The Nordic VOD Royal Rumble

For those that don’t know, the Royal Rumble is a professional wrestling Pay-Per-View event, in which a number of wrestlers aim at eliminating their competitors by hurling them over the top rope.

While this may seem extreme (and perhaps a little violent), it paints a similar picture to what is going on in the Nordic digital media industry.

In light of recent events, we thought it would be interesting to look into the changing landscape of the VOD market in the Nordics. So let’s have a look at the heavyweights, the new guys, and the veterans to see how this Rumble will play out…

Subscription Video-on-Demand (SVOD)

Recently we have seen two major heavyweights, Netflix and HBO, enter the ring by opening their services to the SVOD market in the Nordics. Additionally, the market has seen new and more innovative offerings, which has resulted in overall market price increases.

Currently, there are four major SVOD services in the Nordics: Netflix, HBO, Viaplay (MTG), and C More Entertainment (Filmnet).

The key question becomes, can four major players really survive in a market of only 25 million people? The players in the SVOD market are much larger and more mature than those in the TVOD (transactional VOD) market. Therefore it will be unlikely that we see any consolidation or dropouts of SVOD players in the near future due to strong financial backing and investment. It is likely that these services will continue to try and polish their multi-screen offering and user experience while vigorously defending their content rights to ensure a positive user experience. Netflix has done rather well in this area. I recently tried their service and their platform allows you to switch from watching a video on your TV to your mobile phone, tablet, etc… without missing content or compromising video quality.

Given the entrance of HBO and Netflix, C More Entertainment (backed by Telenor and the Bonnier Group) will try to defend their market position and their share of the IPTV and OTT distribution platforms against the heavy weight players. This will be especially important, since C More has begun to focus more and more on TV series as a part of their content offering.

Telenor in Norway also provides a SVOD service. Telecom operators are uniquely positioned, compared to companies like Netflix, in the sense that they are able to bundle their SVOD offering with their other services such as linear TV, mobile, etc…

Transactional Video-on-Demand (TVOD)

TVOD essentially means that customers pay for their content item by item (transactional). The players in the TVOD market are much smaller players than those in the SVOD market. That being said, there are a couple categories of offerings in the market: independent players (Voddler, Headweb, SF Anytime, Film2Home) and fixed telecom incumbents. It is more likely that some form of consolidation or market exit will occur amongst these players than those in the SVOD market.

The telecom incumbents tend to play one of two interesting roles for TVOD offerings. TDC in Denmark actually takes it upon itself to manufacture agreements between themselves and the studios to secure content rights, which they then sell to end-users. Telia has a different strategy whereby they partner with SF Anytime, Nordic Film, HBO, etc.. for TVOD, but handle the linear TV channels themselves. Telenor also utilizes TVOD partners but they already have a strong linear TV distribution arm since they own Canal Digital.

Partnerships with telecom incumbents are important for independent TVOD players. But the problem here is that most incumbents already have VOD partnerships in place. So as an alternative, TVOD players need to offer digital content that is over and above what the telecom incumbents already receive from their VOD partners in order to remain competitive. They will need to focus on improving their offerings for various devices, such as: Samsung Smart TV, Apple TV, smart phones, tablets, laptops, etc…

As if the market isn’t crowded enough, we now see new players entering the ring. Atflick is a company that offers both TVOD and SVOD with a social networking flare to it. Another start-up that is in the beta testing phase is called Magine. Their service seems almost like an advanced PVR service. PVR is short for personal video recorder, which is a device that records television data in digital format. Based on the service definition, it appears that Magine is trying to be the SVT Play for all TV channels. The key question for them is what contracts or agreements will they be able to secure with TV channels at their official launch. And of course, you still have traditional Pay-Per-View to contend with as well.

Multiscreen

As it stands, Headweb, Voddler, and Film2Home are not powerful enough to make a dramatic impact on mobile devices. That being said, Netflix and HBO can very well be the locomotives that drive the usage of film and TV programs on other devices in the Nordics.

To have a multiscreen offering is definitely important for VOD providers, since a large part of the total digital media turnover is comprised of VOD starts over an IP connection. With Telia having over 50 million VOD starts per year in Sweden and TDC owning the majority share of the Danish market, both companies must surely understand the importance of having a seamlessly integrated TV anywhere strategy.

There are many questions and issues that these competitors need to haggle with. But the primary concern is, “are the current OTT distribution platforms expansive enough for companies trying to gain market share in SVOD and TVOD?” Clearly this is something that even Telecom incumbents have yet to tackle, yet it is such an important part of the user experience.

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