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Broadcast networks' niche SVOD reinforces pay TV carriage and opens new avenues

European free-to-air broadcasters are increasingly vying for global subscription video-on-demand (SVOD) market share. United Kingdom commercial network ITV Plc as well as the British Broadcasting Corp. are accelerating international distribution initiatives beyond linear, using VOD as a platform, and in some instances to drive interest in linear distribution. Such initiatives target more niche market segments compared to a more generalist global approach from major players Netflix Inc. and Inc., and at the same time capitalize on library content as well as, in ITV's case, a multitude of recent prodco investments.

ITV-funded Curio, a high-end documentaries SVOD service, is to launch on pay TV platforms in Sweden and Norway. It is a supplementary offering to existing British-content SVOD service Cirkus, in which ITV is a majority owner and content provider along with other Cirkus backers All3Media Ltd. unit All3Media International, BBC Worldwide Ltd., Endemol and Global Entertainment. Cirkus is also due to launch in Germany on Amazon.

ITV's global production arm, ITV Studios, also unveiled a new partnership with Indian VOD service Hungama Play, making its content available to subscribers across the Indian subcontinent. It marks a fruitful period for ITV Studios — full-year 2016 figures published March 1 revealed a 13% year-on-year revenue increase to £1.4 million.

In March, ITV and BBC Worldwide launched Britbox, a best-of-British SVOD service in the U.S. as part of both parties' international pay and distribution strategies. ITV and BBC each have a 40.5% voting share, while U.S. cable channel AMC Networks Inc. has a 19% nonvoting minority stake.

The foreign-language drama OTT service Walter Presents will also launch in the U.S. as an SVOD service in March — the Channel Four Television Corp. and Global Series Network partnership originally ran as a free AVOD offer in the U.K. In 2015 Irish state broadcaster RTE also launched a subscription app aimed at Irish expatriates, RTE Player International.

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OTT services such as Netflix and Amazon have set a precedent. Growth on Netflix and Amazon is increasingly aided by considerable investment in original and third-party content as well as regional programming. Netflix's International Streaming arm was the fastest growing segment last year after launching in over 130 new countries in January 2016. International streaming revenues grew 64% ($1.2 million) year on year in 2016, while subscribers grew 48% year on year to 44.4 million. Amazon Prime Video mimicked Netflix's sudden global expansion, to more than 200 countries, while placing an emphasis on localized accessibility across its territories — many of Amazon's English titles can now be watched with French, Italian, Portuguese and Spanish subtitled and dubbed versions.

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Tapping pay TV partnerships

Pay TV operators have in recent years adapted to the growth of stand-alone SVOD services in Europe, in particular those with their own prodcos, TV networks, and in many instances holding long-held key content distribution deals with the majors. PT MEO in Portugal, Swisscom AG in Switzerland, Canal+ in France, Telefónica SA's Canal+ in Spain, Liberty Global plc, Sky Europe and Modern Times Group MTG AB's Viasat all operate their own OTT services. Having established its SVOD offering in its pay TV markets, Sky plc is taking a wider global distribution strategy.

Accordingly, terrestrial broadcasters are stretching their SVOD ambitions by leveraging their extensive libraries of new and archived content to seal SVOD carriage deals with pay TV and digital platforms around the globe. While the likes of Netflix and Amazon have had to invest heavily to develop their previously limited content libraries, SVOD offers broadcasters high margins because they already produce and own much of their programming, and sit on a vast library of content.


A significant English-speaking population in the Nordics, which also shares cultural reference points with the U.K., provides promise in mature and hyper-competitive markets. Kagan estimates place Netflix as the dominant SVOD service in all four Nordic countries, with 3.4 million paid subscribers across Sweden, Denmark, Norway and Finland. High pay TV adoption in Denmark, Norway and Sweden — at 101.3%, 97.2% and 123.2%, in 2016 respectively — helps to explain ITV's decision to launch Curio and Cirkus on Sweden's largest multiple system operator Com Hem. Curio will also be available on Get AS, Norway's second largest cable operator with 432,000 multichannel video subscribers.

Furthermore, broadcasters need a strong local operator to establish swift SVOD reach and prominence in new territories. It's a strategy that Netflix used in Europe. Pay TV operators in turn benefit from a strong slate of curated SVOD programming, reinforcing their positions as more comprehensive content aggregators.

