Crackle Growth Acceleration Strategy · Based on Country Attractiveness and Ease of Entry, Sony Crackle should consider international expansion in three “waves” — Wave 1: Expand
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English speaking countries include UK, Canada, Scandinavia, Netherlands, Australia, NZ, Ireland
Spanish language countries include Spain, Argentina, Mexico, Venezuela, Chile
*Source: PWC, IBSG Analysis
Countries included for Strategic fit
Countries excluded for lack of Strategic fit
LINGUISTIC CONSIDERAT
ONS
English Speaking: UK, Canada, Australia, NZ, Ireland
Other English Speaking: Netherlands, Denmark, Finland, Iceland, Norway, Sweden
German Speaking: Germany, Austria, Switzerland
Spanish Speaking: Spain, all Spanish LatAm Portuguese Speaking: Brazil, Portugal French Speaking: France, Belgium China Japan South Korea India Italy Russia (New countries added)
DRAFTHigh level offer descriptions for Wave 1, 2 and 3 regions / countries
Wave 1 Wave 2 Wave 3
Target segment M 18 – 44 M 18 – 44 M 18 – 44
Business Model Ad supported Ad supported Ad supported
Content Original Sony Crackle US original library ~ 25% of Sony Crackle US originals
~ 10% of Sony Crackle US originals
Movies Common content elements • Library / recent movies• 700+ titles, high % of AAA, AA • High refresh: 10%+ / monthConsiderations for countries• Germany/Austria: 20% local • Spanish-speaking LatAm &
Brazil: Significant local requirements
Common content elements • Library / recent movies• 500+ titles with some AAA and
AA and rest blend of A and lower
• Medium refresh: 5-7% /monthConsiderations for countries• Japan: 30%+ local• S. Korea: 30%+ local
Common content elements • Library / recent movies• 250+, some AA, most A &
lower • Medium refresh: 5 % / monthConsiderations for countries• Russia: High local• India: High local, Bollywood• China: Significant local,
blend of Korean, Japanese, Chinese
TV Most US classic SPE TV shows US classic SPE TV shows, dubbed
US classic SPE TV shows, dubbed
Other Movie reviews, news summary, not much sports as expensive
Movie reviews, news summary, not much sports as expensive
Movie reviews, news summary, not much sports as expensive
Localization
Common localization elements Minimal regulatory complianceSpecific considerations• Germany/Austria: Subtitling• LatAm: dubbing of all content
Common localization elements Regulatory compliance / dubbing
Common localization elements Full localization / dubbingSpecific considerations: • India: Only some content
dubbed
Devices PCs, connected TVs, Internet adapters, mobile phones, iPad, gaming consoles
PC, connected TVs, Internet adapters, mobile phones, iPad, gaming consoles
PC, connected TVs, Internet adapters, mobile phones, iPad, gaming consoles
Segments • M 18 – 44 • M 18 – 44: Currently, there are no major players focusing on this segment
• In several English-speaking countries e.g. Australia , New Zealand and Scandinavia, 18-44 M segment is very interested in action, sports, extreme adventure and international content
Business Model
• Ad supported • In UK, significant amount of OTT video available from existing players e.g. BBC iPlayer, Sky UK
• Competing with a paid OTT model would be expensive• Significant amount of catch-up OTT video content is
available (e.g. Scandinavia) – creating consumer expectations that OTT content is free.
