Old rivals become new frenemies
By Kate Bulkley
For IBC, May 15, 2019
Rival broadcasters are forming new alliances as they look to compete with streaming services.
In the face of swingeing competition from the global streamers, European broadcasters are fighting back. Specifically, they are starting to put to one side long-held rivalries with the goal of creating scale. They are also leaning into their local broadcasting know-how as a point of differentiation versus the global streamers.
Global streamers: Consumers “spoilt for choice”
Indeed, unprecedented collaborations among broadcasters are emerging on several fronts, from the joint commissioning of programming, to the launch of collaborative distribution platforms. Commercial broadcasters across Europe are also creating transnational advertising alliances to help them compete more effectively with digital advertising giants Google and Facebook. At the same time, broadcasters are re-prioritising “local-ness” in a bid to differentiate themselves from the global streamers like Netflix and Amazon.
It’s a veritable trifecta of fight-back tactics, but it is one not without vulnerabilities or risks. European broadcasters are betting that working together can position them to stand up against the deep pockets and global reach of tech powerhouses, but the counter-view is that the broadcaster fight back is too little, too late.
Deep-pocketed global players will be tough to compete against, especially as traditional media companies including Disney, Discovery and Warner Media are ready to launch their own OTT streaming services later this year. All of these new services will come with deep back catalogues and ambitious original commissioning budgets providing yet more choice for consumers and more competition for national broadcasters.
Indeed, consumers are spoilt for choice whilst also becoming more discerning. In this environment, standing out and holding consumer’s attention is becoming more difficult.
Plus, for a broadcaster, launching an OTT service carries the potential threat of cannibalisation: the launch of subscription streaming services by advertising-supported broadcasters like TF1 in France and ITV in the UK, may eat into their respective, core linear TV advertising businesses.
Indeed, a recent report from Berenberg bank underlined the “double-risk” to ITV: first, they note, is the threat of cannibalising ITV’s linear, ad-supported schedule by putting attention-getting episodic dramas first on the soon-to-be launched planned SVoD service Britbox. Second is the potential loss of revenue when Britbox prioritises attention-grabbing content on the SVoD platform. If boxsets live in perpetuity on Britbox, this will deprive ITV of potential revenue from the sale of rights to third-party platforms in the UK, including Netflix.
So, is the cost of launching and commissioning for an SVoD service a net-gain or a net-loss for a broadcaster? According to Berenberg, Britbox, which is a joint venture with the BBC, is unlikely to be profitable before 2024. Based on its assumptions, Berenberg forecasts that that Britbox will achieve 20% penetration by 2025 - based on a programming budget in 2020 of £105 million - which is 10% of the budget for the main ITV1 channel.
Britbox’s ISP will be a “hyper-Britishness” with a focus on leveraging a “deep understanding of what mass audiences want,” Carolyn McCall, CEO of ITV told a Broadcasting Press Guild lunch in April. McCall insists that Britbox, which is expected to launch by the end of 2019, is not a “Netflix killer” but is a “complimentary service”. But clearly Britbox is meant to help ITV and the BBC compete against Netflix and the other streamers by offering box sets and the navigation and personalisation tools that have made the Silicon Valley streaming services so attractive to consumers.
The next battleground
There is a lot to fight for, both in terms of culture relevance and the continued control of broadcasting by national champions. “Local content is the next battleground,” says Guy Bisson, analyst with Ampere Analysis, commenting on how broadcasters in France will make a planned, joint subscription streaming service called Salto backed by TF1, France Television and M6, stand out against Netflix and Amazon.
In France, Netflix has 5 million subscribers and Amazon has about 2.4 million. Salto has not yet announced a launch date, delayed both by local regulatory approvals and the signing of new accords with French producers for online rights. However, France Television recently signed an important three-year deal to hold onto online rights to programmes it has co-financed.
“Traditional linear TV is no longer the model,” France Television CEO Delphine Ernotte told a MipTV audience. “We need to continue to have the best linear channels that we can but we need also to invest online. We need to have both.”
Nicolas de Tavernost, president of M6, told an audience at Serie Mania in April that the evening TV schedule in particular is unrecognisable from a decade ago. M6 has had to move away from US drama series to focus on local shows in a bid to differentiate itself from and compete with the big Silicon Valley streaming platforms. M6 has focused increasingly on in-house produced, studio-based game and chat shows in access prime-time and French-language drama in the prime-time slots.
In addition to Salto in France, the Spanish broadcasters RTVE, Artesmedia and Mediaset are also collaborating on collaborative TV service called LovesTV which expects to launch in June. The service uses Hybrid Broadcast Broadband TV (HbbTV) but has ambitions to be a full OTT service. Content from all three broadcasters as well as catch-up options, an updated TV guide and other interactive features are part of the plan to fight back against the streamers and give audiences in Spain more choice and better functionality.
