IHS Report: African TV and Online Video Markets Poised for Growth

The Sub-Saharan African TV and online video markets are both underdeveloped and, in the case of online video, at a very nascent stage of development, but recent data from IHS Markit points to strong growth.

Pay TV growth is closely linked with the state of the economy, and particularly with the disposable income of families, according to a report from IHS Markit. Between 2010 and 2017, gross domestic product per-capita across Sub-Saharan Africa increased 19.1%, while the per-capita disposable income rose by 25.5% during the same seven-year period. Consumer spending on goods and services — a crucial factor for pay TV growth — has increased by 20.3% over the same period, IHS found. The number of households in the Sub-Saharan African region grew 21.8% between 2010 and 2017, while TV households grew with a compound annual growth rate (CAGR) of 3.6% during the same period. Still, the growth of low-priced digital terrestrial television (DTT) services at the expense of incumbent DTT platforms has contributed to a significant decrease in the proportion of consumer entertainment spending.

Online video in Sub-Saharan Africa has had a “delayed and sluggish start” compared to the rest of the world, according to IHS, due to several limiting factors hindering both pay TV and online video, including a lack of infrastructure, relatively high access costs, volatile exchange rates, diversity of audiences in terms of language and stringent regulation. In 2017, there were just over 500,000 OTT subscriptions — excluding multiscreen services — across the region, including South Africa.

South Africa has the most subscriptions and the highest revenue in the region, according to IHS. Subscribers have doubled, growing from 3.6 million in 2010 to 7.1 million in 2017, while revenue grew with a CAGR of 15.2% during the same period. In 1986, South Africa was the first country in Sub-Saharan Africa to launch a pay TV service. It remains the most lucrative pay TV market in the region. It is also the most advanced in terms of technology, content offerings, business models and customer care. Still, the South African pay TV market is the least competitive, according to IHS. One pay TV operator, Naspers Multichoice, has dominated the sector for more than 30 years. Naspers’ satellite service, DStv, controls more than 93% of the market, in terms of both subscribers and revenue.

Roku Bows Service to Help OTT Ad Sellers and Buyers Target Audiences

Streaming TV pioneer Roku June 27 introduced its Audience Marketplace, allowing advertising buyers and sellers to more effectively target audiences on the Roku platform in the United States, according to the company.

By leveraging Roku’s first-party data and proprietary ad technology, publishers can use Audience Marketplace to sell targeted audiences on the Roku platform to advertisers, according to a Roku press release.

“Roku has extensive insights into its millions of OTT streamers, and offers the ability to precisely target specific segments at a household level,” the release stated.

“The business of streaming is winning – both in the minds of consumers and advertisers,” said Seth Walters, VP, demand partnerships, Roku, in a statement. “As the industry’s leading TV streaming platform, we’re well-positioned to empower our publishers to unlock the full potential of OTT advertising and help them to meet the needs of brands and consumers.”

Initial publishers participating in Audience Marketplace include Fox, Turner and Viacom. Advertisers can use the Audience Marketplace for programmatic or traditional direct selling methods.

“Over-the-top distribution has been a key audience driver for Turner’s portfolio of premium content, with Roku being one of the preeminent partner platforms,” said Larry Allen, VP, ad innovation and programmatic solutions, Turner, in a statement. “Participating in Roku’s Audience Marketplace gives us access to rich insights and enhanced audience targeting capabilities, extending the ability for ad buyers to reach and engage with streaming viewing audiences that are critical to grow their business.”

“Roku’s ability to precisely message luxury auto-intenders in premium TV programming unlocks great value for our clients,” said Garrett Winkler, director of connected TV Lead, Modi Media, in a statement. “It helps significantly reduce waste and delivers a more relevant viewing experience. We see this as a huge step towards unifying targeting for connected TV campaigns.”

Combined Subscribers for RLJ’s Acorn TV and Urban Movie Channel Surpass 800,000

RLJ Entertainment announced that combined subscribers to its two proprietary subscription streaming channels, Acorn TV and Urban Movie Channel, have surpassed 800,000.

