The access of film to vod - April 2017 - Gilles Fontaine - European Audiovisual Observatory

The access of film to VOD

April 2017

Gilles Fontaine Head of Department for Market Information

A. PUTTING THE VOD MARKET IN CONTEXT

B. AVAILABILITY AND VISIBILITY OF FILMS

C. EXPLORING THE RELATIONSHIP BETWEEN THEATRICAL AND TVOD RELEASES D. CHANGES IN THE VOD FILM DISTRIBUTION VALUE

CHAIN

AGENDA

A. PUTTING THE VOD MARKET IN CONTEXT

3%

Public funding

Advertising TV

Pay-TV revenues

TVOD+SVOD

Cinema gross box-office

Physical video

VOD is growing fast but is still small

Other windows still drive the exploitation chain

OBS – Audiovisual market in the EU - 2015

TVOD ≠ SVOD Early window

Revenue sharing Mostly films Average number of films in catalogue: 3500 Average growth 2011-2015: 19%

Late window Flat fee Films and TV fiction Average number of films in catalogue: 1300 Average growth 2011-2015: 161%

Transactional VOD

Subscription VOD

TVOD is a substitute to DVD SVOD competes with(pay)-TV

OBS – Analysis of TVOD catalogues – October 2016

9%

Cinema gross box-office

Physical video

TVOD

For the exploitation of individual films, theatres and DVD still prevail

TVOD amounts to less than 10% of individual exploitation of content


TVOD services in the EU

• About 375 significant services

• A combination of • Pan-European services • And national services

• Pan-European services catalogues tend to be larger

• Really pan-European ?

• iTunes: one European film is available in average in 3,9 national services • Microsoft Movies: one European film is available in average in 3,8 countries • Wuaki: one European film is available in average in 2 countries


5%

Pay-TV

SVOD revenues

SVOD amounts to 5% of subscription revenues

For a sale to a pay service, pay-TV still prevails


SVOD services in the EU

• About 330 significant services

• A combination of • Pan-European services • And national services

• Pan-European services catalogues tend to be larger

• Really pan-European ?

• Netflix: one European film is available in average in 4,3 national services • Viaplay: one European film is available in average in 2,3 countries

OBS – Analysis of SVOD catalogues – October 2016

B. AVAILABILITY AND VISIBILITY OF FILMS

Films available in TVOD

• 45 500 different films available in the EU in at least one service

• 3 500 films available in an average TVOD service • Not all TVOD services have the same strategy. iTunes or Google Play tend to be non-selective;

all complying films can be referenced (the « e-commerce » model)

• Other national or multi-national services are more selective and pick-up films according to their editorial line (the «curation » model)


European films available on TVOD The catalogues of the pan-European services are usually larger, but have a smaller share of

European films

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


European films available on TVOD

Pan-European services have even sometimes a smaller number of European films

0

500

1000

1500

2000

2500


Prominence: having the highest number of films on TVOD may be useless is they are not promoted

Key facts about visibility on TVOD services

1. Only 10% of films are promoted

2. The top 10 promoted films get 38% of promotional spots

3. Recent films (2 yers or less) get 96% of promotional spots.

A « Paretto law »: 80% of revenues for 20% of films ? OBS – Visibility of films in TVOD catalogues – October 2016

Films available in SVOD

• 8 900 different films available in the EU in at least one service

• 1 300 films available in an average TVOD service • SVOD more on the curated model than on the e-commerce model


European films available on SVOD The catalogues of the pan-European services are usually larger, but have a smaller share of

European films

0%

10%

20%

30%

40%

50%

60%


European films available on SVOD

Pan-European services have even sometimes a smaller number of European films

0

100

200

300

400

500

600

700


C. EXPLORING THE RELATIONSHIP BETWEEN THEATRICAL AND TVOD RELEASES

47% of European films produced and released between 2005 and 2014 were available in TVOD in October 2015

How are theatrical and VOD releases related ?


Focus on recent films which circulated in cinemas

Sample: On release between 2011 and 2015 • at least 10 000 admissions across the EU

markets • films theatrically released in at least 1

EU non-national market; • EU non-national markets = at least 20%

of national admissions.

• 807 European films • 80% available in at least one TVOD

services • Average theatre release per film: 10

countries • Average TVOD release per film: 6

countries

OBS – VOD distribution – March 2017

49%

37%

14%

Cinemas and no TVOD Cinemas and TVOD TVOD only

Film is released in the country. No subsequent TVOD release (yet)

Not all theatre released are followed by a TVOD release

Was a film released on VOD previously released in theatres in the same country ? Is a film released in theatres available in VOD in the same country ?

Analysis of 8 000 releases


49%

37%

14%

Cinemas and no TVOD Cinemas and TVOD TVOD only

When a film is released in TVOD, it is often after a theatre release.

Film is released in theatres in the

country and then in TVOD

Analysis of 8 000 releases

Straight to VOD: Film is released in TVOD in

the country without a previous theatre release

When a film is released in TVOD, in 73% of cases, it is after a theatre release


So…why films do not make it to TVOD ?

1. Low perceived potential revenues: 2000 - 3000 EUR per European

« independent » film in larger countries non-national countries (?). Less than 500 EUR in smaller non-national countries (?).

2. No theatre release or lack of success in theatres makes the film harder to « sell » to TVOD services and harder to sell both to TVOD services and to consumers

3. Costs (including transactional costs) are seen as too high.

4. VOD exposure may jeopardize a TV sale.

OBS – Interviews - VOD distribution – March 2017

Figures suggest, to an extent, an “unexploited” VOD market. It covers two different case: • Markets with a theatrical release, i.e. with a national distributor but where the

film does not make it from theatres to VOD • Markets without a theatrical release, i.e. without a national distributor

The theoretical « untapped » potential

D. THE VOD FILM DISTRIBUTION VALUE CHAIN

Producer/

Film agent

National

distributor VOD service

Aggregator

Producer/

Film agent

Aggregator

VOD service

CASE A: NATIONAL DISTRIBUTOR

CASE B: NO NATIONAL DISTRIBUTOR

Producer/

Film agent

National

distributor VOD service

Aggregator

CASE A: NATIONAL DISTRIBUTOR

VOD finds its place within the traditional distribution model, where a national cinema distributor player with an in-depth knowledge of the market, will directly negotiate with the VOD services. The aggregator may act as a subcontractor on the national market

Film agent

Aggregator

VOD service

CASE B: NO NATIONAL DISTRIBUTOR

When there is no national distributor, the aggregator may partner directly with sales agent to distribute to VOD services

• Activity of origin: • Technical services • Distributors • Agents • Consultants • On-demand services • Home entertainment • Etc.

• Business models: • Flat fee, Revenue sharing or Combination of both • Generally no MG

Many different profiles of « aggregators »

• From a technical service provider • Streamlines contractual aspects of the administrative pipeline • Ensures the technical compliance • Provides marketing material

• To content & marketing service provider • Digital distribution strategies • Content packaging and curation • Marketing

Evolution of the role of aggregators