The impact of coronavirus on the television and wider media industry

Videonet

https://www.v-net.tv/2020/03/23/the-impact-of-coronavirus-on-the-television-and-wider-media-industry/

What Covid-19 could mean for television and media:

• Short-term rise in broadcast TV and SVOD viewing. Nielsen predicts 60% higher ratings
• Negative longer-term impact, assuming an economic downturn, with impact on advertiser confidence and discretionary media spend
• New streaming services (like HBO Max , Peacock and Quibi) could benefit from an unexpectedly high demand at launch
• There is a danger that media that can be cut back most easily will be the first to hurt in a recession (so there is still some danger for streamers)
• Cinema releases could be postponed, premiered on streaming services or made available in the Pay TV rental window earlier
• Esports could attract new fans from among ordinary sports viewers, with the value of esports rights climbing
• A boost to game streaming sites like Amazon Twitch and YouTube Gaming, and more paying subscribers for this category
• Growth in user-generated channels and content creators, driven by young audiences who are stuck at home due to school closures.

What media and technology companies are doing right now:

• Netflix and YouTube have agreed to reduce video bit rates in Europe.
• Sky has paused sports fees due to the loss of live content
• Sky Deutschland is making some content available free for a month
• Canal+ has made its Pay TV service available free
• BBC will schedule more shows related to education, fitness, religion and cooking, including a virtual church service experience
• Some brands are reallocating spend from linear TV to OTT, where money was originally destined for sports
• Hollywood production has ground to a halt, with California in lockdown
• JP Morgan has cut its European media sector ‘earnings by share’ forecast by 15% in 2020, and 8% in 2021
• Esports firms are taking their live tournaments online, where they began, in one of the easiest moves of all
• Some traditional sports federations are turning to virtual simulations, including NASCAR.

The full story….

The Covid-19 epidemic is likely to result in a dramatic surge in viewing as audiences crave news from TV and some light relief. U.S. ratings agency Nielsen predicts that ‘staying in home’ could lead to a massive 60% increase in the amount of content watched.

Nielsen modelled this figure on how consumers’ media habits changed during the major snowstorm of January 2016 and Hurricane Harvey in August 2017. When a two-foot snowfall hit the New York area, TV usage that Saturday rose 45% from the previous Saturday and was 49% higher than the next Saturday after the blizzard. During Harvey, total TV use rose 56% from the preceding period and was 40% higher than the period following the storm.

“Short-term, viewing of broadcast TV and usage of SVOD services may rise if people stay at home, but it would be simplistic to say that this is ‘good’ for the TV industry,” says Richard Broughton, Research Director at Ampere Analysis. “Any underlying economic weakness triggered by the effects of coronavirus on business and trade, alongside consumer spending patterns on goods and services, will have a negative impact on both advertiser confidence and consumer discretionary media spend.”

He also points to historic economic downturns to show that the portions of media spend which suffered the most were those which consumers could cut back most easily.

“In the last recession, this was cinema, DVD/BD [Blu-ray disc], and industry ad-spend. Pay TV was hit later, and less badly. So, we might see a short-term gain in subscription OTT before any serious social or economic damage has occurred, but the mid-term performance of the sector is likely to be more tightly linked to the overall impact of coronavirus on the economy – and thus health/jobs/personal finances.”

Netflix and YouTube alleviate traffic

Anticipating Internet-buckling demand for OTT video with more people at home – and simply to keep everyone’s communication channels open – the EU asked Google and Netflix to dial back their bit rates. Both have complied, with Netflix reducing its traffic on European networks by 25% for at least the next month. Subscribers with the premium 4K UHD service may be the only ones to experience a dip in service quality as a result. All YouTube videos will now play in SD by default for viewers in the EU.

According to The Guardian, initial fears about broadband capacity rested on the rise in remote working, which led to speculation that residential broadband networks would not be able to cope. But in practice, daytime peaks have risen, while still remaining well below a typical evening peak.

Pay TV opens up

A number of the continent’s Pay TV broadcasters are widening access to their services or pausing subscriptions.

Comcast-owned Sky, for example, is giving customers a breather on its sports subscriptions, given that there’s effectively zero live (traditional) sport to watch. The F1 calendar, a staple of Sky Sports’ schedule, has been halted until at least Azerbaijan GP on June 5. Sky Deutschland is unlocking its Sky Cinema and Sky Entertainment packages, including Sky Box sets for all customers for one month.

With France in lockdown, Canal+ has made its Pay TV service available free in France (not, so far, other Canal+ countries like the Netherlands and Austria). Vivendi-owned Canal+ Group says its premium channels will be made available for free through a set-top box. This is believed to include Disney+, which is due to launch in Europe next week.

Globally, the stage is set for new streamer launches including HBO Max and Peacock, all of which can expect to witness short term surges in subscription. And into the fray comes short-form streamer Quibi, which will offer a 90-day free promotional offer to entice users. The platform may well have done this anyway in order to build profile, but the crisis-induced demand for content could see it take-off faster than even backer Jeffrey Katzenberg had dreamed.

Unlike HBO, Disney and NBCU, Quibi’s offer includes episodic drama and comedy but it also features daily news bulletins, including coverage from CTV News owned by Canadian telco Bell.

Broadcasters streamline

Broadcasters including the UK’s BBC and TV, and NDR and RTL in Germany, are cancelling live audience shows or airing them ‘behind closed doors’, with the BBC’s political flagship current affairs programme, Question Time, one casualty. The BBC is also focussing more of its programmes on the outbreak and offering more content about education, fitness, religion and recipes for those stuck at home – fulfilling its longstanding role as ‘Auntie’ to the nation in a time of need.

“We are already seeing new ideas coming through which might provide innovative new ways of producing TV in these uniquely challenging times,” said BBC Director General, Tony Hall.

This includes: a ‘virtual church service’ on Sunday mornings across local radio in England; a new iPlayer experience for children; the return to iPlayer of shows including Spooks and The Missing, which were presumably earmarked for the pay service BritBox.

Meanwhile, the UK government has categorised broadcast news journalists for radio and TV as ‘key workers’, which means their children can continue to attend ‘school’ when those institutions shut to other children.

Newsnight and The Andrew Marr Show will remain on air but operated by fewer technical staff.

