An Analysis of the US, UK, French and Chinese Markets

1. Managing Media Companies (B)
Paid for Feature Film Content
An Analysis of the US, UK,
French and Chinese Markets
Project for NBC Universal
Professor: Annet Aris
Lindsay Nieman
Libert Froidmont

2. AGENDA
1. Introduction to industry changes
2. Types of players and advantages for each
3. Main differences between key territories
4. Assessment Framework
5. Analysis of market players in each territory
6. Hypothesis of who the winners will be per territory

3. FILM DISTRIBUTION: INDUSTRY CHANGES
Consumption patterns are changing in how people watch films
and in how they are released
Traditional Release
Windows
Theatrical
Release
Linear Pay TV
DVD Sale/
Rental
VoD
SVoD
Free to Air TV
Industry Changes
Release
windows are
narrowing both
in medium and
territory
Warner Brothers
will release
movies for VoD
same day they
are Released for
DVD
Consumers are
expecting films
to be available
on every
platform (PC/
Mobile/ TV) at
the same time
Lionsgate
Starting to
bundle iTunes
digital download
with DVD
purchase
DVD sales are
dropping
DVD sales fell
more than 5% in
2012

4. TYPES OF PAID-FOR FILM DISTRUBTORS
It’s an uneven playing field, where different business models
converge into similar service offering
Type
Examples
Advantages
Challenges
Trends
OTT –
Subscription
Based
Netflix
• Streamed so limits piracy
• Regular revenue stream
• Easier to strike deals with
studios due to security
• Exclusive agreements
• Window framing
• Many companies are
leaning towards this
model (ex YouTube and
independent channels)
OTT –
Transaction
Based
(EST)
iTunes
• More profit per download/
stream
• Quicker access to new
releases
• More expensive for the
consumer
• Competing with iTunes
• Many companies are
leaning towards this
model (ex YouTube and
independent channels)
Managed
Network
Distributor
Comcast/
Sky/
Orange Fr
• As media controllers they
can create rules as have
say in where the content
goes
• Imbedded subscriber base
• Unlimited broadband width
• Balancing channel business
and online business /
subscription business and
transaction business without
jeopardizing the other
• The creation of their own
OTT SVoD channels
Ad-funded
content
portal
YouTube/
Youku
Tudou
• Already popular and widely
used for short-form content
• Achieving studio deals and
alleviating concerns for
piracy
• Moving to subscription
based model
Studio
backed
channel
Epix
• Content deals already in
place
• Brand name
• Changing business model
from licensing out content to
licensing content
• Slow movement in
developing better OTT
capabilities

5. MAIN DIFFERENCES IN EACH TERRITORY
VOD and SVOD are not a one-fit-all solution
•
•
•
Market Leader in terms of film content and film distribution
Equal strength in SVoD and VoD markets
Managed network distributors have high power
•
•
•
•
Delayed content availability due to window framing is customer
pain point
VoD market is stronger than SVoD market
Hunger for Hollywood New Release repertoire
Managed network distributors have high power
•
•
•
•
Local/ European content is still important
SVoD market isn’t successful
Many US players haven’t entered market
Managed network distributors have high power
•
•
•
•
Monopoly market – Youku Tudou
High demand for online content portals – very connected market
Hollywood & Local repertoire is important
Potential space for a Chinese company to export platform
globally

6. ASSESSMENT FRAMEWORK
Evaluation of a company’s competitive position are based on five
factors relating to content, user experience, and sustainability of
business model
Factor Determining Success
Evaluation Criteria
Quality of Interface
•
•
•
•
Screen/ Video quality
Ease of use/ Speed of use
Search/ Recommender functionality
Platform/ Channel availability
Number of Users/ Monetization
•
•
•
Current popularity/ market sizing
Customer purchasing power
Sustainability of business model
Deep Pockets
•
•
Money to secure content deals
Ability to invest in growth
Content Deals in place
•
•
Relationships with major studios
Type of relationships (exclusive/ nonexclusive)
Future Game Changers
•
•
Scenarios in which future growth may occur
Scenarios in which business model will be
weakened

7. ANALYSIS OF US PLAYERS (TIER 1)
Apple and Netflix have clear lead for now but a further analysis
on key parameters shows that Netflix’s position is fragile and is
depending on the other players movements
Netfix
Apple
X-Box
ComCast
+/-
+
+
+/-
# of users /
monetization
+
+
+/-
+
Deep pockets
-
+
+
+
+/-
+
+/-
+
Smart UI
Ability to potentially
direct traffic to Xfinity
through it's broadband
capabilities
Quality of Interface
Content deals in
place
Future game
changers
Being bought by a
bigger player
iTV

