« Everyone is moving towards day and date of movie theater and home entertainment »
Interview of Jonas Dahllöf, CEO, SF Anytime
- Concerning the SF Anytime online film offer
- SBD: What are the competitive advantages of the SF Anytime offer?
JD: SF is a house owned brand name and is part of the history. Anyone who has grown up in these countries has some kind of relationship to the SF brand, by far the strongest when it comes to film. So an obvious way to answer the question is: it’s a broad service, we have a very strong brand name, we are very much related to sales so very competent, we have an incredible film supply. But to compete on the long term on a market with non-exclusive rights, I think this is a question not to be taken lightly.
- SBD: What is your business model based on?
JD: The key focus so far has been T-VoD (transaction video on demand). And we have a small subscription service for different TV platforms, a joint product together with our pay-TV district company. SF Anytime distributes its service over the net but also via a large number of telcos and TV plaforms in Scandinavia.
The digital market is still at an early phase. There is growth but on a low level. Our estimate is that both IPTV and Internet represent about 3-5% maximum of home entertainment. So in the early stages of a market, it’s more about setting up basics, getting the distribution online, etc. But on the long term, the question remains on how to win the competitive advantages in a market with a very limited ability to compete (no exclusive rights). Do you compete with better tales, or better encoded films, or with price? You have to use something in your value chain that is hard to copy; Apple is a great example of that.
- SBD: How many downloads have you had in the last years? How did the figures evolve?
JD: I’m sitting in the board of the newly formed digital resellers organization up here and we had discussions with the film industry, about whether we would give them the volume figures in confidence so they we can jointly have an understanding of how big the market is. And we were not able to convince each other that this was a good idea; which I think is a signal that the market is rather immature. But I can say that SF Anytime has seen a good and healthy growth over the last five years and we have been able to grow with the market. I think we left the “techies” and the “nerdies” behind, and we are moving towards more mainstream consumers. But we are still in a very early phase.
- SBD: What is SF Anytime strategy regarding connected TV and multiplatform distribution?
JD: We are active there as well. It’s a new phenomenon. We have launched a service with LG and there are other things yet to come. I think it’s very important to see the connected TV as an extension of the Internet. Since everyone will be there will not be any competitive advantages. It’s still an other way of accessing the net. You might be able to have some exclusive deals but on the long term, it’s still an extension of the Internet.
- Concerning illegal downloading and the legislative answer
- SBD: Whereas lots of studies show that illegal downloading causes huge industry losses, some others tend to underline a global positive effect of illegal downloading on digital sales. What is your position on this matter?
JD: Being part of the traditional film industry, I really have a problem seeing this as a driver force for healthy consumption. I think this is just a deception. The fundamental problem is much deeper. We have to be really careful on how we set the prices. And the only thing we know is that on the long term the price will go down.
- SBD: What has been the legislative answer from the governments in Scandinavia, along with the EU directive from 2001? What is your evaluation of the legislative framework to protect copyright at the digital era?
JD: Sweden is not a proud example in this area. It’s been very disappointing since politicians have been fishing in murky water. Sweden has 2 members in the European Parliament who are members of the Piracy party. We should not be bragging in this area. Along with the industry, we are lobbying a lot to get this in line. The pirates have been able to politically organize themselves and debate about privacy, surveillance, espionage, democracy, which they blended together with the idea that everything should be free on the Internet, thus creating confusion. The Piracy party in Sweden is even against the patent laws! I think it’s obvious we need to have a real firm but faire policy. We shouldn’t chase the young criminals but the system today has not been in place. If you are a believer in the market economy, you should also be a believer in strong institutions and law enforcement. And if you can’t have those basics, the future of film industry looks pretty dark.
We have tried to implement the three strikes system but we have not been successful; the telcos have been lobbying against that.
- SBD: What is your evaluation of the situation in Scandinavia regarding the windowing?
JD: There is no legal foundation for windowing in Scandinavia. The system, which has evolved over time, is more based on industry practice. The theater window in Sweden is 4 months, followed by DVD and VoD. For most of the US content, the VoD is 3 months but could be up to 6 months. Then it will be on pay TV, then first pay, then free TV. The TV industry thinks it should get early releases or some kind of forced collapse of the windows. What is happening today is that the VoD market is coming day and date with the physical DVD. The trend is quite clear that everyone is moving towards day and date of movie theater and home entertainment.
Also, for 10 years, the movie industry has been in a digitalization process. The theater owners need to make a huge investment in the digital projection to upgrade their cinemas. On the other side, most of the savings are occurring on the studios side. So there are some negotiations between the industry side and the theater owners about those investments in digital projectors. This is an important phenomenon to take into account when talking about the VoD releases within the theatrical release. Of course the theater owners are very skeptical.
- Concerning the consumers
- SBD: From a consumer point of view, what internal studies has SF Anytime made in order to define the needs and expectations of consumers for buying films online?
JD: Doing market research is an important part of the business. But do we know or need to know about the consumer? The answer is no, we don’t.
- SBD: How do you build costumer loyalty? How do you control the user interface?
JD: It’s extremely important to be able to control the user interface. We will be launching a new interface at the end of 2011. In this early stage of the market, our focus has been on being out there, where the consumption is made. The next phase for anyone in this industry lays in better using of the digital possibilities, flexibilities, new opportunities. The market is not mature, so it’s more about being present, being OK on the basic parameters. The game will be much more challenging going forward. I don’t know if subscription can be the key for everyone.
- SBD: What is SF Anytime position regarding the use of social media?
JD: The new site will give us much better functionalities for using social media for example, to create good relationship with the customer base and so on.
- To conclude
- SBD: What will be the key factors to success for films online distribution?
JD: It will be a combination of being good at comforting a position (competence and financial strength), understanding and dealing with distribution, being able to build costumer loyalty since there are no exclusive rights. Everyone can create the business but how do you create a business that makes money on the long term?