Advertising tumbles

Usually, a captive TV audience means consumers are more attentive to brand messages – which may still be the case now. But longer term, ad revenues are expected to tumble.

ITV became one of the first to raise the alarm when it forecast a slump in future advertising revenues of at least 10% for April, with travel companies deferring their advertising campaigns. (Read the full story here at our sister publication, Mediatel News).

ITV also has rights to the UEFA Euro 2020 football championships (which has been postponed a year), which would further weigh on revenues. The share prices of major advertising agency groups WPP, Interpublic, Omnicom and Publicis Groupe have all hit multi-year lows.

Some brands are reallocating spend from linear to OTT, particularly in cases where sponsors had planned to advertise in live sports events. According to video ad serving platform SpotX, online ad inventory has increased 16%, although travel and hospitality brands have heavily reduced or completely halted their spend.

Falling ad revenues will, of course, mean that broadcasters have less money to spend on content – threatening to curtail production activity around the world.

Hollywood production has ground to a halt. The state of California is in lockdown and studios are either postponing the release of tentpoles or planning to premiere them on streaming services. NBCUniversal, for example, is to offer titles including The Invisible Man and Emma to rent through the Sky Store, far earlier than it would normally following theatrical release.

There are genuine fears for the future of cinema as a distribution outlet. ‘Will coronavirus be the final nail in the coffin for the mass cinematic experience? Will Netflix and the other streamers manage total domination over the next few months?’ asked director and producer Kevin Macdonald in the UK’s Guardian newspaper.

JP Morgan is cutting its European media sector ‘earnings by share’ forecast by 15% in 2020, and 8% in 2021.

In a note to analysts and investors the bank said, “Broadcasters, Outdoor and Agencies see 2020 cuts of 25-35% while Internet, publishing and entertainment are more resilient.”

Live sport goes virtual

Not all live sport is shut down. The esports community are taking their tournaments online to continue competitions, which traditional sports are simply unable to do. “Esports now has an opportunity to build its presence among sports fans that ordinarily would be consuming other content,” notes Conrad Wiacek, Head of Analysis and Consulting at Sportcal, part of GlobalData.

“The esports sector also has a great opportunity in the media rights space. With the sporting calendar decimated, broadcasters will be looking for content to fill their schedules. While a boom in media rights for esports was expected, the coronavirus outbreak may see the value of these rights jump significantly.”

Traditional sports are also turning to virtual simulations. Rather than run behind closed doors, NASCAR is launching an invitational esports series to fill the void. The series begins this weekend at the virtual Homestead-Miami circuit with participation of reigning NASCAR Cup Series champ Kyle Busch. Welsh cyclist Geraint Thomas has taken to racing amateurs on virtual platforms such as Zwift. Zwift plans to add to its events such as the Tour of Watopia with new events in light of demand.

Futuresource Consulting expects a boost in viewing of game streaming sites Amazon Twitch, YouTube Gaming and Microsoft Mixer. Twitch viewership has seen a 12% year-on-year increase compared with March 2019, the analyst reports, with a rapid growth in viewers in the last two weeks. Crucially, however, there has also been an increase in the number of paying subscribers (who pay $5 per month for additional channel and social features), of which Amazon takes a significant cut.

There has also been an increase in the number of channels and content creators, with the young audience stuck at home due to school closures using the platform to interact with the outside world.

The X Box Series X may be a gaming console, but it is likely to lead an 8K charge

RedShark

Gaming may be shifting to the cloud but Microsoft and Sony are ready to give the console one more power injection. The Xbox Series X, due late this year, promises to be its most stacked console yet - delivering four times the processing power of an Xbox One. Sony meanwhile is lining up a controller for the PS5, also due before Christmas, which monitors player heart rates and sweat levels to adjust gameplay.

https://www.redsharknews.com/technology/item/7025-the-x-box-series-x-may-be-a-gaming-console,-but-it-is-likely-to-lead-an-8k-charge

Take that Google Stadia.

Xbox Series X packs AMD’s latest Zen 2 and RDNA 2 chipsets enabling developers to work with 12 TFLOPS of GPU performance – twice that of an Xbox One X and more than eight times the original Xbox One.

We are led to expect that this will deliver “a true generational leap in processing and graphics power” with cutting edge techniques resulting in 4K framerates up to 120 fps (8K at lower frame rates) for heightened realism or fast-paced action; larger, more sophisticated game worlds, and an immersive experience “unlike anything seen in console gaming.”

Raw power is just part of the story. Rather than spending GPU cycles uniformly to every single pixel on the screen, developers can use what’s called a Variable Rate Shading technique to prioritise individual effects on specific game characters or important environmental objects.

We can expect more dynamic and realistic environments powered by hardware-accelerated DirectX Raytracing – a first for console gaming. This, vows Microsoft, means “true-to-life lighting, accurate reflections and realistic acoustics in real time” as gamers explore the game world.

Latency from controller to console to display will be reduced using, among other tricks, a Dynamic Latency Input feature which synchronises input immediately with what is displayed making controls even more precise and responsive.

Playstation 5

The PlayStation 5 also uses AMD Zen 2 and RDNA technologies, perhaps with an even higher operating speed of 12.6 teraflops, although more intriguing are the extras Sony appears to have up its sleeve.

Among patents filed by Sony is a Dualshock controller featuring sensors on the handles for monitoring ‘biofeedback’ such as pulse allowing game developers to alter the game content depending on the emotional state of the player.

Another patent filed in 2018 and  unearthed by 91 Mobiles points to an input system that “detects movement of a user’s hand” alongside a “a plurality of sensor units that detect the fingers of the user.”

As noted by Games Radar this doesn't sound too dissimilar from the kind of virtual reality accessories used by PC VR headsets like the Valve Index, in which users have more accurate control of each finger operated in the game space via a number of pressure sensitive triggers.

All of this is a holding pattern before gaming moves entirely to the cloud. Indeed, Microsoft and Sony have shelved decades old rivalries to team up to develop future cloud game solutions, even while both pursue their own cloud platforms (Playstation Now and xCloud which is due to launch later this year). For example, Sony could stream its service over Microsoft Azure data centres.