That is an increase of more than 100,000 subscribers from December 31, 2017, and more than 45% total growth from a year ago, according to RLJ.

“RLJ Entertainment’s subscriber momentum remains robust as we intensify our investments in compelling original and exclusive content, broaden our distribution on both domestic and international platforms, and enhance our marketing to drive awareness,” said RLJ CEO Miguel Penella in a statement. “Viewership across the OTT landscape is growing rapidly as consumers demand more from their entertainment options, offering increased opportunity for Acorn TV and UMC to thrive. Our unrelenting focus on building must-have digital channel destinations, and continued strong subscriber responses to these efforts, coupled with our expanded distribution footprint, puts us firmly on track to achieve our target of 1 million subscribers by early 2019.”

Acorn TV is a subscription streaming service offering British and international television, and Urban Movie Channel is a subscription streaming service for African American and urban audiences.

Parks: OTT Now ‘Standard Source of Video’

Parks Associates  research finds nearly 40% of U.S. broadband households now have at least two OTT video service subscriptions, according to a report released June 11.

The research firm notes that consumers have reached a new stage in connected entertainment where OTT is a standard source of video and viewers are more willing to experiment with multiple OTT services.

Parks Associates says it will examine this transition for OTT “from disruptor to dominance” in the industry webcast “The Lifecycle of OTT Video Services” on Tuesday, June 12, 10 a.m. CT. The webcast, sponsored by SeaChange, will assess the growth potential, strategies, and future for both existing and new video services.

“Every product or service has a natural market lifecycle that reflects the state of adoption, competition, and market development,” said Brett Sappington, Senior Director, Research, Parks Associates. “OTT video is no exception, with services evolving to keep up with a fast-moving market. Netflix, Amazon, Hulu, and other players have moved from simple subscription-based services to creators of award-winning original content such as ‘House of Cards,’ ‘Manchester by the Sea,’ and ‘The Handmaid’s Tale.’

“Understanding the lifecycle of OTT video services allows market participants to better position their offerings and market strategy both for today and for the future.”

During the webcast, Sappington and Marek Kiełczewski, global VP of engineering at SeaChange International, will discuss the state of the lifecycle for OTT video in North America, Europe, and other parts of the world; go-to-market (GTM) strategies, innovative technologies, and business models that telecom, technology, and media companies are using to compete in this disrupted marketplace; and effective approaches to grow an audience and ensure success of the video service through advanced merchandising and promotion.

According to Parks Associates research, 50% of U.S. broadband households watch long-form online video content on an internet-connected TV set. The international research firm also reveals:

69% of U.S. BB HHs have an OTT subscription; 38% have two or more subscriptions.

Households that subscribe to three or more Internet video services is one of the fastest-growing segments in the U.S. OTT space, increasing from 10% of broadband households in 2016 to 15% in 2017.

In the past 30 days, nearly one-half of U.S. broadband households have accessed video content from a subscription OTT service; 31% accessed free content.

Report: SVOD Shakeout on Tap?

Are there too many SVOD services?

Following a record year of 34 notable streaming launches in 2015, 2017 saw the debut of only 10 such services. And in a new study from L.E.K. Consulting, four out of every five consumers reported having just the right amount of video subscriptions.

“Despite the prevalence of cord cutters, subscription streaming services are now the ones that will need to adapt to survive,” stated Alex Evans, managing director in L.E.K.’s media and entertainment practice and co-author of “OTT in Transition: Finding Success in Subscription Video.”

“While the big players, like Netflix, are already winning, we expect genre-based services that successfully cater to niche tastes will also have a role to play,” he said in a statement. “Niche services will need to continuously update high-quality content, while ensuring their programming will resonate with their fickle audience. And larger video streaming platforms must keep an eye on what both traditional TV and emerging players are doing so they themselves don’t get disrupted by innovative content and pricing options.”

