Streaming giants leave European TV networks to dust | Company | Economic and Financial News from a German Perspective | DW
The streaming wars between Netflix, Amazon Prime, and Apple TV + just got a lot more interesting. Two US television giants, Warner and Discovery, this week announced plans to merge, creating the world’s second-largest media company by revenue, after Disney.
The pairing will bring together several iconic mass media brands on a single video streaming platform, including HBO, CNN, Warner Bros, DC Comics, Animal Planet and Discovery Channel.
Tony Gunnarsson, streaming analyst at London-based media consultancy Omdia, told DW the merger will create a deal with both “in-house content and technology know-how” and “financial strength. necessary to compete on the scale of Netflix., Amazon and Disney. “
Discovery to bring dozens of channels to new streaming business, including Oprah Winfrey’s OWN TV channel
Huge production budgets
And the new platform will need that firepower. Between them, the US streaming giants will spend around $ 49 billion (â¬ 40.2 billion) on programming in 2021. Discovery CEO David Zaslav, who will lead the merged entity, is budgeting for content representing nearly half of the entire U.S. streaming market, at $ 20 billion.
Viewers are enjoying the streaming wars massively – enjoying the heyday of original television productions, including the British drama series “The Crown”, the comedy “Mythic Quest” and the horror series “Them”. Traditional European broadcasters, by contrast, find themselves increasingly squeezed out by the number of options available to viewers and budget cuts caused by public sector cuts or falling advertising revenues due to the COVID-19 pandemic. .
European content budgets are only a fraction of their US peers – German public broadcasters ARD / ZDF spend around 4 billion euros ($ 4.87 billion), while the UK’s largest public broadcaster, the BBC, has a budget of around 2.5 billion pounds (2.91 billion euros). $ 3.54 billion).
At the same time, the big US players have stolen a march on streaming as a content delivery system, continually shrinking the market share of their European peers. For example, strong subscriber growth for German TV Now Premium (RTL) and UK Britbox has been overshadowed by Disney’s streaming offering, exacerbating the global versus local imbalance.
Europeans ‘unable to compete’
âDisney + has succeeded in a relatively short period of time in becoming a key domestic service alongside Netflix and Amazon, leaving little room for the rest,â Gunnarsson said. He warned that European broadcasters might not be competitive in the paid streaming market and be left to provide free or ad-supported video streaming services.
While many broadcasters have seen their audiences grow during the pandemic, more than two-thirds of viewers in the UK, France, Germany, Italy and Spain say they now prefer to watch streaming platforms on TV, according to a report. study of the Magnite advertising platform. The UK is Netflix’s largest European market with 15 million subscribers, followed by Germany with 7.2 million. Almost half (46.4%) of all German households now have Amazon Prime compared to 53.5% in the UK.
Then there is the political pressure which threatens to undermine the biggest European broadcasters. For example, the BBC has always faced a more careful review of its 10-year charter renewal – most recently in 2017. However, the broadcaster now faces a ‘Defund the BBC’ campaign, to decriminalize the non- payment for a UK television license, which costs Â£ 157.50 per year and funds the BBC’s video, online and audio content.
In March, the broadcaster’s chief operating officer, Glyn Isherwood, told a UK parliamentary committee that by 2020 an additional 200,000 people had stopped paying their license fees, bringing the total to 1.7 million out of 27 million. of British households.
Such is the concern over the political assault on one of the world’s most famous broadcasters that 120 public figures, including author Sir Salman Rushdie and actors Hugh Grant and Michael Sheen, signed an open letter this week. to the British government.
The letter complained that a group of experts set up to discuss broadcasting reform was meeting in secret. He hailed the BBC and other UK broadcasters as an “important national asset” which the authors said was under serious threat from unregulated streaming services and “click-bait” content from big tech companies. In a time of fierce competition, he said the UK government had cut funding to the BBC by 30% over the past decade and the broadcaster now faces more cost savings.
ZDF is the abbreviation of Zweites Deutsches Fernsehen or Second German Television
The German party wants budget cuts
German public broadcasters also face political pressure ahead of the September federal elections. The business-friendly Free Democratic Party (FDP) called for a reduction in the regional broadcast network and a reduction in television license fees.
The party’s election manifesto now states that public online broadcasting should be “limited to areas comparable to traditional broadcasting,” in effect asserting that public broadcasters should not compete with private media and streaming platforms.
Public broadcasters, on the other hand, see their role as producers of popular, big-budget content that attracts viewers to less commercial content.
Gunnarsson believes the streaming wars will fuel further media mergers in Europe. He says broadcasters on the continent can continue to build on the success of their American peers by collaborating on more original productions. After all, Netflix needs local content not only to grow its audience in each foreign market, but also to appease the European Union’s rules on the origin of content.
“If Europe didn’t have that [public broadcasting] system, there would not be the ability to create high quality content supporting global streaming platforms, âhe said.