VOYO WANTS TO BE PART OF THE BIG THREE. WE ARE ALREADY NUMBER TWO IN THE MARKET, SAYS DANIEL GRUNT
Nova TV has already succeeded in beating HBO Max in the number of subscribers to its video service Voyo. It is the second strongest streaming service in the Czech Republic and Slovakia.
However, Disney+ entering the local market on 14 June may shuffle the ranking. According to Daniel Grunt, Chief Digital Officer in CME, which owns the Nova Group, Disney is investing the highest amounts in content production and we cannot rule out that it will dethrone Netflix globally. To find out more, read the continuation of our interview with Daniel Grunt, which follows the first part from last week.
Most TVs already have 4K resolution, some of them even 8K. Do you adjust the picture quality on Voyo accordingly?
Not at the moment. I have tested Voyo on my 4K OLED TV and I do not need any 4K source for the picture to be excellent when...
… when your TV can upscale to 4K in real time.
Exactly. The upscaling in real time on TV will get better and better as the computing capacity of TV chips will improve. That will be sufficient for ordinary viewers but of course not for some connoisseurs who will look for every pixel with a magnifying glass. When I as a common user want to relax watching a film in Full HD resolution, TV will transfer it to 4K and the experience is very good for me. We are not planning 4K resolution now but going forward, we will certainly move the Voyo Originál products to higher image quality and we have to get ready. It will be a change for the entire production chain but we will have to do it at some point.
And what about Nova’s older shows and films and series from times when there was no HD quality?
We are focusing on having everything in Full HD if possible. One of the projects on which our people are working is the improvement of the quality of older titles. Voyo has been on the market for 11 years, it has a big library including a number of old titles in SD or HD ready resolution. So now we are changing hundreds of titles each quarter to improve quality. At some point we will find out that no higher quality is available for some titles and we will just consider whether the title is interesting enough be on offer with lower image quality.
You have said that 60 percent of users watch Voyo via TV. Is that followed by a computer or a mobile device?
Then it is in principle one-to-one for mobile and laptop with mobile and its importance increasing. Logically and practically, I am convinced that watching Voyo on TV will achieve a greater percentage in the long term, mobile will also grow and the importance of laptops will decline. I will be either at home watching on a big screen or if it is occupied by another family member I may switch on the laptop. But outside, I will use my mobile - on the way to school, to work, on vacation, on weekends...
Do you have any idea for how many users Voyo is the first streaming service? You have said that Czech viewers use 1.3 streaming services per household on average. Logically, they have to use some more and some less - and consider whether it is worth paying for the less used ones.
This is exactly the reason why I have said that for us it is extremely important that people are as active as possible in our service. For this reason, one of the metrics we monitor is the amount of time spent watching our shows per week. Because the more time I spend with a service, the more satisfied I am with it and there is no reason to cut it off. But we do not know the percentage of the use of Voyo and other services as we have no way of finding it. We do not know how viewers use other services, we do not know precise numbers of their subscribers.
Do you commission independent surveys through agencies such as Ipsos or GfK?
Of course we do. There are many surveys and they are made from various perspectives and we are trying to make a big picture of the market. But you are asking about a very detailed matter. For example, we ask on a monthly basis about competitors and how users consumer Voyo - whether daily, several times a week, once a week, several times a month, once a month or not at all. Over the past few months, Voyo has seen the highest growth of any service in daily and weekly usage.
To what degree is linear content important within Voyo? I mean Nova Sport and sports broadcasting.
Linear content in general is an interesting complement but it is not an acquisition factor. It is not something to make people pay for Voyo but if they have Voyo they like using it in situations when they are not in front their TV sets. We can see that linear watching of these channels via Voyo is growing on weekends and during holidays. As for sports broadcasting, it is the most attractive from linear channels. Especially combat sports such as MMA, KSW, etc., attractive football matches, NHL and NBA.
Does it mean that for example Eurosport Player is not a competitor to you as it is a purely sporting matter?
Eurosport Player is a very narrow section. It is a very specific offer, a clearly defined target group, so we do not perceive it as a competitor at the moment.
Let us move to another issue, the Czechflix project that was intended to aggregate content of streaming services from all large Czech TV groups. You said at the DIGIMEDIA 2021 conference last year that negotiations with ČT and Prima were ongoing but that it would depend on the conditions for cooperation being advantageous for all parties. Have the discussions progressed somehow?
No, they have not.
And are they still going on?
Let us say that the intensity of the discussions is lower than it used to be.
