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Huawei to leverage handset base to launch OTT video in Europe

Chinese technology giant Huawei is entering the European over-the-top video market in 2018, leveraging its growing base of smarpthones. It has revealed plans to launch a platform in partnership with Spanish TV group Atresmedia.

Given that Huawei is deeply embedded in some of Europe’s largest operators, the news of its foray into a direct-to-consumer video service should give anyone involved in the industry some serious competition to think about.

Huawei smartphones are rising in popularity across Europe and the new Huawei Video service will initially be offered exclusively to users of Huawei handsets in Spain and Italy, with further expansion scheduled across Europe in the months following launch in the first quarter of next year.

Although unconfirmed for now, it is likely the service will be subscription-based rather than ad-supported as it will center around movies, but even pricing Huawei Video on par with mainstream SVoD services in Europe could see Huawei steal away a sizable share of subscribers from established players, given its growing device user base. All we know for now is that free trailers and documentaries will be available from launch.

Huawei’s VP of consumer Europe mobile services, Jaime Gonzalo, teased at the company’s Eco-Connect Europe event in Berlin that Huawei Video will be refreshing its portfolio of titles more rapidly than competing services. “The frequency of renewal of Huawei Video content will be key in this project,” said Gonzalo, adding that it will come fitted with personalized content and the ability to download titles for offline viewing.

The world’s third largest smartphone manufacturer grew device shipments in Europe by 18% in the first half of this year compared to the previous year, citing particularly robust performances in Central and Eastern Europe and the Nordics. It shipped 38m smartphones globally in Q2 this year, rising 20%, according to Canalys data, although European figures have not been broken out.

Huawei has invested significantly in its European marketing campaigns, employing stars such as actress Scarlett Johansson and soccer sensation Lionel Messi to advertise its high-end handsets. Although much of Huawei’s growth will have stemmed from its dealings with European operators, where its expertise in network communications technologies has spearheaded telecoms infrastructure projects for the likes of Orange in France, Finland’s Elisa and British Telecom. This has played to the advantage of Huawei’s comparatively new smartphone venture, able to push its own products through carriers ahead of rivals. Unfortunately for Huawei, it has not been able to sing the same tune over in the US due to well publicized spying allegations which have kept its equipment out of most networks.

So Huawei has the marketing clout and network operator contracts in place, but little has been mentioned about its back-end video technology assets. Deutsche Telekom is Huawei’s largest account in Europe, with the Entertain TV system built around Huawei hardware and software, and the Chinese firm has become DT’s partner in cloud technologies, which has seen the German operator get some footing in a shared approach both in Europe and in China.

That said, the decision to choose Europe as its initial launch pad over its domestic stronghold where it has built a vast number of IPTV systems is a surprising one.

Atresmedia has experienced a similar rise in fortunes to Huawei, becoming one of Spain’s largest exporters of content through popular original series Velvet, Gran Hotel and El Tiempo Entre Costuras, as well as a distribution agreement signed with Netflix in July for its latest production La Casa de Papel, co-produced by Vancouver Media. Warner Brothers is also on the scene via a worldwide rights deal with Atresmedia Cine, the Spanish company’s movie arm, licensing comedy title Toc Toc in November 2016. Warner Brothers extended the deal in May this year, handling distribution for a new supernatural thriller project called Mirage.

Details on Atresmedia’s additional vendor partnerships are thin on the ground, but two years ago it signed an ad serving agreement with US video monetization expert Ooyala, now owned by Australian telco Telstra, to offer access to Aunia, Ooyala’s Spanish private programmatic marketplace. We have reached out to Ooyala to check up on its contract at Atresmedia and to find out if the company has any involvement, but we think Ooyala’s participation in Huawei Video is unlikely.

Atresmedia posted year to date profit at the end of September up 1.9% to €103.4m. Together with Italian media firm Mediaset, which owns Spanish channels Tele 5 and Cuatro, the two hold 85.7% of the Spanish TV advertising market and 55.5% of audience ratings. Like other markets in Europe, Atresmedia Cine is required to invest 3% of its annual sales back into the Spanish film industry.

Atresmedia’s director of acquisitions and sales, Mercedes Gamero, said: ”Understanding and participating in the transformation of Huawei into a completely customer-oriented company, including its devices and new services, is an opportunity that we have decided to take advantage of, and we wish to advance together as partners. In the short term, we expect to reap new mutual benefits.”

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