Competition on the Nordic streaming market is ramping up with several new services about to launch. Content investments are escalating and only partly offset by price increases. In the US, Netflix recently announced +13-18% on subscription fees. For the Nordic players, the prime question will be how to relate to this astounding surge of both services and content. One way forward could be a tougher attitude towards sharing subscriptions, something that more than 1 in 3 households do. In any case, we should expect new pricing and packaging strategies as the market is reaching maturity.
Nordic consumers have a wide range of online video services to choose from, both global and local. And soon the palette will grow even greater. Disney is about to launch Disney+ (anticipated to be the biggest threat to Netflix’ dominance) with original content from Marvel, Pixar and other brands, as well as content from the recently acquired 21st Century Fox (including X-Men and Avatar). WarnerMedia, the division of AT&T that includes HBO, Turner and Warner Bros, has also announced the launch of a three tier streaming service.
It has also been speculated how much and what content will be removed from Netflix, as the fight between the US giants ramp up. Interestingly, in its Q4 2018 report, Netflix said it is more concerned about competition from other types of activities (especially mentioning Fortnite – currently one of the world’s most played video games) than from Disney. Earlier, in 2017, Netflix CEO Hastings made a similar comment when he mentioned “sleep” as a competitor to binge viewing.
The conclusion, nonetheless, is that we are facing even larger content investments. Netflix, for example, is expected to spend the almost incredible sum of USD 15 bn on content 2019. Likely, Netflix’s recent price hike on the US market is a result of increased content investments. And now the American giant is testing price increases in Europe. So far, trials have been reported in Poland and Italy. In the Nordics, no such move has been observed – yet. The latest price raise was in 2017 (chart below).
The price increase in Sweden did not (seemingly) impact Netflix’ customer growth; the number of subscribers has grown steadily ever since. Mediavision’s tracking of price and packaging for Nordic SVOD services show that most actors continuously adjust their prices – either by simply increasing the price, or by changing both content and price. To illustrate, TV 2 Play in Denmark offered three different packages in 2016 – today only two (Basispakken and Hele pakken), but with four different price options.
Another way for streaming services to increase ARPU, would be to become less generous in allowing households to “share” subscriptions. In H2 2018, on average 40% of the Nordic subscribing households said that they shared their SVOD subscription outside the household. Mediavision estimates that for Netflix in the Nordics this means losing out on revenues close to 10 million EUR each month. The giant stays positive on sharing however, claiming it to be a “great marketing” channel. Maybe another reason to sit back is the obvious risk that such a move would backfire in an expansive and unwanted mobility, i e churn.
So, who will be the winner 2019 on this quickly maturing Nordic market? Not an easy question to answer – and even tougher to execute. A balancing act for the streaming companies; the right amount of investment on the right kind of content with the right price tag. And as Netflix is the clear market leader, its’ price strategy will greatly impact all other services – local as well as new global. On the consumer side, maybe the conclusion is easier: Stacking will grow, resulting in bigger bills – even if prices are stable. Interesting times ahead!
On Jan 1st, 2019 the re-regulation of the Swedish gambling market was set in place. Since then, a good number of foreign gambling actors have gotten a Swedish license. According to Spelinspektionen, Sweden’s governing gambling body, 69 companies so far (as of February 26th) have acquired a Swedish license.
During last fall and heading towards the re-regulation, gambling actors upped their ad spend significantly – likely to strengthen their marketing positions ahead of the new legislation. In this, NENT Group and Discovery Networks (under UK legislation) had particularly strong positions, thereby capturing a majority of total delivered gambling TRPs (Target Rating Points) in Sweden.
Gambling ads share of total TRPs (3-99 y/o), 2016 – 2018
Looking at Bonnier Broadcasting (e g TV4, 7:an, Cmore) for comparison, gambling ads as a share of total TRPs has remained stable at around 5% during the same period (exclusively SE regulated actors).
With the new regulation in place, all licensed gambling actors can advertise in Swedish media. Somewhat unexpectedly, for both the legislator and the different market actors, the ad activity has continued at a very high level and has increased since Jan 1.
Focusing on TV advertising prior to and after the re-regulation, overall gambling ad spend has increased across the board. Interesting to notice is also that Discovery and NENT have actually increased the share of advertising deriving from ‘old’ SE regulated actors. Bonnier Broadcasting, now allowed to take onboard these new advertisers, has doubled its share of gambling TRPs.
Furthermore, the overall total delivered TRPs for NENT Group and Bonnier Broadcasting has decreased by approximately 10% YOY (year-on-year) while Discovery has remained stable.
Gambling ads share of total TRPs (3-99 y/o), January 18 vs January 19
As gambling advertising has continued to increase, this has become a much-debated subject. Sweden’s minister of public administration Ardalan Shekarabi recently called for a meeting with the gambling actors discussing the situation. Shekarabi calls for change and vows for self-regulation among the actors. To regulate gambling activity, may not be such an easy task as it might require a change of the fundamental law on freedom of expression (“YGL”).
Looking at other European countries, gambling actors in the UK have implemented a self-regulatory solution to ban gambling advertising during live sport events, which is also being discussed in Denmark. Italy has implemented a total ban on all forms of gambling advertising since the beginning of 2019. Where Sweden is heading is still too early to say. But to conclude, we can say that the waves of the debate are already high. To be continued.Read more
A new chapter in the history of gambling in Sweden lies just around the corner. On January 1st, the new legislation is set in place and todays’ off-shore regulated companies must, from then, follow Swedish law if they wish to continue to operate in Sweden. In this three-part blog series, Mediavision gives an outlook of the Swedish gambling market – and what we expect of 2019.
Part 2: Consumer preferences – different types of gambling
Today we are delving into consumer preferences vis-à-vis different types of gambling. If we start by looking at monthly reach per gambling type, lotteries and scratch cards currently dominate in KPI “monthly reach”. But, since lotteries as well as scratch cards are gambling types exclusively for Swedish actors, they tell us very little about the overall competition on the market.
Monthly reach per gambling type, H1 17 vs H1 18
By excluding these state-controlled verticals, the picture changes. Instead, focusing on the online verticals, the competition gets a lot tougher. The off-shore actors are steadily increasing their market share, as illustrated in part 1 of this blog-series. Below we illustrate the distribution of both monthly gamblers and spend.
Distribution; monthly gamblers & pend (SE-regulated vs off-shore)
One of the main reasons behind the discrepancy between reach/spend is ATG’s position in horse racing (greatly impacts spend among Swedish actors). If we instead illustrate monthly spend more granular, divided into gambling types, the picture becomes more interesting.
Distribution of monthly spend, SE-regulated vs off-shore actors, H1 18
Online casino, poker and sports betting are dominated by the currently off-shore regulated actors. Also, these companies have steadily been gaining ground over the recent years. And as shown, horse racing monopolist ATG retains a very strong position. Mediavision can conclude that ATG accounted for 90 percent of all gambling spend on horse racing during the first half of 2018.Off-shore actors have yet to make a dent in the horse racing vertical.
Under the new legislation, off-shore companies can challenge ATG on horse race gambling. And likewise, ATG can (and will, as announced earlier this year) challenge the other operators in sports as well as casino. In some other verticals, Svenska Spel has already met significant competition; in sports betting Svenska Spel “only” accounted for approx. 35 percent of all consumer spend during the first six months of 2018 – implying that as much as 65 percent was captured by off-shore brands (e g Unibet, Bet365 and Betsson). For ATG, it remains to be seen if it is possible to retain todays dominant position. The younger gamblers seem to be a lot more difficult to attract – a potential future worry.
We have already found that the Swedish gambling market is characterized by increasing competition. And even more so as all actors on the Swedish gambling market will go head-to-head on equal terms for the first time in 2019. This in turn leads to increased likelihood of mergers as well as co-operation between operators. 2019 is certain to be a very eventful year on the Swedish gambling market.Read more
A new chapter in the history of gambling in Sweden lies just around the corner. On January 1, the new legislation is set in place. If todays’ off-shore regulated companies want to continue to operate in Sweden, it has to be under Swedish law. In this three-part blog series we’ll provide you with an outlook of the Swedish gambling market – and maybe of even greater interest – what we expect of 2019.
First, a comparison of gambling reach for SE vs non-SE regulated companies. Later, we’ll look at reach figures for different gambling types as well as consumer preferences for different platforms used for gambling.
2018 will go down as a very eventful year on the Swedish gambling market. With a new legislation starting Jan 1, 2019, the market will open up for new companies, operating from abroad. A license system will govern both Swedish and off-shore operators, basically under the same rules.
