Written by Sébastien Lachaussée
& Diane Picandet
According to the french law which have transposed Directive 2007/65/EC of 11 December 2007 called Audiovisual Media Services Directive (AVMSD), the “on-demand audiovisual media services” mean “an audiovisual media service provided by a media service provider for the displaying of programmes at the moment chosen by the user and at its invidual request on the basis of a catalogue of programmes selected by the media service provider”. This definition refers to all kind of video on demand and catch up-TV.
The AMS market
The last European Union report mentions that the part of AMS (video on demand and catch-up TV) was growing in such a way that a turnover of 2,2 milliards Euros could be reached in 2013. A growing success made by services which enable viewers to watch audiovisual content whitout time restrictions. In France, audiovisual medias services interest more and more people. Although it is still a very little part of the market (about 1%), the report conducted by Sylvie HUBAC on “the develloppement of video on demand services and their impact on creation” published in France last december reports that the turnover of pay-VOD in France is in progress and reaches 150 millions Euros in 2010.
The AMS may offer in future a lot of economic profits. Moreover, these services may be an efficient solution to the massive copyright infringements on the Internet. Yet, it is necessary to understand interests and issues of the AMS market. At new technologies time, members states of European Union warn on a need to get strong positions on the AMS market.
Currently, the market is divided between pay-VOD and catchup TV, the last appearing today to be the most consumer used solution for watching on-demand medias. The distribution channels of AMS are various : internet, IPTV, digital cable TV, satellite, digital terrestrial television, , mobil networks and they are accessible on TV set, computer or mobil. The video files are either uploading on computer or available on streaming.Those services can be free or not: retailling or renting, subscription, free access.
Video on demand is a service which enables to rent or purchase from an audiovisual content stock accessible from VOD platforms at anytime. Canalplay, M6VOD, TF1vision, Francetvod, Universciné… there would have about fifty video on demand providers in France according to the Hubac report.
Catchup TV is a service provided by broadcasters which enables to watch TV shows already broadcasted for several days (7 days in average). You can watch TV news, entertainement, reports, shows, series already broadcasted on TV channels. Catchup TV is funded by advertising. Most of french TV channels provide such service : France Télévisions with Pluzz.fr, M6 Replay, Canal + à la demande… Yet, you can find both VOD offer and catchup TV on the same web site broadcaster.
The AMS regulations
The AMS have been introduced in European Union by EU regulation 2007/65/EC of 11 december 2007 called “Audiovisual Media Services Directive “(AVMSD). This Regulation has set some rules to regulate on-demand media services compeling to promote access and production of european works by funding or by quota systems.
In France, ASM have been regulated by the media syndicates then the law of the 5th march 2009 which has transposed Regulation 2007/65/EC in french law.
Now, those services are regulated by the CSA (French TV regulation authority) and are submitted at same obligations than others communication services: dignity respect, pluralism, childhood and youth protection, national audiovisual production development, quality programmation, french language use… Nevertheless, advertising settlement for ASM is lighter than others communications services. Despite this regulations, the ASM regulation is so far unfinished.
Structural problems of the market
The AMS are a complex market where different actors and different interests interfere : producers and films distributors, broacasters, internet service providers, research centers, telecom operators, equipment manufacturers, audiovisual medias providers, etc…
Catch-up TV is meeting success. It is true that this service has several advantages.
First, the service is easy to set up by broadcasters in particular because rights cost are reduced by the broacasting of TV programms already produced, coproduced or purchased by broadcasters.Then, they offer large choice and easy consommation of audiovisual contents whitout counterpart for viewers which can watch freely TV news, series and other emissions already broadcasted. Yet, films are often not available because of the matter of royalties, unsupported by the sole advertising.
In comparison, VOD appears like a fragile economy. Too often, unattractive offers, inefficient advertising or interfaces, VOD seems to be unable to offer plenty return for the moment.
For example, video rental prices are evaluated currently between 0,99 and 4,99 euros and the VOD provider gets on the 90% share of the market (IPTV) only a mere 15% of taxe free benefit after deduction of distribution and rightholders shares. The provider profit is reduced by internet providers which get 30 to 50% of the price paid by the consumer. The right holders get 50% to 60% of the Netto revenues of the VOD provider.
In addition, VOD prices are lower than DVD prices and the fear of copyright infringment worries the right holders which are very often undecided to push the VOD develloppement. The DVD retailling of a recent film would be three times more profitable than VOD renting.
The VOD place in the french windowing regulation is also a issue because every actor defends its own “window”.
You’ve come into devil’s circle when you take into account the financial aid for film industry in France which justifies those exclusive windows and the limited capacities of VOD contribution. The consequence is a structural block. As example, in France, VOD subcription is only possible for films 36 month after their theater release.
Evolutions of the windowing are curbed by the limited capacities for VOD to sustain the funding of films… And the VOD capacity to sustain cinema is blocked by the corset of the windowing. Though, getting strong positions on the ASM market is currently the priority.
Indeed, competition is international, the equipment manufacturers (Apple with Itunes/ Ipod/Ipad/Apple TV, Windows Media Player for Windows, Sony), Google with Google TV and foreign VOD platforms (Netflix) which offers VOD subcription plan to get into the european market soon.