OTT video revenues comparable to conventional TV in 2017: CMR

Internet-based video services generated enough revenue in Canada in 2017 to rival the total revenues of private and CBC conventional television stations combined, according to the CRTC’s Communications Monitoring Report. Against the $6.9 billion in revenues the traditional broadcast television sector made in 2017, the $2.4 billion generated that year by over-the-top (OTT) video services represented approximately 35 per cent, the report said, close to the $2.6 billion generated by private and CBC conventional TV stations. Including audio services, the entire OTT segment brought in $2.7 billion in revenue, which is 16 per cent of total traditional broadcasting revenues -- private and CBC traditional, discretionary and on-demand services -- and the result of a growth rate of 28.9 per cent per year from 2013 to 2017. The private and CBC conventional TV segment “continue on a slow revenue decline,” with an average decrease of 5.4 per cent every year from 2013, the regulator said in the broadcasting portion of the CMR, released on Wednesday. It reported total broadcasting revenues were down 3.3 per cent to $17.3 billion between 2016 and 2017. In the latter year, traditional TV service subscribers were down 1.9 per cent to 10.7 million, broadcast distribution undertakings’ (BDUs) contributions to Canadian programming were down 3.7 per cent to $412 million -- with an average decrease of 4.4 per cent since 2013 -- and revenues were down 2.3 per cent to $8.5 billion. The total broadcasting revenues include private commercial and CBC conventional TV and radio, discretionary and on-demand television, including pay, pay-per-view, video-on-demand and specialty services, and BDUs such as cable, satellite and IPTV distributors. Those figures include advertising and subscription revenue. Internet-based services are not included in the overall revenue figure. Despite the meteoric rise of OTT services in the country, they generated “less than a sixth of the revenues of the traditional broadcasting services,” the report said, as BDU revenues in 2017 took nearly half of the $17.3-billion pie. BDUs were trailed by broadcast television services at $6.9 billion, or 40 per cent share, and radio stations at $1.8 billion or 11 per cent. The CMR reported CBC/Radio-Canada television revenues declined 20.4 per cent to $943.9 million compared to 2016, but the report noted that it’s the result of a change in the public broadcaster’s methodology to exclude digital revenues and government funds related to digital activity -- that and decrease in conventional TV ad revenue. Approximately half of the BDU contributions to Canadian programming went to the Canada Media Fund (CMF), at $206 million, followed by local expression at $149 million, or 36 per cent, and independent funds at $58 million -- 14 per cent. Total contributions to CanCon was $3.4 billion. BCE Inc. said in its submission to a panel studying the country’s telecommunication and broadcasting laws that OTT services should pay 20 per cent of their previous-year’s revenues to the CMF. Bell and Corus Entertainment Inc., the two largest broadcasters, made up 59 per cent of total discretionary service revenues. The report divides internet-based video services into three different business models: subscription-based video-on-demand (SVOD), advertising video-on-demand (AVOD) and transactional video-on-demand (TVOD), a service where the buyer pays for a specific content such as a movie or song. All three continued to ascend in the Canadian market. SVOD service revenues grew 26.4 per cent to $1.3 billion between 2016 and 2017, TVOD services were up 8.6 per cent to $451.2 million over the period, and AVOD platforms increased 21.1 per cent to $582.9 million, according to the report, citing estimates from Ovum. SVODs include Netflix Inc. and Amazon.com Inc. The former generated 2017 revenues in the country of $859.7 million, 64.6 per cent of the pie, while the latter made $116.2 million, claiming 8.7 per cent, again relying on statistics from Ovum. The rest of the field, which is not included in the data sheet, encompassed 26.7 per cent of the market with $355.2 million. The Wire Report previously reported on the rise of AVOD services as OTT services continued to make headway in the Canadian market. Since that story, BCE Inc. and Roku Inc. announced they would launch services on that model. The powerhouse in that segment is Alphabet Inc.’s YouTube, which constituted 25 per cent of the Canadian market share with 2017 revenues of $145.5 million. YouTube was followed by Facebook Inc. with 13.2 per cent share with $76.9 million, Facebook-owned Instagram with 5.2 per cent at $30.1 million and Twitter Inc. with 3.2 per cent at $18.8 million. The rest of the field generated $311.5 million. AVOD content on mobile carried the bulk of the revenues in Canada in 2017 with $214.9 million, compared to $155.1 million the previous year. Meanwhile, download-based audio services declined to $108.9 million in 2017 compared to $134.2 million, while streaming audio carried the load with $274.1 million in that latest year, compared to $169.9 million in 2016. The total OTT audio field generated $383 million in 2017. IPTV services, which those BDUs have been hoping would keep their subscribers inside the television ecosystem, saw revenues increase 10.3 per cent to $2 billion to 2017 from 2016, with an average growth rate of 20.8 per cent from 2013 to 2017. Examples of those services include Bell's Fibe, not Crave, and Telus Corp.'s Optik TV. In terms of content, historically, the most sought-after CMF-funded content has been drama, despite the kids content segment beating out those productions in export sales revenue for the first time recently. And when it comes to what kind of drama Canadians want, the eyeballs are on non-Canadian products. In 2017, 161.9 million average weekly hours were spent on non-Canadian drama and comedy broadcast by Canadian TV services, excluding Quebec French-language audiences. That’s compared to 37.7 million hours on Canadian drama and comedy. In the Quebec French-speaking market, 54.2 million of those hours were spent on non-Canadian drama and comedy, versus 20.4 million on the Canadian kind. — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

OTT video revenues comparable to conventional TV in 2017: CMR

News | February 27, 2019

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OTT video revenues comparable to conventional TV in 2017: CMR

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