The foreign operators have ramped up their marketing substantially during the last years, partly explained by their positioning strategy ahead of the new legislation. This has been a much-debated subject, since off-shore gambling operators are prohibited from advertising in Swedish media. However, as the broadcasters NENT Group and Discovery Networks are London-based, this has been a way to target Swedish consumers. Under the new regulation, all licensed actors will compete and advertise on equal terms. This implies that other commercial media, such as TV4, Google and Facebook, also can display gambling advertising. In parallel, competition between the state-controlled actors and off-shore companies is rising. Both sides are in a tough battle over market shares. BOS, The Swedish Trade Association for Online Gambling, has expressed concerns about state-controlled actor Svenska Spel and its compliance with the new legislation. And Svenska Spel was quick to rebutt. So, no doubt, the competitors are on the edge of their seats.
But what about the consumers?
56% of 15-74-year-olds gambled an average month 2018 (H1), +12% YOY. The state-controlled actors dominate in market shares, but the off-shore actors are growing.
Total gambling monthly reach in Sweden H1 18 vs H1 17 (%)
SE-regulated brands currently dominate in terms of reach and market share, but the balance of market shares might be subject to change as the new licensing system is introduced. It remains to be seen how many of the currently off-shore regulated actors will establish themselves in Sweden and what kind of effect it will have.
Following the re-regulation, the government aims for a channelization, the share of gambling taking place with licensed actors, of 90 percent within two years. By assuming that all current actors on the Swedish market are successful in acquiring a license, also counting the top 5 (Betsson group, Kindred, Bet365, Leovegas and Cherry casino) off-shore actors and their sub-brands, a channelization of 90 percent appears not only possible, but very likely. Lotteriinspektionen has started approving license applications, and some of the major players have got their license already.
Currently, 30 percent of newly registered gambling accounts during 2018 are with smaller actors (SE-regulated & top five off-shore actors excluded). This indicates that the competition from smaller actors is still present. Furthermore, several of these smaller actors will likely acquire a license as well.
If the Swedish market were to follow the examples set by Denmark and Great Britain, we can expect the number of actors to decrease and several mergers to take place. In other words, we are likely to see a drastic change on the Swedish gambling market in the coming years. 2019 has the potential of becoming a very eventful year, Mediavision will follow the development closely.Read more
With the transition from traditional to digital viewing in full swing, sports content is in a league of its own. The sports genre has both exceptional strength as a driver for “live” viewing and creates very loyal customers or subscribers. Even though great sport events still to an extent counterweight the decline in traditional viewing, it is obvious that also sports viewing is heading digital. Comparing this year’s viewing with the rather uneventful year of 2017, we see a correlation. The average viewing time for the majority of 2018 scores lower than 2017 except for a few occasions, mainly coinciding with major sports events.
Viewing time per week, traditional TV (3+ consolidated viewing, min)
As shown in the graph, 2018 overall viewing is lower than 2017 (Jan – Oct declining by 6%). Consequently, the already fierce competition for major sports rights has ramped up even further in the digital segment as new actors are looking to establish themselves. So, for the incumbents, it is really important to retain the most attractive rights and thereby the high paying households. Global, and rather non-endemic, giants such as Facebook and Amazon have a great appetite for major sports rights and have already begun to challenge the old order. For instance, Amazon has acquired Premier League streaming rights in the UK and Facebook has acquired Champions League rights in Latin America.
Zooming in on the Nordics, the techies have not yet made any obvious impact on the sports rights market. But there are other new kids on the block. For example, rights owner IMG has launched its own streaming service Strive, distributing Spanish La Liga and Italian Serie-A in Scandinavia. This allow consumers to cherry-pick – surely not what subscribers are used to (i e to single out specific leagues).
Mediavision’s analysis of the Swedish sports rights market reveals that premium sports subscribers are moving online at an increasing rate. Household penetration of premium sport SVOD (subscription video on-demand) increased by 31% YOY (year-on-year) during Q2 2018. Furthermore, international football is the highest valued sport among consumers in the ages 15-74. Broken down in specific leagues, Premier League is the league that consumers express the highest willingness to pay for.
Moving forward, the online migration and competition among actors is likely to increase further. There’s also the looming possibility of FAANGs entrance on the Nordic sports rights market, both Amazon and Facebook have all the tools in place. Amazon’s streaming service Prime Video has been available in Sweden since December 2016, and Facebook recently launched its Watch service in the Nordics. Mediavision is following the development closely, the full analysis will be published shortly.Read more
As many of us are now returning to work after a splendid summer, we’re taking a quick glance at the development of the 2018 traditional TV viewing so far. It’s of course with a special focus on summer ratings, particularly since Sweden this year outperformed all expectations and made it to the quarter finals in 2018 FIFA World cup in July.
And clear enough, the graph shows how the major sports events positively impact on a generally decreasing audience development. This goes both for the Winter Olympics in February (Discovery Networks) and FIFA World cup in June-July (public service SVT and commercial TV4).
Average daily viewing time per week, 3+
Zooming in on the weeks of the FIFA championship and comparing with the weeks of FIFA in 2014, viewing minutes decreased by -9% in 3+. In the target audience 15-24 year-olds, the viewing decline is -43% comparing the FIFA weeks of 2014 and 2018. But this is still less than the average drop in the same group (-49%, January-July 2014 vs 2018), so without doubt, the World cup has a significant value in slowing down the decline. Meanwhile, in the other end of the age scale, 60+ instead increased their viewing minutes by 7%.
Average daily viewing time (min) during FIFA WC ¹
SVT and TV4 have shared the broadcast rights of FIFA WC 2014 and 2018. Share of viewing for both broadcasters increased between 11-19% during the games 2014 and 2018, compared to each broadcaster’s overall share of viewing year-to-date. For their main contenters, NENT (formerly MTG) and Discovery, the World cup had the opposite impact. However, it is important to note that NENT as well as Discovery figures are affected by their respective broadcast rights of the Winter Olympics 2014 and 2018.
Broadcaster share of viewing (SOV)
Earlier this week, the OTT titan Netflix confirmed its’ testing of a new subscription plan in Europe – the “Ultra plan”. How does Ultra differ from its three other subscription tiers? And why Ultra? This week, Mediavision elaborates on some of the questions around the Netflix pricing and packaging.
It is no news that Netflix is the leading streaming platform globally. And Netflix is probably the single most important phenomenon driving traditional media companies to re-think their strategies and sometimes even business models. Studies show that 40% of US viewers 18 to 34-year olds prefer Netflix when watching TV. The strong position of Netflix is also highly apparent here in the Nordics; out of a daily average of 8,6 million OTT viewers, does Netflix alone account for approx. 3,6 mill (15-74-year old’s) as earlier reported by Mediavision. In other words, Netflix is outplacing all other SVOD services in the Nordics.
Netflix is of course aware of its’ sweet spot and it is not surprising that it is experimenting with new pricing models. So, the Ultra plan is now being tested among some of its’ customers in Europe.
The Ultra plan is the most expensive Netflix service, reportedly with a price up to €19,99, but without any new features (compared to the current Premium plan). The difference is that the Ultra tier supports HDR, which Premium reportedly would not anymore. The Ultra plan is only tested among a selected group of subscribers and only in a few European countries, and these have reported different experiences of the Ultra plan. Firstly, the price differs between €16,99 and €19,99 between different test takers, secondly, Netflix has downgraded the features of the other subscription plans for some subscribers – but not to everyone. Among some subscribers that have been offered to try the Ultra plan, the features of the Premium and Standard subscriptions were downgraded, but remaining at the same price level. For these subscribers, the Premium plan has been reduced to only offer streaming to two devices simultaneously (instead as earlier to four), and no option for HDR. The Standard plan has also been reduced to cover only one screen (earlier two). However, for some other Netflix subscribers that are trying the Ultra plan, the other plans have been left the same. Netflix has confirmed that it is “testing slightly different price points and features to better understand how consumers value Netflix”. In other words, the rationale behind Ultra seems to be to make “improvements” pricewise – for Netflix, but not the customer, and to evaluate how highly customers value different features. It is, however, still uncertain if the Ultra plan will leave the laboratory and be rolled out for real, and how the Ultra plan in that case would affect the other subscription plans.
The Standard and Premium plans are currently the most popular tiers and if the features of these would be reduced, it is likely that some of these customers would level up and pay more – this is probably the question Netflix is hoping to answer with the ongoing test with Ultra. It can also be assumed that the Basic and Standard plans would be streamlined for smaller/younger households. Looking at historic price increases, e g 2017, Netflix subscription growth was not affected as shown below.
The paid memberships increased by +10% in international markets between Q3 and Q4 2017 in spite of the price increase. The outcome of higher prices and continued subscriber growth made Netflix’ contribution profit to increase by $72 million between the two quarters (amounting to a total of approx. $135 million in Q4 2017). In Q1 2018, the profit had increased to $272 million – which of course could be an important factor behind the new Ultra plan. The investment in content for Netflix has been increasing substantially over the last years and 2018 the company communicated a content budget of $8 billion.
But – an important but – is that Netflix obviously has not yet decided on the faith of the Ultra plan. It is still very much a case of “stay tuned” – nonetheless it shows the self-confidence of the company (reflecting on increasing prices by €3 to €6 without adding anything, less than a year after the last price increase). Time will tell how highly customers value Netflix; will they seek cheaper options among competitors if the Ultra plan is launched?