Sony and Microsoft also said they will collaborate on semiconductors and artificial intelligence. This means Sony’s image sensors could be combined with Azure AI technology, or Microsoft’s AI platform and tools could find their way into future Sony consumer products.

Google Stadia’s launch last November was successful enough for Alphabet to move to phase two and announce plans to bring out 120 new games, a 4K HDR and 5.1 service (on Chromecast Ultra), support for more Android phones (it’s currently only available on Google Pixels) and wireless gameplay on the web through the Stadia controller (you currently have to plug in a cable).

Bloodshot - A Fight to Remember

Panavision 

DP Jacques Jouffret and director Dave Wilson carve out an aggressive filmmaking style for a comic-book tale of an amnesiac super-soldier

https://www.panavision.com/fight-remember

In a cinematic universe expanding with superheroes, the creative challenge for filmmakers is to set newcomers apart from the crowd. The task is doubly important for Bloodshot, the first installment of a new franchise that Sony Pictures plans for characters of comic-book publisher Valiant Entertainment.

The studio assigned responsibility to Dave Wilson, an established video game cinematic and trailer director for Blur Studio but first-time feature director, who in turn worked alongside cinematographer Jacques Jouffret, whose credits as a camera operator include Deepwater Horizon and Transformers: The Last Knight, and as a DP include The Purge and Mile 22.

“I was blown away by Dave’s imagining for the world of Bloodshot,” says Jouffret. “This is a science-fiction set, but he wanted to ground the story in reality so that the near future feels just a step away. Most superhero movies rely on CGI or cartoon-like visuals, but Dave wanted to portray a real environment. This really excited me.”

Wilson has described Bloodshot as a film about “the illusion of choice in a technologically advanced society.” Based on the bestselling comic book, Vin Diesel stars as Ray Garrison, a Marine recently killed in action and brought back to life by a sinister corporation. With an army of nanotechnology in his veins, he becomes a superhuman, but in struggling to recall memories of his past life, he uncovers an apparent conspiracy and embarks on revenge.

Jouffret and Wilson’s principal stylistic reference was the work of director Tony Scott (Enemy of the State). “The chief elements we took from Tony were the use of multicamera and long-lens shots with foreground action,” Jouffret explains. “We didn’t want to give the audience a clear view of the action, but to keep them off guard, like a live-action documentary. So, if there’s a car accident, we see the start of it or its aftermath but we don’t have a good vantage point to see all of it. This sensibility directly informed our choice of camera and lens package.”

Bloodshot is Jouffret’s fourth film as DP with Panavision’s Millennium DXL2. It’s a camera, he says, that closely approximates the experience of shooting on film thanks to its Primo electronic viewfinder. “As a camera operator, I grew up with my eyes on the eyepiece, seeing instantly what a shot looks like,” he reflects. “My frustration with digital is that this instinctual creative experience with an image is lost because you are referring instead to a DIT and a monitor. The DXL2 is amazing for me because I can finally put my eye on the OLED eyepiece just as if I were shooting film. It means I can make decisions on set. It’s not that DITs don’t have a place — I certainly will check the monitor — but I prefer to be on set, where everything is happening, rather than in the DIT tent. Panavision have succeeded in giving DPs a tool that they can put on a dolly or shoulder and retain creative decision making.”

Jouffret also stresses the importance of lens choice. “In the digital world, lenses are basically the only organic element left. The optical aberrations lend a unique element to the project, and that makes them truly valuable. Lens choice is the one aspect of a show that will stay entirely consistent through to post. You know that the lens characteristics that you chose are not going to change.”

For Bloodshot, Jouffret paired the DXL2 with a set of T Series anamorphic lenses, which are tuned to be compatible with digital sensors without losing any of the imaging characteristics that have become part of Panavision’s anamorphic grammar. “This speaks to our creative decision to inject reality to the story,” he says. “Anamorphic can get you close to the actor without losing their environment. The problem, though, is that anamorphic has a minimum focus that limits most lenses to 3-4 feet. With the T Series 60mm, however, minimum focus is 18 inches. The entire range is beautiful, but my go-to lens on Bloodshot was the 60mm for most all medium close-ups, and a 100mm macro that we used for inserts.”

Production was photographed largely on soundstages in Cape Town and Budapest. With up to 70 setups a day, Jouffret typically rolled with two handheld DXL2s, one DXL2 with a long lens, and a RED camera recording wides from a Technocrane. “I wanted the cameras constantly on the move, never static, always finding the shots and angles so that we continually sense that nothing is perfect or clear,” Jouffret explains. “This is an element that has been missing in most superhero films, which tend to be shot on bluescreen. We didn’t want CGI to overpower our story.”

The filmmakers shot 7K (compressed 5:1) in order to use as much of the sensor as possible. “I believe in large format, and the more pixels I can get the better,” he says. “I love the color science that Light Iron have designed into the camera. The Light Iron Color 2 Film LUT emphasized the DP intent as opposed to a perfect rendition of color.”

Jouffret also employed smoke and other atmospheric elements on set to achieve a degraded naturalistic look in-camera. “With the look we created on the set, we have ended up with a picture that is very, very close to our original intent, ”the cinematographer observes. “We are introducing a character with extraordinary power, but telling his story in a way that is only just beyond imagination.”

This clever new algorithm can make 3D objects from 2D photos

RedShark News

Researchers have written an algorithm to derive 3D graphics from 2D data, quickly and at scale.

https://www.redsharknews.com/post/item/7058-this-clever-new-algorithm-can-make-3d-objects-from-2d-photos

Microsoft researchers claim to have devised an AI able to generate better 3D shapes from 2D images and to do so for the first time using off-the-shelf photo-realistic renderers like Unreal Engine and Unity. The result could help make video games or animated content production cheaper and quicker.

A recent research paper introduces what is described as the first scalable training technique for 3D generative models from 2D data.

While Generative Adversarial Networks (GANS) have produced impressive results on 2D image data, many visual applications, such as gaming, require 3D models as inputs instead of just images.

GANs are two-part AI models comprising of generators that produce synthetic examples from random noise sampled from a distribution, which along with real examples from a training data set are fed to the discriminator, which attempts to distinguish between the two.

Since directly extending existing GAN models to 3D requires access to 3D training data, this data is expensive to generate. The researchers set out to build an AI that can learn to generate 3D models while training with only 2D image data, which is much more widely available, much cheaper and easier to obtain.

