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BluTV, leading player in Turkish TV streaming video, has big plans for the future
Editor's note: BluTV is a Turkish online subscription video service offering original TV programming in Turkish and library content to its subscribers. It is enjoying a solid run of growth and has ambitious plans to expand further. IHS Markit sat down recently to interview Aydın Doğan Yalçındağ, founder and CEO of BluTV; and Alptuğ Çopuroğlu, managing director of BluTV International. The interview has been lightly edited for length and clarity.
What is the basic business concept behind the launch of BluTV?
We have seen the increase of video-on-demand (VOD) and streaming-video-on-demand (SVOD) services around the world, a trend that has also reached Turkey and where appetite for these services is growing. And although the country has other players like Turk Telekom's Tivibu and Turkcell's TV+, we wanted to—and then became—the first stand-alone SVOD service to launch in Turkey. After we launched, Netflix entered the Turkish market and other international OTT services followed.
The basic business concept is to exploit this growth trend and bring this new service to Turkey. while at the same time aiming to grow fast outside of Turkey. Turkish shows are very popular in certain regions of the globe like the Middle East and North Africa (MENA), as well as Latin America (LATAM). So, we want to be the first Turkish service to bring Turkish content to these regions. Outside of Turkey we see ourselves as a niche OTT service that will focus mainly on Turkish dramas, which can then be accessed in those regions by people who enjoy watching Turkish content.
Turkish TV shows have been very popular internationally in the last 10-15 years. Do you have some data—export revenue, hours of content exported, etc.—that attest to this impressive popularity and growth?
In 2017 Turkish TV exports amounted to $300 million, and that figure is expected to increase to $1 billion by 2023. In a span of six years, we expect a 200% growth. Back in 2008, exports were very small—just about $10 million—so the increase in the last 10 years has been huge, with growth to continue unabated. Another factor showcasing the popularity of Turkish TV series is that they are exported to more than 100 countries globally. Turkey is currently among the top five exporters of TV content in the world.
Some of your series were on YouTube first. And then, owing to their popularity, you pulled them off YouTube and offered them exclusively on OTT. What was the main purpose of this strategy, and how do you evaluate its utility now?
We contacted an independent production company that had launched its own show on YouTube, and we tried to convince them to bring their shows to BluTV. The shows were on YouTube for two seasons, accessible for free, and achieved impressive viewership figures: 1 million subscribers to their YouTube channel, with each episode registering around 9 million views. We were always in close contact with them, and we finally struck a deal to pull the shows off YouTube and bring them to BluTV on an exclusive basis from Season 3 onward.
This business deal brought us huge subscriber numbers. Initially we were not sure whether people were going to accept converting to a paying service, compared to what had been offered to them for free before. Yet people were, in fact, more than willing to pay for these shows and to watch them on BluTV. It was a huge success for us, and we are keeping this business strategy—that is, launching a show first on YouTube, testing its popularity, and then transferring it to BluTV. Right now, we have launched a couple of other shows on YouTube, and we will test their popularity. Of course, we do not do this with every show that we have, as most of our shows are launched directly on BluTV. Instead, this is a strategy for when we are approached by semi-professional producers who believe they may have a good idea for a project, or where we may think it is worth experimenting.
Are the IP rights for the content BluTV offers online owned by your company, or do you also accept content owned by third parties?
All IP rights of our own BluTV original productions are owned by our company. For all other content, we have licensing deals with various producers and TV channels. Since we're not part of a larger media group any more, we've intensified our collaboration with different producers and TV channels. For the first time in the Turkish TV history, we've exclusively licensed the online rights of series that are being aired on other TV channels. Our goal is to continue with that kind of consolidation for the Turkish market.
You put a lot of emphasis on original Turkish content. What is the split between original and library on BluTV? Is that split going to change in the next five years, favouring more original content?
In terms of hours, the majority of our content is library material, while original content is forming around 5% of our catalogue with 11-12 original series produced so far. In terms of viewership, however, original content makes up around 55% of total viewership on BluTV. Even though we offer shows like "Game of Thrones," "The Walking Dead" and "The Handmaid's Tale," Turkish originals form the majority of viewership. In the future, we plan to offer more originals because we know that the reason people in Turkey subscribe to BluTV is clearly because of the BluTV originals.
Both Turkish and international OTT services that operated in Turkey are investing in original Turkish content. Do you have an estimate as to how much money is invested annually in Turkey by all OTT players for original content? How high do you estimate this investment could be in the next five years?
Our estimate is that the total investment in 2018 in Turkish original content by Turkish and international OTT services was between $10-15 million. In reality, it is only BluTV and Netflix that are currently investing in Turkish original content. We believe that this amount will grow considerably in the next years as BluTV and global players will keep producing more Turkish content.
Which international markets have you targeted first, and why?