So, the enticing benefits for Netflix are obvious – higher revenues and better margins. But this could also be beneficial to local competitors, historically pressured by the market leader and its’ privilege to decide on qualifier levels as well as price points. Maybe it will also turn out that there is an opening for even lower-priced services, attracting economically conscious subscribers.Read more
Since the last blog post – focus M&A’s on the global media market – the merger between AT&T and Time Warner has been approved and the bidding war between Disney and Comcast over 21st Century Fox has escalated to the next level. Today, we take a closer look at the new giant AT&T and possible implications of its merger with Time Warner.
On June 12, AT&T’s $85 billion bid on Time Warner was approved by the US District Court. The merger was finalized two days later, making it to one of the largest media mergers in history. AT&T, however, did not settle with this. Two weeks later, the company announced the acquisition of AppNexus, specialized in technology for online advertising (so called SSP – sell side platform). Sources say that the price tag was approx. $1.6 billion. Further, AT&T is reportedly planning to buy the remaining 50% of Otter Media, a company that invests in and launches OTT services globally.
Doubtless – it is the acquisition of Warner Media* that stands out. A lot has already been said about this mega merger, but likely the most interesting is to elaborate on the rationale “behind”. One of the prime reasons behind this vertical integration is to strengthen AT&T’s total offerings toward consumers and households. More content means more ways of packaging and pricing – thereby meeting the different consumer needs that now rapidly emerge on the digital media market. And AT&T did not waste any time highlighting its’ new content library, as it shortly after the merger announced the launch of its new streaming service Watch TV. The service includes 31 channels for live streaming and 15 000 TV shows and movies on demand. Watch TV is offered both as a stand-alone service, for $15 per month, and as a bundle included in the new AT&T wireless plans. Depending on which package, the customer also receives a $15 discount on either AT&T’s DirecTV, DirecTV Now or U-verse TV service. In addition, a premium wireless plan customer can also subscribe to one other premium video or music service** without any extra cost. This clearly highlights the AT&T strategy to bundle; different services and various price plans will hopefully keep churn low and retention high.
Since Time Warner was one of the largest global media companies, AT&T now has plenty of attractive content and channels – such as HBO (the home of Game of Thrones and Westworld) and CNN (the #1 news network among 18-34-year olds in the US). Moreover, Turner Broadcasting, one of Time Warner’s many assets, has three of the top five ad-supported cable networks in primetime among 18-49-year olds (TBS, TNT and Adult Swim) while another asset, Warner Bros., is the leading producer of film and TV programming with titles like Wonder Woman and Dunkirk. Set aside all the hours of high quality content, this also means even more consumer data. AT&T’s advertising and analytics business unit, which the newly acquired company AppNexus will be part of, can draw valuable customer insights from its TV, mobile and broadband services. This knowledge will enable even more personalized offerings, with higher accuracy going forward. This is another clear advantage in the highly competitive media market of today.
The diagram below illustrates the impressive revenue stream that AT&T and Time Warner had in Q1 2018. By totaling the two, the combined quarterly revenue amounted to $46 billion. In perspective, Comcast, which is the third largest media company in the world (based on revenue for the fiscal year 2017), and like AT&T offers TV, Internet and phone services, “only” reported a revenue half of AT&T and Time Warner (Comcast’s revenue was almost $22.8 billion in Q1).
But as we have learned, Comcast is also looking to grow its business through mergers. It is in an ongoing bidding war with Disney for 21st Century Fox assets. Shortly after Mediavision’s last blog post on June 8, Comcast made a bid on Fox, which then has been raised by Disney to $71.3 bn – an increase of $18.9 bn compared to Disney’s initial bid in December. Disney took another step closer to closing the deal as US regulators earlier this week cleared the pending acquisition of Fox by The Walt Disney Company, but with the requirement to sell the Fox Sports Regional Networks. Simultaneously, Comcast and Fox are competing to acquire the European media company Sky.
So, the conclusion? Obviously one main strategy for both traditional media and operators is to merge vertically – all in order to improve long-term competitiveness, in a market that has increasingly been challenged by tech companies. The same development is seen locally with pending acquisitions between Telia and Bonnier Broadcasting as well as Tele2 and Com Hem, and with the previous discussions between TDC and MTG, which, however, were disrupted.
In this blog post, Mediavision describes the eventful times of consolidation on the global media market, by disentangling the conundrum that is Fox and Sky’s future ownership.
In December 2016, 21st Century Fox made a bid on Europe’s largest pay TV operator Sky to acquire the remaining 61% shares it does not already own of the company. This was the start of what media is referring to as the “bidding war” in which Fox, Comcast and Disney are involved.
Since Fox’ bid on Sky, Disney and Comcast have gotten involved as well. Disney made a $52 bn bid for Fox’ movie and TV sections (including its 39% stake in Sky). Comcast did not only make a bid for Sky (which is 16% higher than Fox’ bid), but also revealed intentions to compete with Disney on acquiring Fox. The proposed mergers are illustrated below.
Figure 1: Current market situation.
Fox’ bid on Sky (in 2016) has been scrutinized by UK:s Ofcom and the Competition and Markets Authority (CMA). The potential merger has aroused lots of discussion, mainly around the greater influence and power that the Murdoch family would gain in British media if the bid is approved. Also, Sky News’ editorial independence under the Fox umbrella has been discussed. The Murdoch family owns 39% in both 21st Century Fox and News Corp, the latter which consists of e.g. the newspapers The Times, The Sun and The Sunday Times. However, earlier this week, the British government announced that if Fox were to sell Sky News to Disney, as proposed by Fox, with an agreement to ensure that Sky News is funded for at least 10 years (also offered by Fox earlier on), it would be an effective remedy for the public interest concerns that have been called attention to. The British Secretary of Culture also allowed the Comcast bid to proceed, meaning that there is a set-up for a bidding war between the American giants. Regardless if Fox/Disney or Comcast acquires Sky, the buying company would reach 23 million new Sky customers in Europe. This would of course make any buyer better prepared to compete with challengers like Netflix and Amazon.
But consolidation and mergers is apparently the name of the current game, also in other media/tech related companies. In the US, discussions between CBS and Viacom are on-going and AT&T and Time Warner are waiting for a green light from the US District Court. Locally, Telia and Bonnier Broadcasting have confirmed discussions of a merger and Tele2 and Com Hem are awaiting approval of their merger – a decision is expected in the second half of 2018. Depending on the outcome of these potential mergers, media companies bigger than Netflix, in terms of market capitalization, could be created.
Figure 2: Potential market formation.
The illustration above points at a possible outcome of the mergers as well as the size of these media giants – in market cap with today’s* value. Acquiring Fox would add highly rated assets to Disney – such as the X-Men franchise and The Simpsons – which of course also would strengthen its planned streaming service. Moreover, Disney would also become the majority owner of Hulu. Disney has earlier announced that it is pulling its content from Netflix, and with these new resources it would be better prepared to compete with Netflix.
For Comcast, an acquisition of Sky means that it would be able to grow, while avoiding government scrutiny associated with expanding its US cable business, as it is the largest American cable provider. Also, Sky’s streaming service Now TV with its 2 million subscribers, would grow Comcast’s OTT footprint. Next week, AT&T and Time Warner will receive a decision on their merger plans – an outcome that is likely to influence if Comcast will make an official bid on Fox or not.
Moreover, with the mentioned potential local mergers, the international trend is seemingly spreading to the Nordic countries as well. Yet, as the illustrations show, there remains a major difference in scale between the local and US/UK-based actors.
*Market cap as of June 1st, in some cases of June 4th.Read more
Youtube just announced the release of its Spotify contender, Youtube Music. The service is coming to the Nordic countries in the coming weeks.
To illustrate the potential threat this poses to existing music streaming services we have provided an example of the potential impact this might have:
Spotify reported 75 mn premium subscribers out of a total monthly user base of 170 mn globally in Q1 2018. This corresponds to a subscriber share of 44 percent of the total user base. Youtube recently announced a monthly logged in user base of 1.8 bn, worldwide. Now if Youtube Music was to reach a similar share of paying subscribers out of that user base as Spotify, Youtube’s music service would reach approx 790 mn paying subscribers globally.
Now, Spotify mentions in the prospect before its DPO on the New York Stock Exchange that it accounted for around 95% of the Swedish music streaming market in 2017. Considering that Youtube has roughly 3 mn monthly viewers (15-74 yrs) in Sweden, the launch of Youtube Music may pose a considerable threat to Spotify’s dominating market position.Read more
Another season of Swedish public service broadcaster SVT’s Melodifestivalen has come to an end. We congratulate the favorite Benjamin Ingrosso that will compete for Sweden with the winning song Dance You Off at the Eurovision Song Contest in Lisbon in May.
