chili award write up

2017 European Over-the-Top Video Entrepreneurial

Company of the Year Award

BEST PRACTICES RESEARCH

© Frost & Sullivan 2017 2 “We Accelerate Growth”

Contents

Background and Company Performance ...................................................................................... 3

Industry Challenges ........................................................................................................... 3

Entrepreneurial Innovation and Customer Impact .................................................................. 3

Conclusion ........................................................................................................................ 6

Significance of Entrepreneurial Leadership .................................................................................. 7

Understanding Entrepreneurial Leadership .................................................................................. 7

Key Benchmarking Criteria ................................................................................................. 8

Entrepreneurial Innovation ................................................................................................. 8

Customer Impact .............................................................................................................. 8

Best Practices Recognition: 10 Steps to Researching, Identifying, and Recognizing Best Practices ...... 9

The Intersection between 360-Degree Research and Best Practices Awards ....................................10

Research Methodology ......................................................................................................10

About Frost & Sullivan .............................................................................................................10



Background and Company Performance

Industry Challenges

The media and entertainment industry in Europe has been undergoing momentous

technological and structural transformation over the last 5 years, giving the end consumer

unlimited choices in terms of content, price, platforms, and service providers as content

consumption shifts from linear to non-linear. Burgeoning over-the-top (OTT) services, with

more than 400 service providers across Europe, has resulted in a crowded marketplace

where everyone is fighting for the consumer’s time and share of wallet.

Competition has further intensified with the entry of global players including Netflix and

Amazon that have gained instant favor with viewers through aggressive marketing

strategies and popular international content. The popularity of OTT services amongst

viewers has prompted telecom providers, broadcasters, and pay TV operators to enter the

market with their own services; consequently, native OTT service providers, which have

smaller teams and financial power, have to resort to innovative strategies to differentiate

themselves from the big names.

The need for innovative differentiating points has given rise to niche service providers that

target a specific audience segment, such as expats or children, with content distinguished

by genre, language, picture quality, or other factors in order to avoid direct competition

with the big players. However, this is not an easy route to take because of the difficulty in

getting access to premium content, especially new movies.

Piracy is another cause of trouble to service providers in the region since it eats into the

already-thinning subscriber base and revenue. Very few native OTT service providers are

able to directly compete with international names and gain a significant market share.

Entrepreneurial Innovation and Customer Impact

CHILI, a European video-on-demand (VOD) service provider, enables viewers to rent or

purchase content from a vast catalogue of movies from around the world to view on

multiple screens. CHILI monetizes its content through a transactional VOD model, thus

relieving consumers from the obligation of a subscription. Despite competing with popular

names such as iTunes, Netflix, Amazon, and Google Play, CHILI boasts of 1 million

subscribers as of May 2017. Within 2 years of its establishment in 2012, CHILI was the

leader in VOD service in Italy in terms of contents and consumers, and has since

expanded its services to 4 additional countries: United Kingdom, Germany, Poland, and

Austria.

Competitive Differentiation

CHILI’s competitive ecosystem comprises both transactional VOD participants such as

Blinkbox, Rakuten TV, iTunes, and Google Play, and subscription VOD participants such as

Netflix, Amazon, and Now TV. CHILI differentiates itself through a combination of price,



content, and promotional offers. Content can be purchased for as low as £0.99 per movie

while competitors’ prices start at £1.49—or in the case of a subscription service, £5.99.

CHILI’s promotional offers for purchase or rental of even one movie are unique in the

industry.

CHILI’s content library includes more than 50,000 local and international titles that can

either be bought or rented and streamed or downloaded on all devices: PCs, tablets,

smart TVs, and smartphones. In comparison, Netflix’s content library has approximately

4,500 movies and 2,000 TV shows. CHILI’s content is offered in SD, HD, FHD formats with

subtitles.

Market Gaps

The Italian OTT market has services that are either subscription-based or part of a

bundled package offered by a network provider or pay TV service. The end consumer has

few options to choose from when they want a transactional service that offers one-stop

access to all content in high resolution without shelling out a lot of money.

CHILI has addressed this gap by creating a non-obligatory, no-subscription service with

access to a vast catalogue at a low cost. Its services are not bound to a network provider

or a pay TV service. CHILI provides a holistic experience to the consumer without the

costs of the likes of Netflix, Amazon, or iTunes.

Blue Ocean Strategy

CHILI’s growth is fueled by its mission to become an entertainment hub that provides its

viewers a 360-degree experience. The company constantly tries to innovate and

continuously enhances its portfolio. In line with its mission, the company’s platform was

one of the first in the industry to provide content in full HD when it launched in 2012. In

2015, it launched its content in UHD.

Recently, the company forayed into the business-to-business (B2B) space, providing

technology solutions to deliver video content and real-time streaming. CHILI plans to

continue its aggressive expansion in Europe in the coming years.

