © 2019 IHS MarkitTM. All Rights Reserved. 4Online subscription services added just under 17 million new paid accounts
in Europe in 2018
Europe: Pay TV and Online Subscriptions Net Additions in 2018 (000)
18,000 16,969 Online Subscription:
16,000
2018:
14,000
Netflix & Amazon: +32% growth
12,000
Responsible for 2/3 of Next 5 years:
10,000 the growth
+11% CAGR
8,000
6,000
3,928
4,000
-283
-25 1,720
2,000 918 771
41 40 161
0
WE CEE WE CEE WE CEE WE CEE WE CEE
-2,000
Cable DTT IPTV Satellite Online
Source: IHS Markit
Confidential. © 2019 IHS MarkitTM. All Rights Reserved. 5The result is Netflix is the biggest video subscription platform in Europe
Europe: Video subscriptions by provider and platform (2017)
Subscriptions (m)
0 5 10 15 20 25 30
Netflix
Sky
Liberty Global
Tricolor
Vodafone
Rostelecom
Amazon
Orange
Altice
Deutsche Telekom
Cable Satellite IPTV Online
Note: Video subscriptions and revenues for VodafoneZiggo are allocated equally to Liberty Global and Vodafone Source: IHS Markit
Confidential. © 2019 IHS MarkitTM. All Rights Reserved. 6The reaction has been a series of merger mega-deals, positioning fewer,
larger players to better compete on a regional/global scale
Marriage of distribution and content Scale: Content, production, channels
Time
AT&T
Warner Disney Fox
Convergence Geographic diversification
Liberty
Vodafone Comcast Sky
Global
Confidential. © 2019 IHS MarkitTM. All Rights Reserved. 7And operators have tried implementing a range of strategies to keep pace
Bundling Unbundling Mobile video
Aggregating new TV UX and
Premium content
content owners and multiscreen
provision
outlets innovation
Confidential. © 2019 IHS MarkitTM. All Rights Reserved. 8But this kind of misses the elephant(s) in the room… to mix clichés Confidential. © 2019 IHS MarkitTM. All Rights Reserved. 9
These companies diversified to offer a whole range of consumer services
Alibaba Alphabet Amazon Apple Baidu Facebook Tencent
Communications &
Retail Advertising Retail Devices Advertising Advertising
Content
1999 1998 1994 1976 2000 2004 1998
Ads Various Various Amazon ads App store search ads Baidu ads Facebook ads Tencent social ads
AI / Digital Assistant Fashion AI Google Assistant Alexa Siri Raven H Messenger bots Dingdang
Cloud Alibaba Cloud Drive, Photos Amazon Drive iCloud Baidu Cloud Workplace Tencent Cloud
WeChat Pay, QQ
Commerce & Payment Tmall, Taobao, Alipay Android Pay Amazon.com Apple Pay Baidu Wallet Various
wallet, Tenpay
Communications Ding Talk Hangouts, Allo, Duo Alexa messaging iMessage, FaceTime Baidu Hi WhatsApp, Messenger WeChat, QQ
Movies & TV on Google Apple Music, Apple TV, Tencent Video, Tencent
Content Youku Tudou Amazon Prime Video iQiyi, PPStream Watch
Play, YouTube Podcast, Airplay 2 Sports
Nexus, Chrome,
Devices/ Software Yun OS Fire TV, Kindle, Echo iPhone, iPad, Mac, iOS Raven H, Duer OS Oculus -
Android
Health Ali Health Google Fit - Apple Health - Moves WeDoctor
Home TmallGenieX1 Google Home Echo, Ring HomeKit Raven H - -
Location & Transport Various Google Maps, Waze - AppleMaps, CarPlay Baidu Maps Check-In Tencent Maps, iSpace
AR in commerce,
VR & AR AR Core Amazon AR View AR Kit DuSee Oculus QAR
games
Confidential. © 2019 IHS MarkitTM. All Rights Reserved. 10But their history and core business is a long way from the video industry
Alibaba Alphabet Amazon Apple Baidu Facebook Tencent
Communications &
Retail Advertising Retail Devices Advertising Advertising
Content
1999 1998 1994 1976 2000 2004 1998
Ads
AI
Cloud
Commerce & Pay
Communications
Content
Devices/OS
Health
Home
Location & Transport
VR & AR
Confidential. © 2019 IHS MarkitTM. All Rights Reserved. 11Asymmetric business models are critical to platform disruption
Share of 2017 revenue (%)
100% 100% 100% Other
90% Other 90% 90%
Other
80% 80% 80%
70% 70% 70%
60% 60% 60%
50% 50% 50% Advertising
Hardware business
40% business 40% 40%
Retail
30% 30% business 30%
20% 20% 20%
10% 10% 10%
0% 0% 0%
Apple Amazon Google
Other
iPhone AWS Other Bets Revenues
iPad Subscription services Google Other
Mac Third-party seller services
Services Google Network Members
Physical stores
Other products Online stores Google Properties
Source: IHS Markit, Consumer Platforms & Ecosystems Intelligence – 01/19
Confidential. © 2019 IHS MarkitTM. All Rights Reserved. 12Platform companies dominate new markets
USA: Online video advertising revenue World: Smartphone installed base by OS
Facebook iOS
YouTube Google - Android
Legacy TV Other - Android
Other Others
World: Mobile App Store revenues World: Smart speaker installed base by assistant
Alexa
Apple App Store
Google Assistant
Google Play
Siri
Other app stores
Cortana
Source: IHS Markit, Consumer Platforms & Ecosystems Intelligence – 01/19
Confidential. © 2019 IHS MarkitTM. All Rights Reserved. 13And it’s starting to head that way in total video advertising…
Share of ‘total video’ advertising over time
2014 2017 2023
Legacy TV YouTube Facebook Others Legacy TV YouTube Facebook Others Legacy TV YouTube Facebook Others
Confidential. © 2019 IHS MarkitTM. All Rights Reserved.And in content production
Original & Acquired Program spend ($m)
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
2014 2015 2016 2017 2014 2015 2016 2017 2014 2015 2016 2017 2014 2015 2016 2017 2014 2015 2016 2017 2014 2015 2016 2017 2014 2015 2016 2017 2014 2015 2016 2017
Walt Disney Co NBC Universal Sky Discovery Comms. Viacom Inc. HBO Netflix Amazon
Note: Excludes Sport
Confidential. © 2019 IHS MarkitTM. All Rights Reserved. 15And it’s worth considering what we want this pie to look like in another 5 years
Europe: Online video subscriptions by provider and type (2018)
Others
22%
MTG Sky
2% 1%
Netflix
44%
Discovery
2%
Türk Telekom
2%
Turkcell Sky
2% 3% HBO
Amazon
4%
18%
Source: IHS Markit
Confidential. © 2019 IHS MarkitTM. All Rights Reserved. 16What are the key takeaways from this?
• The TV industry isn’t driven by traditional economics anymore
• There is a more fundamental and philosophical discussion about public access,
local culture and privacy
• National broadcasters and broadcast itself actually answer a lot of those concerns
• And perhaps what is missing is shared platforms and technology strategy
• Smaller broadcast channels should move to online distribution
• Major channels at higher quality across more broadcast spectrum
Confidential. © 2019 IHS MarkitTM. All Rights Reserved. 17Thank you
Tom Morrod
tom.morrod@ihsmarkit.com
@tommorrod
IHS Markit Customer Care
CustomerCare@ihsmarkit.com
Americas: +1 800 IHS CARE (+1 800 447 2273)
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