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29 November 2018

France Télévisions ends YouTube distribution to boost Salto

France Télévisions is more likely to lose than gain from ceasing to distribute complete shows or series on YouTube, after earlier doing the same for Netflix. But the state broadcaster claims it is merely taking a lead out of Disney’s book by deciding to keep its global rights at home, in this case to boost the French OTT platform Salto, which it set up in collaboration with commercial broadcasters TF1 and M6.

Even Disney may not be able to resist the advancing tide of Netflix, Amazon and Google, so we feel France Télévisions has little chance and would be better off taking advantage of these distribution avenues to maximize its audience.

Oddly enough, France Télévisions director-general Delphine Ernotte made the announcement at an event sponsored by Google where YouTube spokesperson Justine Ryst was reaching out to broadcasters with offers of partnerships to share value. Other public service broadcasters have accepted such offers with the big players both to share production costs and gain valuable overseas revenues.

In the UK the BBC recruited Netflix as co-producer of Steven Moffat and Mark Gatiss’ upcoming adaptation of Dracula, which will air on both platforms. The BBC calculates it will make far more distributing globally on Netflix than retaining exclusivity for the overseas version of its iPlayer.

Ernotte reiterated earlier calls to arms by urging all French channels to rally round and defend their rights, confusing desire to defend cultural integrity, with commercial ambitions to establish a successful home-based OTT platform. But if the ambition is to create a European alternative to Netflix, then the enterprise is doomed as too fragmented to begin with.

Each country is doing its own thing and even within France there is no joined up approach. At the same event, the CEO of Vivendi-owned operator Canal+, Maxime Saada, argued that the best response to Netflix lay in creating a compelling rival digital offering at competitive prices at a local level, without any grand ambitions to compete on a global stage.

He pledged that Canal+ would launch a new low-cost offering at the end of Q1 2019 to replace its failed CanalPlay SVoD service. He touched on a sub-plot that has rankled with Canal+ in the earlier restrictions placed on it by French competition regulator Autorité de la Concurrence as conditions associated with its acquisitions of TPS in 2006 and Direct 8 and Direct Star in 2011. The regulator had ruled that the dominant position in French TV gained by Canal+ through these acquisitions needed to be offset by a ban on making channels exclusive to its platform. That has now been lifted belatedly after the regulator noted the emergence of Altice as a force in French TV, not inhibited by this constraint, having negotiated exclusive deals with Discovery and NBCUniversal, while building its own portfolio of premium channels.

The regulator also cited the rapid intrusion of the major global OTT players such as Netflix and Amazon, which were competing with Canal+ in the SVoD market and were providing more than effective competition for premium US rights in particular.

The irony is, the relaxation came too late to save CanalPlay whose customer base had collapsed from 800,000 to 200,000. This has left a sour taste at Canal+ and lack of willingness to participate in the joint exercise to build a common OTT platform. It is certainly true the restrictions were maintained far too long, highlighting how an almost obsessive desire to protect the French cinema industry can act against the country’s own services, while not causing Netflix or Amazon much loss of sleep.

Ernotte agrees that only a pan European platform has any hope of competing with the big OTT players at least at home and that remains her ambition. She argues that the ability of France Télévisions to build a partnership with two commercial channels to build a non-linear platform does represent progress towards that goal. The first step would be to ensure that broadcasters realize their investments in content in full throughout the life cycle, including the non-linear stage, even on a non-exclusive basis.

However, Canal+ director Franck Cadoret is scornful about prospects for that OTT TV joint venture, arguing that it is effectively making consumers at home pay for viewing content on demand that was previously free to air. He pointed out it was hard enough to get people to pay for content anyway and that this move would backfire. The only real scope for a public service broadcaster to extract money from consumers would be in old archive content that had not been aired for years, rather than material that has been free in the recent past. That highlights the point that the market for such content is in sales oversees to foreign consumers who have never had free access to it and in that case the major global OTT players are the only realistic conduits.

The French situation has eerie echoes in Germany where the Federal Cartel Office (FCO) has been even slower to take account of the fundamental changes in the competitive landscape. This led German public broadcaster ZDF as recently as June 2018 to lobby the FCO for permission to allow a joint OTT platform involving one or more public broadcasters, possibly shared with their commercial counterparts.

Earlier, the FCO had blocked a joint OTT initiative by ARD and ZDF, in project ‘Germany’s Gold’, as well as the RTL and ProSiebenSat.1 collaboration project ‘Amazonas’. In Germany’s case it was left to ZDF director Thomas Bellut to argue the market situation had “changed rapidly” since those earlier decisions, leading to even higher concentration of power now.

Bellut was more aware than his French counterpart at France Télévisions of the sensitivity over charging for previously free content. He admitted it would be much easier to make a success of a portal providing free access to content, perhaps funded by advertising.

However, Bellut has also indicated ZDF might be interested in joining an OTT platform already set up by ProSiebenSat.1 in conjunction with Discovery. This looks altogether more promising than any of the French OTT ventures because it recruits a powerful US-based global player with its own ambitions to meet the FAANG (Facebook, Apple, Amazon, Netflix, Google) challenge.

Launched in 2016 as an expanded version of Prosieben.Sat.1’s 7TV ad-supported streaming service for the German market, this introduced a range of linear channels from both partners, including highlights from Discovery’s Eurosport. Then in June 2018 the service pushed out further with full Eurosport streaming coupled with ProSieben’s Maxdome VoD offering comprising US series and Hollywood movies. At the same time, ProSieben has avoided trying to charge for content already aired free, while extending an invitation to other broadcasters, which ZDF is still considering.

Irrespective of who else joins, this will be rebranded and relaunched in the first half of 2019, with a combination of paid SVoD and free ad-supported linear content. Discovery’s international head Jean-Briac Perrette rightly argues that only aggregation has any chance against the big players, rather than having a bunch of local players all doing their own thing, which confuses the consumer.

There seems less appetite in most other European countries to take on the OTT giants, with the sentiment being more to collaborate. Notably Spain’s Telefonica in May 2018 entered a global partnership to integrate Netflix’s service into its TV and video platforms across Europe and Latin America. Its executive chairman José María Álvarez-Pallete presented this agreement as a “big step forward in Telefónica’s bet on open innovation and collaboration with leading companies around the world.”

Spain does have its own OTT venture but with more limited ambitions. Media group Atresmedia, whose shareholders include Germany’s RTL, has launched an OTT platform based on a subscription model with no advertising, but aimed at Spanish speakers abroad, aiming for a premium market featuring 4K and Dolby Atmos surround sound, as well as live playback control. Whether it will succeed remains to be seen but it is at least a reasonable model.