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Conference Report: The Future TV Consumer Seminar

Caroline Engell and Mie Thomsen report from the Future TV Consumer seminar in Copenhagen.

Are film and TV shows becoming detached from local broadcasters? Why does Netflix outperform other subscription-based providers in Denmark? And will flow-TV being replaced entirely by streaming?

These were just some of the questions explored at Future TV Consumer seminar in Copenhagen on November 25, 2015. Following on from June’s Future TV conference, the seminar discussed some of the latest developments in the Danish media landscape.

App-ification

Future of TV 1Conference’s founder Claus Bülow Christensen began the day by speculating on where the Danish consumers might be heading. He highlighted in particular the process of ‘app-ification’, whereby Smart TVs allow content to be viewed through apps rather than conventional channels. Consequently, films and TV shows are becoming detached from local broadcasters, he said, so that even sporting events and news programmes, which broadcasters have traditionally monopolised, are being transformed from conventional broadcasting channels to an app-based interface.

Christensen also noted that Danes are increasingly creating their own entertainment packages through subscribing to different SVOD services. This is forcing broadcasters to adapt to new technology (e.g. through app-ification) if they want to compete with services like Netflix.

Media consultant Julie Nygaard from market research company Wilke presented data from two recent consumer surveys showing how the Danish TV industry is losing DKK 25.9m (3.5m) per month due to ‘cable shaving’ – where consumers are reducing the size of their cable packages. Nygaard said that 39% of Danish cable TV owners are planning to ‘shave’ or ‘cut’ completely their TV package in the near future.

Meanwhile, 26% of the Danish households are Netflix subscribers – which equates to a monthly revenue of DKK 60.5m (8.1m) for the US-based company. By 2019, it is predicted that streaming will overtake flow-TV – though for audiences aged 18-29 this already happened in 2014.

The Wilke survey also found that consumers are still willing to pay a lot for TV and entertainment, as long as they receive quality. They also like to binge watch content and have access to the newest global content without commercials.

Henrik Andersen, Head of Communication Consulting at Wilke, outlined the findings of Wilke’s Net Promoter Score Survey, which showed that providers like YouSee and Waoo! performed worst in terms of responsive, reliability, convenience, relevance and price, while Netflix performed best across across the board. He said that Danish media companies needed to learn from Netflix’s success, particularly in terms of maintaining good customer relations.

The future of Netflix

The seminar ended with a presentation by Justin Hewelt and John Holland from PayMedia Consulting in London, who presented the findings of an extensive survey on how Netflix is communicating with their subscribers depending on the subscribers’ behaviour, providing insights to the internal mechanisms and potential future developments of Netflix.

Future of TV 2The pair noted that Netflix is being challenged by the arrival of new OTT services, such as Amazon Prime, which allows users to download content, or SlingTV.com, who offers live sports. Furthermore, companies are collaborating with different players, in order to compete with Netflix – e.g. the Australian OTT service Presto, which is collaborating with HBO.

Hewelt stated that Netflix’s plan to expand their market globally might be less successful in the future, as they are begin to move outside the Anglo-Saxon cultural sphere. Even in Germany and France, Netflix are experiencing difficulties, as US content does not always appeal to the audiences.

Hewelt and Holland listed different factors influencing how well Netflix is doing on different local markets. The need for local content, access to broadband, and how local audiences think of Hollywood content, are important factors determining how easy it is for Netflix to penetrate the market. In other words, Netflix has already expanded to the easily penetrable parts of the world like the Nordic countries and the UK, and is now facing more challenging markets like Asia and Africa.

For Netflix, original content and TV series has become increasingly important as this keeps audiences locked for a longer period of time than a single movie. Although series like Marco Polo (2014) and Hemlock Grove (2013) have not been very successful, people keep their subscriptions since it is cheap. It is easy to justify keeping a membership, even though you do not watch a lot of content on Netflix.

Hewelt even described Netflix as “the ultimate electronic babysitter”, having a strong kids TV profile, which has given Netflix a head start in the competition with other SVOD services. This has eventually led to HBO buying the rights for Sesame Street (1969).

Hewelt also noted that Netflix is forging new partnerships with telecommunication companies. This can be a mutually beneficial situation when Netflix offers 6-12 months subscription for free as a part of a phone subscription, since Netflix gets free advertising, while the telecommunication company advertise for the offer.

Hewelt and Holland ended by saying that there are multiple reasons for people are cable-shaving: pay-TV is too expensive and offer poor customer service, while competitors like Netflix offer better value with no ongoing commitment. Netflix is also easy to set up, and they are good at deepening the relationships to their subscribers, as they offer individual logins, personal emails, and personalized content suggestions.

Claus Bülow Christensen wraps up the day by concluding that the Danish TV industry is facing dramatic times, where the war with Netflix has only just begun.

Caroline Engell and Mie Thomsen are Masters students at the University of Copenhagen.

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