SCS May 2018 - Industry Analysis (Couchweb) www.vivatuition.com - VIVA Financial Tuition

SCS May 2018 – Industry Analysis (Couchweb)

           www.vivatuition.com

1. Macro trends (quantitative):
              subscribers, revenues,
              projections
           2. Qualitative/consumer
              analysis: demographics,
              attitudes, advertising
Overview
           3. Companies: Netflix, Amazon,
              Hulu
           4. Opps and Threats: Sports, Big
              Tech, Traditional TV reactions
           Conclude

1. Quantitative Macro-
        trends
    Subscribers, revenues, projections

Netflix
expansion:
 beyond
   linear
  growth

Quarterly View

Traditional
 “Video”
   (i.e.
  Cable,
 Satellite)

              Data for US

Netflix vs Cable TV Subscriptions

Digital Advertising Overtakes TV

Projections…

TV Revenue
shares
• A huge percentage of TV
  revenues traditionally came
  from advertising
• But increasingly, subscription
  fees for cable TV are taking a
  greater share at the same
  time as overall year-on-year
  revenue growth falls

Death of Advertising? [video]

SVoD = Streaming
Video on Demand

International
   Markets
  (absolute
  numbers)

What about China?

What about China?

2. Qualitative/Consumer
         Analysis
 Consumers, Demographics, Preferences, Advertising

Traditional TV:
     age
demographic

Millennial
Subscribers
    (UK)

Millennial Content Preferences

Reasons for SVoD Subscriptions

Advertising

3. Major Companies
Netflix, Amazon, Hulu

Netflix & Couchweb

Netflix                        Couchweb
• Founded 20 years ago         • Founded 20 years ago
• When first founded, rented   • When first founded, rented
  out DVDs by post to            out DVDs by post to
  customers                      customers
• Streams content to almost    • Streams content to more
  190 countries and supports     than 100 countries in over
  22 languages                   20 languages
• Produces its own TV          • Produces its own TV
  programmes and movies          programmes and movies

“Game Changers:
    Netflix”

How does it all work? [video]

We’ve
 seen the
growth…
 but will it
continue?

Threat 1 - Amazon

Threat 2 – Smaller rivals

Threat 3 – Growth conditions

Industry
resentment?

• Large industry institutions and
  alliances are skeptical of
  Netflix, and are at least
  suspicious of their new
  model…
• Is there a danger that
  powerful alliances could
  boycott Netflix?

Cannes hostility

Oscars confusion

The Immediate
 Competition

Amazon Prime Video

What differentiates Amazon? Diversification!

• Amazon Prime is a paid
                         subscription service
                         offered by Amazon that
                         gives users access to free
                         two-day delivery (one-
                         day in select areas),
                         streaming video/music
                         and other benefits for a
                         monthly or yearly fee

                       • Includes: Prime Video,
                         Prime Music, Prime
                         Reading, and (in trial
                         mode) Prime Air – a
                         service whereby drones
                         deliver goods almost
Amazon Prime bundles     instantaneously!

Potential downside? Confusion!
• For many people, Amazon is still primarily an online store
  and delivery platform
• It’s diversity of offerings and services may confuse
  customers
• Prime attempts to simplify by offering several benefits in
  one bundle
• However, many customers seem to enjoy the simplicity of
  Netflix…

Hulu

• Hulu is an SVoD service similar to
  Netflix
• However, Hulu is a joint venture of
  several traditional media and
  television conglomerates, including
  The Walt Disney Company, 21st
  Century Fox (recently acquired by
  the former),Comcast, and Time
  Warner
• Hulu has recently ventured into live
  streaming of certain events, most
  famously with the latest Superbowl
• Another major difference is that Hulu
  incorporates advertising as part of its
  revenue model

4. Opportunities and Threats

Opportunities

Sports

Sports

Downloadable Content
• Netflix has recently introduced the ability for subscribers to
  download and store episodes on their mobile device
  apps for watching offline
• Several other OTT services providers either already do so,
  or are planning to do so
• This places less pressure on servers, creates greater
  flexibility for customers, and potentially avoids connection
  and buffering issues

Innovations/integrations

• Although there are doubts
  about the time frame and
  demand, Virtual Reality hype
  appears to be building in
  connection to TV
• Collaborations between tech
  companies like Samsung and
  SVoD providers seem a
  possibility in the near future

Threats

Traditional TV networks
transition/adapt

Innovation glitches and core business
• We already saw the potential issues with live streaming of,
  for example, sports events
• One of the major draws of services like Netflix is that they
  are “on demand” – users can watch and rewatch at their
  leisure, at their own pace
• Live events like football matches are qualitatively different
  – most users will insist on seeing them live, as they occur,
  rather than later “on demand”
• Requires potentially different software, infrastructure, and
  partnernships with third parties…

The spectre of the Tech Giants

Thank you and
   good luck!

Sources/Further Reading
• https://www.marketingcharts.com/featured-24817
• http://www.businessinsider.com/cable-tv-curbs-subscriber-losses-but-cord-
  cutters-continue-to-grow-2016-3
• http://www.businessinsider.com/brutal-50-decline-in-tv-viewership-shows-
  why-your-cable-bill-is-so-high-2013-1
• https://www.prnewswire.com/news-releases/netflix-is-now-preferred-tv-
  viewing-source-for-all-demographic-groups-300270704.html
• https://www.youtube.com/watch?v=YXQpgAAeLM4
• https://www.forbes.com/sites/ywang/2018/03/07/the-billion-dollar-race-to-
  become-the-netflix-of-china/#3e1e6bc43495
• https://hbr.org/2017/10/netflix-and-why-the-future-of-streaming-looks-like-
  old-school-tv
• https://www.morganstanley.com/ideas/streaming-tv-2018

Sources/Further Reading
• http://variety.com/2018/digital/news/hulu-super-bowl-live-streaming-
  outage-program-extension-error-1202687484/
• http://uk.businessinsider.com/cable-tv-subscriber-losses-q2-chart-2017-6
• https://globalnews.ca/news/4105524/netflix-movies-banned-from-
  competing-at-cannes-artistic-director-explains-decision/
• http://www.vulture.com/2018/03/why-are-academy-voters-mad-about-
  netflixs-oscars-prospects.html
• https://www.youtube.com/watch?v=aEO7GLNrVPI
• http://www.thedrum.com/opinion/2018/02/08/dawn-new-entertainment-
  era-the-future-ott
• https://digiday.com/media/evolution-streaming-video-services-4-charts/
• https://www.forbes.com/sites/quora/2018/02/09/will-netflix-continue-
  dominating-its-space-long-term/#2e28786554b4

Sources/Further Reading
• https://en.wikipedia.org/wiki/HBO#HBO_Go
• https://www.theguardian.com/technology/2017/apr/09/virtual
  -reality-is-it-the-future-of-television
• https://om.co/2017/02/22/why-apple-should-buy-netflix-again/
• https://www.investopedia.com/articles/investing/092414/econ
  omics-hulu-netflix-redbox-and-blockbuster.asp
• https://www.investopedia.com/articles/personal-
  finance/121714/hulu-netflix-and-amazon-instant-video-
  comparison.asp
• https://www.investopedia.com/articles/investing/040815/bigg
  est-threats-netflix-nflx.asp