HBO’s standalone streaming service arrived 7 years behind Netflix in Latin America, but the Time Warner company finds itself with slightly less work to do in chasing down Netflix in its latest expansion effort, with HBO Go entering four emerging markets in Central & Eastern Europe (CEE) – Romania, Czech Republic, Slovakia and Hungary. HBO will have to pursue an aggressive strategy as Netflix has become well established since it launched in Romania in May this year, following its debuts in Slovakia, Hungary and Czech Republic all in January 2016.
The real cause for concern will lie with Liberty Global and Deutsche Telekom which share the spoils in all four territories and we expect the new threat of HBO to trigger an accelerated effort in OTT video by the two European giants, particularly on mobile with TV Everywhere services, as broadband penetration is poor outside of the major cities in much of CEE.
The mobile opportunity is a big one. Across the four countries, Deutsche Telekom has a total mobile subscriber base of 19 million, and although Liberty Global’s UPC only offers mobile services to 57,000 subscribers in Hungary, it benefits from a global partnership deal with Netflix to bolster its TV presence to its 3 million video subscribers in the same footprint. Perhaps DT should have followed a similar strategy and teamed up with HBO earlier, before Vodafone got there first. We are uncertain about how the launch of HBO Go as a standalone service in Romania will affect its deal with Vodafone, but we have reached out for comment. Vodafone moved onto TV in Romania with a test 4G TV mobile app in July 2016, giving access to 20 local and international TV channels, plus aggregating content from HBO Go and the local music streaming service Zonga.
However, most pay TV operators have not moved any element of their services to OTT. Liberty Global has helped its UPC subsidiary create an Horizon TV class service, with a new UI, on an existing set top, using its own middleware as well as the ActiveVideo CloudTV software, so the VoD content is delivered OTT. Horizon Go is also available, paid for by some.
Meanwhile, DT’s Telekom Romania is also operational in this market and has 1.47 million pay TV customers, a combination of DTH, IPTV and cable. It only has a TV Everywhere service which is free to existing pay TV subscribers. Digi Online, which is from RCS&RDS, is quite new and we estimate 630,000 TV Everywhere OTT regular users and rising to 1.83 million in 2021, just behind Netflix.
Romania is a price sensitive market where OTT video has had to be retrofitted, where possible, to existing set tops, or delivered purely to tablets, laptops and smartphones. For this reason, Rethink’s figures see Netflix lifting from just 730,000 in paid SVoD in 2016, to some 2 million in Romania by 2021.
We see the global strategy of UPC paying dividends in the Czech Republic, which is another skewed market, with few broadband lines, and 100% smartphone ownership instead, making it phone oriented. There are few suppliers in the country offering OTT after UPC and Netflix, so HBO Go should serve as a welcome disruption.
Rethink’s European OTT forecast pegs Netflix at 431,000 subscribers in Czech Republic by 2021, with local SVoD at 263,000 and UPC ahead at 631,000. We have also forecast Hungary to have 2 million paid OTT subscribers by 2021, dominated by UPC, Deutsche Telekom’s Magyar Telekom and Netflix.
Building on its historic presence on linear channels, HBO Go is launching on smartphones, tablets, PCs, Apple TV, Chromecast, Samsung Smart TVs and Sony Playstation. A subscription is cheaper in Romania, costing $5.85 a month after a one month free trial, whereas it will charge $8.20 a month in the remaining three regions.
“HBO Go via affiliates is already a huge success in Central Europe, but our goal is to make it even easier for the many series lovers in these countries to access HBO’s premium content. The launch of HBO Go direct to consumers in Central Europe is a natural step for us after successful launches of HBO streaming services in Spain, Sweden, Denmark, Norway, and Finland,” said Herve Payan, CEO of HBO Europe.