Video On Demand in Spain: 3 Major Players Weigh In

The fall of the giant Megaupload, Netflix’s entry into Spain and copyright issues were the main topics of discussion at last night’s Cava&Twitts event at the Old Moritz Factory, which has recently reopened on Avenida Parallel in Barcelona (as a side note, it is awesome and definitely worth a visit!).

Cava&Twitts

Cava&Twitts is a periodic event started in 2008 in which people come together to discuss the latest in online and social media. The event is complimented with a glass of cava, though last night we received a free glass of Moritz (or, better said, un chupito de Moritz).The session “Video on Demand: The Future of Cinema?”  was hosted by Marc Cortes (@marccortes), founder of Cava&Twitts and Professor of Online Marketing at ESADE.  

Three speakers discussed their industry and their business models: Jordi Miró (@jordimirobruix), CTO of Wuaki; Juan Carlos Tous (@jctous), CEO of Filmin; and José Pacheco, Marketing Director of Youzee (pronounced “you see”). This interesting line-up of speakers brought together three competitors of the same market, although Filmin sets itself apart by specializing in Indie films.  I did not see much difference in the offers of Youzee and Wauki, in fact, they seemed to have the same elevator pitch. I left the event thinking that Wauki and Youzee really should join up and attack the market together.

The event was packed with mostly young people who work in or are very interested in social media. Information overload bombarded attendees - a large screen showed Cava&Twitts’ HootSuite interface while a community manager tweeted the discussion in real-time. Most attendees were using their smartphones to join in the conversation, find friends and take photos.  Speakers answered questions as they came in through Twitter and occasionally took their own photos of the audience with their smartphones. By the end I felt an overwhelming need to attend a Yoga class and re-center myself.

The hour-long discussion was quite interesting. It became clear that these companies are looking to Netflix and the US market for a business model to replicate, while simultaneously complaining that the US market is so much easier to succeed in as it consists of 300+ million consumers. I disagree with this assumption; the larger the market, the greater the competition.  It’s never been easy for Netflix. They carved out a niche in 1997 and went at it with all they had to become the market leader. Companies in Spain should spend less time comparing this market to the US and focus their expert knowledge on a unique business model for Spain.

Spain’s video on demand market is one with low entry risk and high commoditization (see analysis). There are a lot of competitors, but none has the vast offering at a low price that consumers are looking for – besides piracy, of course. It’s time to think beyond replicating a business model that worked in one country and tailor the offer to this market, where it is surely possible to be successful.

As I’ve written in the past, piracy is a huge detriment to the success of video on demand companies in Spain. And although Netflix recently had plans to enter the market, they have put that on hold while they focus on the UK. 

Megavideo is proof that people will pay for high(er)-quality streaming – to the tune of 10 EUR/month in the case of Megavideo – a case that still surprises me as people were paying for pirated content. It’s a matter of finding the right balance between offer and price, which I understand is not easy with the difficulties in negotiating copyright and use of intellectual property here. I appreciated the discussion on the topic of intellectual property as I learned a great deal from the speakers, who are clear experts in this area.

All three gentlemen expressed a desire for Netflix to come to Spain. They said Netflix would bring the visibility and publicity necessary for this offer to become main-stream. I disagree with this reasoning in the case of Wauki and Youzee; if Netflix launches here, their businesses will be eaten up. Filmin, however, has a niche offering that could nicely compliment Netflix’s catalog.

The sold-out event was a success, with 683 mentions, 451 of #candt, 126 RTs, a total audience of 398,867 and 1.305.713 impressions. And, as they tweeted last night:  “mil millones de gracias a todos”.

Some lucky attendees received Filmin gift codes for a free movie rental, t-shirts and even a free one-month subscription to Filmin, which was so nicely packaged in a lovely blue box with the Filmin logo; inside was a VHS tape (What’s on it? We’ll never know because no one has a VHS player anymore) with the gift code attached.

You can find all the Tweets from the event in Spanish here: https://twitter.com/#!/cavaandtwitts