VentureBeat explains that, in experiments, the team employed a 3D convolutional GAN architecture for the generator. Drawing on a range of synthetic data sets generated from 3D models and a real-life data set, they synthesised images from different object categories, which they rendered from different viewpoints throughout the training process.

The researchers also used light exposure and shadow information in the rendering engine, to generate high-quality convex shapes, like bathtubs and couches, that previous attempts had failed to capture.

In theory, the technique can be extended by using more sophisticated photorealistic rendering engines, to be able to learn even more detailed information about the 3D world from images.

“By incorporating colour, material and lighting prediction into our model we hope to be able to extend it to work with more general real-world datasets,” they conclude, leaving others to pick up the ball.

The State of Video Monetisation 2020

Streaming Media Europe

Economic stagnation and political uncertainty continue to dog the Eurozone, denting global advertising spend, according to ad consultancy Zenith. Yet ad dollars continue to pile into online.

http://www.streamingmediaglobal.com/Articles/Editorial/Featured-Articles/The-State-of-Video-Monetisation-2020-139739.aspx

Zenith, owned by French advertising group Publicis Media, said it would normally expect an increase in ad spending in 2020, benefitting from the US elections, the Tokyo Olympics, and the UEFA Euro soccer tournament. But with major European economies (Germany, UK) teetering on a recession, businesses have tightened their purse strings, in turn hurting advertising budgets. Nonetheless, internet advertising is on track, globally, to surpass more than half of all advertising spend in 2021, according to the firm's Advertising Expenditure Forecasts published in July.

In 2018, the global total for internet ads was 47%, with growth led by the overlapping channels of online video and social media, which are expected to increase at average rates of 18% and 17% per year, respectively, through 2021. These channels are benefitting from continued technological improvements to smartphone technology, connection speeds, and advertising targeting and delivery, combined with strong growth in content investment. 

Not surprisingly, TV's share is shrinking, though gradually. Zenith forecasts that traditional television ad revenues will fall from $184 billion in 2018 to $180 billion in 2021.

These trends are mirrored in Europe, where 2018 saw the continent's digital advertising market grow 13.9%—its fastest rise in 7 years—driven by video, mobile, and social spend. The AdEx Benchmark study, organised by IAB Europe, indicates that video grew by 30.9%, to €7.6 billion, accounting for 33% of the display market and contributing to a total €55.1 billion digital ad market value. "Mobile, video and social continue to drive growth across the region, with mobile now closing in on 50 percent of both display and search, and video accounting for a third of all display," according to Daniel Knapp, chief economist at IAB Europe.

While the UK topped the list at €18.4 billion and Germany placed second with €7.2 billion, the top five largest growth markets in 2018 were all emerging economies of the central and east Europe region (Ukraine, Russia, Belarus, Czech Republic, and Serbia).

UK online ad spend, relative to the size of the economy, is now the highest in the world, at 0.63 percent of the GDP, according to a report published by advertising think tank Credos and Enders Analysis. UK advertisers are set to spend 62% of their budget online by the end of 2020, making the country the third largest by gross amount behind the US and China.

Online vs. TV (Again)

Online ad spend and internet retail expenditure have both almost trebled since 2010, resulting in the development of a tech sector that employs tens of thousands of people and comprises more than 300 UK-headquartered companies, according to the Credos-Enders Analysis report.

Its findings were supported by an Advertising Association and World Advertising Research Center (AA/WARC) study, which had UK ad spend reaching £23.6 billion in 2018, with growth driven by increasing spend on search (up 14.3%) and online display advertising (up 21.4%). Notably high growth was recorded for ad investment in broadcast video on demand (BVOD), which rose 29.4% to reach £391 million and is forecast to grow at a similar rate for the next 2 years. Total TV investment was stable year on year at £5.1 billion. Stephen Woodford, chief executive at the Advertising Association, commented: "We see online advertising in all its forms continuing to perform strongly, demonstrating how the UK is Europe's leading online advertising marketplace." 

Thinkbox, the lobby group for UK commercial broadcasters, took aim at figures for the amount of ad spend now going to online video. "In 2018, it was £2.3bn. Take BVOD's reported £390m away from that and you have a non-broadcaster online video ad market in the UK of £1.9bn—26% of the total video ad market," argues Matt Hill, research and planning director at Thinkbox, in a blog post.

Since TV, including BVOD, accounts for 95% of video advertising viewing, according to Hill, and online video such as YouTube, Facebook, and the long programmatic tail together account for 4% (with cinema accounting for the remaining 1%), the amount going to online isn't bringing much value for money.

"In other words, the average person watches 17 minutes of TV advertising a day (the 95%) and one minute of non-broadcaster online video advertising (the 4%)," Hill says. "Yet AA/WARC figures show that £1.9bn was poured into that single minute a day and £5.1bn into the 17 minutes. That means 4% of video ad viewing took 26% of video ad spend; the other 95% of video ad viewing took 70%." 

The UK's most popular and expensive single campaign ad each year is for retailer John Lewis and Partners. Its Christmas ad production budgets exceed £1 million but prove its effectiveness by driving up sales. This year's ad reportedly equates to £11 of profit for every £1 spent.

Addressable TV Goes Mainstream

The rise of addressable TV should be seen in this context. According to Mindshare, addressable TV is forecast to boost its UK market share from 1% to about 30% of total TV ad spend by 2022, making it worth more than £1.35bn.

A study released by Sky in August suggests that addressable TV cuts channel switching by half and boosts ad engagement by more than a third. With its addressable platform AdSmart, Sky has created 17,000 campaigns for 1,800 advertisers since its launch 5 years ago. It is expected to reach 60% of UK households by 2021.

UK commercial broadcaster ITV continues to plough its own path. Working with Amobee (owner of ad-tech firms Turn and Videology) since the beginning of 2020 to develop an addressable TV network on ITV Hub, it plans to launch the service as Planet V in February 2020 as a rival to Sky AdSmart. 

With ITV Hub hitting 30 million registered users and as the primary ad space for the ITV/BBC-owned streaming service BritBox, this is a significant step for ITV. 

