The audiovisual market in the EU is evolving as viewing habits change, especially among younger generations. While revenues for paid audiovisual services are growing, free online viewing is increasing and challenging television. Advertising spending is shifting online to follow audiences. Online video sharing platforms like YouTube and Facebook now capture over half of global online video advertising revenues, competing with television for ad budgets. Younger viewers in particular are consuming more content online and on mobile devices. This has implications for traditional audiovisual players and their ability to reach audiences and adapt to the new landscape. A few major online video platforms have become a "discovery oligopoly" for audiovisual content online, potentially influencing how people access information, entertainment and education in the future.

1. The audiovisual market in the EU &
Video-sharing platforms
Christian Grece
Analyst, Department for Information on Markets and Financing
Strasbourg, 12 December 2016

2. 1. The EU audiovisual services market – Overview
2. Wind of change
- Evolution of Media Advertising spending
- Evolution of TV viewing habits
- Evolution of AV content preferences
3. Online video sharing platforms: A discovery oligopoly?
4. Outlook – « to inform, to educate and to entertain » in
the online space

3. The EU AV services market 2011 – 2015
Revenues in EUR million
2011
EUR 89.6 billion
2015
EUR 99.3 billion
Pay On-demand
CAGR +45,1%
Source: European Audiovisual Observatory, Ampere Analysis, Warc
24,791 25,888
28,865
30,777
4,798
5,031
30,470
34,620
666
2,957
Pay TV
CAGR +3,2%
Advertising Radio
CAGR +1,2%
Advertising TV
CAGR +1,6%
Public funding
CAGR +1,1%
Subscription &
on-demand
2/5 AV market
=
66% of growth
CAGR 2,6%
AD & Public
3/5 AV market
=
33% of growth
Source: ZenithOptimedia Media Consumption Forecasts 2015

4. Dynamics on the EU AV market
• AV service market still resilient when revenues are considered
– Main growth drivers of the market are PAID services, especially subscription-based
– FREE AV services experience moderate growth and are challenged by online media
consumption
• However, something is missing in the picture: Online media ad spend and « free »
online media consumption
– Younger generations consume AV content increasingly online and on mobile devices
– As media consumption shifts, so does ad spending
– Targeting and « big data » renders online advertising more attractive as audiences
become more fragmented
– Online video sharing platforms are competing for ad budgets, increasingly with TV
– Kids, Teens and Young adults are changing the paradigm for linear TV
Where do these younger generations « inform, educate and entertain » themselves
with AV content?
- Brands and Advertisers wishing to reach this audience, invest in « influencer
marketing », mostly on YouTube and social networks, and online video ads, thus
challenging TV for reaching key audiences

5. Advertising spending shifts online…
Outdoor
Radio
Television
Internet
Newspapers
Magazines
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
18%
7%
16%
€84,6 billion
€98,6 billion
34%
31%
1%
32%
37%
5% 5%
6% 6%
Ad spend all media EU 28, in EUR billion and % of total, 2000-2015
Source: Warc

6. …as media is increasingly consumed online, advertisers are following
the eyeballs
Consumers continue to shift their attention online, total media consumption
is increasing
TV 36,5%
Internet 21,1%
2010 2011 2012 2013 2014 2015 2016 2017
Cinema Outdoor Radio TV Internet Newspapers Magazines
TV 39,3%
Internet 12,6%
Source: ZenithOptimedia Media Consumption Forecasts 2015
560 min/day
595 min/day
Average media consumption per user Western Europe, minutes per day all media, 2010 - 2017

7. Video sharing platforms are competing for advertising budgets with TV…
28.9 30.8
19.0
33.4
2011 2012 2013 2014 2015
Source: Warc
EU 28 TV and Online advertising expenses, in EUR billion, 2011-2015
Online advertising has overtaken TV
advertising in 2015

8. …but online video advertising is still small compared to TV
2,1 billion
+37% YtY
28,3 billion
+6% YtY
Online video advertising TV advertising
Source: IHS/IAB Europe Adex Benchmark 2015, Warc
EU 19 Online video advertising & TV advertising expenses and growth in 2015, EUR billion and %