Outside of Turkey, the first market that we targeted was MENA. The growth of BluTV in MENA has been helped by the fact that Arabic broadcasters stopped buying Turkish content almost a year ago. This move has facilitated our entrance to MENA as we have seen a lot of viewers in MENA searching for Turkish content online, mostly on YouTube. We are focusing on MENA to try to expand our brand, and we have a very successful partnership with Saudi Telecom Company (STC), which is carrying BluTV on its new OTT platform, Jawwy TV. The MENA region, and specifically Saudi Arabia and the Maghreb countries, has been our biggest market internationally. We will keep focusing on that market, and we expect more growth in the next year.
How is BluTV currently performing internationally?
The MENA region is where we have our best results, so far. It is a high-population region with one single language, and Turkish content is an important pillar of the main content offering in this region. In 2017 30% of all TV series and movies aired in the Arabic-speaking region were of Turkish origin. Our second-most-important international target segment is the Turkish-speaking population outside of Turkey.
What does the split between international and Turkish domestic users look like? Which of your international markets is the strongest?
Currently we generate around 20% of our revenues outside of Turkey. MENA is the largest market, due to its size and the fact that Turkish content is part of the mainstream content offering. We've also launched a product for the Turkish diaspora and Turkish-speaking communities around Turkey. Germany, the US, the UK, and Azerbaijan are the most important countries for this global service.
Which countries or regions are your next targets for expanding the offerings of BluTV? Could you provide some insight as to why you have chosen these markets?
Because of their interest in Turkish content, LATAM is our next step for global expansion—countries including Argentina, Chile, Mexico, and even places like Peru and Puerto Rico. We're in close relationships with the Turkish producers and are monitoring what they are exporting, how much these exports have increased, and also the show's audience rating in specific countries. We've seen a huge jump in the last two to three years in these countries, and that's why we plan to launch the service there. We would say that our focus for the next six months will be on MENA, but hopefully in the summer of 2019 we will be launching in LATAM.
In some of the markets that you are active, you have signed partnerships with telcos—a prime example being your partnership with Jawwy TV (STC) in MENA. How do these partnerships fit with your strategy, and are you planning to have more partnerships with telcos?
When we launched in Turkey, we would have liked to partner with telecoms operators, but it did not happen. Telcos were pushing their own OTT services, and it wouldn't have been commercially viable. So, in Turkey, we grow direct-to-consumer without any telecom partnerships. Although this was the harder way, we learned a lot more about our customers and what they want. As a result, it is now not essential for us to partner in Turkey as we have dealt with a number of the problems ourselves. It is very different in MENA, however, and it is essential for us to partner with local operators. We would like to partner with a few more operators in the region, especially in the Maghreb countries. We are also in discussions with some of the pay-TV providers in the region since they also have a very good knowledge of—and have established access to—the local customer base.
What is your overview of the Turkish OTT market?
We think the Turkish OTT market has treated us well—we are happy with the interest and numbers we are seeing, but there is obviously a lot more potential. Netflix has just produced its first original Turkish show, but we see this as a positive sign by growing awareness of OTT services in Turkey, increasing the market size, and benefitting us in the long run. It does have some downsides: the price of content will increase as Netflix spends more. But overall, we see it as a positive development.
The Turkish market, for years, has been dominated by the local services: Turk Telekom's Tivibu and Turkcell's TV+ seem to occupy the first spots in subscribers. Their revenues, though, are rather meagre due to the bundling. Netflix has not managed to carve out a considerable share of the market. Where do you position BluTV in this market?
What defines us in Turkey is our original content. It is what people expect from us now, and it is very clear we need to produce high-quality originals. The telcos have access to the customer in their homes, but they are missing the content that attracts people to their platform. They are focussing on live TV channels, but their VOD libraries are very limited. Netflix is definitely a strong competitor, but where we have our edge is with our large library of local content—60% of the library is local. With one show, you can reach so many people and reach a segment of customers you might never have expected to. We, therefore, try to have a broad content offering—from crime and gangster series, to classical dramas and comedies. This year, we are also trying to focus on female audiences. We believe you are as strong as your local content.
Where do you see the Turkish market going in the next five years, in terms of both subscribers and revenue?
We think growth of around 30% is possible and that in the next five years, we could see 5 million OTT subscribers. We definitely think OTT will overtake pay-TV in the next five years as pay-TV reaches its maximum penetration. It will be interesting to see if some OTT services start broadcasting sports rights such as football, which is very popular. They may not get number-one rights, but if they get the digital rights, that would definitely help them to exceed pay-TV. Opportunities such as this are another difference between us and global players: we have around 35 live channels on BluTV in Turkey which allow us to be quite flexible.
Do you expect that any other big Turkish media group can launch a similar service like BluTV in the international market?
It is difficult to say. The Turkish TV market is in disarray right now; some channels stopped airing shows for the last one-and-a-half months because they were losing money. We have done so much in this area that for another Turkish player to replicate this will be very difficult, so we may even partner with another Turkish player if they are willing to do this. The subscription business is a hard business, which requires focus—and we're focused on this. It will probably be smarter for everyone to join forces instead of creating competition now, especially when going global.
Constantinos Papavassilopoulos is IHS Markit Principal Research Analyst, Service Providers & Platforms
Max Signorelli is IHS Markit Research Analyst, Home Entertainment
Posted 30 January 2019
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