Among the dynamics subscription streaming video content providers will need to navigate, according to the L.E.K. report, are:

  • OTT consumers expect more for less — just like music fans who left pricey CDs behind for cheap streaming audio services — and are unlikely to add features that are not truly unique.
  • Targeted content and budget pricing do not guarantee success, as noted by the suspension of NBC’s $3.99 per month SeeSo comedy streaming service after less than two years.
  • Consumers are at the point where aggregators of these services (platforms that centralize a number of streaming subscriptions into one account) are of immense appeal, similar to why and how cable bundles came about. Millennials alone were found to simultaneously carry at least six different services each, with their preferred model of consumption being aggregator services.

More than 3 million U.S. consumers left pay TV behind in 2017 — a threefold increase in the past two years — dropping cable subscribership to less than 80% of households for the first time in 15 years, according to industry research cited by L.E.K. But the L.E.K. study points out these cord cutters are not actually consuming less video content. In fact, by 2020, the “big three” subscription providers (Netflix, Hulu and Amazon Prime Video) are expected to approach a combined 200 million U.S. subscriptions.

“What we’re seeing is a continued, steady movement away from traditional TV consumption, largely driven by millennials,” Evans said in a statement. “We found through our research that the primary factor behind this is cost. Pay TV packages can easily cost $75 to $100 per month, whereas a monthly web-based streaming plan might be $10. It’s worth noting, though, that overall savings may not be as much as planned, considering most consumers will lose their bundle discount on broadband when dropping cable. That, plus aggregating multiple streaming services together, can really start to add up.”

Parks Associates Research Shows 6% of U.S. Broadband Households Likely to Subscribe to Online Pay-TV Service in Next Year

New research from Parks Associates shows that 6% of U.S. broadband households are highly likely to subscribe to an online pay-TV service within the next 12 months, which would more than double the number subscribing today.

“In 2017, 14% of non-pay-TV households were planning to subscribe to a service in the next 12 months, a notable increase from 2015 and 2016,” said Brett Sappinton, senior director of research, Parks Associates, in a statement. “Over 60% of these households are planning to subscribe to an online pay-TV service, either standalone or as part of a service bundle, so consumers are showing a willingness to test alternate pay-TV offerings.”

“Currently, 78% of broadband households subscribe to a pay-TV service, and 5% of pay-TV households subscribe to an online pay-TV service. These solutions include services such as Sling TV, DIRECTV Now, PlayStation Vue, YouTube TV, Hulu with Live TV, or FuboTV,” Sappington said in a statement. “While OTT gives subscribers the opportunity to pick and choose single services, it is easier for them to manage a single bundle. Desire for this convenience will continue to drive interest in online pay-TV services, provided they hit the right price point and deliver the desired content channels.”

Additional Parks Associates findings include:

  • Use of an OTT service in a household correlates positively to high intent to upgrade broadband service.
  • Approximately 33% of cord cutters would have stayed with their service provider if offered a Netflix-style service bundled with broadcast TV channels.
  • 5% of U.S. broadband households have never subscribed to a pay-TV service.
  • 8% of U.S. broadband households have recently downgraded their pay-TV service and supplement viewing with video on an internet-connected device.

Research: OTT Service Subscribers to Grow to 400 Million in 2018

Over-the-top services will reach a subscriber base of 400 million in 2018, according to ABI Research’s recently released Service Provider OTT Services and Set-top boxes Update report.

ABI forecasts that OTT video services will put more pressure on traditional pay-TV services, especially in the developed markets with high broadband and pay-TV penetration. The worldwide OTT video market is expected to grow at CAGR 10% to generate $51.4 billion in 2022, according to ABI.

“OTT video services offer less expensive alternatives and no long-term contract features compared to existing pay-TV offerings that are driving an increasing number of Pay-TV customers to switch to these OTT services,” according to ABI.

