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Scandinavia - VOD's Early Adopters

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Scandinavia is a hotbed for the development and adoption of digital technologies. High levels of investment in R&D, a design heritage which emphasises functionality and simplicity and openness to innovation have made the Nordics home to one of the world’s foremost digital industries.

In this second in a series of blog post exploring VOD around the world, I examine how Scandinavia's open and innovative culture has lead it to be one of the most developed video on demand markets in the world, and the implications for content providers looking to differentiate themselves in this region.

Some of the most notable digital products were created in Scandinavia including the likes Skype, Minecraft and Spotify. Spotify’s model of a monthly subscription for unlimited streaming has been particularly successful, setting a trend towards subscription streaming models as a legitimate challenge to piracy.

Spotify Landing Page Fold May 2015

Source: Spotify, 2015

This willingness to embrace new models along with strong integration between countries and large online audience has resulted in Scandinavia becoming a key region for US streaming services looking to gain a foothold in the European VOD market.

Over half the Nordic population now has access to a video streaming service, with MTG-owned Viaplay (launched 2011) and US imports Netflix and HBO Nordic (both launched 2012) taking much of the market share.

Swedish online video streaming company Voddler attempted to create a ‘Spotify for video’ with their own streaming service launched in 2009. However, attempts to compete with big international players such as Netflix resulted in massive losses and their eventual exit from the consumer market earlier this year.

Netflix has been by far the most successful, with a reported 43% of Scandinavians having access to an account, according to Arkena's Nordic Video Index, which also suggests that it is the choice and control over what to watch, when to watch and on which device being an attractive proposition for users.

Access to big name foreign imports has also been key to their success. Streaming services are particularly popular amongst younger audiences watching US TV series, such as Game of Thrones and Breaking Bad. The success of these services has been credited with reducing the levels of piracy in the region. Figures from the Norwegian research company IPSOS MMI suggest that the rate of illegal downloading more than halved between 2008 and 2012, when most of these services were launched.

The convenience and simple proposition of streaming services is a key driver for younger audiences, research from Danish broadcaster DR suggests. This is posing a challenge to pay TV operators, cutting through convoluted packages.

Figures from Arkena highlight growing uncertainty among consumers over whether or not to end or reduce their pay TV package. In Denmark, DR estimated that nearly 10% had cut back or even cancelled their subscription altogether in the 18 months to the end of 2014, with the high cost of cable TV and large number of channels not being watched a key reason for this.

As a result, premium pay TV companies, such as C More are going over the top of service providers and offering subscription services of their own.

Arkena - cord cutting Nordics

Source: Arkena, 2014

With a number of streaming services now vying for a share of the SVOD audience, establishing key points of difference is essential to reduce customer churn. Nearly half of users have cancelled their subscription, two-thirds of whom have restarted their subscription at least once, according to Arkena’s research.

Understanding the user’s expectations for using the product and providing an excellent user experience is crucial. While this may not be unique to Nordic countries, it is especially pronounced in a region which prizes simplicity and function in design.

Watching interesting and immersive content is a key expectation of streaming services. Scandinavian users report that being able to find interesting content ranks as one of the most important aspects of a VOD service’s user experience (Arkena, 2014). And, as DR’s research highlights, content on streaming services is usually watched with a high level of close concentration.

Through their elegant designs, both Netflix and HBO Nordic establish themselves as places where users can immerse themselves in premium US TV shows. As Ostmodern’s senior designer Phil Readman points out, these are high-end products which place an emphasis on content:

The dark background and minimal approach to typography and layout allow the content packshots to stand out. The large, glossy hero imagery which dominates the landing page grabs the user’s attention.

HBO Nordic Home

Source: HBO Nordic, 2015

Removing noise and distraction and putting content front and centre not only creates a sophisticated look and feel, but it also arguably mirrors the user’s expectation of a more focused viewing experience.

While many broadcasters adopted a similar style to streaming services, some are also experimenting with how they present content to their audiences. Swedish broadcaster SVT, for example, attempted to recreate the lean back experience of watching traditional TV with SVT Flow, a streaming service which allowed users to watch rolling playback of the latest episodes from different shows. Although the service was cancelled due to confusion between itself and SVT’s main catch up service, SVT Play, the willingness to test new VOD products points to potential further innovation in the online video industry in Scandinavia.

Scandinavia’s high levels of digital innovation and openness to subscription based models for content has made it into a key market for SVOD in Europe. The simple proposition offered by the likes of Spotify and Netflix greatly appeals to younger audiences in particular as a legitimate alternative to piracy when it comes to accessing the latest big US TV series.

As subscription streaming services have taken off, it has become ever more important for competing products to establish key points of difference. Providing a user experience which resonates with the user’s expectations of the product is crucial. SVOD services such as HBO Nordic support the user’s desire to immerse themselves in a show with elegant designs which allow the content to take centre stage.

With an innovative and open tech culture, Scandinavia may be an interesting site for future developments in the VOD industry, as services experiment with new ways to present audiences with content that is more aligned with their preferred viewing behaviours.

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