Market Insight

C More, TV4 Group, Bonnier to launch a new online video service Filmnet in Sweden

September 19, 2012

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Bonnier-owned media company TV4 Group and pay-TV broadcaster C More are to launch a new online video subscription service, The service will initially be available from the end of September 2012 in a beta version for a special price of SEK49 (€5.70) per month. The regular price is set at SEK129 (15€) per month. Initially the service will be available on PC/Mac with iOS, Android phone and tablet versions launching later in the autumn.

The service will offer a wide range of Swedish and international films including content from all major Hollywood studios (Fox, MGM, Paramount, Disney, Universal, Sony and Warner Bros). In addition to the film catalogue, Filmnet will offer C More TV shows, which include series from HBO, Showtime, Universal, Turner, Warner, Starz and the BBC. Additional features of the service include social media integration and editorial recommendations, playlists and search functions.

New service comes as a strategic response from the local Scandinavian video provider to the Nordic launch preparations of American premium cable television network HBO and online video service provider Netflix. The move is a relatively safe one for C More and TV4 - the companies are attempting to extend their online services and utilise existing content catalogues to reach as many consumers as possible. For C More, Filmnet ultimately complements the company's multiscreen service, C More Play, available free for the company's traditional TV subscribers; while for TV4, Filmnet is an add-on to the company's VoD service, which is offered on both free-to-view (7-day catch-up) and subscription (library shows and post-7-day series catch-up) basis.

Overall, the Swedish, and indeed the rest of the Nordic region, present an attractive environment for online video service providers: a developed broadband infrastructure, high living standards, positive GDP growth, low piracy levels; and, there are advantages to launching  in a market where consumers are already familiar with online video services and specifically with subscription offers.

The new service has several advantages over the international plays that should make it easier for Filmnet to compete in the Swedish online space. While international providers have to incur high investment risks and additional costs of  content deals for the best movies, TV series and local content with studios and local content distributors, Filmnet is backed by C More, which has already created an extensive catalogue of premium videos. This existing investment, backed up by a substantial existing customer base, will almost certainly help to eliminate many of the risks inherent with launching a subscription OTT service. Alongside this, C More's strong market presence and brand ensures that marketing spend intended to educate consumers can be kept to a minimum, and that cross-promotion of services to existing customers will be possible. Recently C More has signed a new exclusive multi-year film licensing deal with Twentieth Century Fox Television Distribution for the subscription window. The agreement gives C More rights to all new Fox films, which it will make available through C Play and potentially other online services. In addition C More has secured new content deals with HBO and Sony Pictures Television.

However Filmnet faces strong competition from an entrenched array of existing local players. Specifically, the range of competitors includes SVOD providers such as Viaplay, a local branch of Lovefilm; start-up Voddler, alongside transactional VOD services and broadcaster on-demand services such as SVT Player.

In addition the Filmnet subscription price is likely to be considered . Given that the impending service from HBO is expected to be roughly €10, with Netflix's price likely to be approximately €7.5, Filmnet's €15 price could be an additional hurdle for the service. However, Filmnet's array of content and price point raises parallels with UK pay TV operator Sky's standalone subscription movie service Now TV - also at a premium compared to other subscription services on the market. Filmnet is clearly banking on a better content offer being able to drive custom; however a clear weakness of Filmnet is the low level of availability on connected devices. While Filmnet is distributed only on PC/Mac at the moment, Netflix, HBO and the incumbent Swedish online video providers already distribute their content across many connected devices (TVs, Blu ray players, game consoles, etc). A further question remains as to whether Filmnet can differentiate itself enough from the existing offers of its parent companies to become a strong player in the Swedish online space or if it will form a minority audience complementing  already existing online offers from C More and TV4. However, once Netflix and HBO enter the market it will be much clearer as to which services have the strength to survive in the long-term.

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