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Page 54 of 137

• U.S. services were able to economically develop/acquire content such as Money Heist, Sacred Games, The Crown, Wandering Earth and other projects that appealed to U.S. and other viewers around the globe. • Local services have been able to strengthen their position in their markets by being more focused on localized content. • Indie filmmakers around the globe have been pressed into action creating new, more and better content for local, regional and international viewers. “International content distribution firms are becoming more aggressive in competing with the international streaming firms,” McLennan observed. “As they work to become the local service provider of choice for consumers, most aren’t making the strong financial commitment we see with Amazon, Netflix, Disney and others.” McLennan noted: • RTL Group, Europe’s largest commercial broadcaster will be investing $400M over the next three years on their content-wide service. • India’s Hotstar, Malaysia’s iFlix, Singapore Hooq and Chinese providers – iQiyi, Tencent, Youku – are ramping up to compete with Netflix for subscribers (note: Netflix nor Amazon have a presence in China). • ITV has set aside $33M for BritBox this year and $35M in 2020. • Moviestar in Spain, Viaplay in Scandinavia and Hooq in Southeast Asia are focusing on local-language content to win subscribers in their local areas. • Free-to-air firms like ITV, BBC, France’s TF1 and M6, Germany’s RTL and ProSiebenSat.1 are expanding their area OTT efforts to maintain market share. These efforts are important because as Kagan Research reported, the European SVOD market was $6B last year and will be worth $7B by 2022. In addition, SVOD subscribers will increase from 45M to 60M by 2022. According to Digital TV Research, the SVOD market will triple over the next four years to $15B by 2023. McLennan emphasized that all of the U.S.-based OTT services are intent on increasing their expansion in the various countries. “Take Netflix as the most obvious example,” he commented. “They have roughly 139M subscribers worldwide. Only 58M are in the U.S. They are very determined to increase their presence in all 190 of the countries they serve. No matter which country’s OTT market you look at, they are the 800 lb. gorilla in the room. “Country streaming services have to carefully develop local-language films and series that have strong regional appeal as well as pricing sensitivity,” he added. “And theoretically, they should be able to do it because it’s their home territory, their back-yard.” While the global VOD business is in its infancy, there will be ample opportunities for large entertainment firms as well as new entrants or organizations that expand from solely appointment TV to anywhere/anytime streaming firms that offer multiple new, select programming models to fit everyone. Over the next few years, the landscape will become very crowded as everyone focuses on leveraging their assets to provide consumers with the most compelling story. Netflix, Amazon, HBO, Hulu, AT&T’s TimesWarner, Disney, Comcast, Sky and every existing, new/converting service will make a full-court press to be one of the three to five $10/20 a month services consumers sign up for. Of course, few consumers will realize that suddenly they are no longer in content heaven where they can choose what, where and when they want their entertainment but in content hell where they have to struggle through multiple services and are suddenly back with a high monthly bill which was the reason, they cut the cord in the first place. As Chris Nielsen said while wading through the services, “What some folks call impossible, is just stuff they haven’t seen before.”

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