August 30, 2019
With Disney, Apple and WarnerMedia all launching subscription video-on-demand services by the end of the year and into 2020, most platforms have European distribution strategies similar to Netflix and Amazon Prime Video.
That looming reality is putting pressure on local and regional pay-tv operators to match or at least up original content spending to retain and lure subscribers.
New data from Deutsche Bank found, for example, that German broadcaster RTL would have to significantly increase its €300 million ($330 million) annual original content spending to remain competitive.
ProSieben, ITV, TF1/M6 and the Spanish broadcasters have all reportedly pledged modest increases in original content spending.
A shot in the dark considering Apple reportedly is budgeting $6 billion for original content, while Netflix has pledged a $2.5 billion uptick on — largely — original movies.
Deutsche Bank contends RTL would have to increase original content spending to at least €400 million ($440 million).
“They will also need to raise spend or see a further acceleration in the decline of their core linear advertising revenues,” Deutsche Bank wrote in a note.
The bank noted that while RTL added a respectable 200,000 SVOD subs in the first half of 2019, about half of its 1.2 million subs are in Holland where its €7.99 ($8.79) pricing looks vulnerable against Disney+ pricing announced pricing of $7.99.
“Even the TV Now offer in Germany from RTL at a lower price of €4.99 ($5.49) looks vulnerable versus with 3-year Disney+ subscriptions being offered at $3.92 per month,” read the note.
Deutsche Bank said Disney content spending of $4 billion [annually) within the platform’s first three years looms large over RTL’s incremental content spend of €100 million and ITV’s £30 million ($36.5 million).