European OTT video revenue to double by 2021

The media industry in Europe is undergoing rapid transformation with increasing popularity of OTT video services that will see revenue double by 2021, according to Frost & Sullivan research.

Increasingly ubiquitous connectivity, progressive consumers, and regulatory initiatives around a ‘Digital Single Market (DSM)’ have intensified the competition among several international companies, local start-ups, pay-TV operators and broadcasters who offer OTT video services. As the market moves towards maturity, keeping viewers engaged through personalised content delivery and targeted advertisements will be the key to minimising churn, while pricing and technological innovation will play a key role in defining the market over the next five years.

“Despite having an early mover advantage, multi-country service providers such as Netflix, Amazon and Sky battle for viewership with regional service providers such as Maxdome in Germany, CanalPlay in France, Ziggo in the Netherlands, and new entrants such as Knippr, Molotov. The 450+ service provider ecosystem in the continent is expected to consolidate as price wars and content wars intensify, eventually forcing smaller participants to exit or be acquired by the bigger ones.” said Digital Transformation Research Analyst Swetha Ramachandran Krishnamoorthi.

“Parts of the European market are approaching maturity in terms of OTT content viewership – OTT video is increasingly watched not just on handheld devices but also on connected television. Such mainstream adoption presents challenges of a different sort – content providers need to constantly innovate on user interface and content exclusivity to compete with service providers across all media,” added Senior Research Director, Vidya S Nath.

Regional trends shaping the European OTT video services market include: OTT video adoption is already high in Western European countries such as the UK, France and the Netherlands. Expected CAGR in these markets will be around 15 per cent in viewership base. Newer market entrants are targeting a smaller percentage of population with niche offerings. In contrast, markets including Germany, Poland, Italy and the Nordic countries are at an early growth phase, as evident from the increasing number of new service launches and partnerships in the region, boosting the CAGR forecast to above 20 per cent.

US Market Ad Revenues Dip Amid Ongoing Concerns

National TV advertising revenues were down 1% in the second quarter — an improvement from the 3% decline in the first quarter. Yet challenges remain.

The estimates came from Brian Wieser, senior research analyst for Pivotal Research Group, and were based on recent second-quarter earnings results from major media companies.

“The traditional medium is unlikely to return any time soon,” he writes in a recent note, estimating a drop of 1% to 2% for the remainder of 2017.

Although TV networks say there is “strong” pricing in scatter markets, near-term quarter-by-quarter buying of TV time proves “pricing does not necessarily reflect changes in demand.”

Scatter deals with higher pricing come mostly from scatter-only advertisers — which have higher cost bases — and can account for a higher percentage of spending. Changes in demand for TV ad inventory will not cause all advertisers to alter how they budget for the medium.

Wieser is critical of media companies that did not provide specific details about the health of the major TV advertisers. He said “many of the large advertisers that dominate TV are relatively weak at present — and not enough new advertisers are emerging to replace older ones.”

The largest marketers on television — about 200 — account for around 90% of national TV revenues and about 60% of all TV.

“They are losing market share to companies that are smaller and structurally better positioned to spend money on digital media rather than TV,” he adds.

Although there are opportunities for growth — when it comes to new TV metrics, 35 days of time-shifted viewing versus three or seven days — Wieser doesn’t believe this will have a strong impact on TV networks.

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Facebook Raked in $9.16 Billion in Ad Revenue in the Second Quarter of 2017

Facebook reported advertising revenue of $9.16 billion in the second quarter of 2017, a 47 percent increase over the same quarter last year.

In its quarterly earnings report released today, the social giant beat analysts’ expectations with a total revenue of $9.3 billion—an increase of 45 percent year-over-year. Mobile now makes up around 87 percent of the company’s overall ad revenue, up from 84 percent in second-quarter 2016.

Earnings per share for the second quarter totaled $1.32, up from 78 cents during the same period last year.

The company also reported an increase in both daily and monthly active users, with daily active users totaling an average of 1.32 billion in June for a 17 percent increase year-over-year. Monthly active users also increased 17 percent year-over-year to total 2.01 billion as of June 30. (Facebook officially announced last month that it had hit the 2 billion mark.)

“We had a good second quarter and first half of the year,” Facebook CEO Mark Zuckerberg said today in a statement. “Our community is now two billion people and we’re focusing on bringing the world closer together.”

Facebook also reported an overall growth in head count. As of the end of last month, the company had 20,658 employees—an increase of 43 percent year-over-year.

While second quarter earnings were plenty strong, it does show a bit of deceleration—the company reported a 59 percent increase in overall revenue between the second quarters of 2015 and 2016. That year-over-year deceleration falls in line with what a few notable agencies reported to Adweek late last month—slower growth in cross-client ad spend in the second quarter compared to previous years. (For years, the company has consistently reported an acceleration of revenue growth. Late last year, Facebook executives have warned that advertising revenue growth would slow, given the lack of room for ad load growth.)