Streaming wars: will Ukraine be able to adequately respond

Стриминговые войны: сможет ли Украина достойно ответить

Billions of dollars in budgets. Hundreds of millions of subscribers. And mass hysteria about the new season of the Stranger Things, or the premiere of “the Witcher”, which is two days after the start up of the ten best TV shows of all time. Streaming services came into our life rapidly and become so integral to the consumer society. Many of us have watched, at least once, or heard about the products of some of the streaming platforms.

Prologue. First there was DVD

In 1997, appears Netflix. The company, then still dealing with the results of DVD rentals, in the USA. In 2013, they produced their content. And at the moment ahead of, the quantity produced of the show, all network or cable channels. And the number of subscribers they are ahead of any other streaming service. Today Netflix has about 160 million users.

In 2006, your video service launched by Amazon. A 2016 Amazon Video is available worldwide except China, Cuba, Iran, North Korea and Syria. By the way, Amazon Prime, which includes Amazon Video is on the second place on number of subscribers after Netflix. In 2018 he had about 100 million.

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Picture: BBC

1 November 2019 in more than 100 countries, including in Ukraine, start the service Apple TV+. In mid-November of the same year entered the market Disney+ (although in a limited number of countries. Ukraine is not among them). In may 2020 launched HBO Max. And, most likely, this is just the beginning.

Streaming platform of the newcomers in the media market very quickly turned into a trend. Looking at the number growing exponentially subscribers have Netflix, just lazy CEO is talking about creating their own streaming platform. And some passed from words to business.

Such a number of new platforms means not only the growth of the streaming market, but also a surge of original content. After all, Netflix, Amazon and others have moved away from buying the rights to broadcast a television show, movies, TV series and focused on creating your own product. According to some rumors, Apple has invested at launch $1.5 billion in production. And judging by the latest financial report, Netflix, they have a budget for content production in 2019 could reach $15 billion And, given the fact that the products are Netflix leads this year in the number of nominations for “Golden globe” (34 nominations), the money was well spent.

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Looking at the arms race, the question arises: “what kind of place this all is Ukraine?” Should we wait for when the stream will begin to shoot content specifically for Ukrainian speaking audience, as it does already for Netflix, poles, Germans, Spaniards, etc? Or, perhaps, Ukraine should receive their own streaming, which will produce content for the Ukrainians? So far, the intermediate result of this. A global streaming video services is still not officially published in the Ukrainian market. However, in January 2020 will be three years presence, we have Netflix. And, according to recent data, in Ukraine this service uses about 170 000 people.

Episode I. The Future

“The American market is now in the moment when starts the consolidation of players. The next step will be a big purchase and consolidation. As a result, again there will be several big players, which will divide the market” – so says Anna Tkachenko, Director of digital directions and the Director for strategy and development of the group “1+1 media”.

In her opinion, the development of streaming is a natural process. Exactly the same as the cable channels have turned into a cable network.

Boris Danilov. Photo: Konstantin Melnicki / Delo.ua

“It will be a massive battle between the services. Win those who possess private or exclusive content. The more exclusive content you have, the more chances to stay in the market”, – says the forecast Director of Digital Screens (OLL.TV), Boris Danilov.

Episode II. Data is the new oil

Today subscribe to the same Netflix costs $10 (about 260 UAH) per month. About as a movie ticket in the United States. Apple TV is even less – $5. But for the money for a month you get access to a huge library consisting of thousands of names and hundreds of original, exclusive products. It seems a bargain. But the generous Western companies in fact that for such a low fee offer so much?

It turns out that everything has a price. And not all streaming is the goal immediately to recoup the cost of the production of the new series.

If we talk about the production of original content, then this field is not only multi-billion dollar media companies, but in General, little if everyone is trying to take its first steps. Facebook, Snapchat and even Tinder have also removed my TV series.

“Why now all the tech giants went to the content? It is not streaming, but the fact that they went into the niche of content because of data. Today there is a unique story, when the production of content and its distribution are not only the business model and the opportunity to get unique user data on the consumption of content, which are of great value, because then they can be used in different projects”, – shares his thoughts Anna Tkachenko.

Anna Tkachenko. Photo: Konstantin Melnicki / Delo.ua

The example of Anna leads the Amazon Video. KPI there is no such thing as EBITDA (analytical indicator equal to the volume of profit before deduction of expenses on interest, taxes, depreciation and amortization). Their main task is the involvement of users. Amazon Video produces content to more users subscribed to Amazon Prime, which, in turn, sells and provides many other services. And, based on what content we watch and how we watch it, they monetize this information differently.

Today, according to Tkachenko, one user can perform 700-800 indicators of the attributes. “For example, you can see that in some series there is an episode which almost all the audience were revised several times. So then the analysis, which allows the producers to see that it’s all thanks to the actor of the third plan, which has a monologue. Hence, then they pick this actor and make him a main in the second season. Besides, thus saving money, as it is inexpensive, and the audience is delighted, because she really paid attention to it. No expert/producer may not be able to determine that. And the data showed it,” she says.