CHILI’s ability to provide a holistic experience to the consumer by combining reliability,

scalability, quality, and low prices with its content and product portfolio has enabled the

company to attain and retain the market leadership position in its countries of operation.

Passionate Persistence

The competitive ecosystem and the dynamic nature of the OTT market in Europe

necessitate persistence and constant innovation to increase subscriber base and revenue.

Within 5 years of its establishment, CHILI has become a common name in Italian

households. Instead of basking in its early-mover advantage, CHILI continued to invest in

strategic partnerships and investments to grow its business. The company diversified its



portfolio to include B2B products such as video platforms, which now contribute to almost

5% of its revenue.

CHILI’s aggressive marketing strategies and promotional offers have a dramatic effect on

its subscriber base: the company gains 20,000 to 25,000 subscribers every month just

through its marketing and promotional activities. It also partners with consumer

electronics manufacturers such as Samsung and LG to provide its app as part of their

smart TV packages.

CHILI continues to improve its services. It launched in August 2017 a redesigned service

with a fresh user interface and superior user experience. Its strategic acquisition of

Cinetrailer, a promotion platform for European movies, leverages its base of 5 million

customers and allows it to explore new markets.

Price/Performance Value

CHILI follows a value-for-money strategy. The price of contents offered on its Platform

ranges from €0.9 to €11 depending on the picture resolution or whether the viewer wants

to buy or rent the content. This is one of the lowest rates available in the market for legal

streaming or download. All titles available through its OTT app or Web site are offered in

SD, HD, HD+, HDR, UHD, and 1080p formats. All are offered through adaptive bit rate

streaming so consumers can have uninterrupted streaming with Internet connection

speeds as low as 1 Mbps.

CHILI is one of the few OTT services that provide viewers access to movies in the first pay

window—that is, fresh releases. Its 360-degree cinema experience with integrated

promotions through partnerships from other industry stakeholders has become a big hit

amongst European video viewers. Through these initiatives and several new ones planned,

CHILI remains the preferred provider for its highly reliable service offerings, value-added

services, and generally superior service.

Brand Equity

Rapid changes in the video entertainment market have given end consumers unlimited

options; OTT service providers find it increasingly difficult to maintain loyalty as customers

switch to another service as soon as a free trial period end. Even the big names find it

hard to retain their consumers. CHILI, however, prevents churn by engaging the customer

before, during and after the interaction cycle.

CHILI offers integrated promotions focused on cinema, including discount coupons,

themed gadgets and premium merchandise. Some viewers also get a chance to visit

movie studios. The company partners with network providers, consumer electronics

manufacturers, fast-moving consumer goods brands, and retail outlets to run integrated

campaigns for its contents, especially new releases.



Conclusion

The dynamic nature of the video landscape in Europe and the intense competition in the

OTT market necessitate a multipronged strategy to ensure market leadership. At the same

time, constantly changing consumer preferences and evolving market trends necessitate

continuous refinement and expansion of service offerings. CHILI has recognized this need

and strives to not just provide an end-to-end video experience but also a 360-degree

engagement even outside of the movie viewing time. With its reach and size, CHILI shows

enormous growth potential through its partnerships, acquisitions, and aggressive marketing

strategies.

With its strong overall performance, CHILI is recognized with Frost & Sullivan’s 2017

Entrepreneurial Company of the Year Award.



Significance of Entrepreneurial Leadership

Ultimately, growth in any organization depends upon customers purchasing from a

company and then making the decision to return time and again. In a sense, then,

everything is truly about the customer—and making those customers happy is the

cornerstone of any long-term successful innovation or growth strategy. To achieve these

dual goals (customer engagement and growth), an organization must be best-in-class in

three key areas: understanding demand, nurturing the brand, and differentiating from the

competition.

Understanding Entrepreneurial Leadership

Demand forecasting, branding, and differentiation underpin an entrepreneurial company’s

journey toward forming deep relationships with customers and permanently altering the

market with their actions. These two concepts—Entrepreneurial Innovation and Customer

Impact—are the cornerstones of this Award, as discussed further in the next section.



Key Benchmarking Criteria

For the Entrepreneurial Company of the Year Award, Frost & Sullivan analysts

independently evaluated two key factors—Entrepreneurial Innovation and Customer

Impact—according to the criteria identified below.