Content • Original production: None specially developed for this region; offer US original content
• Movies: Movies 6+ months and older, library and current movies
• TV: None specific to local country; offer selective US TV series / episodes of international popularity
• Other content: None• Localization: Limited to regulatory
compliance
• Appetite for original content is mostly for local TV serials• Catch up TV window is ~1 month. Any online video
content (movies, TV shows) older than that is only offered via PPV/DTO
• While there is an opportunity to provide archived TV serials (due to 30 day expiry window of catch-up TV), the content is expensive to offer
• Research indicates that consumers prefer to use catch-up TV to see recent TV episodes, missed on regular TV. This content is expensive to acquire
• Paid TV incumbents (especially satellite) have significant advantage in sports; also live Sports content is expensive
DRAFT Wave 1 sample offer and rationaleGermany / Austria
Offer Rationale
Segments • M 18 – 44 • 18-44 more interested in localized international content; however this content should be subtitled at least minimally through sub-titling
Business Model
• Ad supported • Significant amount of OTT content available through TV broadcasters (catch-up TV), as well as Paid TV providers offering OTT content to subscribers, as part of overall subscription
Content • Original production: None specially developed for this region; offer US original content
• Movies: movies 6+ months and older, library and current movies
• TV: none specific to Germany or Austria; offer selective US TV series episodes of international popularity
• Other content: movies reviews, news summaries, not much sports
• Localization• All content adapted to
German regulations and subtitled
• Wide range of genres (10+) to compete with extensive local online content
• Appetite for original content is mostly for local TV serials
• The catch up TV window is approximately 1 month. Any online video content (movies, TV shows) older than that window is either offered via PPV/DTO or not available
• OTT TV series / episodes demand is mostly to catch-up missed current TV episodes. This content is expensive and is available through catch-up TV services. Therefore not sufficiently worthwhile to offer Germany-specific TV series.
• Sports content too expensive to purchase; local public TV as well as Paid TV (e.g. Sky) has significant penetration
Deep pockets: Germany / Austria public TV, publishers and pay TV companies have in-depth local content of high quality
Public TV has limited windows to show ads during the day; usually no ads during movies
Publishers are providing more information-based content e.g. documentaries, news
Satellite providers are developing online competitive edge in Sports; while they also provide movies, but largely Sports driven
Maxdome has subscription plus PPV. Basic subscription is € 9.99/month; movies are 18-24 months old. Recent releases are by PPV
TV producers are mass market focused
Austria is a smaller market, concentrated with good Public TV. ORS.Ad is # 5 in popularity in Austria (after YouTube) – and produces 90% of scripted content in Austria
OED24.ad (Liberty Global) and Chello.ad are local brands of media companies
Key Learnings for Sony Crackle
• Good quality content on TV, & catch-up TV reduces propensity to pay for online contents
• International content usually through PPV / DTO @ € 0.50 - € 5.99/movie and up
• Part of large publishers• TV Broadcasters offering Catch Up TV • Part of TV networks e.g. N-TV, PGMEDIA • Some niche portals (GMX-UGC), Web.de etc.
• Ad supported, subscription, PPV/DTO • Non-ad (subscription / PPV) e.g. Maxdome• VOD / PPV services (e.g. DT’s Videoload)• Lovefilm has ad supported content
• Extensive short form content i.e. clips, trailers)• Some German local content desired; typically
~30% of overall content• Foreign content must be subtitled
• 18-44 more interested in localized international content; however should be sub-titled
• Consumers get local content from domestic TV providers; low appetite from any new sources
Germany / Austria Opportunity(1) Ad supported (2) international movies (3) little to no
Possibility of using the same programming as US, rights permitting Some commonality of culture could justify common marketing campaigns (except
for Nordic Countries)
Considerations for UK and Ireland
Mature OTT environment; established incumbents Sony Crackle offering should be differentiated with US movies not available on
