Right here, right now

While domestic media on demand services in Poland are well established, international players are yet to properly cash in on the market by John Beauchamp With the increase of Poland’s broadband network, both wired and wireless, the market for media on demand, whether it be video or audio, is ripe for expansion. But while Polish online services have mushroomed over the past years, foreign players have yet to cash in on this segment. With over 72 percent of Polish households hooked up to the web in 2013, according to Eurostat, one would have thought that despite the rise of digital TV broadcasting, the appeal of being able to watch something through the home PC or on a smartphone would have greater traction. Alas, this is not so. Or so you would think. In fact, the figures tell a different story. Domestic appeal There are a great number of video on demand services (VoD) in Poland – an audit by the National Broadcasting Council (KRRiT) lists 21 companies – ranging from the hugely popular, such as the Polsat-sponsored Ipla.pl and Onet’s Vod.pl, to smaller companies which, while do not have a great market share, still manage to keep up their game. One such smaller service is Iplex.pl. Despite having a market share of 0.65 percent in January 2014, “currently, the service has 200,000 unique users and 3 million page visits per month,” explains Deputy CEO of Iplex.pl Łukasz Skrzypek. He adds that revenue from paid content accounts for 25 percent of the company’s total income. At first glance, the figures look impressive for a company with such a small market share. In fact, they are a drop in the ocean when compared to the big players on the Polish VoD scene. Player.pl, which is run by media giant TVN, has around 3.7 million unique users and that’s only through their website. “You have to remember that this does not include the number of users and views generated by mobile devices and smart TVs, which make up a 37 percent share of our platform’s total views,” counts out Maciej Maciejowski, a member of TVN’s board responsible for business development. Indeed, TVN wipes out its direct competition. According to figures published in October 2013 from the Gemius Megapanel, Player.pl comes up trumps with 67.9 million page views. This is a far cry from its contenders, with Ipla.pl managing to muster 22.5 million views and Vod.pl achieving 34.2 million views. The average time per user also plays a part here, with Player.pl grabbing users’ attention for over 9 hours a month. Second only to Player.pl here is Ipla.pl, with over 2 hours a month. By comparison, public broadcaster TVP garners little under 30 minutes a month on its VoD service. Not a problem With the rise of domestic services, the market is ripe for foreign investment. Earlier in 2014, a rumor made the rounds that US-based VoD provider Netflix was mulling over entering the Polish market after they published a job offer which involved Polish-English translation. In the end, the rumors proved to be false. A short but polite email from Netflix’s Joris Evers informed me that “we have nothing to share on our planned European expansion,” although he did add, somewhat  enigmatically, that “we do hope to be a global provider at some point.” Later in May, however, Netflix did announce that it will commence services in a further six European countries by the end of the year: Poland was not one of them. If Netflix were to enter the Polish market, which it eventually must, it wouldn’t cause much of a headache for Polish VoD providers. “The market is very capacious and constantly growing,” Iplex.pl’s Skrzypek underlines. “Paradoxically, if the entry of Netflix is accompanied by a suitable ad campaign, it could help Polish companies in reaching out to a mass audience.” TVN also doesn’t see a problem if Netflix were to come onto their turf. “We have a loyal audience, so the entry of Netflix wouldn’t cause an earthquake,” Maciejowski says. “Our trump-card is a localized and attractive offer. Users love Polish series and programs, while the offer provided from the USA is already available in Poland, albeit, unfortunately, mostly through pirate services.” [negative]“It is necessary to take actions aimed at informing users of internet services and to show alternatives in the form of legal sources.[/negative] Piracy problems And here we come up against the greatest enemy of media on demand in Poland. A huge number of services are available on the internet which allow for downloading or streaming material free of charge. According to a report released in April 2014 by the consultancy PwC, some PLN 700 million annually is lost from annual GDP due to video piracy. According to PwC’s estimates, one in five Poles use platforms which offer illegal access to video content, with the report claiming that “most of those who watch video content on the internet use both legal and illegal sources (73 percent among film viewers, 49 percent among series viewers and 45 percent of those who watch sports coverage).” Furthermore, according to the anti-piracy initative “Oglądaj Legalnie,” around 2.4 million internet users (18 percent of VoD users) above the age of 14 paid for video content in the belief that they are gaining legal access, although nothing could be further from the truth. Meanwhile, almost twice that amount watch illegal online video content fully cognizant of their actions. “Due to the complexity of the phenomenon, it is necessary to take actions aimed at informing users of internet services and to show alternatives in the form of legal sources, as well as to tighten the system of legal regulations and penalize violations,” said Piotr Baranowski, a partner at PwC. “It is necessary to enact solutions aimed against dishonest service providers, which will make it more difficult for them to derive financial benefits from their pirating activities.” In simpler terms, Polish film director and producer Dariusz Jabłoński told Variety that “in Poland the use of distribution windows makes less and less sense, and that the best way to beat the pirates is to make pics available as soon as possible on VoD.” Audio stream Apart from video, audio services are also gaining ground in Poland. Before the Swedish-based Spotify entered the market in 2013, Muzo.pl started offering audio streaming services after all the Polish radio stations managed to get on the on-demand bandwagon. And then, of course, there’s the ubiquitous iTunes, one of Apple’s most popular products. Spotify entered the Polish market in 2013, and while it doesn’t provide any country-specific figures, “the average proportion of paid subscription users in relation to all active users is around 25 percent,” the Spotify press office informs. Furthermore, during its first year in Poland, Spotify users here listened to over 40 million hours of music. Deezer, a French music streaming service, also offers similar services to Spotify with similar pricing, as does Muzo.pl. Here and now There is no doubt that media on demand in Poland is a segment of the media industry which has enormous potential. A number of factors contribute to this: greater internet bandwidth availability thanks to better ISP connections and mobile 4G/LTE services in bigger cities; more and more mobile devices being purchased in Poland (ABC Data, an IT distributor in Poland, believes that sales of tablets will see double-digit growth this year after 2013 sales amounted to around 2 million units); and, more pertinently, greater disposable income, which will allow people to ween themselves of pirate providers. If Poles can afford to watch satellite TV, then it is only a matter of time before media on demand services really start bringing in the cash.