Europe is an attractive zone

European Broadcasters are particularly exposed in the coming years. Europe is a prime target zone for global M&E businesses looking for subscribers and advertizing revenues due to its attractive population size and GDP per capita position relative to other markets. As a result, European Broadcasters and streamers face tough international competition and must innovate to survive.

Sports have created stronger competition for Broadcasters

Broadcasters already had competition for entertainment content from the Pay-TV and SVOD businesses. But when DAZN entered the market for major sports rights, followed by Amazon Prime, Apple and YouTube, the game really changed.

Of the Top 10 Sports Broadcasters globally, including household names like ESPN (Disney) and TNT Sports (Warner Brothers Discovery), 3 are pureplay streamers (DAZN, Prime, YouTube).  These streamers have invested in major European football rights like Serie A Italy and LaLiga Spain, plus NFL rights in the USA. Apple is currently no.19 on the list because it has so far only invested in Major League Baseball and Major League Soccer in the US. As prices rise for sports rights, Broadcasters are priced out but still retain rights and responsibilities for major entertainment and news broadcasts. This still requires a very large scale of distribution but reduces the revenues available to the Broadcasters, creating extra cost challenges. 

Technical Dynamics

Guaranteeing Viewer Satisfaction

The internet is a crowded place, with video, gaming, e-commerce, and websites. In this congested environment it is hard to guarantee a video will be delivered perfectly. Even the best OTT streamers do not have perfect broadcast-grade performance. Many news headlines have highlighted how difficult live streaming is, not just for video quality but also for App performance, including log-in, registration and payment services.

Research from Akamai and Sensum, measuring emotional response to video quality, has shown that high quality streams increase viewer engagement by almost 20%, while rebuffering causes a 16% increase in negative emotions. A highly significant 76% of research participants said they would stop using a service if rebuffering occurred several times.

To offset these business-critical risks, the best OTT streamers have invested heavily in their own infrastructure, with large internal development teams and significant resources to resolve issues. Netflix reports it has invested over $1bn since 2012 in its Openconnect CDN platform. Broadcasters transitioning to streaming at scale must also guarantee video delivery quality, or else the audience will disappear. To do this cost-effectively requires a different type of video delivery architecture and purchasing model, which pioneering companies like DAZN have recently proven.