other online, ad supported services Potential to take advantage of “Cash Cow” US TV classics Presence of Sony hubs and Sony Networks could be leveraged Sony should OEM Crackle with Sony Electronic connected devices like Sony
Bravias, Playstations, tablets and build stronger service awareness in this manner
Germany / Austria
Enough similarity in language and culture to deploy same service in both countries Crackle Germany could capitalize on the local appetite for international movies,
recent and classic US movies should fare well and give strong service identity The service could benefit from content partnership with Deutsche Telecom
Considerations for Australia and New Zealand
Crackle can capitalize on low barriers to entry created by English-speaking population that loves American films
Opportunity to strike an alliance with local SP incumbent Telstra for co-marketing of service and quota-unbundling of Crackle traffic
Considerations for Nordic Countries
Crackle should take advantage of Teliasonera’s interest in alliances with OTT players for bundling services
Possibility that US / English language content not dubbed or sub-titled may not be viable for full ad supported model; however some ads could be sold through ad networks, even at lower prices, to bring incremental revenues with marginal costs
Special considerations for Wave 1 regions / countries
Most Korean consumers have experienced paid-TV services; though price sensitive, they are also used to paying for online content through subscription services
Significant part of TV viewers (17%) regularly watch video using Internet
Consumers use diverse range of devices to watch video; while 99 % watch video on TV;
~ 43% also watch on the Smartphone
~ 25% also watch on Notebooks
~15% watch on navigation devices
~ 41% watch on PMP/MID/PDA
Depth and wide variety of Korean local / localized content, on different platforms is tablestakes; potential for ad supported services, for latest Western content dubbed in Korean
Difficult to compete with the three main broadcasters on Korean content only
Key Learnings for Sony Crackle
• conTing’s subscription service @ $13-15 / month for unlimited content download
• GOMTV’s $9/month service for one broadcaster contents, $20 for all three
• No target segmentation; mass market appeal • High price sensitivity – lower price points
exacerbated by P2P services, that provide pirated content for cents
• conTing: An online video service jointly owned by 3 broadcasters KBS, MBC, SBS
• Each has its own site for online content as well• Portals – GOMTV, Africa TV, DaEum TV
• conTing, GOMTV provide subscription based services for unlimited download
• Many portals offer ad-supported Korean video content, sometimes pirated
• Extensive Korean content e.g. Korean / English subtitled movies, TV episodes, game shows.
• All content that is broadcasted is available on the OTT services; sufficient breadth / depth
Wave 2 Offer and rationaleSouth Korea - (1) Ad Supported (2) localized
international movies (3) on multiple devices (4) 18-44
South Korea Opportunity of launching a service that takes advantage of the high penetration of Internet-connected portable viewing devices (PMP, smart phones and tablets) – To differentiate, the Crackle service should be optimized for these devices
DRAFT Wave 3 sample offer and rationaleFrance / Belgium
Offer Rationale
Segments • M 18 – 44 • 15-24 are most active online video consumers; ~ 33% view Catch Up online TV
• 18-44 M more interested in localized international content; however need content to be dubbed
Business Model
• Ad supported • Significant amount of free content, particularly locally produced, available from Public/ Paid TV Broadcasters to subscribers
• Short clips, UGC and growing international premium content available from popular portals e.g. Dailymotion.
• Consumer expectation that online video is free• Current pay models are limited to PPV/DTO. There is no
successful subscription model
Content • Original production: None• Movies: Movies 6+ months and
older, library and current movies• TV: None specific to France or
Belgium; offer selective US TV series
• Other content: movies reviews, news summaries, not much sports
• Localization: • Subtitling in French is
essential• Regulatory compliance
• Appetite for original content is mostly for local TV serials• High demand for international (especially American)
movies. Movies that are out of theatre release window have limited availability, through DVDs, and PPV/DTO
• OTT TV series / episodes demand is mostly to catch-up missed current TV episodes. This content is expensive and is available through catch-up TV services. Therefore not sufficiently worthwhile to offer Germany-specific TV series.