In markets such as North America and Europe, pay-TV operators have jumped into the OTT market to improve churn by providing less costly video service. DirecTV’s Now, Dish Network’s Sling TV, and Sky’s Now TV are among the operators which offer Virtual Multichannel Video Programming Distributor (vMVPD) services, linear channels via internet connection, according to the report.

“vMVPD services offer live TV packages as low as $10 and customized packages are attracting cost-sensitive customers,” said Khin Sandi Lynn, industry analyst at ABI Research, in a statement.

Dish Network’s Sling has secured more than 2 million subscribers in the two years since it launched, the report noted. DirecTV Now has gained 1.2 million subscribers within one year of its launch, offsetting the subscriber loss of its satellite TV platform.

“Pay-TV operators recognize the consumer demand for vMVPD services and are trying to expand their OTT offering by providing more content choice to compete against other subscription OTT services such as Netflix,” Lynn stated.

Despite the low cost of basic vMVPD packages, the availability of live sports packages and customization features contribute the higher ARPU compared to other subscription OTT services, according to the report. Hulu and YouTube launched live streaming packages in 2017 creating more competition in the vMVPD market.

“As competition intensifies, content and quality of service are crucial to win the OTT war,” Lynn stated.

Lionsgate Inks Deal with ‘Overboard’ Star’s Production Company

Lionsgate’s television group has signed a deal with 3Pas Studios, a production company helmed by Latino star Eugenio Derbez and producing partner Benjamin Odell.

Derbez stars in Overboard from Lionsgate Films and MGM.

Under the agreement, 3Pas will produce English- and Spanish-language series for the TV group, as well as Lionsgate streaming platforms such as the recently-launched OTT service PANTAYA.

The partnership expands Lionsgate’s longstanding relationship with 3Pas, which already includes a first-look feature film deal with the company’s Pantelion Films label.  In addition to Overboard, Derbez has starred in and produced Pantelion’s Instructions Not Included, the highest-grossing Spanish-language film ever released in the United States, and last year’s hit How to Be a Latin Lover.

“We’re thrilled to expand our relationship with the incomparable comedic genius Eugenio Derbez and his 3Pas Studios into the television business,” said Lionsgate EVP and head of worldwide scripted television Chris Selak in a statement. “This multifaceted partnership is another example of working collaboratively across our divisions to identify premier brand name talent like Eugenio and Ben. We can’t wait to see the exciting new projects they’ll bring to our television slate.”

“We’re delighted to launch this new phase of our relationship with Lionsgate, a major Hollywood studio that embraces the creative vision of its artists and is committed to super-serve underserved audiences, including the growing acculturated Latinx market,” said Derbez and Odell in a statement. “It’s great working with Paul and his team at Pantelion, and we look forward to expanding that collaboration in order to supply Lionsgate’s television business and streaming services with exciting, premium quality content for a diverse spectrum of audiences.”

In addition to Instructions Not Included and How to Be a Latin Lover, Derbez is known for the Mexican comedy “La Familia Peluche,” which is being adapted into an animated feature by 3Pas. He also starred in such movies as Under the Same MoonJack and Jill and Miracles from Heaven and will appear in Disney’s upcoming The Nutcracker and the Four Realms. Odell has produced or executive produced more than 20 feature films, including many for Pantelion as former head of production. Prior to that, he was an award-winning TV writer and screenwriter in Latin America.

Research: U.S. Pay-TV Affordability Has Dropped Since 2000

Consumers who complain about their cable bill may have good reason.

Multichannel video affordability in the United States has plummeted since the turn of the millennium, squeezing the penetration rate, particularly among the more economically vulnerable households, according to new data from Kagan, S&P Global Market Intelligence.

Since 2000, there has been a 74% increase in the inflation-adjusted pay-TV bill while incomes have stagnated, according to the research.

The estimated nominal average monthly multichannel revenue per subscriber across the cable, DBS and telco platforms rose at a 5.5% CAGR between 2000 and 2017. Kagan calculated U.S. multichannel purchasing power based on 2017 inflation-adjusted annual multichannel average revenue per user, or ARPU, and average income figures. The affordability calculation dropped from a 10 in 2000 to a 6 in 2017.

