Most media companies have long since woken up and embraced online video. Videoland, NPOStart, Streamz, Britbox, Disney +, HBO Max, Peacock, Joyn, Discovery+: so many initiatives have seen daylight.
Big Tech has turned the media industry upside down. Netflix and Amazon have brought about an unprecedented change in consumer viewing habits in long form content, after Google did the same with its YouTube on short form video. The share of streaming in consumer viewing time has grown at an alarming rate, and it may not be long before the tipping point is reached: consumers will inevitably watch more video online than on television.
Most media companies have long since woken up and embraced online video. Videoland, NPOStart, Streamz, Britbox, Disney +, HBO Max, Peacock, Joyn, Discovery+: so many initiatives have seen daylight. Disney's success is resounding and it looks like it could overtake market leader Netflix in the long run. Let's face it: the combination of the Fox and Disney catalog, the addition of Starz and so on, offer a wide catalog for the whole family. Disney even went so far as to put a large number of linear channels in the garbage bin.
Of the Big Tech companies, Amazon is the most adept at online video activities. It cleverly selects the territories where it wants to be present, packs the video offering into its Prime subscription service and also makes a number of very relevant acquisitions. It gives Amazon the market leadership in Germany and strengthens its presence in the Netherlands. The acquisition of MGM was a surprising step and consumers will see the effects of it this summer: the entire James Bond catalog is being marketed smartly and will undoubtedly generate a series of new Prime subscribers.
In all that violence, one global player remains remarkably silent: Apple’s content businessis negligible. Apple TV+ does not appeal at all to the spoiled video consumer. The Morning Show, announced with much fanfare, is hardly watched outside the US and the adjacent video offering is also of poor quality. Are they asleep in Cupertino? I cannot imagine that, because Apple is an excellently run company. Apparently, however, management lacks knowledge in the field of content and therefore there seems to be only one logical stepforward. The analogy arises with Google, which tried to compete in online video with Google Video 15 years ago, but remained in a disappointing second position. The solution? The acquisition of market leader (and at the moment fiercely loss making) YouTube.
I had actually expected years ago that Apple had acquired Netflix, but after the unprecedented rally of the Netflix share (the price reached a peak of more than 700 dollars last year), that thought seemed unfeasible. But Netflix has landed back on earth and the stock is hovering around $170: surely the policymakers in Cupertino could think of this enticing thought again? The financing of this does not seem to be a problem for Apple. Or will they find the risk of investing in content too great and continue to navigate the current, extraordinarily successful business model (selling hardware with insanely easy software and wonderful user interface)?
Sports rights holders are rubbing their hands in anticipation, because the value of sports rights is rising sharply. After the huge price hikes of the previous decade, there had been somewhat of a stagnation in recent years. The French Ligue 1 even saw the value of its new multi-year deal drop. But now, a new group of deep-pocketed interested parties has emerged: the streamers are about to make major investments in sports. Specialized sports streamers like DAZN have been active for several years. Market leader Netflix, after broadcasting the Paul/Tyson match, has also discovered the power of live sports. YouTube (more on that in my next column) invested in American football earlier. According to figures from Ampère Analysis, streamers will spend over 12 billion dollars on sports rights this year.
The investments that British-Ukrainian entrepreneur Sir Lech Blavatnik has been making for years are starting to bear some fruit. His company DAZN is growing rapidly and attracting one investor after another. The company is running at a significant loss and has a massive need for financing. This month, according to insiders, the Saudi Arabian Public Investment Fund paid a billion dollars for less than 10% of the company. With the promise that he’s building the Netflix of sports, Blavatnik has managed to convince investors. As a result, the company has become a tough competitor to pay-TV channels like Sky and is squeezing many public and commercial TV broadcasters even further.
Entertainment streamers, meanwhile, also see the value of sports—and not just for attracting new subscribers. Keeping churn (the cancellation of subscriptions) under control is at least as important from a strategic standpoint. Therefore, Netflix is going to invest in American football. Less dominant players like Peacock and Paramount+ are also heading in that direction—a development that has the National Football League (NFL) rubbing its hands in anticipation. We also know that trends in the U.S. sooner or later make their way to Europe, which will undoubtedly mean that here, too, the value of sports rights will shoot through the roof.