The six broadcasted programs 2018 (four qualifying rounds, a semifinal and final) attracted 3 million viewers on average (OV; 3 042’), which is the lowest viewing since the format was introduced 2002 (excluding 2010 which was marginally lower; 3 017’ on average). The entirety was weighed down by this year’s semifinal, which dipped to all time low ratings. The final, however, acted counter-weight with an audience of 3 500’. Comparing the average of this year’s six shows to overall viewing 2018 so far (-6% YOY), Mello-viewing declined more; -9%.
In addition, average age of the Melodifestivalen audience is basically unchanged at 45 since 2002, in contrast to traditional TV in general where the average age has increased from 47 to 55 since 2002 to 2017 (and 2018 YTD). Despite decreasing ratings for all target groups, Melodifestivalen manages to retain a fairly homogeneous audience. The show still attracts a significant portion of younger viewers yet to leave traditional TV; the final 2018 attracted an audience share of over 90% among 15-24 year-olds.
SVT Play however noted an increase in viewership for the Melodifestivalen finals, compared to 2017. Saturday’s web audience amounted to 110’, twice the amount of 2017. But despite the hefty increase, web audience remains insignificant compared to traditional. Melodifestivalen is without a doubt biggest on large screen and linear viewing. In other words, Melodifestivalen is not affected by the digital migration in the same way as apparent elsewhere in media. It is rather the opposite – Melodifestivalen is a highly reliable tent-pole in a time when interest for TV is in decline and the audience aging.
SVT has furthermore expanded its content offering with Melodifestivalen peripherals; back-stage-reportage, interviews, panel discussions, artists and performance curiosity etc. Viewing on this content has however been modest. The most started program or show during Saturday (the day of the final) was the actual program; 500’ starts. Succeeding was the clip of Ingrossos winning performance with close to 60’ starts. The same clip was also distributed through the Melodifestivalen channel on Youtube, which after two days almost reached 500’ views. Clip interested target groups thereby don’t turn, despite improved content offering, to SVT Play but to global giants such as Youtube.Read more
Zooming in on the Nordic market, Mediavision’s analysis “Nordic e-sports & gaming Insight 2017/2018” shows that e-sports is becoming a staple among consumers. Almost 3 in 4 e-sports/gaming viewers in the Nordics (73%) stated an interest in a specific e-sports venue (for example Dreamhack) in Q4 2017. This shows that the venues themselves have become popular, and e-sports is no longer simply “games played professionally” but an entire eco-system of value creation, for consumers and actors alike. If you wish to gain more insights on the subject, please contact us or order the analysis right away.
On a global scale, e-sports has been making waves as well. Traditional sports actors are also getting in on the action. This can, for example, be illustrated by how Turner Broadcasting and IMG’s e-sports tournament series Eleague is marketed to viewers. For instance, much like in professional traditional sports, Turner has promoted Eleague by building personalities and generating storylines around teams and players. And evidently this is paying off; Eleague recently, during an event in Boston, broke the record for most concurrent viewers (1.1 million on Amazon-owned platform Twitch). The event was featuring games publisher Valve’s first-person-shooter-game Counter Strike: Global Offensive (CS:GO).
While Eleague is proof that a tournament series outside of traditional sports can be commercially successful, the e-sports scene is still very much under construction. Major League Baseball is one of the traditional sports actors that is looking at the e-sports market. However, Jamie Leece, VP of games and virtual reality at MLB Advanced Media, expresses concern regarding the profitability of e-sports contests. He points out that the products and organizations around e-sports can profit, but that the contests themselves are still struggling. Leagues and IP holders have yet to solve the puzzle, according to Leece.
Turner and IMG might be on track to success with Eleague. But game publisher Blizzard Entertainment has taken another approach; creating its own e-sports league in-house for its blockbuster game Overwatch. Inspired by the strategy of Eleague, Blizzard has also adopted the proven format of traditional broadcasting when creating Overwatch League. The teams are tied to geographical regions with names such as Seoul Dynasty, London Spitfire and Florida Mayhem. Also, while fighting games are more of a niche market, games publisher Capcom, best known for the Street Fighter series, has been hosting its own in-house league Capcom Pro Tour since 2013. If these moves prove successful, and the price of distribution rights continues to increase, more publishers might follow.
However, breaking into to the upper echelon of e-sports is no small feat. For years the same titles have comfortably topped the viewing lists (Valve’s CS:GO and Dota 2 and Riot Games’ League of Legends). It has taken hard work and huge investments for the publisher Blizzard to finally launch its own in-house-league. Overwatch is one of few games to really rival the top e-sports titles in popularity. The success of Overwatch could set an example for other publishers, but most likely in-house and independent leagues will co-exist.Read more
The Mediavision Swedish TV Insight Q4 analysis, published Feb 1:st, once again points at the rapid growth of the OTT market. Viewing, subscribing households, market value – all major KPI:s of the OTT business are pointing in the same upward direction. As stated in the latest press release; yet another record level for SVOD was noted, with a 41% household penetration. Global (or, rather US) actors are still leading the game, with a combined market share of 65% for Netflix and HBO Nordic. And this is higher than last year – indicating some tough challenges for at least some of the locals going forward.
Looking at the consumers, fiction is still the most popular genre – by far – gathering nearly 50% of all time spent watching online video. And it may not come as a surprise that 80% of this viewing time is allocated to foreign content. Entertainment, bulk in traditional TV, is only a fraction in OTT and accounts for a modest 10% of all online video consumption. In contrast to fiction, local services are taking a big slice of the pie in this genre; approx. 70% of the OTT viewing in entertainment is in Swedish.
So, what could be the implications looking at 2018?
First, we already see an increasing supply of both local and international fiction. The market is more competitive and consumers more sophisticated than before. The global giants are directing larger investments into locally produced content, for instance Netflix’ Q4 report points at the around-the-globe success of local originals such as German Dark, Brazilian 3%, and Italian Suburra. In the pipeline for 2018 is more than 30 new local originals. The entertainment genre, though, appears to be significantly less interesting for the big dragons. This leaves room for local players. A not-so-wild guess is that traditional broadcasters will push all sorts of non-fiction genres during 2018. However, time spent on non-fiction in OTT, will most likely not be of any comparable size to traditional TV. A big question will also be how non-fiction can help drive consumption in general and subscriber numbers specifically.
To meet the increasing demand of insights regarding both viewing and subscriptions, Mediavision is now launching a new service The Inventory Insight. It will be key to fully understand how content and content inventory is correlating to viewing and subscriptions. The Inventory Insight is a quarterly analysis covering all content across AVOD, SVOD and TVOD across the Nordics – to facilitate strategic positioning on the increasingly competitive market of online video.Read more
Since the start of 2018, the e-sports industry has seen several major market events. Globally, Turner and WME/IMG owned Eleague has both sold exclusive streaming rights to Amazon’s Twitch and broken viewership records on the same platform, with 1.1 million concurrent viewers. Activision Blizzard’s long anticipated Overwatch League is now entering its third week since launch after reaching 10 million viewers in its first week – following a 90 MUSD distribution deal on Twitch. And on the Nordic market, Danish Yousee recently signed a deal to become the main sponsor and distributor of the official Danish e-sports league “Esportligaen”.
Additionally, according to Mediavision’s Q4 2017 analysis, viewer demographics of e-sports content is broadening. The average age remains stable on a yearly basis at 31 years, while the share of female viewers increased from approximately 1 in 10 to almost 3 in 10.
The increased interest among a broadening consumer base is certainly a factor which has contributed to exclusive content rights becoming more coveted. Also, the fact that several distribution platforms want to position themselves in the e-sports arena (eg Twitch, Youtube and Facebook) means that the competition over rights increases as well – something that become more apparent in the past couple of years.
The development on the e-sports and gaming market is analyzed in-depth in Mediavision’s “Nordic e-sports & gaming insight”. The emphasis of the analysis is on consumer and market insights on the Nordic market – with a focus on Sweden. If you want a deeper understanding of where the e-sports and gaming markets are heading in 2018 and forward, we suggest you contact us or pre-order the analysis today.Read more
The Swedish OTT market 2017-2018 was discussed on the Mediavision breakfast seminar in Stockholm wednesday (January 24)th,.
As we have reported earlier, OTT has grown considerably over the last years. One of the main driving forces is high quality content. Mediavision can now conclude that Q4 2017 daily OTT reach (15-74-year olds) has reached a level of 43%. There are also clear indications that the market is maturing; audiences are getting a little older and consume a somewhat wider range of content. Global giants still dominate both AVOD and SVOD. Mediavision predicts that 2018 will be yet another strong year for OTT, with even tougher competition (in an already quite tough market).
For the local OTT services, run by owners such as e g Bonnier, MTG and SVT, one of the big questions is how to respond to the pressure from the American streaming companies and their enormous content budgets. Netflix said in its Q4 report on Monday, that it added a record breaking 8.3 million new subscribers globally, allowing an even higher content spend this year (approx. 8 bn USD). Clearly, the locals’ need to differentiate and spend their money wisely.
