Led by Netflix, streaming service providers are recognizing two major strategic facts: They don't need to lay down infrastructure like pay-TV providers to reach new markets, and there are a lot of potential subscribers outside the US.
The latest streaming provider to go global is CBS All Access, the OTT service from US broadcaster CBS.
CBS Corp. (NYSE: CBS) announced yesterday that it will expand CBS All Access via a joint effort between its CBS Interactive and CBS Studios International divisions. Canada has been selected as the first market after the US, with the launch scheduled sometime in the first half of 2018. The company has said that other countries "in other continents" will follow, but has not disclosed which ones, provided pricing information or mentioned a timeline.
According to a statement from Leslie Moonves, chairman and CEO, CBS Corporation, "CBS All Access is growing faster than we anticipated domestically, and now represents a whole new opportunity internationally as well."
CBS's streaming services have grown rapidly over the past three years, with the combined subscribers for CBS All Access and Showtime expected to exceed 4 million by year-end. CBS All Access is priced at $5.99 per month (with a premium, ad-free version priced at $9.99.) The service includes 9,000 TV shows on demand, including both current hits from the network as well as older TV shows. The streaming service is also developing a slate of original content. It has recently put together a team to focus on new shows specifically for the streaming service and acquired three new series earlier this month.
In the US, CBS All Access is available via the web, on iOS, Android and Windows mobile devices, major gaming consoles and specialized OTT devices such as Apple TV, Roku, Fire TV and Chromecast.
It is unclear from the company's statement what the impact will be on the network's international distribution arrangements. Prime-time programs from major US TV networks are often syndicated around the world, picked up by local broadcasters to shore up their programming slate. Those agreements are usually exclusive, i.e., if you sign a deal with one network, then no other network can get that show during an agreed window in that region. That is likely to also include streaming rights, so it may mean that in many European countries, the All Access service will not have its most popular content. Instead, that content will be carried by major commercial broadcasters like RTL, ITV, ProSieben, Mediaset, Sky etc., who regularly buy US content. All of these broadcasters also have their own multiscreen streaming services, so All Access would be directly competing with them.
Even assuming that CBS hasn't been selling much of its own content to other broadcasters, is the service likely to appeal to international viewers? It's one thing to include a hit Hollywood show in a broader broadcast package with local content, and quite another to require a discrete subscription for that show. And CBS will be following Netflix, Amazon and HBO into Europe -- all of whom have plenty of US content. There are also other players such as Zattoo and Magine available in Europe, and the catch-up services from local broadcasters in each country. And I haven't even mentioned Sky's Now TV service, which it is expanding aggressively. (See Sky Eyes Spanish Streaming Opportunity.)
The picture is similar in Asia, with Netflix and Amazon already there, as well as Asia-focused services such as PCCW's Viu, SingTel's Hooq and Sky-backed iflix.
Internet streaming does offer content owners the tempting option of going directly to the consumer and gaining scale globally, without anywhere near the kind of capex required for pay-TV services. However, for a service to succeed, content delivery infrastructure is important -- the broadband infrastructure in many parts of the world is very different from the US, and will require a different approach. In developing countries for example, most video services are mobile-first -- which requires a rethink in terms of bit-rates and video profiles -- and most streaming providers look for mobile operator partnerships to manage data costs for their subscribers.
Local content and marketing are also important, particularly to retain subscribers. That's why Netflix is increasingly investing in local shows from France, Germany, Italy, Mexico and Spain (Club De Cuervos, Marseille, Dark, Suburra and Las Chicas Del Cable.)
It's not clear how aggressively CBS will expand globally, or how developed its strategy is today. But even with some of the premium content it has in its vaults, it's not going to be easy for it to grab subscribers today.
— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation