German media conglomerate Bertelsmann published some of the most impressive financial results we have received for some time – shouting from the rooftops about its best result for over a decade. And rightly so. While shifting some 10 million copies of Michelle Obama’s memoirs proved to be Bertelsmann’s standout single performer, a number of the group’s digital businesses thrived, and overseas prospects also experienced positive growth.
But it is Bertelsmann’s German media arm RTL Group which most immediately concerns readers of Faultline Online Reporter – a company which has been making inroads into OTT video for years but most recently followed the broadcaster homogenization trend which is ripping across Europe like wild fire.
Not only that, but RTL’s full advertising technology stack has been overhauled within the past year, after it completed the merger of the two online programmatic ad sales platforms SpotX and Smartclip last February, shortly after terminating its ad tech contract with struggling video software vendor Ooyala (recently acquired by OTT technology rival Brightcove). RTL then further strengthened its ad tech arsenal at the start of this year with a $33 million acquisition of YoSpace, an expert at stitching replacement ads into multi-platform services in a way which replicates original broadcast channels. If RTL wasn’t a force to be reckoned with in online advertising before, it certainly is now.
Credited as one of Bertelsmann’s primary drivers throughout 2018, RTL Group’s digital transformation has involved recently relaunching the OTT video service Now Plus in Germany and France, as well as rolling out on-demand offering 6Play with French media firm M6 Group (which RTL owns). RTL now owns and operates 8 VoD platforms in total and is attempting to align these offerings to push them throughout Europe. Canal+ is on a similar path, trying to relaunch its now shuttered CanalPlay service, and US majors are beginning to coalesce around similar SVoDs.
RTL helped lift full year revenues rose by 2.8% to €17.7 billion, with operating EBITDA coming in at €2.6 billion and delivering a substantial group profit of €1.1 billion – the fourth consecutive quarter in which the group has delivered profit exceeding the €1 billion mark. An enviable feat.
RTL itself achieved record revenues of €6.5 billion, an increase of more than €130 million, with Germany accounting for €2.2 billion and the rest of its footprint bringing in approximately €4.3 billion in revenues. Operating EBITDA for RTL Group fell marginally by €76 million to €1.4 billion.
RTL also saw a “significant increase in subscriber numbers” across its VoD services in Germany, France and the Netherlands, as well as seeing online video views on its various digital platforms rise from 420 billion to 497 billion year on year. RTL’s VoD platforms are primarily ad-supported but some serve up a smattering of SVoD content and a sneak preview of data from our research arm Rethink TV reveals that new boy on the block Now Plus is projected to pick up some 440,000 subscribers by the end of 2019, seeing steady growth through to 2023. Elsewhere, Videoland in the Netherlands ended 2018 with approximately 400,000 subscribers and will grow to 580,000 by the end of 2019, while 6Play in France is forecast to reach 330,000 subscribers by the end of this year.
Also in France, the Salto consortium is planning to build an SVoD around content from France Télévisions, TF1 and M6, so that also includes RTL.
There are discussions whereby ProSiebenSat.1 and Discovery will host a merged SVoD in Germany, and last summer it invited rival channels to join in. It’s easy to forget Bertelsmann has operations elsewhere. Over in Asia, the group has recently invested in Chinese music streaming platform NetEase Cloud Music and e-commerce platform Club Factory.
SVoD offerings like those from RTL are likely to cater for online addressable advertising options as well as chasing sufficient content to survive in the world Netflix has created.
As for the near-term roadmap, RTL’s creative subsidiary Fremantle, behind hit show American Gods, plans to supply content to Apple following the unveiling of its Apple TV+ SVoD offering this week (see separate story in this issue), while RTL’s M6 Group made an interesting move this week by tapping French video technology vendor Streamroot to power live and VoD delivery for 6Play. We say interesting because Streamroot has developed distributed network architecture (DNA) technology for CDN optimization – otherwise known as peer-to-peer (P2P) networking. P2P is considered a dirty word in the industry due to its use in content piracy circles, but Streamroot and vendors like it have expressed optimism about shaking off those old labored labels in the near future and getting momentum behind some genuinely clever technology. With the backing of RTL, that time could be now.