8. ANALYSIS OF US PLAYERS (TIER 2)
Although Amazon and YouTube are presently not market
leaders, our analysis shows that they could pose a serious
competitive threat
YouTube
Samsung
Epix
Amazon
+/-
+
-
-
# of users /
monetization
+
+/-
-
-
Deep pockets
+
+
+/-
+
Content deals in
place
-
-
+
+
Increased mobile
viewing
Rather than licencing
their content with
Amazon (previously
Netflix), might decide to
further invest in their
own O.T.T capability
Enhanced utilization of
recommender system
Quality of Interface
Future game
changers
Paid channel
subscription/ Focus on
long-form content

9. ANALYSIS OF UK PLAYERS
Broadband and TV broadcaster, Sky, still holds dominant
position, however a strong movement from Amazon or another
large US player could change the landscape
Netflix
Sky
YouTube
LOVEFiLM
Quality of Interface
+
+
+/-
+
# of users /
monetization
+
+
+
+
Deep pockets
+
+
-
+/-
+/-
+
-
+
Now TV
Paid channel
subscription/ Focus on
long-form content
The level of backing
from Amazon to help
secure studio deals
Content deals in
place
Future game
changers
Level of investment in
European territories

10. ANALYSIS OF FRENCH PLAYERS
ISPs are likely to keep their lead in the VOD segment in the shortrun, with Apple keeping up with its steady grow. The SVOD will
remain an unattractive market as long as there is no change in
French regulation (chronology law)
Local ISP provider
(Orange)
Local SVOD (Canalplay)
Apple
International OTT players
(Netflix, Amazon,
Youtube)
+/-
-
+/-
+
# of users /
monetization
+
+/-
+
N/A
Deep pockets
+
-
+
-
Content deals in place
+
+
+
+
Future game changers
Orange, as an ISP can
technically put
bandwidth limits or
request for a fee to OTT
players for their use of
bandwith (breaking net
neutrality). Orange
already reached a deal
with Google for the
traffic incurred on their
network.
Local SVoD players are
trying to get a foothold
in the market before
new international
players but with limited
traction so far. A
change of the
chronology laws for
release of content
might help them taking
more share from Free
and Paid TV
iTunes can lever
technogical and
financial power to
negotiate exclusive
international rights
contract
Their entry in the
French market will
definitely shake up the
current state of the
market. However the
French SVOD market is
very competitive and
traction is still low
which might explain the
reticence of
international players to
enter.
Quality of Interface

11. ANALYSIS OF CHINESE PLAYERS
Seen as a viable answer against content piracy, Video on Demand
has gained momentum in China. Some large local players are now
competing to take the lead in the market. Whether they will decide
to go international at some point is a question mark.
Youku Tudou
Baidu
You On Demand
Cable Operators
Quality of
Interface
+
+
?
-
# of users /
monetization
+
+
-
+/-
Deep pockets
+/-
+
-
+/-
+
+/-
+
-
If it can get traction from
Chinese viewers, this
become an very interesting
alternative for US studios
A consolidation of the cable
operators could end in a
entity that would the
potential to challenge the
supremacy of the existing
OTT player if they begin to
offer the movies over the
top as well as through
broadcast.
Content deals in
place
Future game
changers
Ability of leverage its
position as the chinese
Youtube to growth its
subscription based business
and increase the bottom
line.
It will take time for Baidu to
integrate completely into
video streaming but if they
manage to do so it will
probably give them the lead
in the market (also an
opportunity for them to
strenghen their mobile
offer which is one the
current weakness of Baidu).

12. HYPOTHESIZED WINNERS PER TERRITORY

13. Appendix
1. Detailed analysis of US players
2. Detailed analysis of UK players
3. Detailed analysis of French players
4. Detailed analysis of Chinese players

