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CanalPlay Closure Further Highlights Importance of Continued Original Content Investment for SVoD Success
The announcement that CanalPlay is to close in France is another reminder of the growing requirement for major content investment to compete in the increasingly dynamic subscription video sector, particularly amongst local services. CanalPlay will join the list of high profile closures worldwide over the last couple of years, all with significant parent companies; that includes Shomi (Canada), Watchever (Germany) and KPN Play (Netherlands). Futuresource estimates that CanalPlay had approximately 600k subscribers at the end of 2017, but has struggled to maintain pace in 2018 as Netflix momentum continues to build. Netflix doubled its subscriber base in France in 2017 hitting 2.5 million, with more subscriber growth expected for 2018.
In what was effectively a eulogy, Maxime Saada, chairman of the Canal+ board declared that “we had a French Netflix, it was killed”. But arguably, therein lies the problem, success in the SVoD sector in any country will be driven by differentiation - not trying to be the “French Netflix”. Offering content that is unique, high quality and ideally, exclusive or original. Such a strategy does not come cheap though, something that Canal+/Vivendi was seemingly not willing, or able to fund, particularly when its addressable market is more localised than the likes of Netflix or Amazon Prime Video.
Let’s take the UK and USA, where you have a “Big 3” in the SVoD sector, Netflix, Amazon Prime Video and Hulu (USA)/Now TV (UK). In Futuresource’s opinion, in these instances the three are much more complementary than competitive, with little overlap in content across services and combined they provide a very compelling proposition, representing good value for money (typically around $30 per month for the three). Overlap of users across the services is strong. In the UK, half of Now TV subscribers also use both Netflix and Amazon Prime, in the USA, two-thirds of Hulu subscribers do the same, according to Futuresource’s Living with Digital consumer survey. 60% of CanalPlay subscribers also had Netflix.
Original and premium/exclusive content is the key driver of viewing on these services, but clearly this requires a huge investment, This has not deterred other local French service providers and content holders from investing in the sector, but notably they have repositioned to take a slightly different route – pooling resources with similar companies to provide a much broader, compelling service. One such initiative from French commercial broadcasters TF1 and M6 Group plus public broadcaster France Televisions, seems them collectively launching a new national TV platform “Salto”, integrating free catch-up services and new SVoD options. In addition, Orange and Altice/SFR are expected to merge their premium TV and movie subscription services to improve their content offering and ultimately increase its appeal, in addition to providing an alternative to Netflix.
Futuresource’s Video Insights: France Market Report, published today, highlights that, despite the demise of CanalPlay, the French SVoD sector continues to go from strength to strength, driven by the increasing popularity of Netflix. Amazon Prime Video has also quietly gained momentum in France – whilst Amazon doesn’t have the brand kudos or strength of customer base as it does in the UK and Germany, Futuresource estimates that there were around one million Prime Video households at the end of 2017.
The SVoD sector in France is expected to continue its impressive momentum, fuelled by new service launches and progression of existing services, almost doubling in value between 2017 and 2019 to over €700 million. These new services will see total individual SVOD subscriptions reach almost 9 million in 2018; but with a rising number of these subscribers taking more than one service, the number of households with at least one subscription will be closer to 6 million households, equivalent to one in five French households.
The news of CanalPlay’s departure was perhaps widely antipcated, but it will not detract from what is becoming an increasingly dynamic and fast moving segment of the French video and TV industry.
Here at Futuresource Consulting we deliver specialist research and consulting services, providing market forecasts and intelligence reports. Since the 1980s we have supported a range of industry sectors, which has grown to include: CE, Broadcast, Entertainment Content, EdTech and many more.