Meanwhile in Germany, broadcaster ProSeibenSat1 and Discovery have announced June as the launch date for the newly renamed Joyn, an ad-supported TV streaming service. Joyn will show some programmes a week ahead of their premiere on linear free-TV as well as having a 30-day catch-up window. So far, RTL - the rival commercial broadcaster to ProSeibenSat1 - has declined to partner Joyn, preferring to move ahead with its own service TV Now, which combines live streamed TV and on-demand TV as well as some content that is premiered on the service before its linear launch.
In UK, Freeview reached a new milestone in January when it launched a mobile app that allows users to live stream the BBC, ITV and Channel 4 plus on demand content from BBC iPlayer, ITV Hub, All4, My5, and UKTV Play. Launched in 2002, Freeview now reaches 17 million homes and according to the company it provides a “competitive constraint” on both pay TV operators Sky and Virgin TV as well as Netflix and Amazon. It’s true that the public service channels are more popular in homes with a Freeview access than they are in pay TV homes (Sky or Virgin) in the UK but the pace of innovation at Freeview has been a lot slower compared with its Silicon Valley rivals.
Thompson acknowledges that competition in the TV marketplace is accelerating, putting more pressure to evolve: “It’s a banal thing to say, but you can’t stand still as a platform or have innovations every four or five years and remain relevant,” Jonathan Thompson, the CEO of Digital UK, said in a recent interview.
Transnational alliances are also popping up as European broadcasters look to work together on joint programme commissions. A transnational collaboration of France Télévision, Italy’s Rai and German broadcaster ZDF has created a co-production alliance to pool finances to produce a range of high-end content across a range of genres, including drama, documentaries and other entertainment for the international market.
Meanwhile, a year ago Scandinavian broadcasters launched a joint initiative called Nordic 12, designed to strengthen Nordic culture and secure rights to the best Nordic shows against competition from streaming services. The alliance includes broadcasters DR, NRK, SVT, RÚV and YLE and promises to use cooperation among them to make faster decisions on 12 drama commissions a year.
Old rivals, new friends
As traditional linear TV advertising revenues are stagnating, thanks to the fragmentation of audiences and the growing appeal of the SVOD businesses, broadcasters which have traditionally battled against each other are also teaming up on new joint advertising initiatives. In the UK, Sky, Channel 4 and ITV are working to promote TV as an advertising medium that offers advertisers a more “brand-safe” environment for their messages compared to the unregulated and unmonitored digital platforms. The stakes are high: in the UK, the Silicon Valley giants led by Google and Facebook are estimated to be winning up to 90% of all new online advertising revenue.
In France, 85% of viewing is still to linear TV and just 4 percent is VoD, according to M6. As more younger viewers move online and to streaming platforms, broadcasters are teaming up to protect their digital revenues from eroding. Three broadcasters, France Télévisions, M6 and TF1, have created an alliance called Sygma that has created a common standard for advertisers to buy inventory on VoD programmatically
“Broadcasters across Europe are also collaborating to offer advertisers a pan-European alternative”
In addition to working more closely in national markets, broadcasters across Europe are also collaborating to offer advertisers a pan-European alternative to buying ads from the digital giants. But scaling alliances and creating combined sales houses across European markets is not easy.
One example of pan-European collaboration on advertising is the European Broadcaster Exchange (EBX) which partners four broadcasters in the five leading European television markets: Germany’s ProSiebenSat.1, TF1 of France, Mediaset covering both Italy and Spain and Channel 4 from the UK.
International video marketplace: ”greater competition, greater viewer choice”
Separately, international video marketplace, RTL AdConnect launched in 2017, combines VoD inventory from broadcasters including ITV in the UK, and RTL across several markets, including M6 in France using the HBB technology standard with inventory from YouTube, too. According to Stéphane Coruble CEO, RTL AdConnect, there’s an appetite for this from brands. “Addressability and targeting are the holy grail all advertisers are looking for,” he said.
Broadcasters are rising to the challenges of greater competition and greater viewer choice by collaborating on subscription streaming services, co-commissioning content and offering national and pan-European advertising alternatives. The goal is to create both new revenue streams and crucially to remain relevant to digitally savvy audiences.
But it is not a straight play between broadcasters and the Silicon giants: TF1 recently announced an accord with Netflix to collaborate on its first big-budget period series La Bazar de la Charité, based on the tragic fire that occurred during a charity event in Paris in 1897. TF1 CEO Giles Pélisson has been a pretty outspoken critic of Netflix but he said the deal works because Netflix agreed to let TF1 hold onto rights for local windows in France. “The important thing is that there is a sharing of the value,” Pélisson said.
Make no mistake, consumers have a lot of choice in what content they watch and where they watch it. For broadcasters, the stakes are high. Working with the global steamers means that they may not have access to the audience data that can help them with future commissioning decisions as well as calculating how to value of advertising slots. Plus, if consumers associate a BBC or TF1 drama with a global streamer and not the national broadcaster, support for public service broadcasting and commercial broadcasters will dwindle away. This poses an existential threat to broadcasters and deserves proper scrutiny by policy makers concerned with the future of national broadcasting.