• Paid TV incumbents (especially satellite) have significant advantage in sports; also live Sports content is expensive
French OTT market is crowded, dominated by incumbent TV providers (including French TV), deploying catch-up TV
No successful subscription model, for an in-depth, extensive international content library; Netflix has market entry plans
Viability of ad- supported model: French ad spend is largely captured by TV incumbents offering catch-up TV, may be hard to get sufficient ad volume to support a successful business model
A differentiation could be a breadth/depth of classic movies provided by Sony library
Consumers are accustomed to good quality /in-depth local OTT content – e.g. Orange
Hence less appetitive for Subscription
Increasing price sensitivity
Local quota regulations unclear for OTT
Key Learnings for Sony Crackle
• Dailymotion: Free content, limited movies, focus on UGC videos
• PPV for movies is typically € 2-4 per view• Subscription trial pricing unclear
• 15-24 segment active online video consumers; ~ 33% view Catch Up TV on multiple devices
• DM: Targeted to 18-34, with mature content; 32nd most visited, 93M UVs over 6 months
• TV / IPTV players’ online sites: Orange, SFR• TV Broadcasters: (Free –TF1, France TV, A2,
Pay TV: Canal+)• Online OTT service provider: Dailymotion
• Mostly Ad supported, free content• Catch Up TV very popular, ad-supported • Limited subscription trials / PPV: Canal+, TF1
• Catch UP TV displays mostly local content; usually international rights are not included
• Dailymotion: Content by “channels” e.g. Sports , News; UGC, clips, trailers, some premium
France/Belgium Opportunity(1) Ad supported (2) international localized movies
In spite of crowded competitive environment, Crackle France could benefit from the relative current gap in US movies (current and classic) and build an identity around the provision of this type of programming; some original English versions subtitled in French would be acceptable
Possibility of segmenting offer to higher earning demographics and target ad avails accordingly Strong interest on the part of Orange France Telecom (France) and of Belgacom (Belgium) in striking
partnership arrangements with new OTTs should be explored, as well as a possible alliance with Dailymotion to effectively compete against the planned introduction of Netflix to the French Market
Russia Most of the video content is available free, and a high percentage is legal. While this is an issue for paid models, it poses least threat to Crackle’s ad supported model, with content past most of paid windows
Sony operations are relatively new, and not fully established and mature
India Capitalize on English speaking audience segment and appetite for American movies and TV shows presented in their original language
Also capitalize on the presence of a Sony hub and of the popularity of the Sony networks to source content from these
Possibility of sourcing inexpensive local content (Bollywood) for local distribution
China Need to secure license prior to operating creates additional burden and possible delay in deployment Possibility of aligning with the right local partner to get immediate market traction Censorship requires review and approval of each title; may increase timing for content publishing on the
portal, lower refresh rates and alter contents Difficult to “remove money”
Italy Crackle Italy could capitalize on the Italian public’s taste for international movies with a strong US movie identity (subtitled or dubbed offering)
Special considerations by region/country for Wave 3
Objectives Identify which operational processes and associated resources and systems need to be country-local, versus regionalized
Cost Drivers
Local Processesand
Resources
Cost Drivers
Rationale• Local content ingested locally• Flexibility to license some content locally• Rev. share with local partners, if applicable• Hosting will be performed locally• In the beginning, outsource ad-sales or use
ad networks to get running start • Marketing campaigns need local know-how• Legal, programming etc. needs local teams
Rationale• U.S. content licensed centrally in deals
covering multiple countries• US content ingested in US• Common product development and
engineering can be performed centrally (e.g. by U.S. team); only incremental localization required (e.g. skins, language)
Grow to 66% of Hulu yearly visits by FY16 Grow to 705 titles by FY16 (235 SPE, 470 External); 10% price inflationAd load: 13 ads per hour. Viewing time per visit growing from 10 to 55 minutes Technical headcount doubles every 2 years (engineering, video production)CPM growing from $13 to $22 over 5 years Sales & Marketing doubles every 2 years