If Czechflix is established, would you provide it with Nova’s TV content or the original production from Voyo?
It is a question I cannot answer because if there is no model of how the service should look like, what the main benefits for individual participants there will be it is hard to predict. All of the participants should provide their premium production for the service to make sense, which means ideally originals just like Voyo Originál, and another thing that works, i.e. previews of TV series.
How are the Voyo trailers around Televizní noviny (TV News) working out for you? Previously, Nova promoted evening shows on linear channels, now it also promotes selected films or series on Voyo. Do viewers watch what is promoted in the time when it is promoted?
Logically, TV is our strongest communication channel. What we communicate around Televizní noviny and in prime time works the most. We watch the service’s traffic, new signups and entries on Voyo home page at the time the trailers are running and we can see big peaks. It is an immediate effect showing the power of TV. Usually what I communicate most strongly on TV I have on the most premium positions on the home page of the service, so it is hard to tell whether the decisive factor was the trailer on TV or that a user came to Voyo and came across the show.
Is it worth it driving people away from linear broadcasting to Voyo and reducing the ad block rating?
We are not driving out those who want to watch linear TV because they are going to stay with the linear broadcasting. For people who are not sure and consider switching to another channel or paying for another service it is better to go to us rather than to somewhere else. That is why we are doing it. It is better to cannibalise ourselves than being cannibalised by someone else.
350 thousand users is quite a lot, it is a good chunk of money. Is Voyo in the black or are you still in the red?
We are still in the red.
And what is the outlook?
Our plan is really long-term, for five years, which does not end with a million users but with a higher number. There are relating investments, income and we are now above the plans in terms of revenues because we have significantly more subscribers than we planned for this time. Now we have more than 350 thousand users, which is a level we planned for the second half of this year. And I am talking about an adjusted plan because based on last year’s results, we have increased the plan for 2021-2025. The goals for the end of this year are substantially higher than we planned at the beginning of last year. It is still true that in 2025 we should generate profit. I think that if we continue at the same pace as so far we will be profitable.
Which means that at a million users you will be in the black.
Profit depends on the amount of investments in content and we can see now that the more we invest the more subscribers we get. As any digital business, we prefer growth to profit. But we can change it whenever we want. At present, our investments in content are huge. We are talking about billions of crowns so even if the income from Voyo is wonderful, investments in content production are even higher.
Do you think about offering multiple types of subscription? For example Netflix has several levels: the basic rate for a single device and SD resolution, then a version in HD for multiple devices, after that Premium in 4k. HBO Max has come with a reduced introductory price...
We will consider it in the future. Now I think it is too early because both we and the market are in the growing phase. It is much more important to acquire as many people as possible to subscribe to the service and any division into packages makes the message about the product more complicated. For me it is important that the message is as simple as possible in order to educate the market. Working with subscription packages will start to make sense when the market starts to slow down and we need to keep our subscribers or increase income.
Are you worried about inflation and that the prices of everything are going up and people will try to save money? And that entertainment will be the first thing to cut off? It is dispensable.
We will see what will happen. Practically speaking, CZK 159 per month - how many packs of cigarettes is that?
Not everyone smokes.
When I go to the pub with my friends, how many pints will I have for this amount? When I go to the cinema, for CZK 159 I would have to go there alone to watch just one film so if I take my family with me and go to the cinema to watch a single film, I will pay a multiple of what I will pay for Voyo’s library with 17 thousand hours of content and all my family can watch. So there is no problem there in my point of view. But we may need to introduce such comparative communication at some point. But I think that people would stop going to the cinema rather than unsubscribe from Voyo or Netflix.
Every time I go to the newsagent’s, subscription cards for Netflix or Voyo catch my eye. How does this method of subscription work? Is it selling well?
We introduced it during the last year in the autumn season. It was based on a simple consideration that there was still a segment of people, especially older ones, who were not used to paying online. It related much to Ordinace. We offered this subscription method to these people but it is really a minority issue. When I look at the methods of payments for Voyo, 99 percent of people use recurrent payments when the amount is deducted from their credit card.
But the subscription cards make you visible at the newsagent’s.
Exactly. It is visible and we are giving a chance to people who might be discouraged by the online payment using a credit card.
Or it may be an option to give Voyo as a gift.
Yes, this worked very well at Christmas. We sold a large number of annual packages. The Voyo brand got under people’s skin. By the way, this is one of the things that Nova managed to achieve: increase brand awareness. When you look at the market today, we are the largest together with Netflix. When you ask about a streaming service, Netflix is the first what comes to people’s mind. Voyo is second. Then there is a long pause followed by other services with single-digit shares.
