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Online video services – pricing and payment models | Mediavision | Affärsutveckling och strategi för medieindustrin

Online video services - pricing and payment models

This week we continue last week’s discussion on pricing and payment models of online video services. During the spring of 2019, ad-funded online video services (AVOD) are seeing a significant upswing across the Nordics. In Mediavision’s analysis of the Nordic TV & video market, we conclude that AVOD revenues have increased by +20% YOY in Denmark, Norway and Sweden. Comparatively, a similar digitalization of the ad market can be seen outside the Nordics as well. In the UK online advertising accounted for 57% of the total ad spend (£23.6 billion) in 2018 and is expected to increase further in the coming years.

Looking at paid services, new details regarding Warner Media’s coming SVOD service were recently revealed. The yet to be named AT&T-owned SVOD service, is slated to see its US release in early 2020. The service will bundle together HBO Now and Cinemax with content from Warner Bros. Recent news show that the new SVOD service will be sold as one primary service at one price, reportedly higher than Netflix and more than twice the price of Disney+. The question is whether Warner Media will be able to compete at such a high price level in a fierce market where penetration is stabilizing and growth is likely to be driven mainly by the stacking of subscriptions.

However, reports also state that Warner’s upcoming SVOD service may be complemented by a less expensive, ad-supported version after the premium service has been released. This hybrid pay/ad business model is currently used by for example Hulu in the US. As John Stankey (CEO of AT&T’s media businesses) puts it, the ambition is to create a service that can compete for ads with Google and for subscribers with Netflix. In a Nordic context, this would follow the example of Denmark’s TV2 Play that offers both a full price service without ads, and a lower priced ad-supported alternative. It remains to be seen if this is the way forward in order to cope with Netflix’ dominance and the simultaneous price pressure from Disney+ (Newsletter June 5th).

The struggle with finding viable payment models is not only exclusive to the online video industry, but also a challenge to other digital media markets. The Dutch start-up Blendle, the “iTunes of news”, is changing its business model. The service is leaving micropayments behind to lean solely on subscriptions. Blendle is a digital newspaper and magazine service where users get access to a wide range of magazines and newspapers, for a monthly fee. Until now, customers were also able to pay per article. Lack of revenues from micropayments, and the search for more predictable revenue streams are described as the main reasons for focusing solely on subscriptions.

Mediavision blogs:

Who will win the Nordic streaming war?
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.

Mediavision press releases:

10 million streaming subscriptions in the Nordics
Streaming video continues to grow rapidly in the Nordics, Mediavision concludes in its recently published analysis on the Nordic TV and video market. An increasing number of consumers subscribe […].

Industry news:

NENT Group has announced a new series with Peter Stormare called American Runestone. The first six-part season of the documentary series is set to premiere on Viaplay during 2020. NENT Group has ordered a second season of the series.
HBO “Vice News Tonight” and ends seven-year relationship with Vice Media, in which HBO has been the exclusive television home for Vice News. Vice Media is currently looking for new collaborating networks and is at work on a yet unannounced news show on Hulu.
Disney+ is forecasted to reach 75 million subscribers globally by 2024, by Digital TV Research. Global SVOD subscriptions is projected to increase by 86 percent in the coming six years. The average SVOD subscriber is expected to pay for 1.78 SVOD subscriptions.
The Swedish TVOD-service Plejmo is being cancelled by its owner Magine. Plejmo was purchased by Magine in 2015 and was backed up with a film catalogue of 20 000 titles. Plejmo’s roughly 300 000 active users will be transferred to the Danish competitor Blockbuster.
TV4 & C More has announced the 7th season of Morden i Sandhamn along with four movies which are set to premiere on TV4 & C More during 2020. The series and the movies are based on the books written by Viveca Sten.
UK audience research bureau BARB has commissioned audience measurement company Kantar to implement its new router meter across all on the UK’s TV audience panel. Viewing across TVs, smartphones, tablets and PCs will be measured.
Google has announced an acquisition of the analytics startup Looker. Google is paying $2.6 billion for the company, which will be added to Google Cloud.
Danish media and telecom giant TDC has completed its separation into two separate entities. The split results in two separate companies, Nuuday which comprises customer-facing brands and NetCo which operates TDC’s networks.
Media investments in Sweden declined with 4.8 percent in May compared to the same month last year. Cinemas suffered the hardest blow with a drop of 23.4 percent compared to last year. Outdoor advertising however grew 14.2 percent.

Mediavision in the news:

Der er sikkert en del der fortsat går og tror at Netflix er den største streamer. Og det kan såmænd også godt være tilfældet. Detaljen er bare at et hav af andre streamere bider giganten i haserne her i Norden.
Streaming video continues to grow rapidly in the Nordics, Mediavision concludes in its recently published analysis on the Nordic TV and video market. An increasing number of consumers […].

Industry events

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