FY12 FY13 FY14 FY15 FY16Video ad revenues 8.0$ 27.0$ 64.4$ 139.8$ 303.4$ Other revenues 2.0$ 3.8$ 7.5$ 14.9$ 30.1$ Total Revenue 10.0$ 30.8$ 71.9$ 154.7$ 333.5$
Project Breakeven (17.1)$ (27.8)$ (24.4)$ 2.9$ 66.3$ Internal Cost of Capital 12%NPV (5‐Year) $31.9 ROI 46%Breakeven 3 years
Scope (e.g.process) M Misc. Notes and Reference:Content costs M Hulu monthly visits on 2/11: 143MComplexity (e.g. technology) L Netflix viewing time per visit on 1/11: 94 minExternal Dependencies L
M
Dependencies None
Key Revenue Assumptions Key Cost Assumptions
Project IDProject Name Sony Crackle Acceleration Project ‐ USA
Sweden has best BB penetration and quality in Nordics region; most providers offer unlimited Broadband, with no monthly caps; mature platform for OTT content providers
IPTV players e.g.Teliasonera , bundling OTT aggressively; rent~ 6000 movie titles / day
Consumers extensively use catch-up TV- mostly driven by Sports events
Home video rental market is fragmented. Teliasonera, Canal Digital etc. run small home video rental business, and OTT distribution competes with these
Potential opportunity to bundle local content from Teliasonera
Main competition will be existing TV companies bundling OTT as part of tripe/quad play offerings / catch-up TV
Voddler and other OTT player have small footprints
Growing Device use (SVTplay.se)
Key Learnings for Sony Crackle
• PPV: Typical price for new movie $ 5-7 / view• Monthly online subscription: ~$ 15/ month• Most TV providers and national TV bundle
online content with Triple pay (~$30/month)
• Video/Cable providers - Teliasonera, Comhem• Swedish national TV: Catch Up TV for 1 month• Emerging OTT video providers: Voddler, Canal
Digital, Letswatch.com
• Cable providers offer OTT subscription, PPV• Viasat is an on-demand OTT service• Voddler is ads based (like Hulu)• Canal like Netflix, Letswatch (like MTV online)
• Local content (in local language) ~ 25%• Global content in English; usually with subtitles• Deep breadth / depth – with all genres, due to
large local production from Swedish TV
• Significant online video viewing, largely for younger population, both males and females
• 25-44 segment more interested in international content, vs. 44+ interested in local content
Scandinavia Opportunity(1) Ad supported (2) Recent international movies and TV serials
with CC relevant for each country (3) On multiple devices (4) 24-44 segment
Consumers are accustomed to deep, good quality content, as it is extension of the linear TV offerings of established players
Players like BBC and Sky TV have deep libraries; leverage for quality OTT content
Between iPlayer / Sky UK, most TV content is online – so bar is really high for entry
Most non-ad OTT models are largely limited to mobile VIDE – E.G. Sky mobile @ 8 p/month on iPhone or 35p/month on iPad
Sony connected TVs, PSN have high penetration; recently Sony tablet launched; need to align Crackle with overall Sony UK strategy to avoid consumers’ confusion
Consumers are accustomed of using on-line video content without ads; indirectly paying for online content through TV license fees
Most catch up TV is for 2-3 weeks, subscription based providers (e.g. Netflix) or Amazon not available. Hence there is a gap for TV shows more than a month older
Key Learnings for Sony Crackle
• BBC iPlayer, Virgin media : Free for TV subscribers or ad suppported
• Sky UK: Free to Sky TV subscribers, $ 24+ for non-subscribers, PPV movie rental - $ 5.60
• Channels dedicated to different viewer’s needs e.g. Sky TV ‘s 3 movie / 4 for sports channels.
• Most players are for mass market; some satellite providers (SKY) are sports focused
• BBC iPlayer and Sky UK are market leaders in UK, Virgin Media is an aggressive new entrant
• Emergence of SkyGo – merging live sports with Sky Portal on variety of devices
• BBC iPlayer: Free for TV subscribers• Sky UK: Free for Sky UK TV subscribers,
subscription for Non-Sky consumers• Virgin Media free to its linear TV subscribers
• Extensive content as extension of Linear TV • E.g. iPlayer: 10 channels, programs from 12
other channels, 14 genres• Sky TV: 32 channels, including 3 for movies
UK Opportunity(1) Ad supported with Sony classic content of archived TV
episodes / movies (2) across all Sony devices (3) mass market segment
French OTT market is crowded, dominated by incumbent TV providers (including French TV), deploying catch-up TV
No successful subscription model, for an in-depth, extensive international content library; Netflix has plans to enter shortly
