1. Evolution of the VoD market in Europe Workshop Europa Distribution Paris, 7th July 2009 André Lange Head of Department Information on Markets andFinancing European Audiovisual Observatory

2. 2 LEGAL EUROPEAN DEFINITION OF « AUDIOVISUAL MEDIA SERVICE ON DEMAND » Directive SMAV (11 December 2007) "on-demand audiovisual media service" (i.e. a non-linear audiovisual media service) means an audiovisual media service provided by a media service provider for the viewing of programmes at the moment chosen by the user and at his individual request on the basis of a catalogue of programmes selected by the media service provider”

3. 3 Article 1(a) of the Directive : 7 criteria necessary to identify an audiovisual media service on demand 1.There should be a service, i.e. an economic activity 2.The service should be under the editorial responsibility of a provider of an audiovisual media service 3.The service should have a public dimension 4.The service should aim to inform, entertain or educate the public in general 5.The main objective of the service should be the delivery of programmes 6.The service should be audiovisual 7.The service should be delivered by electronic communication networks

4. 4 Definition of the provider of audiovisual media service (Article 1d of the Directive) “Media service provider" means the natural or legal person who has editorial responsibility for the choice of the audiovisual content of the audiovisual media service and determines the manner in which it is organised ». Practical question for the statistician : how to identify the provider ? Confusion between the provider of the service and the distributor Frequent situations of « partnership » How to consider partners channels on Youtube ?

5. 5 TRANSPARENCY ISSUES Identification of the VoD provider Catalogue analysis Households expenditures Companies VoD revenues Analysis of revenues flows > Report Attentional on the implementation of article 3 and 4 of the TWSF Directive includes analysis on the difficulties of monitoring the VoD market > Need for an European regulation ?

6. 6 TECHNICAL MODELS OF ON-DEMAND SERVICES Source : NPA Conseil

7. 7 FILM IMMEDIATE DOWNLOAD POSSIBLE ON THE NEW iPhone 3GS THROUGH ATT Wifi, LAUNCHED IN USA June 19 2009

8. 8 RESPECTIVE ADVANTAGES AND DISADVANTAGES OF DELIVERY PLATFORMS PLUSMINUS Internet - B to C model - Editorial possibilities, search possibilities - Customized marketing - Allows niche strategies - Allows international strategies - Allows larger catalogues - Viewing most often on PC screen - Breaks in the quality of service - Slow to download - Risks of piracy - Services most often not accessible on MAC IPTV - Viewing on TV set - Existing basis of subscribers (different according countries) - Capacity limits (>FTTH) -- EPG rather slow and not user friendly - More difficult of access for independent producers and niche programmes - Smaller catalogues than on Internet services Cable - Viewing on TV set - Existing basis of subscribers (different according countries) -Cost of digitization of networks -More difficult of access for independent producers and niche programmes - Reduced catalogues Satellite and DTT - Viewing on TV set - Existing basis of subscribers (different according countries) -No return path -Needs storage on PVR -More difficult of access for independent producers and niche programmes - Reduced catalogues

9. 9 THE CHALLENGE OF VoD ON THE TV SCREEN VoD in the framework of cable or ADSL triple play offer (IPTV) VoD through PVR Hybrid PVR – IPTV systems (Canalsat, Viasat) Dedicated set-top box –Apple TV, Vudu,… –Maxdome, –FNAC/Netgem –CANVAS project of British PSB broadcasters and BT) Cable ipod > TV Screen Web enabled TV set (The Yankee Group expects 50 million people will have Internet connected HDTVs by 2013. Another 30 million, they say, will have connected Blu Ray players – and 11 million will have purchased media adaptors.

10. 10 DIGITAL HOUSEHOLDS BY KIND OF PLATFORM (31.12.2007) Source : OBS

11. 11 PENETRATION OF BROADBAND, DIGITAL CABLE AND IPTV (2007) % of households Source : Screen Digest / OBS

12. 12 NUMBER OF VoD SERVICES IN 24 EUROPEAN COUNTRIES (2002-2008) Source : NPA Conseil

13. 13 NUMBER OF ON-DEMAND AUDIOVISUAL SERVICES IN EUROPE (December 2008): 691 services Source : OBS

14. 14 BREAKDOWN OF ON-DEMAND SERVICES IN EUROPE BY KIND OF NETWORK (December 2008) Source : OBS

15. 15 PROVIDERS OF ON-DEMAND AUDIOVISUAL SERVICES IN EUROPE -Telcos: T-Online, France Telecom, Belgacom, Telecom Italia, Telefonica -ISP: Fastweb (IT), Arcor (DE), Absolut Medien (DE), Tiscali (GB)‏ -Cable operators: Telenet, ntl, Telewest, ONO, Casema -Broadacsters : Canal+, TPS, TF1, RAI, RTLNederland, FT2, ARTE, M6, BBC, Premiere, ProSiebenSat1, Sky, Mediaset,… -Film groups : SF (Svensk Filmindustry)‏, MK2, Filmax -Producers associations : Universciné, FIDD -Archives Film & TV : British Pathe, NFI, INA -Video publishers: TF1 Video, Editions Montparnasse -Retailers : Lovefilm, Virgin, Glowria, Carrerfour -New companies (agregators) : Cinezime, 4friends, Live Networks, Videonetwork… -Copyright collecting societies : SGAE, EGEDA -Manufacturers : Apple, Archos, Microsoft, Nintendo -Specialised services : Arts Alliance Media Ltd

