Flash Insight

– For public release –

First commercial SVoD only streaming service

with extensive Multiscreen/Device support in

Germany

1

Management Summary

Easy to access SVoD movie streaming platform for multiple devices and screens, even for offline

consumption. Proposition

Watchever offers an offline mode for consuming movies & series without internet connection. Pricing

is lower than national competititor Maxdome but has currently less content available. Differentiator

Market penetration with BILD/ComputerBILD special launch offer (until January 24, 2013).

Watchever is the first SVoD offer for the iOS platform (incl. Apple TV), and customers finally can use

a legal and comfortable streaming service like they heard of with Netflix & Hulu in Germany.

Market implications

As the content catalogue grows and becomes up-to-date, the offer can be competitive, even if Netflix

enters the German market with an SVoD offer.

Other services need to catch up with their offering, otherwise they will suffer substantially.

Watchever Outlook

Source: Mücke, Sturm & Company analysis

Watchever has launched its streaming service in Germany ,offering movies and series a broad range of mobile devices for a monthly flat rate.

Watchever sets new standards for VoD streaming services in Germany in terms of features & pricing.

However, the content catalogue (movies & series) lacks of new titles. Google Play Movies is more

expensive, but has (thanks to TVoD business model) a lot more (new) titles. Lovefilm offers only

some 1400 movies with a similar title aging compared to Watchever. In the US, Netflix is still

unbeaten with regard to its content catalogue (a mere 10,000 titles) and pricing ($7.99 per month).

Benchmarking

2

Watchever offers a pure SVoD service that is available on the most relevant devices. Watchever in Germany: Details

Offering Details

Unlimited and ad-free streaming of series & movies for

a fee of 8,99€ per month.

“Thousands of movies & series (US, EU and German)”

from independent and major studios, many of them in

HD quality, all in original language or German (dubbed).

Available on Smart TV (Samsung, Panasonic, more to

come), mobile devices (iPhone, iPad, Android tablets),

game consoles (both PS3, XBox to come), on Apple TV

and online (PC, Mac, both via Silverlight plugin).

Offline consumption on mobile devices possible.

Flexible child protection settings

Personalized and social recommendations (Facebook)

Multi-Screen & Mobile Companion

Strategic Rationale

Offer an attractive streaming service in an easy-to-understand pricing model and bring it to the masses.

First mover advantage in gaining market share in Germany without competition from US services like Netflix or Hulu,

which are both said to enter the German market soon and of which a wide audience already heard of.

Source: Mücke, Sturm & Company analysis

The service‘s homepage (logged in)

3

Content suppliers and consumers are benefiting from the entrance of Watchever in the German VoD streaming market. Implications for German VoD ecosystem

Content suppliers

Consumers

Competitors A new strong contender for the other SVoD providers Maxdome,

and expecially Lovefilm (SVoD only), but in a growing market.

No competitor for DtO, TVoD or FVoD services.

With Vivendi, Watchever has a strong parent company and might

be tenacious enough to fight market share.

Watchever is a rather pushing product with BILD as a strong

marketing partner in Germany.

New option for the distribution and monetization of content at the

end of the monetisation chain.

Teach German customers to pay for content on a monthly basis,

not per view.

Option to consume premium video content with an easy to access

platform in a reasonable pricing model

Opportunity to consume premium video content on Android devices

Comfort-of-service through unique and best-in-class features

Implication Description

The competitor positioning shows the focus of the respective competitor and highlights other supported business models

DtO: Download to Own; TVoD: Transactional Video on Demand; SVoD: Subscription-based Video on Demand; FVoD: Free Video on Demand

Source: Mücke, Sturm & Company analysis

TVoD SVoD FVoD DtO

Market View

/

4

Watchever clearly outperforms the competition in terms of features and UX.

High-level SVoD streaming services benchmarking

First

impression

Intuitive UI, especially on Apple TV

Consistent user experience on

different devices

Personalized recommendations

Various movies highlighted on start

page

Detailed movie pages

Detailed information and cross-links

to Amazon

Recommendation of comparable

movies

Content

offering

Reasonably large catalogue of

movies & series (1,639 movies

& films, 352 series‘ seasons)

Lacks newest movies and latest

series‘ seasons

Broad content offering

(6,054 movies and 212 series)

Blockbuster Option for an extra fee (4

blockbusters for 5€ per month)

Only weak streaming content offering

(1,363 movies & films)

Still focussing on DVD rental

Feature Set Offline mode for mobile devices

Multi-screen & mobile companion

functionality

Child protection with individual FSK-

threshold

All titles as OV and German audio

Offline mode for PC/Mac/Laptop

2-step child protection (FSK16 and

FSK18)

Many titles as OV and German audio

Detailed content search

Child protection FSK18 only

Accessibility Smartphones, Tablet, Smart TVs,

Media Clients (Apple TV)

Up to 5 devices and 3 parallel

streams, easy device management

Many Smart TV, STB, PC/Mac/

Laptop, PS3, no mobile devices

supported

All devices need to access the

internet with the same IP adress

Large range of CE supported

(with focus on Sony products)

Using multiple devices with one

Lovefilm account possible

Market

position

New entrant Incumbent Competitor with focus on DVD rental

Source: Mücke, Sturm & Company analysis, content catalogue sizes as of January 15, 2013

5

Watchever focuses on recommendations & social media as the preferred method for content catalogue utilization. Watchever Recommendations & Social Media

Recos

Social

media

Recos

Social

media

Source: Mücke, Sturm & Company analysis

6

Mobile Companion

Navigate to the desired content comfortably on your mobile device:

Supported Devices

With its elaborated features and accessibility, Watchever is up-to-date and be able to succeed in entering the German market. Supported Devices, Mobile Companion & Multi-Screen

Laptop

PC, Mac

iPad

Android Tablets

iPhone

Apple TV

XBox 360*

PS3*

Samsung (2012 Models)

Panasonic

LG*, Philips*

Multi-Screen

Continue watching a movie started on your TV on your mobile device or vice versa:

Source: Mücke, Sturm & Company analysis, content catalogue sizes as of January 15, 2013

*) announced for Q1/2013

7

Watchever lacks newest movies and latest series‘ seasons, but with its feature highlights, it has the potential to gain a decent customer base in a growing market. Watchever Outlook

Source: Mücke, Sturm & Company analysis

We are constantly analyzing

industry trends and

developments in the sectors

of technology, media and

telecommunications

If you are trying to determine

which impact Watchever or

similar developments have on

your business – please get in

touch!

Patrick Sturm

Managing Partner

T: +49 173 3916619

E: p.sturm@muecke-sturm.de

W: www.muecke-sturm.de

Contact Drivers of Watchever

+ Potential for Watchever exists through its

comprehensive feature set, including

multi-screen, companion device, offline

mode and OV titles

+ Content catalogue utilization through

state-of-the-art tools: personalized and

social recommendations, live search,

linked content

+ Market potential in Germany through

partnering with BILD (tabloid

newspaper).

+ Broad potential user base for mobile

offering through large range of

supported mobile devices.

+ Exclusively streaming Watchever content

on Apple TV widens the user base once

more.

Hurdles for Watchever

- Weak overall content offering, due to

the SVoD model being at the end of the

VoD expoitation chain

- Support for older Smart TV (before

2012) must be offered as well.

- New market entrants (Netflix & Hulu

are ante portas) might shortly offer

outstanding SVoD at a competitive

price.

- Payment options include Visa &

Mastercard only

German SVoD market share potential: 20-30%