2018 FIFA World Cup

Today is the start of the 2018 FIFA World Cup in Russia (ending July 15). In the US, FOX has the English-language TV rights while Telemundo has the Spanish-language TV rights; fuboTV is streaming the games via its FOX partnership. Here’s the list of all the broadcast, streaming, and radio rights by country: link.

Team USA didn’t qualify for the first time since 1986, which is a big blow to FOX since casual viewers are unlikely to watch. It paid $400M to outbid ESPN in 2011 for the 2018 & 2022 rights plus the 2015 & 2019 women’s World Cup rights. Telemundo also outbid Univision at the time. The 2014 World Cup brought an avg TV audience of 4.3M to ESPN (+50% from 2010) and 3.4M to Univision.

In 2014, 3.2B people (45% of the world population) tuned in over TV for at least 1 minute and 280M tuned in online. 2.1B people watched for at least 20 minutes. The average audience per match was 187M. Those numbers exclude out-of-home viewing. (source)

21st Century Fox’s valuable position in India

Here’s an interesting data point: 21st Century Fox dominates OTT market share in India through its Hotstar subsidiary, which has 150M MAUs. According to new data from internet service provider Jana, Hotstar accounted for 70% of video streaming app downloads in Q1, compared to 13% for SonyLIV, 11% for Voot (owned by Viacom 18), 5% for Amazon Prime Video, and just 1.4% for Netflix.

Hotstar is part of Star India, a 21CF asset that could generate $1B in EBITDA by 2020. Star India reaches 700M people per month across 60 TV channels, plus has sought-after cricket broadcast rights; it owns 80% of Hotstar (with 150M MAUs). Star India hasn’t gotten much attention in the press coverage of Disney and Comcast’s bids for 21CF but it’s a notable component of the conglomerate and offers substantially more growth than most other divisions of 21CF…it’s the market leader in a massive, rapidly-growing market.

(sources: Variety, WSJ)

 

SVOD and Protectionism

The Dutch Culture Council recently asked legislators to require SVOD services operating in the country to maintain libraries with at least 15% Dutch content and apply a 2-5% tax on all revenue derived from foreign content streamed in the country. It’s a protectionist move both to nurture the Dutch film/TV industry in a competitive global market and to protect Dutch culture from the overwhelming pop culture influence of Hollywood. It’s also increasingly common around the world.

Local content quotas have long existed in television. Now that governments are wrapping their head around online streaming – and especially amid the surge of nationalist populism – clampdowns are coming.

The EU Parliament voted last year on a mandate that 30% of content on VOD platforms be European (FYI: Netflix’s library in Europe is already ~20% European). National governments are layering national quotas over that. Italy raised its local content quota on TV (which is supposed to include SVOD) to 60%. France already has a 60% quota on TV and is pressuring VOD platforms to substantially increase quotas as well, with Netflix CEO Reed Hastings committing to increase the company’s French content production by 40% in 2018.

In China, 70% of content on SVODs must be Chinese (hence why Netflix doesn’t operate there and instead signed a distribution deal with Baidu-owned iQiyi).

The net effect is a limitation on the amount of international content made available to subscribers in these countries and an increase in local content that doesn’t meet the bar for quality those platforms otherwise require. But the concerns are legitimate. The dynamic of online streaming platforms is a hits business. As Netflix and Amazon Prime Video expand globally, their hit shows become the hit shows across every geography. And the resources these SVOD platforms have to invest in their own content dwarfs that of local studios; even Rupert Murdoch felt 21st Century Fox wasn’t big enough to compete on its own. Local content quotas (and potentially streaming taxes) help nurture the local media industry to produce local hits (and sometimes global hits), which is important economically and culturally.

I wonder, however, how feasible content quotas are outside censorship-heavy states like China. How do you define regulated streaming content vs. content that’s just part of the broader internet (like Youtube videos)? What about SVOD services whose entire niche is to share a certain culture’s content with people abroad, like BritBox – a 250,000-subscriber service entirely dedicated to British TV shows and classic British films? If they’re restricted enough, won’t Europeans just use VPNs to access content that Netflix subscribers get in the US?

(This post is an abstract from today’s MediaDeals newsletter.)

New models for storytelling: Skam case study

There’s a new storytelling format I’m excited to see experimentation with: narratives that unfold across both traditional media and social media, blurring the line between reality and fiction. The hit Norwegian TV show SKAM is a case study here. It followed a (fictional) group of high school students through assorted teen drama (compare it to the British show Skins).

SKAM characters had real-world social media accounts that interacted with each other in alignment with the plot leading up to each week’s TV episode: a scene at a party gets posted by one of the relevant characters at 2am on a Saturday when it’s supposed to really be happening; a scene in the school cafeteria gets posted at noon on a Wednesday. Characters interact online (with tweets, posts, photos, comments) as you’d expect them to based on the plot. The high-production-quality videos then got compiled into the TV episode of the week, which acted as a recap providing extra context. The plot unfolds in a world broader than just the TV episodes and intertwines with real social media interactions. Watching the TV episodes was only part of watching the show.

The low-production-budget show broke viewership records in Norway, Denmark, and Sweden and gained a large online following around the world. It ended after 4 seasons due to what creator Julie Andem framed as the exhaustion of running a show that’s constantly unfolding every day. Simon Fuller’s XIX Entertainment is producing a US remake of the show, which will launch on Facebook Watch, and local adaptations are in the works in 5 other European countries.

It’s a fascinating case of blending reality and fiction, something we’ll see a major way when augmented reality finds widespread consumer adoption. And it offers potential for a dynamic production format that’s about storytelling through low-cost daily activity on social media rather than in neatly defined episodes. Why not have fictional characters be real-world social media influencers? Those become channels to monetize too through product placement, etc.

(This is an abstract from today’s MediaDeals newsletter.)

Cineplex and the Future of Exhibitors

Amid the global shift to streaming video, are exhibitors (aka movie theater companies) doomed?

Let’s step back: what role do exhibitors play in the market? 1) They curate and host Hollywood’s new releases so mass audiences know what to see; 2) they provide social, in-person media experiences for the family, for dates, for fun; 3) they deliver digital ads to captive, in-person audiences.

I look to Toronto-based Cineplex as a hint at how an exhibitor can continue to play this role in an evolving industry. (It’s more than just offering 3D glasses, recliner seats, and beer.)

Cineplex is the largest exhibitor in Canada, with 163 cinemas. Its box office revenue and concessions revenue are roughly equal (as is normal) and like competitors, they’ve added non-traditional programming like live streams of the opera and boxing matches plus films/livestreams for large immigrant populations. But that’s just the start. Cineplex is seizing opportunities that fit the broader definition above.

  • Decide you want to stay in for the night? Cineplex offers TVOD films to stream right there on their website, continuing to guide you to new(er) releases from Hollywood.
  • Want to go out but not to the movies? Cineplex has The Rec Room, Playdium, upcoming TopGolf venues, and other physical restaurant-and-entertainment experiences.
  • More of a gamer than a cinephile? Cineplex now owns an esports tournament organizer (online and offline), WGN. And it recently opened VR experiences in two of its Toronto and Ottawa theaters.
  • Regularly do any of these? The SCENE rewards program has you covered with discounts and other membership perks. It has 9M members in a country of 36M people.
  • Want to sell digital ads to in-person audiences? Cineplex has that covered too. They handle the ads not only in their theatres but in most of their competitors, reaching 94% of Canadian movie-goers. And they’re leveraging their expertise to expand digital ad units in malls, banks, quick service restaurants, and other public locations around North America.

In the short term, most exhibitors are enhancing the cinema experience in incremental ways so the corresponding increase in ticket prices for a luxurious experience makes up for the decline in attendees. But ultimately the opportunity is in evolving the whole business like Cineplex is doing. (Many exhibitors won’t stay ahead of the curve, of course, but that’s an opportunity for entrepreneurs and activist investors.)

Over the next 5 years, expect social AR and VR experiences to be particularly transformational for exhibitors smart enough to recognize the market that will arise there (already visible with VR arcades in China).

(This is an abstract from today’s MediaDeals newsletter.)