LONDON -- OTTtv World Summit -- The German OTT market is growing rapidly, according to Marvin Lange, CEO of SVoD provider Maxdome. But competition is growing rapidly and it's increasingly difficult to stand out.
Maxdome is a division of the broadcaster ProSiebenSat.1 Media SE. As the catchy title would suggest, ProSieben is a major German media company operating commercial television channels, premium pay channels, radio stations and some related print businesses. It has operations in 13 European countries.
It is divided into three divisions: Broadcast, Content Production,and Digital & Adjacent, which includes the SVoD service.
Maxdome currently offers more than 50,000 titles, priced at €7.99 per month ($8.73). It earned a sizeable €175 million ($191 million) in 2015 revenue, but at 12% to 13%, online VoD penetration is still low in Germany, compared with more advanced markets like the US (50%) and UK (30%).
It is picking up, and Lange credits the entry of Netflix Inc. (Nasdaq: NFLX) and Amazon for "igniting SVoD usage and subscription." He feels Maxdome has also benefitted from this overall market expansion. But at the same time, he points to rapidly growing competition, citing the demise of Vivendi's German VoD service, Watchever. (See Does Watchever's Demise Highlight a Looming Challenge for OTT?)
Lange cited some key statistics for Germany's OTT service adoption:
- 55% with at least two OTT services
- Approximately two OTT services is the average number of subscriptions
- 95% of OTT subscribers use the top three VoD services: Netflix, Amazon or Maxdome
- Maxdome is keeping up with rapid growth in the German market; it grew 95% last year while the total market grew 94%
Lange listed three key elements to Maxdome's strategy. He said it came down to offering a competitive selection of content, being available on all devices and differentiating through content curation.
He also mentioned Maxdome's partner strategy with broadband providers, taking advantage of parent ProSieben's market clout and relationships to negotiate for content and build advertiser relationships.
In addition, Maxdome has developed some innovative new services. Lange was especially proud of a recent agreement to provide VoD entertainment to the 80 million travelers on Deutsche Bahn’s high-speed ICE trains. Users bring their own device and link up to the ICE portal, where they have access to 50 titles for free.
"It's streaming without the Internet," said Lange. Users connect to an on-board WiFi service, but there is no Internet connection so there is no impact on the service in coverage holes, or while the train is going through tunnels.
The entire Maxdome catalog is available to regular subscribers, and new subscribers get a free month if they sign up on a train. The service has already been used by 10 million unique users since its very recent launch this winter.
Lange was equally enthusiastic about a new approach to curation that Maxdome is now using to differentiate its service.
"OTT services can present users with a large, overwhelming list of titles," he said. "It's very difficult to navigate, with not much data or context. Or we have to trust in the effectiveness of the almighty algorithm."
He feels that pure data approaches are not effective, and that a human element was important.
"We use big data solutions, and leverage algorithms, but we supplement that with human inputs," he said. The VoD provider has developed a team of "maxperts" -- genre-based experts who review and recommend movies and provide more information and opinion for users.
The site also offers detailed movie descriptions, trailers and discussions on social media about the movie, to provide as much context and insight as possible and help users navigate the catalog.
Despite Lange's comments, it's worth noting that most Netflix users are quite complementary about its "almighty algorithms." Still, Netflix reportedly spends $150 million annually on its personalization, recommendation and user interface -- not an easily replicated strategy for most OTT providers.
Maxdome also structures its content along "lanes," such as movies that are "Trending," "What Others Watched," "Themed Picks," "Editorial Picks" and "Mood," where titles are arranged according to what mood the user is in.
Lange said that the maxpert recommendations resulted in a 70% uplift for recommended titles. The VoD provider is also opportunistic about tying special promotions to current events. For example, when the Brad Pitt-Angelina Jolie break-up was announced, it promoted "Mr & Mrs Smith" starring the pair -- and saw a 1,040% rise in views of the movie.
It makes you wonder what movie promotions the Trump presidency might be inspiring today.
— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation