As SVOD continues to develop, so does its business model and the role of those operating within the industry. Going abroad is a tempting opportunity for most premium video providers, but it’s crucial to be aware of the regional specifics and incoming challenges.
D2C: Expanding to new markets is pretty challenging
Once upon a time, programmers created, organized and delivered content while distributors were responsible for bundling networks, soliciting subscribers and managing the nuances of collecting monthly payments. But not so much anymore.
These days, many SVOD providers are going direct-to-consumer (DTC) and managing a lot of the responsibilities that fall outside the content delivery remit; the demand for localization carries challenges in handling payment in different currencies and delivering language translations. And add handling tax in the list of challenges.
Even program providers with relatively compact distribution zones face new hurdles. According to a recent paper by IMB Video Cloud, HBO for instance delivers a Netflix-like DTC service, HBO Nordic, that offers content from HBO alongside programs from Starz Entertainment and Fremantle Media.
Despite its regional focus, as the name HBO Nordic suggests, the OTT initiative must satisfy a subscriber base that spans four different markets, four different currencies, and five separate languages. No straightforward feat.
Going global and operating overseas is the way forward; however, it does require carefully negotiating a host of cross-border demands.
But, it’s worth it: by 2019, it’s expected that OTT pay TV services will have the highest compound annual growth rate of any pay TV service, bigger than cable, satellite and telco-delivered video operations. That’s big business.
SVOD content origin: Country specifics
There is a global demand for SVOD, but at the moment, the US is dominating the global SVOD.
In fact, a new study from European Audiovisual Observatory shows that 61% of TVOD catalogs and 67% of SVOD libraries are made up of US-created films, with European content accounting for just 25% and 20% respectively.
What’s more, for SVOD leader Netflix, the study shows that 48% of its TV content is from the USA. That’s almost half, all from one country.
But, as the market continues to thrive, fresh innovations appear, and new regulations or initiatives are put into place, we expect the balance to tip in the not so distant future.
As an increasingly large amount of content is created and more SVOD services appear on the market, many competing for commercial success in all pockets of the globe, some regions have started to lay down certain regulations.
In a recently revised directive on audiovisual media services (AVMS), the European Council have signed off a 30% content quota for European SVOD services.
By doing so, the European Council are hoping to boost the competitiveness of Europe’s audiovisual industry, while preserving core values including the safeguarding of minors, media pluralism, cultural diversity and consumer protection.
Not only will this mean that European SVOD providers have a fighting chance of global SVOD domination, but consumers everywhere will be able to enjoy a diverse range of international content.
For the international SVOD market, exciting times lie ahead, and we look forward to being a part of them.
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