Planet V combines ITV's unparalleled mass simultaneous reach with targeted advertising. Kelly Williams, managing director of commercial at ITV, said in a press statement, "It will be a continually evolving platform, providing the very best frictionless, data-driven buy, in a premium, brand-safe environment, for our clients."

However, AdSmart has already locked down Channel 4 and Channel 5 as well as access to linear TV channels in Virgin Media households, while the BBC is experimenting with AdSmart to run personalised promotional content. 

According to Enders Analysis, "the adoption of Sky AdSmart and similar services on YouView and Freeview could take addressable TV ads from a sideshow to a pillar of revenue."

All of this is a drop in the ocean compared to the grip that Facebook and Google have over the UK ad market. According to eMarketer, the US tech giants will command 68.5% of the £14.56 billion ($19.41 billion) UK digital ad market this year, a figure expected to surpass 70% by 2021.

Elsewhere in Europe, three French broadcasters, France Télévisions, M6, and TF1, have created Sygma, a common standard for advertisers who want to buy inventory on their video-on-demand (VOD) services programmatically. The idea is to make it easier for buyers to access inventory from all three broadcasters, plus reduce wastage and types of fraud.

The European Broadcaster Exchange (EBX) is a joint venture of four broadcasters in the five leading European TV markets: Germany's Pro­SiebenSat.1; TF1 of France; Mediaset, covering both Italy and Spain; and the UK's Channel 4—although there is little word on its success.

Germany's RTL Group sells inventory for its properties and represents partners, including RAI, DPG Media (formerly Medialaan) in Belgium, and ITV internationally through RTL AdConnect, which owns ad-techs SpotX and Smartclip. In the summer, it expanded operations in North America by opening a branch in Los Angeles to go with its East Coast office.

Stephane Coruble, CEO of RTL AdConnect, laid out the rationale: "Europe, as a fragmented market, can be difficult to enter and it is tempting to go to the online giants to build global campaigns. We leverage our position as RTL Group's 'total video' sales house to offer unique one-stop solutions for high quality content and brand safe environments, providing access to millions of consumers daily through Europe's leading online video platforms and high reach broadcast channels."

Total Viewing Measurement Advances

Subscription video-on-demand (SVOD) viewing on the TV set continues to march upward, taking up 19% of total activity in 2018, according to the ratings agency Broadcasters Audience Research Board (BARB).

It's been a source of heated debate that the main SVOD services, including Netflix and Amazon, have refused to share their data with the measurement service, forcing it to make a best guess about changing habits and trends.

That might change if CEO Reed Hastings is taken at his word. At a Royal Television Society event in September, the Netflix boss admitted that SVODs had been "guilty of being simplistic" over data and rights and said he would be happy for Netflix to be measured by BARB in line with UK broadcasters. "The best solution is to have BARB report on us in a consistent way," he said. "No one wants to rely on us to do our own measurement. To a strong degree, it would be good for us and the industry to be on the BARB panel." 

BARB commissioned Kantar to install its broadband router meter technology into the panel of 5,300 BARB homes to track streaming activity by any member of the household on any device. This will provide greater insight into unidentified viewing (TV set viewing that BARB cannot identify, which accounted for 20% of total TV set use in 2018). A significant portion of unidentified viewing is believed to comprise viewing to SVOD and online video services. 

The meters will track video streaming activity from a designated list of BVOD, SVOD, and online video services, including Amazon, Netflix, and YouTube.

"Whether it is live streaming or watching on-demand, people around the UK are getting used to watching content that's been distributed through BVOD services and other online platforms," said BARB chief executive Justin Sampson in a press release. "This is why a meter attached to the broadband router in panel homes is a vital capability for BARB to have." 

The data will be reported at an aggregate, rather than programme level, with hopes it will start to become available toward the end of 2020.

AVOD Gold Rush

While the streaming market has been driven by subscription, ad-supported streaming services came to the fore in 2019, as did hybrid models that combine both subscription and advertising.

Advertising-supported video-on-demand (AVOD) platforms are not directly competing with the large SVODs, suggest Ampere analyst Isaq Chowdhury in a blog post. Instead, they present an alternative option for consumers who are seeking more content at a lower cost.

According to Ampere, the more SVOD services a household takes, the more likely viewers are to be tolerant of advertising. This is most likely among younger consumers, who have a higher tolerance for advertising. Plus, as consumers reach online video spending limits, they may be more willing to watch ads as a trade-off for a service that is cheaper or even free.

AVOD revenue growth is expected to increase dramatically over the next few years as viewers switch to OTT and ad dollars move accordingly. Initiatives in this area include broadcaster portals like ITV Hub, where inventory is being sold programmatically. Netflix's recent overtures about joining BARB perhaps signal its intent to launch an ad-supported tier, following in the footsteps of Amazon's Internet Movie Database (IMDb)-affiliated Freedive. Viacom's AVOD Pluto TV was made available on Apple TV and mobiles in the UK, Germany, and Austria in 2019 and also debuted in Switzerland.

Netflix and other premium SVODs would need to tread wisely in the UK. Almost three-quarters of UK TV subscribers voted against sponsorship or ads on VOD services in a survey by consultancy Differentology. A fourth of people would upgrade to an ad-free service, and 39% would either cancel their subscription or switch to another paid service.

In the US, Facebook and YouTube are expected to continue leading the market through 2023, trailed by Hulu, Roku, and Tubi, according to an end-of-year report from IHS Markit | Technology. "The AVOD gold­rush is here, and it represents a prime opportunity for service providers, new AVOD entrants, and content companies," writes Sarah Henschel, senior research analyst for media. "Ultimately, the winners and losers in the AVOD industry will be determined not only by content, but also by data strategies and user acquisition."

The degree of product placement in original content used by SVODs to supplement revenue came to light in a survey by Branded Entertainment Networks. All of Amazon's original programming contains brand integrations; 91% of Hulu and 74% of Netflix originals do. For example, Netflix worked with Coca-Cola to weave a new drink into the core plot of Stranger Things season three. 

Monetisation Strategies 

"Overwhelmed consumers will become more discerning and focus their time on services with algorithms that provide the greatest enjoyment," says Kantar in its Media Trends report. "Among subscription-funded services, the winners will be those with the highest quality original content and understanding of different audiences."

