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Combating the global SVOD threat

Global Netflix

Europeans love the content they find on Netflix and Amazon Prime Video so much that they are abandoning home-grown TV content. EU broadcasters are worried, and they are starting to work together to combat the threat.

BBC Director General Tony Hall summed up how many European broadcasters are feeling about the U.S. SVOD invasion:

“We can see now, more clearly than ever, that the global media landscape is likely to be dominated by four, perhaps five, businesses on the West Coast of America.”

However, UK and European commercial and public service broadcasters (PSBs) are not standing idly by as they lose their audiences. They are banding together to confront the threat. Here are four recent announcements that show how former adversaries are setting aside differences to confront their common enemy.

Germany: Discovery and Germany’s ProSiebenSat.1

German FlagDiscovery and Germany’s ProSiebenSat.1 are combining digital operations to create a new digital service they hope will have better reach and depth than the assets on their own. Discovery’s Eurosport Player will join the joint venture 7TV and ProSieben’s Maxdome in the new service.

The converged service will offer movies, TV series, and professional sports. It will also provide a range of viewing options. Viewers will be able to catch-up with shows on TV they have missed for free, ad-supported. They will also be able to subscribe to watch more content ad-free.

Both companies are committed to investing in the platform, which is set to launch in the first half of 2019. They will create digital originals for the platform and have invited other German commercial and PSBs to participate.

UK: BBC, ITV, and Channel 4 eye Kangaroo revival

British FlagIn 2009, the British broadcasting regulator ofCom nixed a proposed BBC project that would have brought together multiple broadcasters in a single SVOD service. At the time, the chief concerns of ofCom were the project, called Kangaroo, would stifle competition among the broadcasters and erect an insurmountable barrier to emerging online competition.

Nine years on and things look very different in the UK market. Netflix has 8.2 million subscribers and Amazon 4.2 million. Meanwhile, regional broadcasters are struggling to compete. For example, the BBC admitted that 16 to 24-year-olds spend more time with Netflix than with BBC TV and BBC iPlayer together.

It appears Kangaroo could be ready for rebound. The BBC, ITV, and Channel 4 are in discussions about forming an online joint venture. NBC Universal is also said to be involved. Given the dramatic shift in the market since 2009, perhaps ofCom will look more kindly on the proposal this time.

EU: Quota system

EU FlagIn April of 2018, the EU adopted a revision of the audiovisual media services directive that includes an EU content quota requirement for OTT TV services. VOD and SVOD services must ensure that 30% of the content on their platforms is of European origin.

The provision protects EU content production infrastructure but does not guarantee the content produced will be European in flavor. Netflix wants regionally produced content to have global appeal, not a European sensibility. The quota might not help reassert the cultural voice of European countries at all.

EU: Public sector broadcast production alliance

EU FlagEuropean PSBs spend €14 billion ($16.4) annually on production, but the money is divided up among different countries. Dividing resources in this way makes it difficult to compete with production budgets of global companies like Netflix. PSBs are coming together to try and level the playing field. France Télévisions, Germany’s ZDF, and Italy’s RAI announced they are building an alliance that will see them pool resources to create new content. The idea is to share the cost of bigger budget projects and show them in multiple European countries. However, according to Delphine Ernotte Cunci, CEO of France Télévisions, the alliance is not planning to copy the Netflix model:

“I think we have to implement one or more SVoD services, but we cannot copycat the Netflix model because it does not fit our European political and economic organization. But I would say that we have the means to create this positive environment whose sole purpose is to foster European creation to very high standards.”

Why it matters

EU broadcasters are increasingly concerned as citizens abandon watching their content for global SVOD services.

The broadcasters are starting to come together to share resources, launch joint services, and even change laws to help them to compete.

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