In order to support its’ clients in this work, Mediavision – in collaboration with Playpilot – yesterday announced a new quarterly analysis The Inventory Insight. It is a data driven content analysis focusing on the supply side of all major OTT services in the Nordics.
The breakfast seminar also catered for a panel discussion looking at 2018. Lena Glaser, programming director at SVT, Mathias Berg, operative manager at Bonnier Broadcasting, Fredrik Ljungberg, programming director at Viaplay, all gave their views on the challenges of being a local service in a highly competitive market. The panel agreed that local content, local language and local presence are key assets. And, according to the panelists, having a linear TV business is still very important.Read more
During 2016 the Swedish influencer market had a turnover of 500 MSEK, according to IRM. This corresponds to a growth by 40%, double that of overall digital advertising revenues at around 20% growth for 2016. No figures have yet been released for 2017, but the market is likely to have grown further. And 2018 has already delivered one major industry event. German media giant Bertelsmann finally made an entry on the Nordic market by acquiring Swedish YouTube and influencer network United Screens for 120 million SEK. Looking forward, another major event is the upcoming winter Olympics, in which Discovery Networks has focused on integrating influencers in their coverage of the games. During the Olympics, influencers will be seen in both traditional outlets as well as in Snapchat, after Discovery struck a deal with the social media company in October of last year.
Furthermore, there are other signs that indicate an upswing for influencer marketing. Last week Facebook announced an update to its news feed algorithm, saying that it would now prioritize posts made by friends and family higher than those from brands and companies. Mark Zuckerberg explained that the feedback they have gotten from the community indicates that posts from media, brands and companies take up too much space in the news feed at the expense of moments that connect users to each other. He also added that he expects people to spend less time in total on the Facebook platform as a result, but that the time spent will be perceived as more valuable. Advertisements are not directly affected, but less time spent on Facebook means less exposure to ads. If companies who rely heavily on Facebook for advertising start to receive less traffic as a cause of this change, they might have to look elsewhere. Some have already expressed their concerns on the matter. This could provide an opportunity for influencers as their posts will not be affected negatively by the update.
Lastly, YouTube had several run-ins with advertisers during 2017 in regard to ads being displayed in inappropriate contexts. This caused several companies to pull their ads off YouTube. The company has since taken steps toward being perceived as brand-safe. Recently YouTube announced that it is raising the bar for channels to be able to monetize their videos, thus kicking out thousands of smaller content creators from its advertising program in the process – meaning more leverage for already established influencers.
All in all, things are continuing to look up for the influencer community and 2018 is set to set a new record year for the market.Read more
Looking back on 2017, the digital transition of consumers in video is going strong, especially in the older age groups who are becoming ever more frequent users of streaming services. Amongst the young, a clear majority are frequent users of on demand services. In the 15-24 age bracket, 70 percent of time spent viewing is on demand. The dominance of on demand viewing in the younger age groups comes as no surprise, however the real challenge comes as older age groups start to radically change their consumption habits.
The American giants often referred to as “FAANG” (Facebook, Apple, Amazon, Netflix, Google) dominate the market. Combined, Netflix and Google/YouTube accumulated more than half of all on demand viewing in the Nordics during 2017 while local actors had to make due with what was left. And we have yet to really see the likes of Amazon or Facebook Watch on the Nordic market. Disney, on the other hand, is most definitely preparing to make a move. Bob Iger closed out 2017 by acquiring a large stake in Murdoch’s 21 Century Fox for $66 bn, which gives Disney access to a gargantuan library of content rights as well as the American streaming service Hulu. Conclusion 1: The American giants will most likely continue to dominate during 2018. Which in turn poses the perhaps biggest challenge for the local media actors.
Despite the media ownership being globalized and moving west, the picture is not as clear when it comes to content. On one hand: A clear majority of the viewing on streaming services’ 2017 was spent on foreign content. On the other hand: The American giants are increasingly interested in locally produced content. Netflix has recently been stepping up their production of non-American content with productions such as Italian series Suburra, Swedish Quicksand, German DARK, Brazilian 3% and Danish The Rain. According to Netflix’ head of content Ted Sarandos, Netflix’ strategy for 2018 is to ramp up the production of local content. HBO Nordic is jumping on the bandwagon as well. Swedish director Lukas Moodysson is set to produce a series called Gösta. To the consumers’ delight local streaming actors are ramping up their production as well. Both public service and commercial actors are putting money toward local drama and sports, among other things. Collaborations between companies are becoming more frequent, as a pragmatic way of solving the increasing costs of a global arena. Conclusion 2: Consumers rejoice! 2018 is looking to be a year of content in abundance.
So, what does the crystal ball tell us about 2018? So far, this year has shown two different but important structural changes, and that is just in its first two weeks. They might provide a hint of where we are heading. European media conglomerate RTL acquired United Screens on January 9th and Com Hem – Tele2 announced a merger on January 10th. These two events indicate that size matters in today’s media industry. To create scalable economic advantages is the obvious goal for companies who directly target consumers. Add to that a strong economy, large sporting events (Olympics and FIFA World Cup) and even a general election. All the ingredients for excitement and large media events are in place for 2018.
Another question that needs answering, and that is being asked by many, is how local and traditional actors can establish a long-term advantageous position for themselves? The cost of technology, marketing and customer management is huge. Not to mention the cost of strong and well-made content…
Mediavision estimates that close to 5 million Nordic households will have at least one paid on demand streaming service at the end of 2018. Usage of ad-funded services is quickly rising as well. Altogether, another year of strong growth for OTT – but with the majority of revenue going to global actors. At the same time, the traditional streams of revenue (advertising and pay TV) are being stretched thin. Conclusion 3: Based on this, we are likely to see more restructuring in the Nordics of the same kind that started off the year. Perhaps, a couple of unexpected collaborations might pop up. “Bigger is better” seems to be the way to deal with the competition from the American giants.
Regarding the consumers, the future is easier to predict. 2018 will be a year of extraordinarily strong supply – qualitatively better and more abundant than ever before. Seldom has so much great content been produced and made available to so many. Welcome 2018!
CEO MediavisionRead more
2017 will go to history as one of the most eventful years that the Swedish gambling market has ever experienced. Primarily, this is due to the governmental inquiry that was presented March 31, including recommendations for a future market regulation. In short, the commission suggests a licensing system, in which gambling operators can apply for licenses to offer certain gambling types to Swedish consumers. If everything goes according to plan, 2018 will mark the last year with the current regulation in place, as the suggested implementation of the new system is in January 2019.
The main incentive for the Swedish government to get the licensing system in place is, arguably, the increasing size of non-Sweden regulated operators on the Swedish market. With the current system, the government is without both control and potential tax income from operators not regulated in Sweden.
With that said, Sweden regulated actors, such as horse racing monopolist ATG and state-owned Svenska Spel, still control a clear majority of the Swedish gambling market. As an example of their strong position, ATG accounted for 90 percent of all gambling spend on horse racing during the past year, according to Mediavision’s analysis.
However, ATG has found it difficult to persuade the younger generation of gamblers to place their bets on horses, a potential future worry. And in other gambling verticals, Svenska Spel is already suffering from much fiercer competition. In the sports betting vertical, Svenska Spel “only” took approximately 40 percent of all gambling spend during 2017, according to Mediavision. The other 60 percent was captured by brands regulated outside of Sweden, such as Unibet, Bet365 and Betsson.
All in all, aggregated market growth is fully captured by operators regulated outside of Sweden. This is partly reflected in recent customer account registrations. According to Mediavision’s gambling analysis of 2017, 62 percent of all gambling accounts registered during the past 12 months were with non-Sweden regulated brands.
This is one part of the explanation as to why Sweden regulated operators have been fairly positive towards the commission’s suggestion overall, as it will open up the current system, where certain categories of gambling are not fully permitted. This is perhaps most evident for online casino, as no Sweden regulated operator is allowed to provide this gambling form under the current legislation. Following the commission’s suggestion, ATG recently made a notable M&A move, as the horse racing monopolist signed a conditional agreement to acquire Danish online casino and sportsbook operator Ecosys once the new regulation is in place.
Non-Sweden regulated operators have also been largely positive towards the commission’s suggestion, overall. This is partly due to the improved marketing opportunities that come with the suggested system. The group would get access to all available advertising platforms, be able to offer sponsorships and to expand collaborations with Google and Facebook.
Ahead of the expected reregulation, there is an aggressive race for market shares going on among the many actors on the Swedish gambling market, to obtain the best possible position going forward. Before the dust settles, we are likely to see more company acquisitions and mergers, in order for actors to solidify their positions and to leverage their customer bases. As the market matures and new structures fall in place, there will need to be an increased focus on customer retention rather than acquisition, and on decreasing costs rather than just increasing revenue.