14. Analysis of the US players (Tier 1)
Netfix
Apple
X-box
ComCast
Quality of
Interface
- Customers complain about
the interface ' Recommender system is
based on ratings and what
you've watched before
- High Level of Customer
Satisfaction
- Easy connectivity with TV ability to see what's
trending at the moment on
TV/ VOD - Voice conrol Interactive features - easy
to uese: all in
entertainment set
- Currently a bit outdated
but comcast is rolling out X2
interface
# of users /
monetization
-Netflix has over half of the
streaming video rentals,
according to NDP’s
VideoWatch in Q1 2013
Netflix dominated with 90%
of video-streaming units.
- winner in the EST model
iTunes representing 65% of
total turnover of film
purchases online
- X box one will be released
in 21 countries
- 23% of VoD movie rental
market
Deep pockets
- Independently owned
- Apple is the richest U.S
company
- Backed by Microsoft
- Recently purchased GE's
share of NBC Universal for
$16.7 billion
- Deals in place with 6
major studios - exclusive
deal with Dreamworks
- For iTunes good deals are
in place but in their
subscription model they are
reliant on Netflix
- Netflix, iTunes and
Amazon apps as well as
own content deals
- Managed network
distributor
- Smart UI - Technologically
advanced X-box One
- Ability to potentially
direct traffic to Xfinity
through it's broadband
capabilities
Content deals in
place
Future game
changers
-Being bought by a bigger
player
- iTV

15. Analysis of the US players (Tier 2)
YouTube
Quality of
Interface
# of users /
monetization
Deep pockets
Content deals in
place
Future game
changers
Samsung
Epix
Amazon
- Not easy to navigate but
familiar to users for short
form content purposes
- Still in launch phase - focus
is going towards enhanced
recommender systems
- Only available through
several carriers
- Customers think that interface is
ugly
- Commands 27% of all
downstream traffic - 17% of
the connected Internet TV
market
- More Samsung phone users
than iPhone users, but less
use it for content currently
- 30 million pay-tv
subscribers (but behind
Showtime, Starz & HBO)
- Amazon Prime currently comes in
with only 1.31% of web traffic.
- Owned by Google
- Investment through content
acquistions, i.e. mSpot
- Content seller not buyer
- Amazon spent $1billion on content
for Amazon Prime and Netflix
believes that they will spend $2.17
billion on content licensing Amazon now has an exclusive EPIX
deal (which used to be Netflix's)
- Netflix Reed Hastings said they
could be losing as much as $1 billion
a year on their streaming service
(but will continue to spend until
profitable)
- Will come with paid
channels - Youtube is
investing in own content'
-Transactional model means
that exclusivity agreements
aren't as relevant - Though
still deals with 5 of 6 Major
studios
- Backed by Lionsgate,
Viocom's Paramount and
MGM
-On May 16, 2013 Amazon
announced a new TV content deal
with NBCUniversal to make
available NBCUniversal’s biggest TV
shows such as Covert Affairs,
Grimm, and Suits, etc. Amazon is
also the exclusive online
subscription home for PBS’s
Downtown Abbey and now for CBS’s
“Under The Dome”. According to the
website, over 40,000 films and TV
shows are available to their Prime
customers.
- Paid channel subscription YouTube has released 60 new
channels , each with a price of
$2 a month per channel. /
Focus on Long-form content
- Move to mobile content
consumotion could
potentially leave Samsung in
a more powerful position
- Proper launch of O.T.T
service
- Enhanced utilization of
recommender system

16. Analysis of the UK players
Netflix
Sky
YouTube
LOVEFiLM
Quality of Interface
- Customers complain
about delayed
availability of US films Recommender system is
based on ratings and
what you've watched
before
- Customers are overall
satisfied but many still
have low awareness of
Now TV
- Not easy to
navigate but
familiar to users
for short form
content purposes
- Interface is very
similar to Netflix rated easier to
browse
# of users /
monetization
-Netflix has over half of
the streaming video
rentals, according to
NDP’s VideoWatch in Q1
2013 Netflix dominated
with 90% of videostreaming units.
- over 5 Million
subscribers
- Commands 27%
of all
downstream
traffic - 17% of
the connected
Internet TV
market
- 2 million
subscribers
Deep pockets
- Independently owned
- Leading UK channel
- Owned by
Google
- Amazon backed
but separate
operation
- It holds the largest
body of rights to
distribute movies
through its subscription
video on demand (SVOD)
online services including
Sky Go and Now TV, and
through its 11 linear
movie channels via its
satellite platform and
finally through
wholesale agreements
with Virgin Media
- Will come with
paid channels Youtube is
investing in own
content'
- Rated better
newer content
than Netflix - Deal
with Disney -
- Now TV
- Paid channel
subscription YouTube has
released 60 new
channels , each
with a price of $2
a month per
channel. / Focus
on Long-form
content
-The level of
backing from
Amazon to help
secure Studio
deals
Content deals in
place
Future game
changers
- Deals in place with 6
major studios - Exclusive
deal with dreamworks
- Level of investment in
European territories

