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European broadcasters going OTT: an inescapable consolidation?

If over the last years, the European video market has mainly been driven by the expansion of international platforms-Netflix on top of them, a growing number of European broadcasters have launched their own OTT offer, both on AVOD, SVOD and linear OTT side.

Usually domestic-market oriented, those OTT services mainly rely on catch-up and Live TV programming from their already existing linear TV offers, to accompany an increasing cord-cutting trend in Western European countries.

But most of those domestic OTT services have been struggling to increase their market share in more competitive environments, for several reasons. The broadcasters have limited the content investments on their OTT platforms to avoid cannibalisation with their traditional TV business and to ensure that most of their original productions and exclusive licenses would remain on their linear programming. This initiative has led to a lack of content diversification among broadcasters’ OTT platforms, limiting their potential reach. The growth of digital video ad spending indeed led smaller domestic broadcasters to launch their own web platform on an AVOD or freemium model, increasing in fact the fragmentation of already atomized markets.

In already mature markets, some actors initiated consolidation strategies, partnering with other domestic or regional players : LOVEstv in Spain, Joyn in Germany, NL Ziet in the Netherlands, or the soon to be launched Salto in France.

But those partnerships have faced major issues in terms of content strategy so far. On top of the limiting factors: the difficulties for the platforms to produce content on their own, to avoid competition with the other domestic OTT launched independently by their shareholders. Some of those joint-OTT, such as NL Ziet, adopted a revenue sharing model based on content consumption on the platform. Hence, building an exclusive content offer, independent from the broadcasters’ content offers, would lead to cannibalization of the broadcasters’ revenues on the platform (for more insights, our webinar about OTT strategies from European broadcasters is available here : https://dataxis.com/webinars/linear-ott-services-for-fta-broadcasters-from-free-to-pay/ ).

Even when those platforms dispose of their own content budget, the allocated amounts remain usually low. After investing initially €45 million over 3 years, SALTO’s shareholders finally decided to triple the amount of their content spending on the platform to €135 million. But on a yearly basis, this amount only accounts for less than 1.5% of the global content spending of France Television, M6 Group and TF1 Group.

To ensure a constant flow of new content on its platforms, Atresmedia adopted a different strategy. Launched in 2018, Atresmedia Studio has been the new nerve center of content production for the broadcaster, feeding its own platforms in Spain and exporting the content abroad. This in-house production allows the broadcaster to split its catalogue on its different services: AVOD and SVOD in Spain, and the recently launched Atresplayer Premium service in Latin America.

In fact, those separated OTT initiatives highlight the reality of a very fragmented European TV market, where regional offers need to adapt their value proposition to each country. Gradually launched over several European countries, Dplay managed so far to segment its OTT service into AVOD, freemium and premium offers depending on the market specificities of each country. But those initiatives remain rare in the European video landscape.

In the end European broadcasters will probably need to build consolidated offers to face increasing local and international OTT competition.

Thibault Giry

Market Analyst

Dataxis


July 10, 2020

  • Up to 3-year Quarterly history
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Thibault Giry

Market Analyst

Dataxis


July 10, 2020

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