Yet having great and exclusive content is no longer enough to keep customers truly entertained and engaged. There was a heightened realisation this year of the importance of the user experience in attracting and retaining viewers.

The UI should get users where they want to go in the least number of clicks. It's the Netflix model to which others are still playing catch-up. Vodafone Portugal updated its UI in July, describing the change as "simpler, intuitive and intelligent," and including the basic ability to resume viewing at the point when it was interrupted. A summer update to Sky Q included
"simple, one-touch destinations" for functions that help customers "find what they want to watch quickly and easily on any device."

QoE is another vital part of the equation. A Brightcove survey found that too many ads and poor video quality are the key spoilers for live-streaming experiences, with respondents also abandoning a live stream because of buffering and the live stream crashing.

Ad delays of just 5 seconds lead 13.6% of viewers to abandon content, a report by Conviva has found. With nearly half of all streaming ads failing (per Conviva), that's a big risk for service providers as more ad dollars head for the streaming world. 

SVODs should focus as much effort on retention as acquiring subscribers in the first place. "A significant rise in acquisition costs (the marketing cost of fresh subscribers for Netflix US alone is around $100), coupled with the pressure to encourage viewer loyalty beyond a handful of months, means that subscriber retention [is] a far more economically feasible growth option for today's OTT players," Cleeng strategist Dimitar Serafimov  argues in a blog post. 

The fragmentation of content options is expected to exacerbate viewer fatigue as well as max out their wallets, leaving the field open for platforms best able to aggregate multiple accounts and to deliver an array of targeted content and services like contextuality, second screen, and voice control. This puts content discovery at the top of the list for service providers.

Vodafone Portugal, for example, introduced a voice-driven search engine to its UI that uses natural language recognition. The next stage of sophistication will likely include tools to discern the viewer's emotional state to refine content recommendations. 

Even if machine learning is used to drive personal content recommendations, the sheer scale of available content and datapoints renders traditional grid or tree-based UIs unfit for purpose going forward.

The advent of 5G is expected to boost video advertising, particularly over mobile. Faster speeds and high-resolution ads might encourage viewers to stop scrolling and watch more ads. There will be opportunities to create personalised video ad storylines to push up engagement rates, and creatives could exploit the potential of AR games to get people to interact with brands.

The State of SVOD in Europe

Streaming Media

Already wilting under the Death Star orbit of Netflix and forewarned of further competition landing from US studios, Europe's broadcasters have drawn up plans to defend their position.
http://www.streamingmediaglobal.com/Articles/Editorial/Featured-Articles/The-State-of-SVOD-in-Europe-139735.aspx

In Europe, as in North America, the video-on-demand (VOD) market is overcrowding as major direct-to-consumer (DTC) platforms pressurise an already heated business. 

Apple TV+ was first out of the box in November. It will be joined by HBO Max; short-form mobile VOD platform Quibi; NBCU Peacock, which uses the same user interface (UI) as Comcast-owned Now TV (Peacock is likely to be an ad-supported service, free to existing Sky customers in the UK); and Disney+.

Disney+ is already live in the Netherlands, where the service was beta-tested in September. The country was chosen because of a propensity of its population to pay for content. (Among its 7.5 million inhabitants, Netflix and Spotify both have 3 million subscribers, while Videoland, a competing local service owned by RTL, has 1 million subs.)

That there is growth in premium VOD has been reported by several analysts. While TV viewing remains dominant in Europe, revenue has been broadly flat over the past 5 years, and national networks have seen their audiences erode, according to Digital TV Research. Meanwhile, subscription video-on-demand (SVOD) figures are forecast by the analyst to reach 100 million subs in Europe by the end of 2021, with total SVOD revenue in the region expected to jump to $12.47 billion within 5 years. 

Kantar's TGI Global Quick View data shows that 44% of consumers in Great Britain who pay for an online streaming service have at least two subscriptions, with 7% paying for four or more. The market could prove dif­ficult for new premium streaming services as consumer attention—and wallets—only stretch so far.

"Whether people will sign up for multiple OTT services is yet to be seen, and there will be no one answer," says Steve Miller-Jones, VP of product strategy at Limelight Networks. "Pure cord cutters won't mind the idea of multiple subscriptions and will follow the content. There will be others who want everything wrapped up in one place alongside their TV and internet. To serve this second cohort of consumers, there will certainly be more integration of OTT and pay TV."

He adds, "One thing we can all be sure of is that competition in the streaming market is going to be fierce on all sides. After the initial hype dies down, and the first seasons of flagship shows end, the content war in the SVOD will really start as services look to prevent subscriber churn."

Kantar analyst Sushmita Jain suggests that the ever-increasing amount of available content and platforms "will lead to a paradox of choice. … [M]ore is not always better. Overwhelmed consumers will become more discerning."

It is widely expected that the streaming war will intensify into 2020, but Antonio Corrado, CEO of Mainstreaming, thinks the Apple and Disney challenge to Netflix and Amazon will benefit the consumer. "This could also mean that user experience and quality of service could become a real differentiator as these giants battle to gain market share," he says.

The arrival of Disney+ doesn't necessarily mean pay-TV operators will be excluded from carrying its content; "instead it heralds the beginning of a new commercial paradigm," David Sidebottom, analyst at Futuresource Consulting, writes in a blog post. "Disney will still be keen to maximise distribution and therefore will likely look to maintain relationships with pay-TV operators, seeking carriage of Disney+ as an app or through more sophisticated integration."

Netflix has made similar carriage pacts with Sky in the UK, Sky Italia, and Canal+ in France as defence against rival SVOD launches.

Netflix has an estimated 11.3 million UK subscribers compared to Amazon's 9 million Prime Video subscribers. Netflix, though, has a market share of 61% of daily SVOD usage, with Ama­zon Prime in second at 25% and Now TV in third at 11%. The figures are based on Goldmedia's VOD-Ratings for October 2019 as reported by Broad­band TV News. According to that analysis, there are 2.6 users for every Netflix UK account, compared to 1.9 for Amazon Prime Video, which, in part, explains higher usage levels of Netflix. Now TV has 2.3 users per subscription.

Forging Alliances: Broadcasters Fight Back 

To combat the threat from digital streamers, a number of broadcasters within and across European markets have allied to launch new online services. Although business models vary, they offer digital-first functionality like programme restart and content recommendations, with availability on as wide a variety of products and platforms as possible.

