Analyst: French broadcasters focusing on original content
June 20, 2019
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:
- Pay-TV group Canal+ has made cost cuts to free up funds to invest in content. The broadcaster launched a new SVoD service in March 2019– Canal+ Séries – dedicated to a younger audience, supported by shows such as Mouche, a remake of the BBC’s hit show Fleabag.
- Commercial broadcaster TF1 is seeking advertising revenue opportunities from its digital activities. It has just announced plans to further enhance its catch-up platform MyTF1 with new advertising inventory and new exclusive content.
- Public broadcaster France Télévisions is focusing on international partnerships with other broadcasting groups to help support its local content investments.
- Orange created a new division – Orange Content – in 2017, merging its pay TV operations OCS with film division Orange Studio, with the aim of producing high-end series to drive its premium TV operations. Literary adaptation The Name of the Rose was the first OCS Original show to air, broadcast in March 2019.
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:
- Canal+’s production arm StudioCanal launched a new TV production unit in February 2018, dedicated to creating premium original content for an international audience. Canal+ also produces content dedicated to its foreign local markets: Invisibles was released in October 2018, the broadcaster’s first African original series, a market the broadcaster has earmarked for growth.
- The pay-TV operator also collaborates at an international level and has worked on the US remake of its original Calls with Apple and Safe with Netflix via a UK-based subsidiary.
- TF1 is increasing its investment in European creation via Newen, a global production company it acquired in 2015. It has also bought stakes in European production houses in Belgium, the Netherlands and Denmark. Shows created by these companies include Versailles, Ares and The Bridge.
- France Télévisions has formed international partnerships to compete with Netflix’s investment in exclusive content. In 2018, it partnered with Italian broadcaster RAI and German broadcaster ZDF to fund and produce high-profile TV series for domestic and international audiences. So far, four projects have been announced, including Leonardo and Around the World in Eighty Days
“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.”