Viability of Ads supported model: French ad spend is largely captured by TV incumbents offering Catch Up TV. IPTV and DM is also competing; may be hard to get sufficient ads to support a successful business model, if not sufficient differentiation
A differentiation could be a breadth/depth of classic movies, which Sony Library has
Consumers are accustomed to good quality /indepth local OTT content – e.g. Orange
Hence less appetitive for Subscription
Increasing price sensitivity
AV Terminal Regime : local content regulation for TV; unclear for OTT
Key Learnings for Sony Crackle
• Dailymotion: Free content, limited movies, focus on UGC videos, to be quickly uploaded
• PPV for movies is typically € 2-4 per view• Subscription trial pricing unclear
• 15-24 segment active online video consumers; ~ 33% view Catch Up TV on multiple devices
• DM: Targeted to 18-34, with mature content; 32nd most visited, 93M UVs over 6 months
• TV / IPTV players’ online sites: Orange, SFR• TV Broadcasters: (Free – France TV, TF1 Paid
TV:, Canal+)• Online OTT provider: Dailymotion
• Mostly Ad supported, free content• Catch Up TV very poplular, ads-supported • Limited subscription trials / PPV: Canal+, TF1
• Catch UP TV has mostly local content; usually do not have online rights for international shows
• Dailymotion: Content by “channels” e.g. Sports , News; UGC, clips, trailers, some premium
France Opportunity(1) Hybrid – Ad supported with subscription for more premium content on devices (2) Premium, international localized movies
Italy does not have subscription or PPV OTT content providers; efforts to launch these services have not been successful
Italian customers’ buyer values (i.e. free content, long form, movies) plays well to Sony Crackle’s value proposition
Most of the OTT players are focused on mass market; 1-2 players do provide some focus on 30-40+ segment
None of the players are focused on young male, 18-34 segment; opportunity for Sony Crackle to establish a toe-hold in this segment
Key competition is from TV providers’ portal e.g. WIND, Alice, Terra – provide their linear TV content online; do not have a differentiated proposition like Sony Crackle
Key Learnings for Sony Crackle
• Largely ads supported, free content• PPV / VOD launched by some entrants, but
largely failed
• No direct competitors with scale and focus• Some ISP portals getting traction (e.g. Chili)• TV broadcasters entering into OTT content
• ISP content providers have advertising supported business models
• Broadcasters provide OTT free to subscribers
• Limited libraries, content is mostly short-form, complemented by with limited movie titles
Most Korean consumers have experienced paid-TV services; though price sensitive, they are also used to paying for online content through subscription services
Significant part of TV viewers (17%) regularly watch video using Internet
Consumers use diverse range of devices to watch video; while 99 % watch video on TV;
~ 43% also watch on the Smartphone
~ 25% also watch on Notebooks
~15% watch on navigation devices
~ 41% watch on PMP/MID/PDA
Depth and wide variety of Korean content, on different platforms is tablestakes; potential for subscription based services, for latest Western content dubbed in Korean
Difficult to compete with the three main broadcasters on Korean content only
Key Learnings for Sony Crackle
• conTing’s subscription service @ $13-15 / month for unlimited content download
• GOMTV’s $9/month service for one broadcaster contents, $20 for all three
• No target segmentation; mass market appeal • High price sensitivity – lower price points
exacerbated by P2P services, that provide pirated content for cents
• conTing: An online video service jointly by 3 broadcasters KBS, MBC, SBS
• Each has its own site for online content as well• Portals – GOM TV, Africa TV, DaEum TV
• conTing, GOMTV and other portals provide subscription based services for unlimited download and owning of content
• Many offer Korean video content, often pirated
• Extensive Korean content e.g. Korean / English subtitled movies, TV episodes, game shows.
• All content that is broadcasted is available on the OTT services; sufficient breadth / depth
South Korea Opportunity(1) Subscription (2) Premium, international localized movies and
TV episodes (3) On multiple devices (4) 24-44 segment
Content originally weighted to UGC. Now providers e.g. Youku have ~ 70% copyright content, ~ 20% UGC , ~10% original videos produced by the SP
3 Types of OTT providers – (1) Independent OTT Video SPs e.g. Youku, 56.com (2) Online Broadcasters usually state-owned e.g. China Network TV (3) niche integrated portals e.g. Sina.com, Tudou.com and (4) Download sites (Pirated/Legal content)
High regulations, particularly for foreign content; must be approved through Censor.
