Sweden’s Magine is boldly going where bigger OTT players have feared to tread by rolling out a subscription service without a set top box. With just 35 staff and €6.5 million in angel funding, Magine has just launched a beta version of its service in Germany after its domestic kick off in March 2013, with plans to take on Spain imminently.
Being a small player Magine had to lay precise strategic foundations and it seems to have made the right calls by accumulating demand during a six month beta before the Swedish launch and wooing major broadcasters and content owners, who see the service as presenting an opportunity rather than a threat. In fact while Magine has won plaudits for its boxless approach delivering the service via apps alone, it regards content as its main selling point, backed up by intuitive navigation and powerful search. In Sweden Magine is providing programming from public broadcaster SVT and private broadcaster TV4, as well as international channels CNN International, BBC, Eurosport, National Geographic, Nickelodeon and Cartoon Network.
In Germany content deals have still to be worked out during the beta period, but the company has admitted this is absolutely key to success. In Sweden this is helping convert the 12,000 beta users and some of the 40,000 users on the waiting list, into paying subscribers to the tune of €12 a month to receive around 30 channels, although with a free option comprising just a few channels as a taster.
Oddly enough Sweden’s rather peculiar rights regulations have handicapped the service a little there so far. While Swedish networks such as public broadcaster SVT and commercial channel TV4 already offer online catch-up services, Magine as a third party is prevented by law from transmitting their programs on a similar basis. This means Magine can only stream shows from those broadcasters live, at the same time as they air on terrestrial TV.
The company had not even realized this restriction existed during the early development stage and had to reshape its packages accordingly, offering more channels as part of its free version for the first six months to generate interest. But this archaic law is likely to be revoked.
The main point is that boxless OTT for the first time enables a start-up to launch a subscription linear service not just in its own country but across a variety of major markets, because significant upfront investment is avoided. It has even shown that a decent content catalog can be put together through negotiation, even if the highest value material is excluded because of fears over piracy as much as anything else. As we know there are growing efforts on the part of content providers and operators to persuade governments to act in blocking unauthorized cross border streaming.
The combination of streaming advances and arrival of portable devices, especially tablets, that provide good viewing experiences, means that in areas where reasonable broadband is available, boxless OTT is a viable proposition. It remains to be seen whether Magine will succeed, with remaining challenges still centering over rights acquisition outside Sweden against the broader picture of policing multinational OTT distribution.