9. 57% of online video ad revenues in Europe will go to Google & Facebook in
2018, leaving EU broadcasters with under 20% - an online duopoly
Source: IHS Markit

10. Which is nothing new in the OTT space – Domination of each AV segment by
few players
FB & YouTube capture already
50% of global ad video
revenues

11. Impact on TV viewing and online video viewing habits?

12. TV viewing - Status Quo or Transition?
3:38
3:47 3:50
3:56 3:55 3:53
2:16 2:20 2:19 2:23 2:19
1:56
0:00
0:28
0:57
1:26
1:55
2:24
2:52
3:21
3:50
4:19
2009 2010 2011 2012 2013 2014
Total population Young adults
EU Average TV viewing times, total and young population in hours per day, 2009-2014
Source: OBS on EurodataTV Worldwide data

13. Young generations will bring the change in paradigm
Viewing times in the Nordics and the UK are an illustrations of the changes to
come
The drop in daily TV viewing time is accelerating for younger viewers
Live TV viewing only 1/3 of
time spent watching AV
content in the UK

14. Online TV viewing is increasing in EU-5…

15. …and 53% of online video is watched on mobile devices in W. Europe
Source: Ooyala Global Video Index Q3 2016

16. What type of entertainment content will be valued by consumers?
• Viewers are increasingly favoring pro-amateur and amateur content, especially the type
found on video sharing platforms
• Consumers will value premium high-end content (e.g. Game of Thrones) or long tail and
niche content, such as the content offered by MCNs on YouTube or specialised video sites
(eSports, gaming, music, special interests…)
• Traditional broadcaster midtier content will lose value in the eyes of consumers, putting
an increased pressure on broadcasters to adapt to new content desires of younger
audiences (approach of lowest common denominator not functioning with fragmented audiences)

17. Consequences for the traditional AV sector?
• TV screen has become a screen among other for the consumption of AV
content
TV content is consumed on all screens - viewers do not make a real
distinction (long form content still consumed on connected TVs)
TV channels have to be present and distribute their content through all
screens to remain relevant – know-how? R&D investments?
• In the mobile space, a handful of players command the attention of
viewers
• Difficulties for AV players and advertisers to adapt to the mobile
ecosystem, to reach and engage their audiences
– Dependency on platforms and social networks to reach their consumers
– YouTube, Facebook, Dailymotion, Snapchat and specialised video sharing platforms such
as Twitch, Vevo capture the attention of online video viewers
 Discovery oligopoly for AV content in the online space?

18. Online video sharing platforms: A discovery oligopoly?
Source: Activate/WSJ Live

19. Where will users get their information (and education) in the future?
The example of the US gives us some ideas
“Television news is also changing in a wider sense as people increasingly move away from these traditional formats and
incorporate new kinds of online video news in their media repertoires.
If television news providers do not adapt to these changes, they risk irrelevance.”
‘What is Happening to TV News?’ – Reuters Institute for the Study of Journalism

20. Online video sharing platforms: The future destination for information,
education and entertainement?
- AV content for entertainment purposes increasingly consumed online
- However, on video sharing platforms, short form content is consumed the most (especially music clips,
humour, DIY videos, gaming videos) – long form content in the OTT space is consumed on SVOD and
TVOD services
- New forms of entertainement, such as eSports and live streaming on Facebook and YouTube, will further
challenge traditional AV players
- Broadcasters have until now reluctantly made available short extracts of their content on video sharing
platforms but the need to reach younger audiences will bring change
- But what will be the future for news and information through AV content?
- Social networks and video sharing platforms are playing an ever increasing role in the way people inform
and educate themselves
- No editorial control on video sharing platforms, Danger of « fake news » and impact on political
campaigns?
- Discovery oligopoly: a few players act as intermediaries between audiences and publishers, controlling
the access to information
 Future of news, education and access to information?

21. Christian.Grece@coe.int