More and more companies are realising the potential that comes with giving consumers the power and the choice of what they want to watch, when they want to and where they want to. They are investing time and money into Video on Demand (VOD) capabilities, which are either subscription-based or rely on advertising to make money. Michael Bratt explores this blossoming sphere.
Recently Disney announced was pulling all of its content from Netflix, when the deal between the two companies runs out at the end of 2018, in favour of setting up its own streaming service.
Hulu now has agreements in place with all five of the major US broadcasters, after it struck a deal with the CW Network (a joint venture between CBS and Warner Bros) to bring CW content to its Live TV service. This content will appear alongside programming already from NBC, FOX, ABC, and CBS itself.
The Wall Street Journal recently revealed that Apple will invest approximately $1 billion in acquiring and producing original TV shows over the next year.
At the beginning of August, Facebook officially launched its new video platform, Watch, which will feature content from a wide range of creators and publishers, including professionally produced shows, user submitted content and live broadcasts.
Developments in Africa
These are just a few of the examples of companies embracing and investing in video content through VOD systems. On the African continent there are also exciting things happening. iflix, one of the leading Subscription Video on Demand (SVOD) services for emerging markets, arrived in Sub-Saharan Africa, adding 500 million consumers to the over one billion consumers in 19 markets across Asia and MENA it already has.
“Currently we are seeing that over a billion consumers globally are abandoning traditional TV and opting for internet streams and subscriptions. That transition alone shows that there is a huge amount of power in the VOD space and how it is changing the entertainment market as a whole,” says COO Marc Barnett (left) on why the company is focusing on and investing so much into VOD offerings.
Discover Digital is another player that is making waves. First and foremost a tech company, this brand recently announced two big acquisitions to boost its VOD performance capabilities. The first was a 74% stake in technical service and TV production company EFX Productions, and the second was the purchasing of Turkish firm IKON Interactive’s content management solution (CMS) and source code.
Managing director Stephen Watson (left) says Discover Digital is not only investing in VOD offerings but also continues to invest in traditional OTT television channels. “We need to make quality content more accessible to people who cannot necessarily afford pay TV services… And certain content will always be best enjoyed live. News services for example; everyone should have access to news from around the world, not just premium pay TV subscribers… And certain sports events are best enjoyed live and younger children’s programming. There is still space for certain linear channels”.
Discover Digital only has a VOD presence in South Africa at present, having launched it in May this year, but it is gearing up for expansion into other African markets and its recent acquisitions will certainly help boost the offering.
A promising future for VOD
Barnett believes the future is very bright for VOD and touts giving the power and choice to the consumer as the overwhelming driver. “In the same way that we are seeing mobile technology leapfrog other traditional forms of media, I think we’ll see the same thing in entertainment… I can’t see a world, other than for things like live sport, where people go back to someone telling me what I should watch at 20:30 on a Tuesday night. Linear services will struggle,” he thinks.
Watson concurs. “The future of content is all going to be video and you can start to see that across big social channels,” he says, adding that believes that the rollout of VOD will be a very very slow process. “I always have huge concerns for businesses that believe that if you throw tons of marketing investment at it and initial cash and big content rights, then you are going to see immediate uptake. It is well established in mature markets but if you are looking at playing across emerging markets, it is a very slow journey… it’s a long term play,” he explains
VOD still facing challenges
When asked what the main challenge facing VOD is, Watson says that the easy answer would be reliance on broadband and the current challenging state of it across the continent. But he extrapolates a bigger concern he sees, which is the heavy fragmentation of the VOD market. “We said it was all about consumer choice, but in the end if the consumer has to go to five places to enjoy a five course meal, because they want something different at every part, which in its own right is going to create fragmentation.
“The challenge for VOD operators is going to be, do they find themselves in a space where it’s all about original content with production risks and costs, or how do you find a way to ensure you maintain a very strong obligated service that offers something for everyone within a family.
“How do you make sure what you’ve got is compelling when the major creators of content are going direct to consumer or ultimately will end up direct to consumer?”
Operating in emerging markets, the main challenges for iFlix are market driven, including piracy. “Being able to create a product that people will pay for and want to use above the current options, so our product needs to be of a quality and of an ease of use that makes someone think ‘it will be better to pay iFlix the cost of a pirated DVD to have access to all this content for an entire month’ rather than to continue to pirate like I do today,” Barnett explains. Educating consumers as well as offering reduced data costs are focus areas for iFlix to curb this challenge.
The success of ShowMax
An entrenched VOD player in the African market is ShowMax, a Naspers initiative which is a standalone and also a DStv offering. It recently boosted its capabilities by announcing a partnership with VAST Networks that will give ShowMax customers unlimited wi-fi access to stream and download content at 83 VAST wi-fi hotspots in South Africa, for a three month period. The streaming service also recently revealed that its service is now available on the Xbox One gaming console.
The VOD space is hotting up with major companies all exploring the possibilities. But could this ultimately lead to too much fragmentation through too much choice for consumers? Only time will tell, but what is certain is that VOD is currently a major player which will only develop further as time goes on.
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