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First “consolidation” on the Polish VOD market

VOD-Discovery-Cyfrowy-Polsat

Cyfrowy Polsat and Discovery Communications Europe, the owner of TVN, have signed a joint-venture agreement to create a common VOD streaming platform. It is the first such aggregation of VOD content on a national scale made by competitive platforms.

Joint-venture of Cyfrowy Polsat and Discovery

Cyfrowy Polsat and Discovery Communications Europe and TVN in a joint communiqué informed about the conclusion of a joint-venture agreement concerning the creation of a new VOD streaming platform focused on the Polish content. Cyfrowy Polsat is the founder of the joint-venture, and after obtaining the approval of UOKiK Discovery will take over 50% of its shares. Both broadcasters will provide the joint entity with up to PLN 30 million of initial financing each. The partners announce that the company will be a “business-independent entity”. The announcement does not disclose the brand under which the platform will operate or its expected start.

Cyfrowy Polsat and Discovery VOD with Polish content

The joint service of TVN Discovery and Cyfrowy Polsat will host Polish productions – films, series, documentaries, entertainment programmes and sports broadcasts. The content will be provided by both broadcasters and external producers and distributors. In addition, the platform will also include own productions made by the established company. At the first stage of the service’s operation, the content available on the platform will be free of charge (AVOD model), which is likely to encourage users to use the platform and to explore its potential. Over time, the service will be simultaneously monetized through the introduction of a mainly subscription-based offer (SVOD), but also pay-per-view (TVOD).

Cyfrowy Polsat and Discovery admit that after the launch of the new VOD service, the existing proprietary platforms, i.e. Ipla and Player, will retain their separate activities. Suppliers point out that their future shape will be determined in the nearest future. This may mean that the scope of content available on both websites will be redefined or even limited to free content. It is also possible that in time Ipla and Player will be absorbed by the new platform, which will be justified in a situation of great success of the new project.

New leader on the Polish SVOD market?

The announced platform focused on the Polish content will be primarily complementary to the offer of international VOD services available on the Polish market. It is difficult to fully speak about direct competitiveness, mainly with respect to Netfliks, because the content available in it is foreign productions. All the more so as the VOD market is characterised by a tendency for users to rotate between individual VOD platforms and watch only selected and interesting content. VOD services do not bind users in the traditional way, as is the case with linear TV.

PMR believes that the new VOD service has a good chance of success on the Polish market, given the market position of both companies – Ipla and Player are among the leading SVOD services in Poland in terms of the number of real subscribers. Position of these platforms is also determined by their well-established brand and strong domestic content, as well as the growing number of premium productions, including those dedicated exclusively to VOD platforms. It is highly likely that the majority of these users will migrate towards an offer built around the new project. These opportunities would certainly be increased by the full inclusion of Ipla’s and Player’s offerings into the project. Will the merger of Polsat and TVN give them a leading position on the Polish SVOD market in terms of the number of users? This question can be answered by reviewing the data on the VOD market in Poland, including the number of real subscribers to particular SVOD services available in the PMR report: “Pay TV and VOD market in Poland. Market analysis and development forecasts for 2019-2024”.

In PMR’s opinion, the biggest competition for the announced platform is the HBO GO subscription service, which, apart from international productions, focuses on original Polish productions.  Direct competition is also seen in the announced Canal+ OTT service, which is to aggregate Polish and international content. On the other hand, HBO and Canal+ productions are currently available on the Ipla and Player platforms. The question arises whether this cooperation will be extended also to the joint project of Polsat and Discovery. This competition would then be less pronounced.

The VOD service of Cyfrowy Polsat and Discovery may be a real competition for international VOD services in the global dimension. Ultimately, the platform is to be addressed also to the international audience. In the announcement, the partners do not explain exactly what the international strategy of the new OTT service is to be based on. Discovery distributes its international channels on paid platforms in many countries around the world. These projects may be the basis for the expansion of the new service from the Polish region.

Adaptation to global trends

The partnership between Cyfrowy Polsat and Discovery is a business model taken over from the global market. Over the last few years, the process of aggregating VOD content has been taking place on the global market, thanks to which international services with a global reach have been created. Broadcasters also pool their resources to create complementary services of a local nature, directly focused on the specific needs of viewers.Discovery reports that it is already building similar projects in other markets. An example is the German market, where the company, in cooperation with ProSieben, one of the largest commercial TV stations in Germany, has launched the OTT service Joyn. The strong point of the content based on the platform is to be sports broadcasts. At the initial stage of development, the service will be free of charge. The subscription will be implemented later.

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