Mediaset appears to stall pan-Euro OTT plans with Netflix deal

Italy’s Mediaset has suddenly decided to play its video strategy to a very different tune. Earlier this year, the Vivendi-owned company was wrapped up in cross-border controversy as it sought solidarity from neighboring European broadcasters to form a combined anti-Netflix initiative. Like many TV operators before it, Mediaset soon realized partnering with the SVoD juggernaut was a safer bet than challenging it head-on.

Unveiled at an event in Rome this week, Mediaset and Netflix are collaborating on seven movies available globally on Netflix from 2020, followed by screenings on Mediaset’s FTA channels a year after the initial Netflix release. Titles will be produced by independent Italian firms in keeping with European regulations about homegrown content and key to the deal are the new tax commitments made by Netflix, a week after Italian prosecutors opened an investigation into alleged tax dodging.

Mediaset might appear to be getting the better side of the deal here – reaching an international audience of 150 million+, but there is a balance to the equation. OTT video uptake has been slower in Italy compared to elsewhere in Europe, with Netflix sluggish since its Italian debut back in 2015, hindered in part by under-investments in broadband infrastructure. Netflix has more recently begun to find some momentum, climbing to around 1 million subscribers today and projected to reach 2.8 million by 2023, according to our research arm Rethink TV.

Not a huge market for Netflix, admittedly, yet siding with Mediaset and therefore likely stalling or even stopping plans for a pan-European push is definitely a clever bit of business from Netflix.

Yet Mediaset never really intended to take on Netflix at its own game, instead targeting the FTA TV market to steal eyeballs away from Netflix, although Mediaset has admitted that going OTT-only is essentially its only option. It comes after Mediaset bought a 9.6% stake in ProSiebenSat.1 back in May, making the Berlusconi family the largest shareholders in the German broadcaster and therefore giving the company the voting power required to channel resources into OTT.

Mediaset’s increased commitment to going OTT comes after the broadcaster sold its DTT business to Sky, in a deal approved in May this year with the primary concession of barring Sky from striking any exclusive content deals with streaming or linear platforms for three years. The deal is part of Mediaset’s deal to distribute its pay TV services on Sky.

Mediaset, along with ProSiebenSat.1, the UK’s Channel 4, Greece’s Antenna Group, Portugal’s Impresa Group and TVN Discovery Poland, have reiterated their promise to use the European Media Alliance (EMA), which was formed about five years ago, as a platform for joint initiatives in video streaming, technology, and monetization.

Mediaset came out with its latest set of results last week, reporting a revenue hit of €322 million year on year as the Italian mass media firm filed first half 2019 revenue of €1.48 billion, hindered by the Mediaset Premium pay TV business and underperforming ad sales. EBITDA, however, managed to grow 55% to €191.6 million.

From struggling pay TV platform to a company striking deals with Netflix and Sky; it looks like the sinking Mediaset ship is on course for a revival after lightening its load. But if we know anything, it’s that parent company Vivendi doesn’t like to play fair, so stay poised for a few more twists and turns in this European battleground.