16. 16 BREAKDOWN OF PROVIDERS OF ON-DEMAND SERVICES BY PRIMARY ORIGIN (December 2008) Source : OBS

17. 17 MARKET POSITIONS OF THE VARIOUS PLAYERS PLUSMINUS Telcos, ISPs, Cable - Financial capacities - Technological expertise - Triple play offers - Management of subscriptions and tracking of demand - No great experience in the field of rights - Necessity of accessing leading catalogues - Necessity of working with agregators Broadcasters - Financial capacities - Good position on the rights market - Experience in audience measurement, pay-TV, DVD market - Brand - Catch-up formulas, archives - Less financial capacities than telcos - Dependent from distributors (delivery) - Negotiations with producers - Competition rules Retailers - Knowledge of the consumers practices - Brand - Less financial capacities than telcos - Difficult access to IPTV delivery - Competition with their own « brick and mortar » services Aggregators, distributors - Experience in rights management - Possible pan-European strategies - Niche catalogues - Less financial capacities than telcos - Difficult access to IPTV delivery

18. 18 MANUFACTURERS (Apple, Microsoft, Sony, Nintendo,…) Strategic advantage : main objective is the sale of hardware Possibility of offering good conditions to rights owners and to increase rapidly the catalogue Possibility of opening « channels » to other providers Cumulating position of provider and distributors of third services Common platform for films, TV programmes and videogames Worldwide players

19. 19 iTUNES STORE SUCCESS Source : Apple Inc. (data provided without geographical breakdown) 1 million videos sold as at 31.10.2005 (20 days after the launching) 8 millions videos sold early January 2006 15 millions videos sold as at 23.2.2006 50 millions TV shows and 1.3 millions films sold as at 10.1.2007 2 millions films sold as at 11.4.2007 200 millions TV shows sold as at 16.10.2008

20. 20 USA – SHARE OF DIGITAL TRANSACTIONS FOR FILMS (2008) Source : Screen Digest February 2009

21. 21 iTUNES STORES EUROPEAN TURNOVER (2005-2007) EUR million Source : iTunes S.AR.L.

22. 22 VoD STRATEGIES OF THE VARIOUS CATEGORIES OF FILM PRODUCERS IN EUROPE Majors US- Blockbusters and library « long tail « - Agreements with local providers of VoD services - No exclusivity - No direct investments in Europe - No pan-European deals National film groups- few blockbuster, « long tail » libraries» - Agreementts with local providers of VoD services - No exclusivity - Almost no direct investment (SF, MK2) - VoD international sales through agents Independent producers- Mainly « long tail » catalogues - Regroupment strategies with aggregators (Universine, Filmotech,…) - Niche strategies, sometimes international - Looking for IPTV and cable access - Support of MEDIA 2007 Programme Broadcasters- Catch-up TV - Difficulties in exploiting archives - Some operators have films catalogues - Mainly Internet services - Alliances with YouTube, DailyMotion,… - Difficulties in accessing cable and IPTV

23. 23 BUSINESS MODELS Digital rental (24 hours > 48 hours) –1 title (1,5 to 6 EUR) –1 pack (Credit) Sale ( “ Download to own ” DTO) - Download to PC (5 to 15 EUR) - Download to burn (15 to 20 EUR) Online subscription VoD (SVoD) Free VoD : financed by advertising (MSN, Myvideo, … ) or licence fee (BBC iPlayer) Catch-up TV of film pay-TV channels (Canal+, Canalsat, SkyPlayer, TopUpTV Anytime, … )

24. 24 FRANCE : 8 leading services supply 3959 films (2753 in 2007, + 48,9 %) Source : CNC

25. 25 FRANCE : Characteristics of VoD catalogues of the 8 leading services Source : CNC Recent films (<12 months) : 2,8 % of the total supply New films (<36 months) : –French : 47,3 % –US : 30,7 % –European : 15,2 % 22,7 % of films in VoD have realised more than 1 million admissions 63,8 % have realised less than 500 000 admissions 50,3 % of films are classified « Art et essai » 95,4 % are feature films 2,6 % are animation 2 % are documentaries

26. 26 FRANCE : Availability of films by number of platforms Source : CNC

27. 27 FRANCE : VoD IN FRONT OF OTHER CONSUMERS PRACTICES 1st Semester 2007/2008 Sources : CNC, ALPA/Thomson, GfK/CNC, Gfk/NPA

28. 28 FRANCE – EVOLUTION OF HOUSEHOLDS AUDIOVISUAL EXPENSES (2004-2008) EUR million Source : CNC

29. 29 UNITED KINGDOM : UK film revenues (2004-2008) Millions £ Source : UK Film Council 2009 Statistical Yearbook (forthcoming)

30. 30 VISITS AND PAGES VIEWED ON MAXDOME WEBSITE (2007- 2009) Source : UVW

31. 31 GLOBAL ON-DEMAND REVENUES FORECAST 2012 - Includes nVoD - Euros Billion Source : Screen Digest – January 2009

32. 32 CABLE vs IPTV VoD REVENUES IN WESTERN EUROPE – Euros million Source : Screen Digest – January 2009

33. 33 Number of illegal film download (June 2009) Source : MARC

34. 34 QUESTIONS FOR THE DEBATE How to fight online piracy ? Films in iTunes Stores in more EUR countries ? Strategic importance of HD VoD ? Is the shortening of the windows a real threat for cinema-going ? Will VoD kill the video rental business ? How to ensure pre-eminence of European films in VoD catalogues ? Is the multi-territory licence a key issue for the development of a pan-European VoD market ?

35. 35 FOR MORE INFORMATION: http://www.obs.coe.int andre.lange@coe.int