During Venice’s VoD Market Day, Guy Bisson discloses the major streaming trends of the last 18 months
- VENICE 2022: The expert highlighted how AVoD and FAST are “a big thing now”, and how streamers are shifting their business model from customer acquisition to customer retention
On 5 September, the Venice Production Bridge and the Hotel Excelsior’s Spazio Incontri hosted the VoD Market Day. The event was opened by the words of Michael Gubbins, of Sampo Media, and Marc Putman, president of EUROVOD. The floor was then given to Guy Bisson, of Ampere Analysis.
In his contribution, titled “Full Circle Streaming: Trends to Watch as Streaming Enters Its Own New Normal”, the analyst explored the main industry transformations that have occurred in the sector over the last 18 months. “Arguably, the business of streaming has changed more in the past 18 months than at any other point in its 15-year history,” he began. He highlighted how the already-troubled “traditional” TV sector had been subject to further pressure, with the streaming segment also being hit, although it still possesses significant growth potential.
He touched upon on how Netflix “gave a shock to the streaming market” when, in Q1 2022, it recorded a 200,000-user loss driven by Russia, but crucially, those numbers were 2.5 million off the guidance that had predicted a 2.3 million gain. Paradoxically, the platform’s management team had foreseen up to 2 million additional subscriber losses for Q2, but celebrated only losing 970,000 users in the end, mainly based in the USA and Canada, where prices have recently been increased.
“Despite Netflix’s lacklustre results, the streaming market continues to grow,” he added, showing a graph that displayed 1.4 billion global OTT subscribers in 2021 and 1.6 billion in 2022, with the forecast for next year standing at 1.7 million. This trend is occurring in part owing to the growth of all of the other players. By the end of 2023, studios and new global players are expected to account for 40% of all new SVoD subscriptions, but “everyone else” will account for 45%, with Netflix and Amazon claiming only 16%.
On the topic of stacking, he disclosed how US paid streaming stacking rates have essentially been flat for a year (falling slightly from 4.4 SVoD services per SVoD home in Q1 2021 to 4.2 in Q1 2022). Meanwhile, Europe still has plenty of stacking headroom, however, estimated at an additional 1.6 in Q1 2022 on the current figure of 2.6. “Actual or pending saturation of SVoD in key markets means free business models are already playing a pivotal role in the transition of viewing to streaming in both a hybrid-service andan aggregation model,” Bisson stated.
Speaking about the current scenario, he said that changes to content access have elevated the value of IP and that, in this post-COVID phase, the content boom is greater than ever. This boom, however, needs source material and talent, which is causing an arms race for valuable IP and the creation of a new “studio system”.
Besides this, he pointed out how the streamers’ business model is shifting from customer acquisition to customer retention. Bisson explained that in the paid streaming space, there is a clear relationship between breadth of offer and customer retention, and as with SVoD, exclusivity remains an important factor in the AVoD market. “Perception can also be leveraged for content ‘breadth’, with a number of approaches emerging,” he said, mentioning the example of Disney+, labelled as a “franchise-first approach”, and HBO, described as “prioritising personalisation and show brands”.
In terms of consumer trends, he noted how European interest in overseas TV shows and movies (excluding US content) is growing (from 29.9% for overseas films with subtitles and 25.8% for overseas TV series in Q3 2019 to 36.3% and 32.5% in Q3 2021, respectively). Commissioners have responded rapidly to this tendency, with Netflix and Amazon hosting most of the overseas content (65% and 54%, respectively). That being said, “local and niche players [such as MUBI and Curzon] still win out for the best-quality European films”.
In the last part of his contribution, Bisson covered the topics of AVoD and FAST (free ad-supported TV), and how they are both “a big thing now”. Specifically, COVID pushed online video advertising past a key inflection point, although “television-equivalent” online video ads represent just 7% of the online video advertising revenue. Moreover, outside the USA, AVoD and FAST have yet to gain viewer traction (Europe’s five biggest markets saw it grow from 0% in Q3 2019 to 4% in Q3 2021, whilst in the USA it skyrocketed from 14% to 34% over the same period). This is occurring owing to national broadcasters dominating ad-supported streaming in terms of viewer numbers.
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