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State Of Taiwan Online Video Subscriptions

Online Video Bolstering Consumer Home Video Spend, Spearheaded By Subscription Streaming

Can ComScore Break Nielsen's Near-Monopoly On Ratings?

Most TV Everywhere Viewing Is Live TV In The Home

Public Companies Going Private

Technology, Media & Telecommunications
State Of Taiwan Online Video Subscriptions

Highlights

The following post comes from Kagan, a research group within S&P Global Market Intelligence.

To learn more about our TMT (Technology, Media & Telecommunications) products and/or research, please request a demo.

Apr. 16 2018 — Subscription video on demand has struggled to gain ground in Taiwan due to the prevalence of free content in the form of value-added video options utilized by telcos in an extremely saturated and competitive mobile market, legitimate ad-supported video platforms, and pirated content.

Kagan, a media research group within S&P Global Market Intelligence, estimates that mobile penetration rates reached 124% in 2017 and are projected to climb to 140% by 2022. The major mobile players in Taiwan (Chunghwa Telecom, Taiwan Mobile Co. Ltd., and FarEastOne Communications) each offer forms of over-the-top video. Taiwan is also characterized by high rates of video piracy. In June 2017, an iQIYI Inc. executive claimed that levels of piracy in Taiwan exceeded those in China. He said Taiwanese regulators have not done enough to combat piracy and shore up the legal video market.

Taiwan mobile, broadband and multichannel penetration

For those SVOD players operating in the market, we have identified iQIYI, Catchplay On Demand, and Netflix Inc. as having made the most progress.

IQIYI is China's most popular SVOD service in terms of estimated paid subscribers. In March 2016, the service expanded to Taiwan in order to monetize its content in the second largest Chinese-speaking market in the world. The service operates both ad-supported and subscription revenue models in the country. Currently, iQIYI is a subsidiary of Baidu Inc., but the streaming service and its parent have recently announced plans to list iQIYI service on the Nasdaq Stock Market, having submitted a draft prospectus to the SEC for an IPO. Baidu plans to remain the majority shareholder, but listing the company would provide an influx of capital that would provide additional resources for acquiring and producing content in the extremely competitive Chinese OTT market.

Launched in China through a partnership with local content distributor OTT Entertainment Ltd., iQIYI has repeatedly applied to establish a local subsidiary in the country, but policies regulating the type of investment coming into the country from mainland China are prohibitive. Regulators cite the need to protect their right to broadcast and promote their own cultural content, as well as China's insistence on barring Taiwanese OTT services from operating on the mainland as primary factors in the issue.

Catchplay Group's roots are in theatrical and DVD distribution in the Taiwan market. By branching into content production, investment, and aggregation, the group has built a sizable film library that it monetizes through various ventures. In March 2016, with Netflix having launched in the country only months prior, the group launched SVOD platform Catchplay On Demand. The group's existing film assets allowed the service to enter the market with an advantage in terms of diversity of content and new releases. The service provides Chinese and Asian-language films as well as Hollywood content from independent and major studios including Comcast Corp.'s NBCUniversal Media LLC, Time Warner Inc.'s Warner Bros., and Walt Disney Co. The service also monetizes its film catalog through a rental revenue model in Taiwan.

Netflix launched in Taiwan in January 2016 as part of its global expansion. The service has not been successful in partnering with major telcos in the area possibly due to incumbent telcos offering their own OTT packages. Whether by design or default, Netflix instead pursued partnerships with system-on-a-chip manufacturers in the country. In mid-2016, Netflix began partnering with these regional manufacturers as part of its Recommended TV program. Through the program, Netflix evaluates the quality of smart TV delivery of Netflix content, bestowing a Netflix Recommended TV designation to quality products.

Pricing

SVOD is very reasonably priced in Taiwan. All three services register less than 0.3% on our affordability index, which is based on gross national income purchasing power parity. The affordability of the dominant pay TV platform is 0.4%. Even Netflix, which has typically priced its service on a premium tier throughout Asia, is affordable in the market. Netflix's most expensive four-screen subscription also registers lower than Taiwan's dominant pay TV platform on the affordability index. To provide context, Netflix's two-screen plans register 0.31% and 0.19% on the affordability index in the U.K. and the U.S., respectively.