We were discussing it in detail at the DIGIMEDIA conference several years ago. At that time you said that you had a large group of people tracking where Voyo’s original content appeared so that you could report it and have it blocked.
We have a team of people who are engaged in it and we are paying about three external agencies that are searching the content for us, reporting it and we then solve it. After the launch of Voyo Origiál there has been an increase and it costs us a lot of money to manage the surveillance. Yes, we are still reporting pirate copies to entities such as Uložto and they are responding with delay, often within days. And when they delete the content it reappears. If we had less activities against pirates I think that Voyo could not work well. Piracy would kill it.
Nova has the same owner as the largest IPTV service in our country, O2 TV. Are you planning any synergies? O2 TV has purchased a lot of interesting sports rights...
Yes, it is true. At the same time, Nova is selling many rights to O2 TV, in principle most of the best football leagues in Europe that run on O2 are bought from Nova. That is why we are talking about it. It is not specific to O2 TV. When we look at all advanced countries, major streaming services cooperate with all operators and large content suppliers of a particular country. So it is quite probable that Voyo will be available via these operators along with the standard offer of linear channels of all pay TV stations, along with Netflix, HBO Max and Disney+. It is a trend, it is where the market is going and we can see it everywhere.
I do not know whether O2 TV still has a video library...
Yes, it has.
Does not it make sense to replace it with Voyo if you have the same owner?
It will make sense if we manage to create an interesting concept to be proposed to users because Voyo has some value. Premium content has some value that is large and it will always be reflected in the price of the package. Be it O2 or other potential partners in future, Voyo must always have its value. With Voyo, we will never go below the cost for which it is available to users separately in the market, for which they can buy it directly. As I said a while ago, in the stage of growth we definitely do not want to provide any substantial price reductions to pander because we would reduce the perceived value of Voyo. And if Voyo has increased so much over the last year it is because people started perceiving its value.
What streaming services are you watching at home and how much time do you spend with them?
If we are talking just about streaming services, I have Voyo, Netflix, HBO Max, Amazon Prime, Europsport Player and in addition I also subscribe to Spotify for the entire family and Xbox Gold for children. And I may be paying for something else that I no longer remember.
Do you manage to watch them?
I make a selection. I am the kind of person who sits down in front of the TV at night and goes through his ritual. I am going through all of the services I am paying for unless I am watching a series. I have come to a stage when I do not watch films at home at all. I switch on TV after 9 or 10 pm and it is late to watch a film. I rather watch two or three episodes of some series that are 50 minutes long and I still have a chance to stop when the episode ends.
But If I am not in the middle of watching a show, I go through all services and quite often end up watching linear TV. I switch on something that is on, I watch from the middle, it is interrupted by ads although I know that if I make four steps and put a blue-ray disk in Xbox I could have the same thing in better quality, from the beginning and with no ads. But I still keep sitting and watching linear broadcasting because all I want is peace of mind. I think that many people will do the same in future. New users who will subscribe to a streaming service will be overwhelmed by it at first, they will watch the best for several months and then they will find out that making a decision what to watch is painful. It will annoy them to search what they have not seen yet or what is new. Even the large size of the library portfolio may be limiting if you have to make a choice.
When using competitive services, do you come across something that is better than on Voyo and that could inspire you?
We get inspired all the time, if only because we started investing significantly more in Voyo and its development last spring. I remember that when I worked at MTG (former fifty-percent owner of Prima, ed.) they had several slogans in their DNA and one of them was “copy with pride”. And it was not meant negatively at all. The point is that often it is better to take inspiration from what works in the market and is established than inventing something nobody else has because it may mean that it does not work. But it is not that we are mindlessly copying everything we like. We think a lot about why they have it this way or that way, why they have selected a particular approach and we think about how to improve it.
How many of the big streaming services do you think can make a living on the Czech market?
The general economic theory is working with the concept of an economy of three or the “Big Three”. If there is a market that has already been developed or mature, three big services can survive in it and along with them maybe some more narrowly focused ones if they keep a sharp eye on their costs. I am convinced that in the Czech market, there can be three services that will be profitable in the long term. And we have to be one of them.
One of them or number one?
We do not need to be the first, we want to be one of the top three services. For me, it is important to have a certain number of people paying us regularly and to be one of the first services that come to people’s mind when they think about signing up to a SVOD service.