17. Analysis of the French players
Local ISP provider (Orange)
International OTT players
(Netflix, Amazon, Youtube)
Local SVOD (Canalplay)
Apple
Some issues reported by
French consumers on SVOD
services are:
- Difficulties to view
content (bugs)
- Technical quality of some
programs is not as expected
(e.g. issue with subtitles)
- Weak recommendation
functionalities
- overall, interfaces are
seen as slow.
- No proper recommender
system
- Limited effort to adapt
iTunes to film content
- No social tools
Orange is the clear leader
on the VOD segment, with
a 38% market share.
Combined, ISPs represents
65% of the VOD market.
Still low after 2 years in
operation: 200.000
subscribers for CanalPlay the current leader in French
SVOD
iTunes Video is capturing 2030% of the French VOD
market accroding to
estimation
Orange is one of the biggest
ISPs in Europe (revenue of
EUR 23 Bn in France for
2010) and has been
investing a lot on their VOD
offering
Owned by Canal+ group, the
biggest Pay-TV players in
France. However, so far,
investments to promote the
offering have been limited.
Apple has the financial
resource to invest further in
the French market if it
decides to.
Will depend on each player
whether they can and want
to invest into the French. It
hasn't been a priority for
them so far.
Content deals in place
Orange has rights
agreements with Warner
Bros, HBO and local
broadcasters (TF1, France
Television, M6)
4.000 movies and TV series
including catalog from
Warner, Pathé (French
producer) et Studio Canal
(part of Canal+).
iTunes has good deal in
place and is able to provide
most of the international
and local movie content.
Will be able to rely on their
portfolio of international
rights.
Future game changers
Orange, as an ISP can
technically put bandwidth
limits or request for a fee to
OTT players for their use of
bandwith (breaking net
neutrality). Orange already
reached a deal with Google
for the traffic incurred on
their network.
Local SVoD players are
trying to get a foothold in
the market before new
international players but
with limited traction so far.
A change of the chronology
laws for release of content
might help them taking
more share from Free and
Paid TV
iTunes can lever technogical
and financial power to
negotiate exclusive
international rights contract
Their entry in the French
market will definitely shake
up the current state of the
market. However the
French SVOD market is very
competitive and traction is
still low which might
explain the reticence of
international players to
enter.
Quality of Interface
# of users / monetization
Deep pockets
- The strenght of ISPs is that
the can provide an "All inOne" solution making life of
viewer easier
(TV/VOD/Internet)
- It appears nonetheless
that the quality of the
interfaces can be improved
(slow, bugs, no proper
recommender system)
Overall, better interface
than local players
No (S)VOD offering in
France yet

18. Analysis of the Chinese players
Youku Tudou
Quality of
Interface
Baidu
You On Demand
Cable Operators
Similar to youtube
Similar to youtube
Not tested
Scarce offering at the
moment
# of users /
monetization
Has currently the largest
customer base in the online
video business in China
Can lever its large customer
base from its established
"big boy" position in the
search engine market
Still low
Potential customer base of
200 million cable homes
Deep pockets
Neither Youku nor Tudou
were profitable pre-merger
and it's highly probable will
not generate positive net
profit before 2013. This
might impact the ability of
the new to highly invest in
VOD infrastracture and
content
As the largest online player
in China, has the ability to
invest further in VOD as
highlighted by the recent
acquisition of PPS Stream
for USD 370 million
Limited compare to its
chinese competitors.
The cable operators are still
fragmented so far.
Considered as the chinese
OTT partner for video
content by most US studios.
Lot of local content + also
self-produced programs
Qiyi's (VOD channel of
Baidu) have started the
process of removing
illegitimate TV series and
entire movies (both
Chinese and Hollywood/US
content) from their vaults,
in a process of going legit.
This will probably result in
more content agreements
with local and hollywood
studios.
Content deals in
place
Future game
changers
Ability of leverage its
position as the chinese
Youtube to growth its
subscription based business
and increase the bottom
line.
It will take time for Baidu to
integrate completely into
video streaming but if they
manage to do so it will
probably give them the lead
in the market (also an
opportunity for them to
strenghen their mobile
offer which is one the
current weakness of Baidu).
Have support of most of the
notable Hollywood studios
as well as agreements with
Chinese content providers
If it can get traction from
Chinese viewers, this
become an very interesting
alternative for US studios
Low on international
content
A consolidation of the cable
operators could end in a
entity that would the
potential to challenge the
supremacy of the existing
OTT player if they begin to
offer the movies over the
top as well as through
broadcast.

19. Thank you for your attention !