In other words, the upcoming few years will probably be just as interesting and eventful as 2017 for the Swedish gambling market.Read more
On the Nordic TV market, traditional TV viewing continues down the path of decline during fall 2017. The waning viewer interest in broadcast TV is part of an overall trend, with consumers shifting to online. But viewership in 2017 has also taken a hit due to the lack of major sporting events. 2016 housed both the UEFA Euros and the summer Olympics in Rio. Looking towards 2018, viewership is expected to be affected positively by both the winter Olympics and the FIFA World cup. Nordic countries represented in the World Cup are Denmark, Iceland and Sweden, while the winter Olympics is expected to draw massive interest from both Finland and Norway.
On the other hand, online video consumption continues to grow across all age groups. Among young (15-24 year-olds), two thirds of total daily video viewing time (traditional TV + online video) was spent on online video services. Online video consumption is also displaying strong growth in older age groups. Across all Nordic markets, the older age segments represent the largest relative online video viewing growth during fall 2017.
Also, consumers continue to prefer global over local. In terms of subscription video on demand (SVOD) services, global actors Netflix and HBO Nordic dominate. Meanwhile, Netflix and Youtube account for more than half of all online video viewing across the Nordics. Amazon Prime Video has yet to make an impact on the Nordic market, but are expected to further increase competition once they decide to enter the region fully (i.e. Amazon Marketplace and Prime).
Mediavision follows the Nordic media industry, with a focus on video, in the bi-annual analysis Nordic Video Insight. Click here to learn more.Read more
In an attempt to combat problems related to the past year’s advertiser boycott, Google stated that it is hiring thousands of new workers to review content on the platform. This came as a direct response to the critique regarding Youtube as an advertiser friendly video service, a debate which recently resurfaced. Several big companies joined the boycott as their ads had been placed next to videos containing inappropriate elements, verified by Youtube’s algorithm.
Youtube started off in 2005 as a video service centered around user generated content (UGC) that anyone could upload, share, and comment on. While this still holds true, the introduction of video ads in 2007 meant content was in a larger need of scrutiny, as the tonality and freedom of the internet often does not correspond to what is considered advertiser friendly. Today, it is evident that Google is making an effort to create a more advertiser friendly video service, something that is negatively affecting business for the “traditional” UGC side of Youtube. This conflict, which is also known as the adpocalypse, has meant a significant decrease in ad revenue, especially for the more “edgy” channels. Advertisers have been given more freedom to choose in what type of context their ads will be placed – thus steering away from content including profanity or sensitive issues. This move is arguably pushing creators to other services, eg Amazon’s Twitch and potentially Facebook Watch. Despite this, Youtube continues to grow as it transitions from UGC to AVOD. Being ranked the 2nd most visited website (after Google) in 2017, its bargaining power as an advertising platform remains strong. On home turf, Mediavision’s latest analysis of the Swedish video market shows Youtube as the country’s most viewed online video service – in all age groups, with an increased preference among young.
A similar controversy has been surrounding video content on Facebook during the past year, with advertisers questioning the robustness of Facebook’s content verification procedures. Facebook has also announced hiring more people for manual review of advertisements, following the Russian involvement in the US presidential election through Facebook ads. Furthermore, with the introduction of video ads in 2014, and mid-roll ads in the beginning of 2017, Facebook began a similar journey to that of Youtube – from UGC to AVOD. However, unlike Youtube, Facebook has not focused primarily on video from the beginning. Thus, Facebook has been able to work with issues regarding content review while the video vertical is still a rather small-scale enterprise compared to that of Youtube. The introduction of Facebook Watch on the US market in August, marks a clear approach to video; ie separating the more free form UGC from the more commercially produced content included under the Watch tab. Facebook Watch is seemingly looking to emulate a more traditional broadcasting approach to its ad business, according to reports from the service’s potential ad buyers.
Since Facebook Watch has yet to spread outside the US, a Nordic comparison with Youtube is not possible. The question remains whether Facebook will be able to challenge Youtube’s position as the dominant AVOD service for advertisers in the Nordics. Yet, focusing on the Nordic markets, Mediavision is following the progression of these services in relation to consumer interest, overall video consumption and market growth.Read more
On the other side of the Atlantic, mergers and acquisitions within the media industry continue to make headlines. One is AT&T’s purchase of Time Warner that is being blocked by the US Justice Department (DOJ) on antitrust grounds. Another is the potential sale of 21st Century Fox. Due to the recent impediments in the AT&T-Time Warner merger, speculations have arisen that this would negatively impact the interest from Comcast, Disney, and Sony in continuing their pursuit of a Fox deal. However, according to sources, talks are still ongoing between Fox and Comcast, as well as with Disney. Furthermore, AT&T and Time Warner have extended their merger agreement, from end-of-year 2017, to April 22nd. Before then, AT&T intends to “vigorously contest the DOJ’s allegations” and expresses confidence to win in court; ultimately resulting in a successful merger of the two companies.
On home turf, both local and global VOD actors continue to invest in Nordic drama. Most recently, Hulu acquired the US distribution rights to Midnattssol (Sweden) and Gidseltagningen (Denmark). Meanwhile, public service broadcaster SVT and MTG’s leading local SVOD service Viaplay, who jointly produce the high-profile drama series “Vår tid är nu”, announced that the series will be renewed for a third season. The announcement was made even though the first season has yet to reach its conclusion. This is akin to Netflix’s strategy of greenlighting multiple seasons of new drama series in advance, something which is relatively new to the Swedish market. It remains to be seen whether the series will attract interest from abroad; something SVT and Viaplay would no doubt welcome.
In other news, linking back to our last newsletter (17th November); the single most popular e-sports event franchise among Swedes is coming to Stockholm: Dreamhack. Meanwhile, Dreamhack owner MTG has set up a new $30 million investment fund, specifically targeting smaller companies in e-sports, online gaming and game-focused virtual and augmented reality.Read more
The Swedish gambling authority Lotteriinspektionen has yet again reported that gambling operators regulated abroad have increased their share of the Swedish market. According to Lotteriinspektionen, non-Sweden regulated operators, who offer their products exclusively online, currently command 25% of the Swedish gambling market (gross winnings revenue). For the first three quarters of 2017, the overall market increased by 3% compared to the same period last year. In this period, non-Sweden regulated operators grew by 11% while operators regulated in Sweden reported zero growth as a group. Thus, the proposition to implement a new license-based system in Sweden, encouraging foreign-based companies to move to Sweden and operate under Swedish regulations, is becoming ever more urgent. The current goal is to have a new system in place by January 1, 2019.
However, not only operators regulated abroad are growing online. Operators regulated in Sweden are also increasingly positioning themselves online. During the first three quarters of 2017, state-owned Svenska Spel saw an increase in online revenue by 15% while land-based gambling revenue decreased by 5%. Similarly, horse racing monopolist ATG saw an increase in online gambling revenue by 16% and a decrease in land-based gambling revenue by 8%.
While the aim of a future license system certainly is to attract foreign-based operators targeting the Swedish market to also move to Sweden, the rapid shift to online gambling could actually have the opposite effect, incentivizing currently Sweden-regulated operators to set up shop off-shore instead (e.g. Malta).
Examples of the latter have recently occurred in the Netherlands, another European gambling market in a similar situation. Just like in Sweden, a new gambling regulatory system is proposed to be in effect by January 2019. The proposed system will make it possible for off-shore gambling operators to apply for a license from Kansspelautoritet, the gambling regulatory body in the Netherlands. Licensees will then enjoy all the perks that come with a license, at the cost of paying Dutch company taxes on their gross earnings revenue instead of Maltese taxes (for instance). On the other hand, operators who are already regulated in the Netherlands might be able to move the bulk of their business elsewhere, since a prerequisite for obtaining a Dutch online gambling license is to only have some form of physical presence in the country.
As a result, several incumbents are now preparing their move to Malta, making the island their base ahead of January 2019. Depending on what is considered sufficient to meet the Dutch requirement of a “physical presence”, it might potentially sway operators towards fully operating under a Maltese gambling license, and not a Dutch one. This is certainly an unintended effect of the proposed gambling regulatory system in the Netherlands, as it would be in Sweden.
Mediavision continues to follow the development of the Swedish gambling market closely. In December 2017, a full-year analysis of the Swedish gambling industry will be published, focusing in particular on the online and foreign-based operators.Read more
October was an eventful month in the world of e-sports with a multitude of events and tournaments. Major events included League of Legends World Championship (LoL WC) 2017, DreamHack Denver 2017, EPICENTER 2017 and 2017 ESL One Hamburg. The latter attracted 20,000 on site visitors and 25 million unique online viewers worldwide over two days (October 28-29), corresponding to a 250% increase in viewership compared to the previous ESL One in Frankfurt 2016. These numbers were achieved through broadcasting the event on multiple video streaming platforms, such as Twitch and the Chinese service HuomaoTV, but also through pushing video content on social media like Facebook and Twitter. Clips on social media generated 38 million impressions from around 8 million unique users for ESL One Hamburg content, an increase by 50% compared to ESL One in Frankfurt 2016.
