Telefonica is preparing to launch a European Netflix rival backed by big investments in original content. The rumor, as first reported by Spanish news outlet El Pais, might just encourage other media majors to put their streaming projects into top gear, as many have been reluctant to open the tap away from home soil.
The Spanish operator plans to expand its original content to the key markets of the UK and Germany through its new OTT plans, where it already operates through O2 UK and Telefonica Deutschland. The company’s original content is currently only available on its Movistar+ pay TV platform in Spain, not on its streaming services Movistar Fusion TV and Yomvi, which it inherited from its purchase of the Canal+ pay TV business in Spain.
Telefonica plans to spend in the region of $82 million on original content this year, according to El Pais – a drop in the ocean compared to Netflix and Amazon but it certainly shows its intended direction.
Citing anonymous sources close to the matter, El Pais notes that Telefonica plans to add an a la carte option, suggesting it could be more similar to Now TV and Sky Ticket rather than Netflix. It continues that the new service would be focused purely on Europe and not targeting any of Telefonica’s Latin American territories – where Movistar Play has been recently expanded. Although it suggests the service looks set to include content produced in its Latin American subsidiaries such as Peru.
While competition is certainly fierce, there are really only a handful of other companies which have the resources to build out OTT video offerings across Europe. Vivendi is the first name which jumps out, having talked up its continent-wide OTT ambitions for some time now, as well as a few German media groups and broadcasters such as RTL, part one of the world’s largest mass media companies Bertelsmann, and of course Amazon. Outside of this list we are struggling for possible contenders.
US firms such as CBS with its All Access streaming service are restricted from coming to Europe because of licensing regulations, having already shipped US content off to various providers across Europe. This omits most US players from entering the market, for now, but perhaps one wild card we might be inclined to put a bet on is US media conglomerate Viacom.
Viacom may be looking for pastures new after it was beaten to the hand of Scripps Networks Interactive by Discovery Communications in a $46 million deal earlier this month, and it must start searching elsewhere to move out of the 18 to 34 age bracket where the bulk of its appeal is stuck.
Viacom recently launched a new business arm dedicated to creating multi-platform video products, called the Global Product Development Group. The company is aiming to increase global engagement with its brands due to declining interest in the US in channels such as MTV. Its initial priority is to expand its suite of mobile apps, Play Plex, and says it is already in the process of transitioning Viacom’s website to a single web framework.
The Telefonica news comes just weeks after Sky CEO Jeremy Darroch confirmed the company will be launching a “simple and affordable” OTT service before the end of the year, in Spain. In addition, AMC Networks is reportedly in the final stages of rolling out an OTT service in Spain with 1,000 hours of VoD content and 17 TV channels, to be integrated into operator-owned platforms in the country.
Sky has already decided to go down the route of Now TV, which doesn’t directly compete with Netflix as they are two different beasts, while Amazon could certainly come up with a plot twist should it acquire some sports rights in Europe – amid recent rumors that it could be entering the bidding for Premier League soccer rights.
There have been no hints that Telefonica’s OTT plans for the UK and Germany will include live sports, with suggestions that it is honing in on original content for now, but it would be foolish to turn its nose up at the opportunity to bid for soccer rights outside of Spain in the future.
If Telefonica goes ahead with a European Netflix rival, it will be interesting to dig into the technology suppliers behind the service, given that its two streaming arms, Movistar and Yomvi, have been built by different OTT technology vendors.
A brief insight from our Rethink TV service reveals that Elemental supplies encoding for Movistar, while Ericsson’s Envivio is used at Yomvi, which is a favorite reference account for Nagra, as the supplier of both the distribution platform and content security – involving its MediaLive multiscreen system and MediaAccess content protection portfolio.
Meanwhile, Telefonica is also involved in a project to build its own set top middleware, based on the Frog Source software from French pay TV player Wyplay, which will presumably be deployed on some new Arris set tops, as the manufacturer secured a new five-year deal with Telefonica at IBC last year.
As Telefonica prepares to enter Germany and the UK, the two largest economies in Europe will be saying their goodbyes to the end of an era at the end of October, after Amazon announced this week it will be shutting down its Lovefilm DVD rental service, in the only two remaining countries where it was available. Lovefilm, which Amazon acquired in 2011, was pulled from Scandinavia back in 2013.