Select Taiwan SVOD affordability


Technology, Media & Telecom
Online Video Bolstering Consumer Home Video Spend, Spearheaded By Subscription Streaming

Highlights

The following post comes from Kagan, a research group within S&P Global Market Intelligence.

To learn more about our TMT (Technology, Media & Telecommunications) products and/or research, please request a demo.

Sep. 20 2018 — Spending on home entertainment is rising toward levels not seen since 2004, when consumers spent $24.37 billion building massive home-video libraries of DVDs and VHS cassettes. Since then, the optical-disc market saw more than a decade of significant declines as consumers shifted to digital entertainment. By 2012, total spending on home entertainment was down to $20.13 billion, with $4.13 billion coming from online video while DVDs and Blu-ray discs accounted for $12.88 billion and multichannel PPV/VOD contributed the remaining $3.13 billion.

Fast forward to 2017 and the mix of consumer spending has changed significantly. Consumers spent a total of $22.62 billion on home entertainment from multichannel, online and disc retail/rental sources. Online spending accounted for $13.00 billion of that total while spending on discs dropped to $6.84 billion and multichannel PPV/VOD shrank to $2.79 billion.

While the data might seem like good news for traditional providers of home entertainment, a key component of the growth in digital spending is the rise of subscription video on demand. The majority of online spending is going to over-the-top services like Netflix, Hulu and Amazon Prime, which increasingly have focused on creating original programming (mainly episodic TV) rather than licensing content from Hollywood studios.

Removing subscription streaming from the consumer spending pool paints a less favorable picture for traditional content providers. In 2012, consumers spent just $1.43 billion on non-subscription online video purchase/rental, and a total of $17.44 billion excluding the SVOD component. By 2017, while consumer spending on online video overall had risen to $13.00 billion, some $10.47 of that came from streaming subscriptions versus $2.53 billion from online video purchase/rental, and total home-entertainment spending was just $12.16 billion excluding SVOD.

Spending on sell-through home video peaked in 2006 when consumers shelled out $16.53 billion for DVDs and VHS cassettes. Since then spending has declined by hundreds of millions (sometimes billions) each year. In 2017, consumers spent $6.50 billion on DVD and Blu-ray sell-through and electronic sell-through. This seems to suggest that people are becoming less and less interested in adding to their home-video libraries and are turning to the more affordable streaming options. The story is similar for the home-video rental segment, which saw consumer spending peak in 2001 at nearly $8.45 billion before dropping to $2.87 billion by the end of 2017.

This has to be a somewhat unsettling trend for the major film studios, and is likely a key factor in shifting their strategy to focus on major franchise films and low-cost genre fare. The former tend to have broad worldwide appeal and can still move enough video units to help offset their high production and distribution costs. The low-cost genre fare, on the other hand, may be more risky and not sell as well internationally, but has a fair chance to break even. If the latter films lose money, the successful franchise films typically cover the losses.

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US Online Video Outlook To Eclipse $15B In 2018

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DVD, Blu-ray Spending Down $1B-plus For 11th Year In A Row

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Technology, Media & Telecom
Can ComScore Break Nielsen's Near-Monopoly On Ratings?

Highlights

The following post comes from Kagan, a research group within S&P Global Market Intelligence.

To learn more about our TMT (Technology, Media & Telecommunications) products and/or research, please request a demo.

Sep. 17 2018 — Advertising agencies are becoming increasingly frustrated with the inability of Nielsen Holdings PLC's Nielsen Media Research to convince the major media companies to embrace its new cross-platform measurement system, called Total Audience Measurement. This creates a huge opportunity for comScore Inc., formerly Rentrak.

ComScore is trying to reinvent itself following its delisting in 2017 — it was relisted June 1 — following an accounting scandal. The company's stock has fallen from $65 per share intraday on Aug. 17, 2015, to close at just $18.06 per share on Sept. 6. It currently has a total enterprise value of less than $1.2 billion, paltry in comparison to Nielsen Holdings' $12.9 billion.

In April, comScore named Bryan Wiener, previously executive chairman of Dentsu's digital media agency 360i LLC, as its CEO. On Sept. 5, the company announced that it hired Sarah Hofstetter to serve as president and head up commercial strategy, including sales and marketing.

