Mark Moeder, CEO of Denver-based data firm SymphonyAI Media, looks at how Europe’s streaming business could be about to change radically amid growing competition and a cost-of-living crisis.
The streaming wars continue in full swing around the world with global players, traditionally led by Silicon Valley, now starting to be challenged by US studios and AVoD services, all while local players find a corner of their market to make their own.
While pay TV services continue to account for the largest number of acquisitions of English-language series, they no longer hold the complete majority they once did. Meanwhile, competition is heating up as SVoDs of all shapes and sizes start to make ground and find success in Europe.
The latest data, however, suggests the status quo is set to change radically, with Netflix facing new challenges while AVoD services are marching into the fray to tempt price-conscious eyeballs away from subscription services.
Competition is heating up
The prevalence of studio SVoDs in the English-language space has had an inevitable effect on the levels of vertical integration in the market, with just over half of English-language scripted TV series being licensed directly from US studio’s distribution arms to their own SVoD services.
Disney is technically the largest acquirer of US content in Europe, thanks to a combination of its presence in almost every major European territory and its parent electing to license nearly all of its current distribution catalogue to Disney+.
WarnerMedia’s roll-out of HBO Max continues to be held back by a number of existing volume deals to third parties. Most recently, its volume deal with VodafoneZiggo in the Netherlands ended, resulting in an almost immediate launch of HBO Max in the market. With some volume deals, such as those with Sky in the UK, Germany and Italy, set to last until 2025, it will take some time for HBO Max to reach as ubiquitous a level as Disney+ in Europe.
SVoD success in Europe
Local SVoD services are finding ways to thrive in Europe, with many being led by broadcasters. Viaplay, from Nordic Entertainment Group (NENT), is not only a major buyer of English-language shows – the group being the most prolific buyer that is not owned by a US studio or Silicon Valley company – but has also produced a number of highly lauded Nordic originals that have found success overseas.
International expansion is not reserved for just US studios and Silicon Valley, as NENT continues to expand Viaplay’s reach past the Nordics to include the Baltics, Poland, Netherlands and even the US. Most Viaplay originals now are having their territory rights drawn up from commission to ensure their first-window debut will be on the SVoD in all current and future homes of the service.
In France, meanwhile, Salto is an SVoD established in 2019 by the three main French free TV broadcasters: France Télévisions, TF1 and M6. Rather than producing originals, the SVoD has focused on acquiring UK and US TV shows and branding them as exclusives. These series often come at the expense of providing new shows for its owners’ respective channels, with so far this year over 85% of shows debuting on Salto rather than on linear.
Without a strong original pipeline, Salto has struggled to grow, with reports suggesting that the SVoD has just 500,000 subscribers.
Advertising players hot on the heels of SVoD
AVoD services in Europe are also largely led by broadcasters, with many leveraging their existing catch-up services as de-facto AVoD platforms, debuting some content exclusively as digital releases.
In the UK, ITV is set to release its AVoD service ITVX with 15,000 hours of content, boosted by a number of originals it will host months ahead of their eventual release on ITV’s linear channels. An SVoD tier will be available that adds more content from ITV’s existing SVoD, BritBox, while also removing ads.
As rising global inflation rates continue to fuel a global cost-of-living crisis, it becomes harder for consumers to justify the cost of their sometimes multiple SVoD subscriptions, meaning some are starting to churn. While the pandemic initially boosted global subscribers to SVoD, the global economic fall-out now is having the opposite effect, providing a huge opportunity for AVoD services such as ITVX. Distributors are now dealing with broadcasters who may be less inclined to think about traditional linear scheduling and who are keener than ever to acquire the rights to content for a year or more, so it can have a second life on their digital services.
Netflix, in particular, is facing trouble globally as the company revealed that it lost 200,000 net subscribers in the first quarter of 2022 and is likely to lose two million more in Q2. The SVoD’s stock dropped 35 points as a result.
In past seasons, the service has grown its output of digital original scripted series massively, with over half of these being foreign-language, making stand-out successes like Squid Game an inevitability in the long run.
These numbers put the service well ahead of Amazon historically, with the effects of Covid-19 on production in the 2020/21 season resulting in only a minimal reduction in output, suggesting huge growth was planned. A steady stream of high-quality originals that not only convert more subscribers but keep existing ones in their ecosystem from churning is essential, but already Netflix’s main rivals are beginning to encroach on the SVoD’s once huge lead in scripted series volume.
A different picture for the 2022 fall season?
The fall season is typically a time for some of the biggest scripted series in the US to hit global markets, with many bound for the same services internationally thanks to the prevalence of global SVoD services like Netflix, Amazon and Apple TV+, as well as studio SVoDs that continue their own international roll-outs.
Previous fall seasons saw Netflix commissioning more English-language scripted series than all other VoD services combined in the US, but the 2021 fall season saw a massive growth in studio SVoD commissions, challenging Netflix’s lead. Many of these commissions are bound for the very same services in Europe where they are available.
Disney+, which has a wide presence in Europe, in turn, takes any and all Disney commissions from their other US services, such as Hulu, ABC, FX and Freeform, meaning that subscribers in Europe saw more scripted originals come to their screens from Disney than Netflix in the 2021 fall season.
The struggles of titans like Netflix reflect the changing nature of the streaming wars and the sheer number of SVoD options available to consumers in Europe. AVoD clearly has an opportunity to engage with newly price-conscious consumers and competitive SVoD services can now try to target those clearing Netflix from their monthly bill, potentially making room for an alternate service.
This opens up more opportunities for distributors without direct-to-consumer services looking to sell content to buyers who are seeing traditional content pipelines dry up.