Some share a belief that ring­fen­cing homegrown content is something that domestic audiences are crying out for. This concept is perhaps fatally un­dermined by the weak content budgets (in the low mil­lions of euros) local broadcast­ers allocate for original content compared to the billions of euros of glo­bal SVODs.

Some have had to overcome anti-competition hurdles; others have been forced to get into bed with local rivals. Both dynamics have hamstrung speed to launch, ceding more advantage to SVODs.

Lovestv, a joint venture of Spain's three leading broadcasters, RTVE, Atresmedia, and Mediaset, went live in November 2018. Currently confined to smart TV devices based on hybrid broadcast broadband TV (HbbTV), it brings together catch-up VOD content and live rewind. 

German commercial broadcaster ProSiebenSat.1 partnered with Discovery to introduce freemium service Joyn to the German market in June 2019. It comprises 55 free-to-air TV channels offered as live streams, including those of public broadcasters ARD and ZDF; commercial broadcasters Viacom, Welt, and Sport1; and Bloomberg and CNBC. Its attraction is multi-screen availability (smartphones, smart TV, tablets) without prior registration and a content mix including curated theme channels and catch-up. 

In November, it launched subscription layer Joyn PLUS+, costing €6.99, and plans to introduce the Euro­sport Player by mid-2020. ProSiebenSat.1 also plans to roll out Joyn in other European markets.

The main terrestrial broadcasters in France (France Télévisions, TF1, M6) will finally launch Salto, a joint venture, this spring, with the intent to become the default streaming video destination for French premium video. Since its initial announcement in mid-2018, however, Netflix has become increasingly dominant, with CanalPlay shuttering in mid-2018, although Canal+ Séries launched in March 2019.

Salto will include linear terrestrial channels and catch-up along with SVOD, but the partners must commit to a series of remedies to prevent anti-competitive coordination in rights acquisition, the commercialisation of TV channels, and the distribution of pay TV services and the advertising market.

In November, UK broadcasters ITV, BBC, Channel 4, and Viacom-owned Channel 5 launched SVOD service BritBox. It costs £5.99 a month and contains mostly archive programming from the UK broadcasters, with the BBC only placing shows on the platform after they have been available on iPlayer for a year.

As was widely reported, BritBox president Soumya Sriraman had this to say about the service on its launch: "BritBox is proudly a mass niche service. We blend the immediacy of broadcast with the swagger of a digital streamer creating a 'broad-streamer.'"

"BritBox feels like it's over before it even started," believes Chris Wood, CTO at software solutions developer Spicy Mango. "There has been little promotion of the new service in the UK, and the promotion that has taken place is limited. Unfortunately, this service might not make the cut, but realistically, there has to be some streaming victims in 2020, as the industry is becoming far too fragmented, and customers won't consider paying £6 per month for content that is largely available on other platforms."

Netflix's total content spend reached $15 billion in 2019, while the BBC spent around $2 billion, highlighting the scale of the challenge local broadcasters face.

Sky also made moves to shore up its audience. In October, it began broadcasting Sky News on Amazon's Twitch and separately agreed to a new output deal to give it continued access to HBO's new production and content library.

The most ambitious attempt to achieve scale by creating a pan-European TV company is being led by Italian TV group Mediaset. In November, Reuters reported it raised its stake in ProSiebensat.1 to 15.1% as the next step in a potential merger of its Italian and Spanish operations with its German rival under a new Amsterdam-headquartered group called MediaforEurope. The merger is opposed by French group Vivendi, a minority (28.8%) stakeholder in Mediaset, with the battle to be decided in court.

SVOD Growth in Europe

Beyond Netflix and Amazon Prime Video, the market is fragmented in many countries in mainland Europe. Many local SVOD players have struggled to grow, meaning that multiple subscription uptake has not reached its potential. The arrival of new international and local services will help stimulate this "if they are unique, affordable and able to lock-in subscribers beyond any initial binge viewing," Futuresource's Sidebottom advises in a post on BizTechReports. 

The year-on-year growth of the Spanish video market consumer spend will lead all other Western European countries between 2019 and 2023, according to Futuresource. This is as a result of continued strong pay-TV revenue growth (accounting for 70% of the overall video entertainment market), whilst many other countries are flatlining or even beginning to decline. Furthermore, continued rapid SVOD uptake is anticipated, similar to the region as a whole, but coming from a comparably lower base. Netflix and Amazon spearhead the market, aided by SVOD integration with pay-TV services and investment in local language production. By 2021, Spanish consumers will be spending half a billion euros on SVOD subs per year, accounting for 17% of video spend in the home.

SVOD is the key element of the German video market, which has shown "impressive" continued growth, based on Futuresource's analysis. More than 10 million households subscribe to one or more services, which means that a quarter of German households are actively engaging with SVOD. "Amazon Prime Video remains the market leader, but Netflix continues to make strong gains," according to Tristan Veale, market analyst at Futuresource. "The two services are mostly complementary, and there is room for both to thrive."

SVOD is providing most of the impetus in Italy's home video market, with annual consumer spend expected to reach nearly €1bn in 2023, says Futuresource. Growth will be driven by local services such as Telecom Italia's TIMVision, Netflix (which was added to Sky Italia's Sky Q platform in October), and Amazon Prime, along with the proliferation of new services.

"In 2019, consumers [were] expected to spend €340 million ($380m) on SVOD, up by 47%, with 5.3 million households subscribing to one or more services," says Veale. By the end of 2020, it expects there will be more SVOD than pay-TV households in Italy.

Mediaset, the largest commercial broadcaster in Italy, operates a variety of OTT services, which include Mediaset Play, Infinity, and the Tivu­On hybrid DTH-OTT service in partnership with Telecom Italia and RAI. While it does not publicise subscription figures, they are expected to have declined in 2018–19 as the first year of its loss of Champions League rights to Sky Italia kicked in. It struck a deal with Netflix in October to co-produce a series of movies in the country, which will be released on Netflix first before being broadcast on Mediaset's free-to-air channels in Italy, according to Reuters.

