French broadcasters are increasing their investment in local original productions to compete with Netflix’s five million subscriber base in the country, according to analyst firm Ampere Analysis. In 2018, the big five French players – France Télévisions, Canal+, TF1, M6 and Orange – spent €5.4 billion on content, with over 40 per cent of that figure dedicated to originals. At the end of May 2019, 106 new local shows were in development or production. But with Netflix currently producing 15 new programmes for a French audience, and stiff competition from global players such as beIN Sports, Mediapro and Amazon Prime Video, is the response of the big five French broadcasters enough to compete in a rapidly transforming market?
Time for broadcasters to reject their traditional business models
Increased competition for content and slow growth in TV advertising revenue (alongside budgetary cuts for France Télévisions) have forced French broadcasters to rethink their business models to compensate for lost revenue. The local players have reduced their spend on acquired content to redirect funds to producing their own local originals that will appeal to both a domestic and international audience. This tactic offers two significant benefits: monetisable IP portfolios, and a diversified revenue stream.
The broadcasters have adopted different tactics and strategies:
Salto and the shift to digital
Subscription OTT video represents only 3 per cent of audiovisual revenues in France, a market worth a total of nearly €14 billion in 2018. France’s OTT market lags a number of its peers – including Scandinavia, the UK and the US – but digital subscriptions are growing rapidly. To tap into this growth, the top three broadcasters – France Télévisions, TF1 and M6 – have announced the creation of Salto, a new SVoD platform set to launch later this year. Offered alongside their free channels, Salto will provide TV shows and exclusive content with an emphasis on French and European productions. Through this new service, the three broadcasters aim to generate revenue from subscriptions and maintain control over content rights following their initial broadcast window. For instance, France Télévisions has said it will cease licensing the French digital rights of Call My Agent! to Netflix and has signed an exclusivity time period on digital rights for the shows it co-produces or commissions.
The international opportunity
French broadcasters are looking further afield to grow key markets, including Africa where Canal+ has more than four million subscribers across 25 countries. This market has a rapidly expanding middle class with growing disposable income which makes it particularly appealing. Once again, the broadcasters have taken different approaches to international expansion:
“French consumers are adopting digital TV subscriptions quickly, and the local broadcasters know they must respond fast if they are to protect their revenues in a changing media landscape,” advised Léa Cunat, Analyst at Ampere Analysis. “With increasing competition from international behemoths Netflix and Amazon Prime Video, fierce price wars for exclusive sports content, and flat ad revenues, there’s no shortage of tactics and strategies being employed to stay in the game. But the emphasis put on original content encourages creativity and the emergence of new talents. It’s a fascinating market to watch as it transforms.”