SVoD a black hole for European broadcasters

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Investment analysts at Deutsche Bank used the RTL results and comments made earlier this week to examine the challenges faced by Europe’s major broadcasters coming from various current – and new – OTT players.

RTL admitted that it might have to significantly increase its investment in original programming from its current €350 million annual level. RTL is reviewing how much to place into new programming, and is expected to confirm the commitment ahead of its full year results in March next year.

Deutsche Bank says the upcoming threats of Disney+, HBOMax, Apple TV+ and NBC Universal who are all launching in the next 6-9 months, as well as rising spend from Sky Go/SkyTicket, will likely mean a €400 million commitment from RTL.

But whatever the amount, the bank suggests that across Europe the current levels of investment in new programming is insufficient when compared to the cash being ploughed into Europe by the new OTT players.

“ProSieben, ITV, TF1/M6 and the Spanish broadcasters have all announced far more modest spend. They will also need to raise spend or see a further acceleration in the decline of their core linear advertising revenues,” said the bank’s note to clients.

“RTL’s progress in attracting 200,000 new SVoD subscribers in 1H19 is certainly respectable. But this comes before keenly priced and far more comprehensive new offers. At least half of the current RTL 1.2 million subscribers are in the Netherlands, where the RTL/Videoland €7.99pm pricing looks very vulnerable with Disney+ pricing announced a month ago of $7.99 in the US. Even the TVNOW offer in Germany from RTL at a lower price of €4.99 looks vulnerable versus with 3 year Disney+ subscriptions being offered at $3.92pm,” adds the bank.

“Meanwhile the comprehensive nature of the US giants’ offering plus their ability to later move into local programming (as we have seen with Sky and Netflix) are concerning. The Disney content budget of $4 billion pa within 3 years and AppleTV+ spending of $6bn (FT, 19 August 2019) is a global figure, but RTL’s incremental content spend is just €100 milliom pa over the first years of launch, by contrast, and ITV’s an even more paltry ~£30 million pa.”

The bank suggests that RTL – and perhaps other broadcasters – will be trimming their shareholder dividends in order to fund extra programming investment.


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