Wiener and Hofstetter have worked together for two decades, most recently at 360i, where Hofstetter was CEO and chairwoman. The two executives' deep ties to the advertising community may be just what is needed to bring a competing cross-platform measurement system to the broadcast and cable network industries.

Cable network ad revenue grew for decades before stumbling, albeit modestly, during the last recession. More recently, despite a booming economy the cable network ad industry has faltered, in part due to cord cutting and cord shaving but also because current ratings do not include all of online viewing and out-of-home viewing.

Currently, the ratings only include online viewing within a three-day period, which includes the exact same commercial load as linear. Many media companies do not believe that online viewers will tolerate the huge ad load that exists on linear TV and do not include the same commercial pods that appear on linear TV when serving up the shows online.

Although negotiations between Nielsen Media Research and the major media companies have been going on for some time, many in the industry are tired of the delays in adopting a new system and are looking at alternate ways to measure viewing.

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Technology, Media & Telecom
Most TV Everywhere Viewing Is Live TV In The Home

Highlights

The following post comes from Kagan, a research group within S&P Global Market Intelligence. To learn more about our TMT (Technology, Media & Telecommunications) products and/or research, please request a demo.

Summary: subscribers to telco operators were more likely to indicate they streamed TV Everywhere content compared to cable and DBS subscribers.

Sep. 17 2018 — Streaming live TV Everywhere to a mobile device inside the home is the TV Everywhere activity most often performed at 52% of multichannel TV respondents, according to data from Kagan’s MediaCensus online consumer survey.

While 58% of respondents surveyed in multichannel homes viewed TV Everywhere in the last three months, just 46% did so out of their home. Click here for the full Kagan report.

Viewing live TV inside the home was not only the TV Everywhere activity performed by the most respondents; it was also the most frequently performed.

Subscribers to telco operators were more likely to indicate they streamed TV Everywhere content compared to cable and DBS subscribers. Subscribers to some operators are more likely to stream TV Everywhere content, with AT&T U-verse (64%) being the highest and WOW! (42%) the lowest among operator subscribers surveyed.

Younger subscribers, especially Millennials, were more likely to stream TV Everywhere content compared to older subscribers.

For more information about the terms of access to the raw data underlying this survey, please contact support@snl.com.

Data presented in this article is from the MediaCensus survey conducted in February 2018. The online survey included 20,035 U.S. internet adults matched by age and gender to the U.S. Census, with additional respondents subscribing to the top multichannel video operators in the U.S. The survey results have a margin of error of +/-0.7 ppts at the 95% confidence level. Generational segments are as follows: Gen Z: 18-20, Millennials: 21-37, Gen X: 38-52, Boomers/Seniors: 53+.

Consumer Insights is a regular feature from Kagan, a group within S&P Global Market Intelligence's TMT offering, providing exclusive research and commentary.

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Capital Markets
Public Companies Going Private

Sep. 14 2018 — The recent tweet from Elon Musk has understandably made big news, but it is worth pointing out that the appetite for taking public companies private has been a key area of activity this year. S&P Global Market Intelligence’s data shows that 2018YTD is already at 39% of 2017 numbers, standing at €17.8bn of deal value across 32 completed deals, globally. Going-private closed deal count is at a healthy 49% compared to full 2017 numbers.

In terms of most popular sectors for going-private deals, since 2013 - Information Technology has been leading the pack with €108.9bn of aggregate deal value recorded across 104 deals, while Consumer Discretionary* is trending as a distant second with €49.7bn of total deal value.

The top target location for going private deals is the US, and interestingly – China comes in at second place, with UK following. The three regions have seen total deal size of €218.8 during the period of 2013 through 2018YTD. The popularity of these locations is further supported by the fact that after going private, average target’s EBITDA values have increased compared to when those companies were public. The US-based going private targets grew their EBITDA by average of 56% since leaving the public market, while Chinese and the UK-located companies grew EBITDA by 10% and 38%, respectively. Overall, the going private moves proved to be successful for ex-public companies globally within the 2013 – 2018YTD deals’ time frame, where their average Net Income values grew by 58% while EBITDA values grew by a smaller but yet attractive 29%.

In terms of the deal pipeline, 18 going-private deals were announced globally since 1st January 2018 and would add €25.8bn of aggregate deal value to already closed €17.8bn.

The following was originally published on Angel News on August 16, 2018: Public companies going private, S&P Global comment

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