Extensive licensing: Separate licenses needed to TV, PC and Mobile distribution; foreign companies almost required to work with Chinese partners, mostly govt. owned
Price of local content very low; however due to monopoly, BW leasing cost are high
While emerging younger segment desires professional content; monetization uncertain
Key Learnings for Sony Crackle
• Most content is free; ad supported• Youku price point for subscription not available
but expected to be < $ 3 / month• Emerging subscription sites, price unlcear
• Most consumers have low propensity to pay for OTT; as regular TV costs 2-3 $/month
• Emerging, untapped 15-30 years segment• Movies, dramas and long TV episodes favored
• Youku, Todou, 56• Drive large online video use. Youku is #1 video
portal (~20% OTT video market),Todou ~ 16%
• Other competitors: government owned entities
• Youku is largely ad supported• Youku is also developing subscription-based
model with premium contents (e.g. Avator), music and educational contents
• Youku has extensive Chinese, Japanese and Korean content, TV episodes, original production with ~50,000 hours content library
• Moving from UGC to premium content
China Opportunity(1) Ad supported (2) Blend of localized /local movies, TV episodes
and sports (3) Partnership with independent, OTT Portal (4) On PCs (5) 24-44 segment
Low Broadband penetration and sub-standard speed / QOS likely to be reduced over 3 years; government’s policy to cover 70% of population at BB of 2 Mbps or above
Extensive 3.5/4G deployment plans between 2012-14; spectrum auction completed
None of the video entertainment players e.g. DtH (Tata Sky, Dish ), Cable (Hathway), IPTV (Airtel) or terrestrial broadcasters have established online video distribution
Low barriers to entry due to minimum regulation / enforcement , pirated video content abundantly available across different websites, and a heavily fragmented market
Sony networks have high visibility in India and SET in a well known, popular brand
Local content (Bollywood-created) sourcing costs are low for online distribution
Key Learnings for Sony Crackle
• No established players in the video distribution value chain have formal, establish offerings
• Most of the online content is free; some real-time content (e.g. IPL) is ad-supported
• English speakers concentrated in ~ 20 Metros – savvy and require globally sourced content
• Majority of other consumers require heavy local content
• YouTube is the market leader for online video• Fragmented market with niche sites (Rajshree
HindiTVshows, Indiatimes, Aajtak.com etc.)• Bharti Airtel’s online TV
• Most OTT video sites are ad-supported• Indications of some subscription based offers
e.g. sports IPL (Cricket), NBA, BPL (British)
• Extensive content, usually not categories by Genres, but by movies, TV serials, sports
• Extensive local content - ~ 70%+. Localized content is less due to English speaking segment
India Opportunity(1) Ad supported (2) Blend of localized /local movies, TV episodes
and sports (3) Superior, safe and secure user experience (4) On PCs (5) 24-44 segment
Broadband infrastructure quality / availability is inconsistent: High quality and penetration in Moscow and selected other large cities; sub-standard in regional cities with population of < 1 million people
Many regional cities have only ADSL low speed BB connections, and penetration could be < 25%
Mobile broadband access is inconsistent; high cost of access; mobile video content is not available at scale, or in depth
Any new entrant will face intense competition from local players with locally produced content
Market fragmentation; leakage of video content on different websites; pirated portals
Local business environment not always transparent
Key Learnings for Sony Crackle
• No successful subscription services• BitTorrent, RuTube, NOW, Zoomby, TVZavr
etc. are all ad-supported, free video content providers
• 45+ segment interested mostly in traditional local content, oriented towards drama/soaps
• BitTorrent largest player (~ 80% video market)• TV providers (e.g. BTTPK, NTV, One TV)• Content aggregators (e.g. Amedia, RWS)• Private channels (e.g. STS, Home Channel)
• Most OTT content is ad supported• P2P of video content sharing prevalent; most
content is first downloaded, than viewed later• PPV / Subscription models still not successful
• Extensive / in-depth local content; mostly Russian Soaps, Serials, Movies from government-entities and private companies
