Netflix launches licensed video streaming service in Scandinavia
Netflix is an online video streaming channel for movies and TV series. Users of their service can watch content online for a monthly price, anywhere and anytime. The website has over 27 million subscribed users in the U.S., Canada, Latin America, the U.K. and Ireland. This week, Netflix reveiled plans to launch its service in Sweden, Norway and Finland by the end of 2012.
It’s not surprising that Netflix chooses Scandinavia for their next expansion; online media is popular in the Northern regions of Europe. According to a report released by The Swedish Record Industry Association, 64% of the Swedish music industry revenues came from digital sources in the first 6 months of 2012. This was good for a total of 446 million Swedish kronor (54.1 million Euros). Revenues from digital music streaming increased by almost 80%, whereas revenue from digital downloads dropped by 14%.
However, these statistics reflect digital music streaming trends, not including video streaming. Setting up successful video content platforms has proven rather difficult in Scandinavia. Although two Swedish firms, Voddler and Headweb, have tried to create a European equivalent to Netflix, this has not been a success. The main reason is the struggle of companies to sign distribution contracts with content providers. The costs of licensing content are high and have to be negotiated country by country, which makes it all the more complicated. This raises a high bar for new businesses entering the market. Nevertheless, Netflix signed contracts for distribution licenses with studios including Miramax, Sony Pictures and News Corp’s Twentieth Century Fox, which creates a strong marketing position for them.
Ingrid Alomonsson of MediaVision: "The extent to which Netflix will be able to convert illegal behavior depends on the size of its content library and the subscription cost," "We have seen that Spotify, which has signed distribution deals with both large and small record companies, has had an inhibitory effect on illegal downloading [in Sweden]."
Depending on the success of Netflix in Scandinavia, the service could expand to other European countries. This business model provides a way for the public to watch videos online in a way that benefits both consumers and the entertainment industry.
Read more on the topic of online content distribution on Future of Copyright:
Sources: The Wall Street Journal , Netflix.com
Written by: Nathalie Falot
Update: Today Strategy Analytics published their latest Global Recorded Music Forecast. They confirm the The Swedish Record Industry Associations findings on the popularity of online content streaming. According to the forecast, revenues from streaming music will grow with 40%, up to 1.1billion U.S. Dollars in 2012.
Ed Barton, Strategy Analytics' Director of Digital Media, explains: "Although downloads still account for nearly 80 per cent of online music revenues, this market is maturing and spending is flattening in all key territories. Streaming music services such as Spotify and Pandora will be the key growth drivers over the next five years as usage and spending grow rapidly"
Whether this development will influences online video streams, remains to be seen. The entire forecast can be found here
Comments(0)
Your comment