Mediavision has been following the development of Nordic e-sports, both the consumption and the market, for some time (see the 2016/17 E-sports/gaming analysis). Our most recent analysis shows that among popular e-sports events, tournaments, and leagues, DreamHack is rated the most appealing by Swedish e-sports and gaming viewers. Approximately 3 out of 10 viewers state interest in following the event. This interest was reflected during DreamHack Masters Malmö, held in late September through to October 2017. DreamHack viewership broke previous records with 31 million unique viewers worldwide, thus becoming the most viewed DreamHack event to date. Other recent events, such as LoL WC 2017, scored lower in terms of interest among Swedish consumers of e-sports/gaming, despite being a far more popular event worldwide.
In 2016, the finals of LoL WC reached 43 million unique viewers – a number very likely to have been beaten by this year’s edition of the tournament, which ended November 4. Viewership figures for LoL WC 2017 are expected to be announced in the next few weeks. Overall, new record-breaking viewership numbers across the board solidify the view of e-sports as a global phenomenon that is rapidly gaining momentum, and becoming ever more commercialized. However, despite being an inherently digital and global market, e-sports does have certain local niches – one being Swedes’ preference for DreamHack. As the industry keeps growing and maturing, local markets and preferences will no doubt be of increased importance.Read more
Ericsson recently published its annual ConsumerLab report. In the report, Ericsson reveals a positive outlook on the future of virtual reality (VR) – and specifically its role in video on-demand (VOD) viewing. According to the report, which includes respondents from over 40 countries, the global penetration of VR devices is roughly at 10%, and 25% of respondents plan to get one (some of which already have one, i.e. not only non-holders). In comparison, according to Mediavision’s analysis, during the third quarter of 2017, VR device penetration among Swedish households was at approximately 8%. This corresponds to an increase of +14% since the fourth quarter of 2016.
Among other things, Ericsson’s report points towards the social aspect that VR can bring to video on-demand (VOD) viewing, for instance being in the audience of a VR concert with other VR users. However, for consumer interest to really take off, there are still several obstacles holding VR back, such as headsets being prohibitively expensive and limited content. According to the report, a third of consumers would be more interested in VR if their TV and video provider offered a VR content bundle, something which is yet to be seen. And even though Ericsson is optimistic about the prospects of VR to pick up the pace, not everyone seems to share the analysis. A few days ago, Nokia announced they are to cease production of their VR camera Ozo, only launched last year, parting ways with 310 employees in the process.
As discussed in an earlier blog post, augmented reality (AR) currently seems a likelier market to take off rather than VR. However, some of the issues with VR are being addressed and the market is getting more competitive, despite Nokia handing over the reins to others. With the increased competition, more consumer-friendly VR devices are now popping up. Facebook is launching a stand-alone version of their Oculus headset called Oculus Go at a lower price than its predecessor, and without the need for expensive hardware to run it. Also, Microsoft is launching a range of mixed reality headsets from different PC manufacturers like Dell, Hewlett-Packard and Lenovo – increasing competition and opening up for a less expensive VR experience than competitors like Sony, Oculus, and HTC Vive.
Based on recent events, the next step for gargantuan OTT actors, like Netflix and Amazon, to conquer even larger market shares seems to be locally produced content. The trend of streaming giants producing local content is certainly gaining momentum. Netflix’ first Italian original production, Suburra, premieres today (October 6th). The series is produced by Cattleya, the same company that created Gomorrah, which premieres its third season later this fall on HBO Nordic.
Furthermore, having recently announced Nordic original Störst av allt (Quicksand), Netflix is clearly making strides in Europe. But the trend is catching on closer to its US home turf too. Netflix has struck a deal with a Canadian organization to spend $500 million on local programming over a five-year period and set up a Canadian production company, aptly called Netflix Canada. According to Mediavision, approximately half of all upcoming Netflix original productions (as of September 2017) are local productions, i.e. produced outside of the U.S.
Amazon also walks along the path of “glocalization”, just having announced its first UK original drama production called Fearless. Fearless is a legal conspiracy thriller starring Helen McCrory and Michael Gambon produced by Mammoth Screen.
In other news, the top 3 social media platforms among Nordic users; Facebook, Instagram, and Snapchat, have all launched new functionalities. Snapchat continues to add to their AR offer with an integrated art viewing functionality. Instagram releases clickable ads in posts, facilitating sales of clothing, for instance, seen in pictures on Instagram. Facebook announced they will hire 1,000 new people to review ads, in an attempt to make it more difficult for advertisers and organizations to manipulate Facebook’s ad platform. This news came shortly after Facebook disclosed that fake Russian-backed accounts purchased about $150,000 of political ads between 2015 and 2017, a lot of which was aimed at influencing voters in the 2016 US presidential election.Read more
Foreign based gambling operators, such as Bet365, Kindred (Unibet parent) and Betsson are commanding a continuously bigger slice of the Swedish gambling market pie. According to Sweden’s gambling authority, Lotteriinspektionen, the foreign based firms grew their total gross winnings revenue (turnover after payout of gamblers’ winnings) by 17 percent during H1 2017 on a yearly basis, obtaining a 24% share of the Swedish market. At the same time, operators regulated in Sweden, such as Svenska Spel and ATG, reported neither positive nor negative growth, thus losing in market shares.
Ahead of the upcoming re-regulation of the Swedish gambling industry, there is an ongoing race among the many different stakeholders on the market to position themselves, leading to extensive marketing campaigns and a strong focus on customer acquisition and engagement. In this post, we will take a closer look at the two most important gambling verticals for foreign based operators, i.e. online casino and sports betting.
Mediavision has previously noted that the online casino vertical currently works as the main growth engine among foreign based operators. This is consistent with reports from the two biggest publicly listed foreign based operators, Kindred and Betsson, as both have a majority share of their gross winnings revenue generated by casino games, at 51 and 74 percent respectively, during Q2 2017.
However, several casino focused operators, such as Leovegas and Mr Green, have started to put an increased emphasis on sports betting, both having launched their sportsbooks late in H1 2016. Most major foreign based operators now offer both casino games and sports betting, attempting to cater to a broader audience (increased own customer base) and to satisfy a greater range of their own players’ gambling demands (increased ARPU). This is certainly also true for other gambling verticals, mainly bingo, poker and horse racing, although to a lesser extent.
One reason for gambling operators to offer both casino and sports betting is age. During the first half of 2017, both foreign based sports betting (i.e. excluding Svenska Spel) and online casino generated 4 percent in monthly reach among 18-74-year-old Swedes, respectively, according to Mediavision’s data. However, among young (18-24) foreign based sports betting attracted 6% on a monthly basis, compared to 4% for online casino. This suggests that offering sportsbooks has a greater potential as a gateway to attract the youngest group of gamblers to your own brand.
This far, the overlap of online casino gamblers and sports punters (Svenska Spel excluded) is relatively small. During the first half of 2017, approximately a fifth of all who gambled on foreign based sports betting also gambled on online casino, and vice versa, during an average month. As several big brands become less niched, specialized primarily in one gambling vertical, and move towards becoming more of full-service, one-stop shops for punters, the aim is surely to increase these customer overlaps.
Currently, gambler overlaps vary significantly among different brands. Overall, top sports brands, such as Bet365 and Unibet, display a relatively low share of sports punters who also gamble on casino (both at approximately 10 percent) while big casino oriented brands, such as Leovegas and Mr Green, display shares of 20 percent and upwards. However, the share of casino gamblers that also gambled on sports is much higher for Bet365 and Unibet compared to competitors. Approximately 30 percent of casino gamblers on Bet365 and Unibet also gambled on sports via the same brand. In other words, all operators currently have the potential to improve overall engagement and gambling activity in their own customer bases.Read more
The annual Emmy Awards was held for the 69th time Sunday night. Hulu became the first ever purely digital actor to win the prestigious Outstanding Drama Series award for “The Handmaid’s Tale”. In total, Hulu won 10 awards out of 18 nominations, while Netflix and HBO won 20 and 29 awards respectively – racking up more than 200 nominations combined. Thus, it is evident that the streaming services are climbing ever closer to the upper echelons of Hollywood.
However, the streaming giants certainly wish to conquer more than just Hollywood. Both Netflix and HBO recently announced that they are drawing closer to start producing original series in the Nordics. Netflix’s first Nordic original is based on Malin Persson Giolito’s novel “Störst av allt” (called “Quicksand”). Scriptwriter is Camilla Ahlgren, who has previously worked on successful TV series “Bron”, with FLX set to produce the series. HBO’s new original series, “Gösta”, is written and to be directed by Swedish filmmaker Lukas Moodysson. Memfis Film will produce the series, which starts shooting next year. In other words, Nordic local TV and film awards, such as Swedish “Kristallen”, might also be subject for competition from the global actors moving forward.
