|
Contributors | Messages | Polls | Resources |
|
Original Content Strategy Offers Diminishing Returns: maxdome CEOMarvin Lange, CEO, maxdome, 11/30/2016
The entry of Netflix Inc. (Nasdaq: NFLX) and Amazon into the German market has helped ramp up relatively sluggish OTT adoption rates, but brought in additional competition for the existing players. OTT adoption is low in Germany, compared with the US and UK, but as many as 38 different providers are competing for German consumer eyeballs online -- leading to some high-profile providers shutting down. The high level of competition is for a reason though -- German research firm Goldmedia found that online video brought in €423 million ($464 million) in 2015 and was expected to grow to €990 million ($1 billion) in 2021. Adoption and usage were also picking up, probably due to the brand recognition and buzz around the launch of Netflix and Amazon in the country. (See Does Watchever's Demise Highlight a Looming Challenge for OTT?) Telco Transformation met up with Marvin Lange, CEO of maxdome, a German OTT provider launched originally in 2006. Lange is also a member of our Video Transformation Advisory Board (VTAB). (See Introducing the Video Transformation Advisory Board .) Owned by broadcaster ProSiebenSat.1 Media SE, maxdome offers major Hollywood blockbusters in SD and HD as well as TV series, documentaries, live events and information programs. In an exclusive interview, Lange shared his thoughts on the development of the OTT video space in Germany. Telco Transformation: How long have you been with maxdome? Marvin Lange: I joined in November 2013, so about three years ago. I was originally one of two managing directors, and I was responsible for finance. I took over as CEO about one-and-half years ago. TT: What's the Internet streaming market like in Germany -- can you give us a quick snapshot? ML: It's picking up, but not as fast as in some other countries. It's primarily subscription-based VoD services and we estimate that penetration is up to about 13% now. But if you look at the US for example, it is more than 50% penetration, and in the UK it is more than 30%. So we have been slower to adopt Internet video, but it is happening. TT: Why do you think that is? Is it just the availability of high-quality free TV services? ML: I think it is, but I think it is also cultural to some extent. In Germany, we are a little suspicious of signing up for subscriptions. We want to avoid the "subscription trap." But yes, we also have a very strong free TV service, including catch-up services for shows that have been missed. These services -- we call them mediathek services -- are similar to the BBC iPlayer in the UK. All the major providers offer them -- national broadcasters ZDF and ARD, ProSiebenSat.1 [maxdome's parent company], and [commercial channel] RTL also offers it for a small fee. And the major cable providers also offer it, usually free to their subscribers. So it is relatively easy for consumers to watch past shows for free. Pay TV penetration in Germany is also a lot lower than the US or UK -- it's about 15% penetration at 5 million subscribers. Compare that with Sky in the UK, which alone has 12 million subscribers. We also have services such as Zattoo and Magine which aggregate TV content and stream them, but I wouldn't call them pay-TV services. TT: Who would you consider your primary competition then -- is it pay-TV providers, broadcasters with streaming services, Netflix and Amazon or all of them? ML: For us the Tier One competitors are Netflix, Amazon and Sky Ticket [Sky Deutschland's OTT service, equivalent to Now TV in the UK]. To some extent, yes, the others are also competition because we are all at some level, competing for the consumer's time. So we have to look at all the catch-up services. That being said, we aren't seeing many consumers say "we won't sign up for maxdome because we have catch-up." One advantage we have over catch-up services is that shows don't come and go. On mediathek services it’s difficult for consumers to know when a show will be on and how long it will stay for. They are deleted quite quickly. But on maxdome we keep titles on for longer, so there is more predictability, consumers know that it will be there. This also fits in well with modern viewing habits and trends such as binge watching. And of course we also offer a range of films and series that are not available on mediathek services at all. TT: What kind of content are you concentrating on: Hollywood movies, TV shows, local content? ML: I would say all of the above, but we do differentiate ourselves by offering exclusive access [within Germany] to Hollywood series and movies. But we do include a sprinkling of local content as well. We aren’t doing original production on a massive scale but are producing our own content. We have already started developing a local German-language production and will launch it shortly. But generally we prefer to license -- ideally, high value content with local exclusivity. TT: Are you concerned about the entry of Netflix and Amazon? Netflix is reportedly spending $5 billion annually on original programming, and Amazon is not far behind. And now they have launched in 200 markets. ML: 200 markets, yes, but with one show, though! Definitely these competitors are at the front of our minds, but I don’t think you can win by outspending everyone with your own productions. There are diminishing returns to this strategy: if you have 50 original series and then you launch a 51st, it will not have the same impact. I would say there is little difference in market impact between a show that is original and one that is exclusively licensed. That is our core proposition -- to try and get high-value shows to consumers that they cannot get from anyone else in Germany. Not from Netflix or Amazon -- only on maxdome. We are also concentrated on the navigation and orientation aspect of the experience, as you remember from our discussion at the OTTtv Summit. (See Maxdome's Lange on Keeping Up With the Netflixes.) We feel that taking the appealing content that you cannot find anywhere else, and combining it with [effective] orientation, is the right strategy. I think that there is a lot of appealing content now, across a lot of services. It is now finding it and accessing it that will be important for video services moving forward. TT: Do you negotiate for rights along with ProSiebenSat.1 [a major German broadcaster and owner of maxdome]? ML: Yes and no. Sometimes we do, but we are a standalone entity with our own budget and we make our own deals. But we look at where it makes sense to do something together, and then we can. If ProSiebenSat.1 is striking a deal with a big Hollywood studio, then we may also be included in the deal. So we see what makes sense -- if there is a benefit, then yes, we will be involved. TT: Are you looking at new technologies, such as UHD and virtual reality currently? ML: We are keeping a very, very close eye on developments, but we have to wait until it is the right time for us to adopt new technologies. Virtual reality in particular, is different -- it is different from a narrative standpoint. We'll have to look at production from a different point of view. So we are prepared. We will be very quick to jump on the bandwagon when it does take off.
— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation |
In part two of this Q&A, the carrier's group head of network virtualization, SDN and NFV calls on vendors to move faster and lead the cloudification charge.
It's time to focus on cloudification instead, Fran Heeran, the group head of Network Virtualization, SDN and NFV at Vodafone, says.
5G must coexist with LTE, 3G and a host of technologies that will ride on top of it, says Arnaud Vamparys, Orange Network Labs' senior vice president for radio networks.
The OpenStack Foundation's Ildiko Vancsa suggests that 5G readiness means never abandoning telco applications and infrastructures once they're 'cloudy enough.'
IDC's John Delaney talks about how telecom CIOs are addressing the relationship between 5G, automation and virtualization, while cautioning that they might be forgetting the basics.
On-the-Air Thursdays Digital Audio
ARCHIVED | December 7, 2017, 12pm EST
Orange has been one of the leading proponents of SDN and NFV. In this Telco Transformation radio show, Orange's John Isch provides some perspective on his company's NFV/SDN journey.
Special Huawei Video
Huawei Network Transformation Seminar The adoption of virtualization technology and cloud architectures by telecom network operators is now well underway but there is still a long way to go before the transition to an era of Network Functions Cloudification (NFC) is complete. |
|
|
||
Telco Transformation
About Us
Contact Us
Help
Register
Twitter
Facebook
RSS
Copyright © 2024 Light Reading, part of Informa Tech, a division of Informa PLC. All rights reserved. Privacy Policy | Cookie Policy | Terms of Use in partnership with
|