• Lack of localized content (translation issues)
Russia Opportunity(1) Ad supported (2) Localized movies, TV episodes and sports (3)
Leading OTT players in LatAm are backed by parent Telco companies with deep pockets. Also means that
High quality content, with high breadth / depth because of Telco ownership
Financial support: (Televista, Telefonica)
Consumers are very price sensitive , with low propensity to pay for Online content
Market leaders typically have one site, that spans across different countries in LatAm
Typical content includes Spanish movies, Spanish full seasons top-rated TV episodes, as well as archived past seasons
Industry leaders offer mobile products e.g. Es.Mas Mobile; Telenovalas Mobile
Low propensity to pay for subscription, PPV or DTO – hence ad supported model is attractive
Key Learnings for Sony Crackle
• Ads supported, free e.g. Tvolucion, Terra• Subscription limited to catch-up Es.Mas TV:
($149 / month, or $1090 per year MEX)• No established standalone subscription offer
• ~ 26M users / month for all domains of Es.Mas• ~ 15M vistors / month for Terra TV• All LatAm players focus on mass market • Consumers have high price sensitivity
• Es.Mas, Terra, Fox.Mundo• Leading LATAM TV providers’ catch-up TV • Some ad supported portals offering a variety
of video content; none subscription based
• Es.Mas has subscription based, catch-up TV• Tvolucion has Ad-supported, free content• Terra TV also provides ad-supported content• PPV, DTO models are not common
• Extensive Spanish content in a range of genres• Extensive long-format episodes e.g. 600K hrs
of soap, films (~ 700 titles), game shows etc.• Access to TV content OF Televista & Telefonica
LatAm Opportunity(1) Ad supported (2) Localized / dubbed Sony classic movies and TV shows (3) On PCs only (4) mass market with some additional
Spanish consumers have great interest in local content, even going back last 40-50 years. A lot of popular soaps, movies and dramas (e.g. Agela Negra, a 1 hour TV show, with 24 yearly episodes)
Low devices penetration. e.g. Hybrid STBs are minimal, connected TVs only recently launched, no Roku like successful service. Smartphones are not typically used for video watching, except some YouTube clips
Due to low availability of devices, the current portable video market is small; time-shifted/ place shifted viewing of TV content is small
Sports is becoming dominant, along with reality shows; accounting for a significant amount of OTT video content
Heavy market influence from large, well established leaders e.g. Telefonica; who set consumer viewing trends / expectations
Key Learnings for Sony Crackle
• Most OTT video is free, with some ad support (e.g. rtv.es was free , now ad support)
• Transactional services are DTO; e.g. Canal+• No established subscription based service
• Extensive local content: ~ 30% for movies, and ~ 50%+ for TV episodes, developed by a thriving local movie industry
• Extensive dubbed international content
• Price points not established for DTO/PPV; AS significant amount of content leaked through piracy, and commonly available on local sites
• Subscription services not available
• Propensity to pay for online content is very low• Pirated content: expectation of free OTT
video• <34 have more international/broader interests;
44+ more interested in older Spanish titles
• 3 TV Broadcasters – Tvespisona (etv.es), Telecino.es and Antenna3.com (Telefonica)
• Canal+ (with best digital player, available to its subscribers, for mobile devices)
Spain Opportunity(1) Ad supported (2) Localized Sonic classic movies and TV
shows (3) On PCs (4) 24-44 segment, more interested in international content with broader interests
• Netflix, Hulu / Hulu Plus, Amazon Instant Video• These three sites drive signifiant US online
premium video usage
Prevalent Business Models
Content Depth, Breadth, Availability
Main Offerings / price points
Consumer segment / other details
Subscription based premium content segment is heavily contested between Netflix, Amazon and Hulu Plus – with additional inroads by entrants like CinemaNow
High cost of content due to investments made by Netflix
Established players have a mass market approach – no specific focus on 18-34 segment
Sony Crackle should continue to strengthen existing brand positioning by
Increasing availability of movie titles from SPT catalog
Offering content for ethnic groups e.g. Hispanics, by leveraging its international content