Entrepreneurial Innovation

Criterion 1: Market Disruption

Requirement: Innovative solutions that have genuine potential to disrupt the market,

obsoleting current solutions and shaking up competition

Criterion 2: Competitive Differentiation

Requirement: Deep understanding of both current and emerging competition to create and

communicate strong competitive differentiators in the market

Criterion 3: Market Gaps

Requirement: A clear understanding of customers’ desired outcomes, the products that

currently help them achieve those outcomes, and where key gaps may exist

Criterion 4: Blue Ocean Strategy

Requirement: Strategic focus on creating a leadership position in a potentially

“uncontested” market space, manifested by stiff barriers to entry for competitors

Criterion 5: Passionate Persistence

Requirement: A deep belief in the “rightness” of an idea and a commitment to pursuing it

despite seemingly insurmountable obstacles

Customer Impact

Criterion 1: Price/Performance Value

Requirement: Products or services offer the best value for the price, compared to similar

offerings in the market.

Criterion 2: Customer Purchase Experience

Requirement: Customers feel they are buying the most optimal solution that addresses

both their unique needs and their unique constraints.

Criterion 3: Customer Ownership Experience

Requirement: Customers are proud to own the company’s product or service and have a

positive experience throughout the life of the product or service.

Criterion 4: Customer Service Experience

Requirement: Customer service is accessible, fast, stress-free, and of high quality.

Criterion 5: Brand Equity

Requirement: Customers have a positive view of the brand and exhibit high brand loyalty.



Best Practices Recognition: 10 Steps to Researching,

Identifying, and Recognizing Best Practices

Frost & Sullivan analysts follow a 10-step process to evaluate Award candidates and

assess their fit with select best practice criteria. The reputation and integrity of the

Awards are based on close adherence to this process.

STEP OBJECTIVE KEY ACTIVITIES OUTPUT

1 Monitor, target, and screen

Identify Award recipient candidates from around the globe

• Conduct in-depth industry research

• Identify emerging sectors

• Scan multiple geographies

Pipeline of candidates who potentially meet all best-practice criteria

2 Perform 360-degree research

Perform comprehensive, 360-degree research on all candidates in the pipeline

• Interview thought leaders and industry practitioners

• Assess candidates’ fit with best-practice criteria

• Rank all candidates

Matrix positioning of all candidates’ performance relative to one another

3

Invite thought leadership in best practices

Perform in-depth examination of all candidates

• Confirm best-practice criteria • Examine eligibility of all candidates

• Identify any information gaps

Detailed profiles of all ranked candidates

4

Initiate research director review

Conduct an unbiased evaluation of all candidate profiles

• Brainstorm ranking options • Invite multiple perspectives on candidates’ performance

• Update candidate profiles

Final prioritization of all eligible candidates and companion best-practice positioning paper

5

Assemble panel of industry experts

Present findings to an expert panel of industry thought leaders

• Share findings • Strengthen cases for candidate eligibility

• Prioritize candidates

Refined list of prioritized Award candidates

6

Conduct global industry review

Build consensus on Award candidates’ eligibility

• Hold global team meeting to review all candidates

• Pressure-test fit with criteria • Confirm inclusion of all eligible candidates

Final list of eligible Award candidates, representing success stories worldwide

7 Perform quality check

Develop official Award consideration materials

• Perform final performance benchmarking activities

• Write nominations • Perform quality review

High-quality, accurate, and creative presentation of nominees’ successes

8

Reconnect with panel of industry experts

Finalize the selection of the best-practice Award recipient

• Review analysis with panel • Build consensus • Select recipient

Decision on which company performs best against all best-practice criteria

9 Communicate recognition

Inform Award recipient of Award recognition

• Present Award to the CEO • Inspire the organization for continued success

• Celebrate the recipient’s performance

Announcement of Award and plan for how recipient can use the Award to enhance the brand

10 Take strategic action

Upon licensing, company is able to share Award news with stakeholders and customers

• Coordinate media outreach • Design a marketing plan • Assess Award’s role in future strategic planning

Widespread awareness of recipient’s Award status among investors, media personnel, and employees



The Intersection between 360-Degree Research and Best

Practices Awards

Research Methodology

Frost & Sullivan’s 360-degree research

methodology represents the analytical

rigor of our research process. It offers a

360-degree-view of industry challenges,

trends, and issues by integrating all 7 of

Frost & Sullivan's research methodologies.

Too often companies make important

growth decisions based on a narrow

understanding of their environment,

leading to errors of both omission and

commission. Successful growth strategies

are founded on a thorough understanding

of market, technical, economic, financial,

customer, best practices, and demographic

analyses. The integration of these research

disciplines into the 360-degree research

methodology provides an evaluation

platform for benchmarking industry

participants and for identifying those performing at best-in-class levels.

About Frost & Sullivan

Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth

and achieve best-in-class positions in growth, innovation and leadership. The company's

Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined

research and best practice models to drive the generation, evaluation and implementation

of powerful growth strategies. Frost & Sullivan leverages more than 50 years of

experience in partnering with Global 1000 companies, emerging businesses, and the

investment community from 45 offices on six continents. To join our Growth Partnership,

please visit http://www.frost.com.

360-DEGREE RESEARCH: SEEING ORDER IN

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chili award write up

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