On ITV Studios' content partnership with Cirkus, the service's co-founder, Mark Bradford, said: "Incumbent pay TV platform operators everywhere are looking to ... address the imbalance between their linear and on-demand offerings, bringing them more in line with increased viewer demand for on-demand access."

Consequently, ITV and other broadcasters will partner with local pay TV operators for greater coverage, especially in territories where their brands are not universally recognized. Furthermore, while SVOD deals with mobile operators are important for broadcasters, partnerships with pay TV operators are also vital because much of their long-form content makes for better viewing on bigger screens.


In March 2017, BBC Worldwide launched the BBC Player in Malaysia, partnering with Telekom Malaysia's HyppTV IPTV service for SVOD carriage. The BBC Player also launched a year earlier on Singapore operator StarHub Ltd.'s platform, with a complementary BBC First linear TV channel launch. The BBC Player sources content for its authenticated service from BBCWW brands CBeebies, BBC First, BBC Brit, BBC Lifestyle, BBC Earth and BBC World News. BBC Worldwide inked a strategic cooperation deal with Chinese online video platform Mango TV in October 2015. Mango TV is owned by Hunan, owner of China's second most popular TV channel in audience terms. The collaboration expanded in February 2016 specifically editorializing BBC documentary and preschool programming. The two entities are also considering collaboration on productions and formats that can cater to global, in particular Chinese, markets.

Broadcaster activity in the U.S.

The backing for thematic and genre-specific SVOD services help to carve a niche in a crowded marketplace. Curio features documentaries and Walter Presents is a foreign-language drama service. NBCUniversal Media LLC's global service Hayu features reality formats and Hopster, in which Sony Corp.'s Sony Pictures Television is a minority stakeholder, targets pre-school children.

The dominant SVOD players have cornered the mass market, and thematic offerings can be ideal for testing uncharted territories. Broadcasters can target dedicated fans of proprietary shows, a key objective of Britbox in the U.S. "BBC and ITV are the two most prolific content producers... in British television," said Ann Sarnoff, President of BBC Worldwide North America. "This will be a must-have service for lovers of British television."

Britbox, Curio and Cirkus are to compete directly with British content SVOD service Acorn TV in the U.S. Owned by RLJ Entertainment (RLJE), Acorn TV launched in 2011, also offers programs from Ireland, Canada, Australia and New Zealand and has experienced rapid subscriber growth to 430,000 paying subscribers as of year-end 2016.

RLJE is a global content distribution and licensing business that is seeing digital OTT channels Acorn TV and UMC (Urban Movie Channel, which targets African-American viewers) driving much of its growth areas in recent years. One of RLJE's key assets is ownership of 64% of Agatha Christie Ltd, which manages the media and literary rights to the late novelist's works. This gives Acorn TV content rights to key British dramas such as Poirot and Miss Marple. Furthermore, around a third of Acorn TV's content is original, while the chairmanship of Robert L. Johnson, founder of pay TV network Black Entertainment Television LLC, can leverage relationships with content providers in the African-American genre to grow UMC's current 30,000 subscriber base.

In addition to content ownership Acorn TV secured carriage on Amazon TV, Apple Inc.'s Apple TV and Alphabet Inc.'s Android and Samsung Electronics Co. Ltd. mobile platforms in the last year. This platform expansion helped take Acorn TV's subscriber base from a little more than 100,000 in 2015 to over 400,000 in 2016. Prior to this, it was only available on Roku but now around a third of its subscribers access the service via Amazon TV.

RLJE has also attracted investment from AMC Networks Inc., as the U.S. pay TV market continues to combat cord-cutting. AMC invested $65 million in the form of loans to RLJE last October, and has the option to buy 50.1% of the company in the future. The partnership offers potential cross-promotion, content development and content distribution opportunities — a huge asset to both businesses, given their complementary programming and the shared audiences they serve.

Terrestrial broadcasters seeking a niche in thematic SVOD services face stiff competition from established standalone services (Netflix, et al.), new developing entrants to the market like Acorn TV, and pay TV operators staking their claim in a crowded market. Nevertheless, broadcasters pursuing global SVOD can rely on tailored content, broad platform reach, brand recognition (channel and content) in some instances as well as deep library archives to make an impact.

Global Multichannel is a service of Kagan, a group within S&P Global Market Intelligence's TMT offering.