It’s clear, however, that this hasn’t been all smooth sailing. DAZN incurred the wrath of German consumer organizations by hiking its prices for the Bundesliga and the Champions League a little too enthusiastically. Technical problems in Italy plagued the sports streamer, and even Netflix underestimated the impact of a mega-event like the Paul/Tyson match. Those are temporary problems, though—ones that will disappear as streaming technology advances and industry expertise continues to evolve.
Private equity firms see these developments as well and are becoming more and more interested in sports organizations. And here again, the NFL is at the center of attention. After an extensive study, the league concluded that private equity firms (at least to a limited extent, for now) can invest in NFL clubs. Sports are increasingly being valued for what they’re truly worth, because there’s still so much potential in them—due in no small part to streamers taking an interest in the rights. In other words: sports are streaming ahead!
Oege Boonstra begon in de media als commercieel directeur bij facilitair bedrijf NOB en werd later onder andere directeur van de internationale operaties bij Endemol. In 2008 was hij een van de twee oprichters van 3Rivers, waar hij recent is teruggetreden uit de dagelijkse bedrijfsvoering om 3Rivers met raad en daad te blijven bijstaan als non-executive chairman.
Ronald Goes studeerde eerst economie en accountancy. Daarna was hij onder andere CEO bij RTL Productions, betrokken bij de opzet van SBS en meer dan vijf andere tv-zenders in Nederland en bestuurder bij Endemol en Talpa Media. Momenteel leidt hij al meer dan vijftien jaar, vanuit Londen, de wereldwijde productietak van Warner Bros.
- Hoe hebben hun ervaringen buiten de media-industrie (bijvoorbeeld in accountancy en de verpakkingsindustrie) hun visie op leiderschap binnen de media gevormd?
- Welke cultuur maakt een startup succesvol en hoe bouw je die?
- Welke invloed heb je als leider en welke keuzes zijn nodig om zo’n cultuur te creëren en te behouden binnen een groot, internationaal en goedlopend bedrijf?
De antwoorden hoor je in de Joost Mag Het Weten podcast
In recent years, money seemed to be endless in the media world. The advertising markets were booming after the COVID crisis, funding for public broadcasting remained largely untouched, and the marketing machines of new video streaming platforms worked overtime. Investments in content were skyrocketing, there was insufficient staff to complete all productions, and the sky seemed to be the limit.
How different things are now. Market leader Netflix, for example, has reduced content investments by a third. Advertising markets have also come under pressure, particularly in Germany. Finally, politics has again started to interfere with broadcasting contributions: in the Netherlands, the budget for public broadcasting was cut by €150 million, and other countries are also pausing to reassess.
It is therefore unsurprising that all media organizations have started to watch their spending. Some have even implemented drastic budget cuts. A good example is Warner Bros. Discovery, where one initiative after another has been announced to achieve billions in savings. The cause is the enormous debt burden the company carries. It must be said that this policy is paying off: the debt has been reduced by a third in three years. A remarkable achievement. It’s hardly surprising that financial engineering played a key role in this process. However, the fact that it is done so openly is. One example: a film like Batgirl, which was already in post-production, was completely written off. The costs were booked "below the line," meaning they did not appear in the profit figures. The reason: the series was considered "non-core business." This kind of accounting trick is being adopted by more media companies.
Another interesting aspect is the funding of public broadcasters. In the Netherlands, under the leadership of the then-almighty Harry Kramer, the broadcasting fee was incorporated into general taxation around the turn of the millennium. It was deemed that the fee was outdated, so it was abolished, and public broadcasting was then funded from general government funds. This had significant disadvantages for public broadcasting: politics could now directly interfere with its financing. The result is well-known: public broadcasting has been facing significant cuts in recent years.
In the United Kingdom, they still use the old system of a television and radio license fee. Everyone who owns a TV must pay £169,50 annually. Many Brits are questioning why this mandatory fee still exists in an era of video services paid for directly. Interestingly, it is considered a legal offence to not pay the license fee. It’s no surprise that it’s now up to creative financial minds. It will be interesting to see what emerges from this: even a tax on broadband connectivity is being considered. A system that Spain recently dismantled. Financial engineering of hand has become the norm in both the public and commercial media domains...