These announcements follow what has previously been communicated by company representatives. During Goldman Sach’s annual Communacopia Conference, Netflix CFO David Wells spoke of the growing consumer interest in content produced in other parts of the world. Furthermore, the chief content officer of Netflix, Ted Sarandos, mentioned in an interview with Variety that the company is looking to go from producing 17 local (i.e. non-American) series this year, to creating somewhere between 70 and 100 within the next couple of years.Read more
A few days ago, Apple held its keynote during which the company released several new products and a brand-new focus on augmented reality (AR). Rather than virtual reality (VR), AR has proven to be the technology of choice for both Facebook and Snapchat – and now Apple.
According to Mediavision, approximately 7% of Nordic HHs have a VR device today, showing no growth so far during 2017. Thus, the Nordic VR market has yet to take off. Considering Apple being the market leading brand for both smartphones and tablets in the Nordics, Mediavision believes that the company focus on AR has the potential of being the spark that ignites a new mainstream consumer market with AR.
First Nordic company to try to capitalize on this development is Ikea, which recently announced the app; Ikea Place. Together with Apple, Ikea has developed an AR app to be released on September 19th which lets the user place furniture in the space in front of them using the camera on their Iphone/Ipad. Ikea expects this will boost sales as an increasing number of consumers are introduced to the technology of AR.
Moving forward, we will most likely see more commercial uses for AR technology. The Nordic consumers’ interest is surely set to peak as AR becomes readily available in peoples’ smartphones and tablets – reaching a majority of the Nordic population virtually instantaneously.
Mediavision follows the media industry development with a focus on digital media on the Nordic markets. We perform personalized projects and thorough analyses (many of which are found under Publications).Read more
The Swedish games industry has an impressive track record, including some of the world’s most popular gaming franchises, eg Minecraft and Battlefield. Much thanks to these games, the Swedish games market’s development has been explosive over the past few years. Swedish game developers generated a total revenue of more than 12 bn SEK (1.3 bn EUR) during 2016, according to The Swedish Games Industry. As a comparative example, this corresponds to more than half the size of the entire Swedish TV market in 2016 (22.6 bn SEK).
*Annual average exchange rates as reported by Riksbanken.
Source: The Swedish Games Industry
Compared to just four years ago, revenues have increased by approximately +250%, corresponding to a compound annual growth rate (CAGR) of +32% since 2012. Meanwhile, becoming an increasingly mature market, profit margins have also increased drastically during the same period. In 2016, the accumulated profit amounted to more than 8 bn SEK, corresponding to a profit margin of 66%, according to The Swedish Games Industry.
Over the past few years, the Swedish games industry has produced several AAA games (games with a high budget, comparable to blockbuster movies), while a globalized market and digitalized distribution has paved the way for more indie developers to reach out with their games as well. Most recently, the Malmö based game developer, and subsidiary to Ubisoft, Massive Entertainment was trusted with the project of creating games set in the universe of James Cameron’s upcoming Avatar movies.
In other news, US media company and broadcaster Viacom recently announced the release of a new subscription based video service; Paramount Plus. Denmark, Norway, and Sweden will be among the first markets in which the service will be launched. The service will only be available through traditional TV distributors in each country. In Sweden, customers of Com Hem, Bredbandsbolaget, and Canal Digital will be able to access Paramount Plus, starting October 11th. Another US actor advancing on the European market is Amazon, which recently launched the Amazon Prime Video service on Sony’s Playstation 4 console.Read more
Mediavision has compiled the subscriber development during the first half of 2017 for the five major traditional pay TV operators in the US, compared to that of OTT service Netflix.
*Includes: AT&T, Charter, Comcast, DISH, and Verizon.
Source: Company reports
Throughout the first half of 2017 subscribers have increasingly cut the cord to the top 5 traditional pay TV operators in the US; corresponding to a loss of approximately 1.5 million subscribers compared to end of year 2016. Meanwhile, Netflix added around 2.5 million subscriptions in the US alone during the same period (with an additional 7.7 million international subscriptions) – reaching the milestone of over 100 million subscribers worldwide in Q2 2017.
In attempts to counter this development, and eventually capitalize on the digitalization of the TV industry; several traditional operators are moving into the OTT space. AT&T’s online streaming service DirecTV Now added about 300’ subscriptions during H1 2017 vs end of year 2016, and DISH’s Sling TV added around 250’ in the same period. However, these services still have a long way to go before completely offsetting the drop in traditional pay TV subscriptions, and catch up with competitors like Netflix, Hulu, and Amazon. Furthermore, actors are trying to maintain consumer interest toward traditional pay TV channels through “skinny bundling”. This could mean either offering an á la carte selection of channels or excluding certain expensive channels (often sports) to offer packages at a cheaper price.
Further efforts to thwart traditional TV decline includes CNN setting out to reach a younger audience through a cooperation with Snapchat. Snapchat has also emphasized its focus on mobile video content, following a rather lengthy negative development on the stock market for the parent company Snap Inc.
In the Nordics however, there’s no clear decline of subscribers in the TV market, as IPTV and digital cable keep growing, offsetting the decline in satellite and terrestrial television subscriptions. Regardless, the effects of digitalization are increasingly visible in the Nordic markets as well, as most pay TV operators employ their own OTT service, or include an existing service in their own infrastructure (eg including Netflix or HBO Nordic in set top boxes or own apps).Read more
The summer has been an eventful one in the media industry, yet how has traditional TV performed throughout the Nordics?
In Sweden between week 26-31, time spent watching traditional TV decreased in the population by -9% vs the same period last year. Furthermore, the drop among young (15-24 year-olds) was -24% year-on-year (YOY), resulting in an average daily traditional TV viewing time of just around 30 minutes throughout these weeks. However, for 2016 the period included the final stages of the UEFA Euros won by Portugal in mid July – which partly explains the decreased viewing in 2017.
The drop in viewing has affected all of the major broadcasters, even though only SVT and TV4 broadcasted the UEFA Euros in 2016. MTG experienced the largest drop among young with -43% YOY in average daily viewing time.
In Finland, July showed a similarly negative development, with a viewing decrease among young even more significant than in Sweden. For the entire population, a viewing decrease of -7% July 2017 vs July 2016 was recorded, while viewers aged 10-24 decreased their viewing by a whopping -33% compared to last year. For these younger viewers, this resulted in an average daily viewing time throughout July of 30 min, similar to the amount of time Swedish youngsters spend watching traditional TV.
In Q2, Danish broadcaster TV2 recorded a share of viewing (SOV) equal to that of public service broadcaster DR, who saw a decreased SOV compared to the same period last year – no doubt affected by the UEFA Euros in 2016.
Source: Kantar Gallup
While traditional TV viewing is on the decline across the Nordics, global online video actors are growing at an increasing rate. Facebook reported a better than expected Q2 with a more than 70% increase in profits vs Q2 2016. This news was followed by the limited release of the dedicated video service; “Facebook Watch”, marking the start of a head-on competition between Facebook and Youtube, as well as traditional TV actors with presence in the AVOD sector.
In the past week, Disney was in the news for withdrawing their content from Netflix after acquiring majority ownership of Major League Baseball’s tech subsidiary BAMTech for 1.5 bn USD. The acquisition is an outspoken move towards releasing OTT services dedicated to distribution of Disney material within both sports, reality, and fiction. Furthermore, BAMTech has a close connection to League of Legends creators Riot Games, working on the game publisher’s own streaming platform. Thus, the acquisition puts Disney, and specifically its sports subsidiary ESPN, in a position of power within the e-sports industry – following ESPN’s recent investments in e-sports.Read more
During the past week, the e-sports and gaming industry has been at the top of many news outlets. The tournament/event Intel Extreme Masters became the most watched e-sports event in history, Facebook ventured deeper into live-streaming of e-sports and gaming content and Youtube partnered with e-sports company FaceIT for streaming rights.
Run by MTG owned e-sports company Turtle Entertainment, the e-sports event and tournament Intel Extreme Masters in Katowice took place 25-26 of February and 3-5 of March 2017. The event had over 46 million unique viewers – thereby overtaking League of Legends World Championships in October 2016 as the most watched e-sport event in history. However, it is important to note that while League of Legends WC reached fewer viewers in total (43 million), it most probably had a higher peak viewership, since IEM Katowice hosted tournaments in three different games; LoL, CS:GO, and Starcraft II – segmenting viewership between the three. Nevertheless, it’s an accomplishment corresponding to a yearly increase of more than +35% viewership compared to 2016.
Furthermore, Facebook recently announced that they are releasing the feature of livestreaming directly from desktop to your followers/friends on Facebook. This is a definite step toward competing with e-sport actors such as Twitch.tv and Youtube Gaming. Meanwhile, Youtube partnered with e-sports company FaceIT, which was announced late last week as the biggest e-sports investment from the Google owned company to date. FaceIT runs the e-sports league “Esports Championship Series” (ECS) which will now be exclusively available on Youtube.
More on the development of the e-sports and gaming industry in the Nordics can be found in Mediavision’s latest analysis “E-sports & Gaming 2016/2017”, including unique insight into the development of both consumers and actors in the industry.
Sources: Company press releases, Reuters.