"The key challenge for any localised service will be the sustained provision of high quality, exclusive content when compared to both Netflix and the existing TV landscape," writes Sidebottom in a blog post. "Such services will also have to differentiate against their backer's existing live and on-demand services. This will require significant additional budget if they are to establish themselves and keep subscribers renewing."

One thing is certain: whether it's major global D2C brand launches from Disney or local broadcaster joint ventures, consumers' thirst for premium streamed video will continue to grow, driven by both increasing content and service choice.

BBC Plots Transition to iPlayer 

UK free-to-air broadcasters are the most successful within Europe at encouraging their audiences to use catch-up broadcast video-on-demand (BVOD) services, ahead of those from Sweden, Germany, and Denmark. Kantar's analysis shows that only four broadcasters in Europe see more than half their audience using the associated catch-up service: the BBC and ITV in the UK and Sveriges Television (SVT) and TV4 in Sweden.

Of those, the BBC has the highest engagement, with more than two-thirds of its regular linear audience now using its iPlayer monthly, which will help the BBC transition to using the iPlayer as an interface for its entire service portfolio.

In 2019, the BBC announced its fourth upgrade to the iPlayer in 12 years in a bid to better compete with international SVODs. Details on the revamp won't crystalise until 2020 but include the extension of programme availability for at least 12 months rather than the 30-day window and a concentration on live events (like music festival Glastonbury, the FIFA World Cup, and elections), which are not core to Amazon or Netflix. A "hero" screen will carry a main feed at the top of the iPlayer homepage, with smaller icons for concurrent feeds.

The BBC is also emphasising the role of human curators in creating innovative audience experiences as opposed to, in its characterisation, the machine-driven service of a Netflix.

iPlayer had a record 7 days in the final week of September, racking up 90 million programme requests. And, crucially, the number of people younger than 35 whom iPlayer is reaching has gone up by more than a third in the past year.

The vision is to transform iPlayer from a catch-up service into a "total TV" destination, according to BBC director general Tony Hall, speaking at the RTS Cambridge Convention in September. This includes serving personalised content to audiences which it hopes to deliver as Object-Based Media (OBM). BBC R&D has been experimenting with building out OBM at scale and toward the end of 2019 unveiled developments in a low-latency streaming technology called Remote Experience Streaming. 

As befits its public service remit, the aim is universality: the streaming of a remote experience should happen on any device, no matter what its computational ability is. BBC R&D also built a prototype that allows viewers to navigate through branching narrative episodes with a mouse and keyboard, or a gamepad or remote control, when watching on a TV. 

Soccer Tests Live Streams

Soccer, the world's biggest sport and Europe's most popular live-viewing pastime, remains in the hands of pay TV, but cracks appeared in its right to possess TV's crown jewels. 

DAZN and Amazon are making the most concerted attack. Amazon's debut broadcasting the English Premier League (EPL) in December was considered a success.

Amazon, which paid a reported £90 million for 20 live Premier League matches a year through the 2021–22 season, aired its allocated games via its Prime Video OTT subscription service in December. Whilst the tech giant has not made its viewing figures public, it claims that "millions" watched its coverage. It is using sports as a loss leader to entice subscriptions to its £79 annual Prime service and claims Premier League coverage contributed to rec­ord numbers signing up to it since its 2007 launch in the UK.

The EPL will be satisfied too that its package of rights for games to be simultaneously streamed had increased the competition's reach by a third, according to Ampere Analysis. According to Ampere, Amazon's distribution means that 72% of fans now have access to at least some matches, compared to 54% who have either or both a BT Sport or Sky Sports subscription. That will give Amazon the impetus to seek increased involvement in more sports rights, including bidding for more Premier League games at the next auction for the 2022–2025 seasons.

There were some glitches, notably in delays of up to a minute between broadcast and live stream, a perennial problem for online casters, which new technologies like low-latency common media application format (CMAF) might iron out.

Amazon's success prompted an immediate response from BT Sport when it launched a monthly pass allowing fans to pay for content without having to commit to an annual contract. Its £25-a-month pass allows anyone to dip in and out of content, including EPL and Champions League football, which it retained rights to show along with the UEFA Europa League and new Europa Conference League in the UK from 2021–24 for £1.2 billion.

Sky went down this route of "pay lite" some time ago and found that its monthly pass to Sky Now has not dented its core pay-TV base of about 10 million subscribers.

"Given the high price of sports rights, it is a risky bet," Richard Broughton, Ampere research director, told The Guardian. "Sky's Now TV has mitigated the risk of contract customers moving to a 'dip in and dip out' culture by pricing the sports pass quite high in recognition that consumers have to pay for flexibility."

"As the public become accustomed to DTC offerings, expect innovation around the monetisation of seasonal content such as TV shows or sports leagues," says Limelight's Miller-Jones. "With the NBA, we already see options to buy game-by-game, and there is no reason why that won't also become the case with something like the Premier League, where rightsholders are trying to capitalise on their investment and encourage customers to dip their toe into the water to try out their service."

However, Germany's pay-TV incumbent rights­holder Sky Deutschland was left with nothing in the rights to air Champions League from 2021 to 2024. It was outbid by Amazon and DAZN, which split exclusive rights between them for an undisclosed amount, according to Reuters. ZDF secured live free-to-air rights to the final, along with highlights.

In December, DAZN also struck a deal with Telecom Italia (TIM) that will give TIM customers access to DAZN's content, including the Italian soccer league Serie A. The partnership builds on TIM's strategy of establishing itself as a leading aggregator of content in Italy, with a sports offering that includes Major League Baseball and IndyCar.

2019 saw esports tournaments hit the mainstream press with a big bang. Esports has been around for a long time, but with tournament prize money now exceeding $30 million in some cases, this is now an entertainment genre that cannot be ignored. 

"In 2020, we'll see broadcasters trying to get in on the act and find a way to bring what has been a streaming-only format on YouTube, Twitch and Mixer to their main channels," says Spicy Mango's Wood. "It's a demographic that they are currently missing, but could this be the way to reach what should be their future subscribers?"

2020 will also see more traditional sports move into esports, Kantar's Jose Colagrossi told TVB Europe: "For example, football clubs establishing their own esports teams, and Formula One streamed over Twitch with gamification. And as coverage of esports expands into traditional media, we predict that esports players will become well-known celebrities and influencers in their own right."