Multichannel offerings have evolved a great deal since 2000, including a greater number of networks and advanced services such as video on demand, DVR services and improved user interfaces, with the vast majority of the packages delivered to subscribers digitally and in HD, but consumers’ ability to pay the price for that improvement didn’t grow much.

“The eroding legacy multichannel affordability partly explains the popularity of over-the-top services such as Netflix Inc. and Amazon.com Inc.’s Prime Video,” according to Kagan.

Research: OTT Sub Households to Far Outstrip TV Sub Households in 2020

U.S. OTT subscriber households will far surpass TV subscriber households in 2020, according to new data from Convergence Research.

In five years at the current run-rate Netflix will have in the United States as many subscribers as all the the traditional TV access providers combined, according the Convergence’s Brahm Eiley. Amazon Prime at the current run rate will surpass the traditional U.S. TV access providers in terms of subscribers in three years.

However, the average revenue per unit (ARPU) for U.S. TV subscribers in 2020 will still be four times U.S. OTT subscriber households’ ARPU, down from 6 times in 2017.

Convergence has just released its annual 2018 Couch Potato Reports, “The Battle for the American Couch Potato: OTT, TV, Online” and “The Battle for the American Couch Potato: Bundling, TV, Internet, Telephone, Wireless.”

Convergence estimates that U.S. OTT access revenue (based on 55 OTT providers led by Netflix) grew 41% to $11.9 billion in 2017, forecasts $16.6 billion for 2018 and $27.6 billion for 2020.

The firm estimates 2017 U.S. cable, satellite and telco TV access (not including OTT) revenue grew 1% to $107.6 billion ($94.30 per month ARPU) in 2017, forecasts $107.4 billion ($97.90 per month ARPU) for 2018, and $106.9 billion for 2020.

In 2017, the United States saw a decline of 3.66 million TV subscribers and in 2016 a decline of 2.2 million. Convergence forecasts a decline of 3.72 million TV subs for 2018.

The firm reports that 2010 saw the start of the rise in cord cutter/never households, and as of the end of 2017 estimates 32.13 million U.S. households (or 26.1% of households) did not have a traditional TV subscription with a cable, satellite or telco TV access provider, up from 27.56 million (22.6% of households) at the end of 2016. Convergence forecasts 36.76 million (29.6% of households) will be cord cutter/never households by the end of 2018.

Meanwhile, 2017 saw U.S. residential broadband subs surpass U.S. TV subs, growing to 96.95 million. Convergence estimates 2.33 million U.S. residential broadband subs were added in 2017 (2.66 million in 2016) and revenue grew 7% to $56.8 million; the firm forecasts 2.57 million additions and 6% growth to $60.5 billion for 2018.

“The gloves are off,” commentary in the report reads. “The TV-movie Industry is being reconstructed from the inside and by the outside, as programmers now directly compete against their traditional TV access and independent OTT buyers that rival them in terms of content spend. Amazon, Apple, DAZN, Facebook, Google and Netflix all have the money muscle to finance their own productions or outbid on programming including major sporting franchises.”

Because the OTT services are acting more like studios and vying for top content, traditional content owners may fight back, the commentary reads.

“We expect especially for the U.S. market going forward fewer content deals between programmers and independent OTT providers: 2017 saw Disney choose not to renew with Netflix and embrace OTT, HBO not renew with Amazon in the U.S., Hulu (which is spending more on content on a per U.S. subscriber basis than Amazon or Netflix) continue to bolster its offerings, compete more directly against TV access providers, and A+E, AMC, Discovery, Scripps, and Viacom back supply Philo,” the firm commented. “The traditional TV ecosystem does not show decline ‘yet’ except for TV subscribers. TV access players continue to raise prices (ARPU is growing but we forecast TV access revenue decline going forward), and programmers have kept up increases in programming fees and advertising rates, but this architecture cannot last in the long run.”