Episode III. Specific examples

“Disney, if you understand their system, the main income comes from parks, entertainment, resort, and franchise. It is their main monetization,” – says Anna Tkachenko. According to her, even buying a FOX for more than $70 billion – in the first place, investment in the content, to consolidate the subscribers of their service and get even more data. “Disney with data work for a long time. When you get into any Disneyland you just by purchasing fast pass and still use the app. It all reads a large amount of data, which are then konsolidiruyutsya in a huge database and analyzed. Based on this analysis they then decide everything from changes in the parks to what are the characters more interesting to the children in these parks. Therefore, Disney+ is absolutely not a story about what they are going to make money on streaming. This is a very long-term strategy, where the content is part of an ecosystem of data,” shares his thoughts Anna.

Anna Tkachenko. Photo: Konstantin Melnicki / Delo.ua

Same thing with Apple. They are already not the first year expertly processed the data from your iPhone. “For them the content is the same opportunity to obtain data that can then be run, with the aim of improving its products, understanding how to monetize them. This story is not about how to make money on content,” says a spokeswoman for 1+1 Media.

Of course, this does not mean that the money didn’t matter and you can spend them endlessly to get your data. At Netflix, for example, a slightly different KPIs. This year, the company’s debt to investors was about $12 billion But the cost of their original projects they have only increased. Since Netflix is a public company, her main indicator is the price of the shares on the stock exchange. As explained by Anna Tkachenko, here the scheme is quite simple: while a growing number of subscribers and rising prices stock – their shareholders happy.

HBOMax from all the big streaming platforms, today will be the most expensive. Subscription to them is stated at $15 per month. At the same time, according to Anna Tkachenko, produce content, they are much less. Before HBO, before purchase AT&T was a classic business model. Their income from the production of and stream had to exceed the costs. “Now things are changing. And they have already announced that they will increase by 50% the production of its content. Whether HBO Max business project? Doubts appear. The content also becomes part of the eco-system,” says Anna.

Episode IV. It is necessary to unite

In Ukraine today, in addition to the global Netflix, there are local streaming services or OTT. OLL.TV, MEGOGO, Divan TV Sweet TV. But mostly, they are completing their purchase kinoteka movies, retransmission of TV channels or content created by the channel included in the media group of which they are.

Until then, the whole world will become one nation with one language, one tradition, one religion, local content will be very popular.

No streaming or OTT platform not made in Ukraine product about Ukrainians and for Ukrainians. Unless you count a documentary about the revolution of dignity “Winter on Fire”, which was created with the support of Netflix.

The question arises, how not to stand aside of the global trends and, even worse, do not suffer from these same trends? And what is better in this case to wait until a conditional Netflix or Amazon and will order the Ukrainian production of such product? Or to start to produce content of high quality?

Anna Tkachenko believes that the solution in this situation is only cooperation and unification with other Ukrainian producers of content. Moreover, she believes that it is quite feasible, given the benefits of local content: “Until the whole world will become one nation with one language, one tradition, one religion, local content will be very popular. And the success of recent Ukrainian film to prove it. Everywhere in the global markets right now is consolidation around local content. And even existing media-competitors agree and develop common platforms, because “winter is coming”. Consolidation of the local market is the only way to survive in this struggle. Because money and resources as much as they (global strikingb, – Delo.ua), we have”. In addition, 1+1 media has already attempted to join before. “Initially, we wanted to consolidate the market under one platform, but then we have failed. Not all were ready. We saw great potential in this 3 years ago, they believed that any Union – it would be a strong story. Now we can focus on the development of their platforms,” says Anna.

Boris Danilov. Photo: Konstantin Melnicki / Delo.ua

Representative OLL.TV still skeptical looking at the entrance to the Ukrainian market global players: “Ukrainian consumer is not yet ready to pay for the video service. That is, he pays very little. To begin to take some part in this market, you need to bear in mind a case in which the projected revenues will outweigh the costs. While it is difficult to imagine that for a global player in this case will be positive.” At the same time, Boris Danilov believes that the probability of a new Ukrainian streaming service in the future still exists: “of Course. When the audience of Ukrainian services will reach such a level that the investment in streaming is a profitable occupation, new projects will necessarily appear. But profitability will come not tomorrow. This is a distant prospect. Within 5 years”.

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Episode V. the Prediction and the native platform

If it happens in the end, the Union for the sake of creating high-quality Ukrainian content? It is difficult to say. Media group “Ukraine” continues to develop its OTT platform “OLL.TV”. At the same time, Boris Danilov admits that his service is still not enough arguments to influence the content produced by the channel “Ukraine”, which they rebroadcast. “While we bring not so many returns per unit of produced content as broadcasters. Therefore, in this, the time to produce content exclusively for us is not really advisable,” shares Boris.

1+1 also develops its platform 1+1 video. They experiment, make it more interactive. “We shall consolidate and analyze all the data completely to the audience that watches us online. Can it be compared with the audience that is watching classic television. For example, in one series, linear TV core audience of maybe 40 years, and on the platform, the difference in age the nucleus is 10 years,” says Anna. She also does not deny that in the future may receive content produced specifically for their platform.

At the same time, Anna Tkachenko believes that the development of independent platforms, the TV channels were not allowed to become full-fledged competitor to the big stream. And the only solution in this case is still Association.

Стриминговые войны: сможет ли Украина достойно ответить

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