Salto Netflix killer to surface a year late and with wrong strategy

When there is an elephant in the room it can be difficult to think clearly and that seems to be the case for many European pubcasters and pay TV operators as they rush headlong into misconceived strategies to combat Netflix, often through collaboration, sometimes going it alone. The latest development highlights many of the problems, including inertia and regulatory confusion, as finally TF1, France Télévisions and M6 have submitted their planned joint-venture streaming SVoD platform Salto to the French Competition Authority. The platform was first announced over a year ago in June 2018 but then got bogged down in regulatory mire as it was first passed to the European Commission, which then in March 2019 handed it down to the French authorities to adjudicate on the grounds it had limited bearing on competition outside the country.

Certainly the venture would have been blocked on competition grounds in the pre-OTT era and before Netflix entered France in September 2014 meeting a frosty reception from all the incumbents including of course local content creators. But now the process is being fast tracked at last as third parties have been invited to submit their comments before 12 July. In the absence of such concerns, or if the project parties address them satisfactorily, then a decision will finally be made after up to about three months, so still not that rapid, although it could be within 25 working days.

So, the wheels grind slowly while Netflix continues to expand briskly in the country, with its number of subscribers rising there by almost 1 million to pass 5 million during the year this project has been in limbo. Meanwhile Vivendi’s Canal+, broadcaster and pay TV operator, has resurrected its Netflix competitor as Canal+ Series. This came after failure of its first SVoD service CanalPlay which predated Netflix’s arrival by three years and so was prey to that event rather than posing as predator.

CanalPlay was fatally wounded and took four more years to be killed off by its owner to spare further suffering, raising the question of why its successor should succeed. Canal Series is a much more slimmed down and focused venture distributing just series, including both local and international content, and so in a way is going even more directly against Netflix. However, Canal+ CEO Maxime Saada insisted that lessons had been learned to complement Netflix by offering different local content, albeit with the same model around a low-cost subscription. The decision to stream just series was also motivated by the fact that French streaming rules are much more permissive for those than movies.

In keeping with other vendors, Canal+ has sought to exploit Netflix’s recent price hike and set the price just lower, charging €7 a month to stream in HD and 4K on one screen at a time, or two screens at €10 and four screens €12. Netflix in France costs €8 for the basic package, €11 for HD and two screens, and €14 for 4K and four screens.

Of course, it comes down to content and if many consumers see Netflix as essential and Canal+ as a nice to have extra then the lower pricing may not count for much. A problem we see is that French intransigence and obsession with US invaders in general, and Netflix in particular, is leading them to bang their heads against a wall rather than seeking opportunities to mingle competition with cooperation over content creation to take advantage of the additional investment available. After all Canal+ has actually tried to make a virtue out of slashing its content budget to the bone at a time when Netflix has been increasing spending on French original content.

The same holds for Salto and as we reported in January 2019 one of the project members France Télévisions has lost more than it has gained from ceasing to distribute complete shows or series on YouTube, after earlier doing the same for Netflix. The state broadcaster claimed it was merely taking a leaf out of Disney’s book by keeping its global rights at home, but the difference from Disney is that this greatly reduces its potential reach even within France and especially the wider Francophone world.

Elsewhere broadcasters tend to be less prickly about cultural invasions and more prone to cooperate with US content creators in general, as the BBC did with its high budget Night Manager and Little Drummer Girl Series both based on John le Carré funded in larger part by US pay TV channel AMC. The BBC was able to make a series it otherwise could not afford while AMC gained from the association and branding. The BBC has also collaborated with Netflix itself over several historical dramas such as Troy: Fall of a City, The Last Kingdom and Watership Down.

This is despite the BBC recognizing Netflix as its major adversary and reason for decline of its once all conquering iPlayer catch up portal, which lost out partly through being hamstrung by rules such as restricting time programs can be available to one month. A similar excuse was made by Canal+ for CanalPlay’s demise. At least iPlayer is still very much alive even if its 40% share of UK streaming in 2014 has been reined back to 15% by Netflix and Amazon Prime.

This led the BBC’s Director General Tony Hall to call for a closer pan European alliance with extension of commercial ties and joint content production to help build a united front against the big streamers. There is limited scope for such cross-border collaboration given the cultural and linguistic divides between countries, although some broadcasters have had much more success than others. Germany’s Bertelsmann has greatest penetration being active in 14 countries, followed by Swedish group Kinnevik on 10 and the BBC itself with 8.

It is certainly true that the US invasion has persuaded a number of European broadcasters and a few pay TV operators to abandon old hostilities and unite to create OTT platforms aimed to combat Netflix in particular, as with the French Salto group. In the UK, the BBC has joined forces with commercial FTA rival ITV to launch BritBox by the end of 2019, attempting to create what the iPlayer should have been by initially showing archive shows from both broadcasters before moving onto create new shows. With a combined annual budget of about $75 million a year for the first two years, it is almost up with what Netflix and Amazon are spending on UK productions.

Then in Spain, free broadcasters RTVE, Atresmedia, and Mediaset España, have launched a joint catch-up platform, LovesTV. In Germany there is a slightly different thrust as New York based media group Discovery has teamed up with local FTA partner ProSiebenSat.1, to create an ad-supported streamer called Joyn, launched in June 2019. This incorporates Discovery’s Eurosport portal and also its recently acquired German VoD service Maxdome, but has wider ambitions to become the country’s Netflix killer by inviting other content producers to contribute. So far, pubcaster ZDF and Sport1, with a fare of mostly second line sports and news channel WELT, have signed up. However, Mediengruppe RTL Deutschland, Germany’s second major commercial TV broadcaster, has not joined as it is persevering with its own TV Now service, so there is still some fragmentation in the country’s domestic streaming landscape.

At the pan European level, the most concrete development so far has been over pooling of content creation funds in the Alliance formed between three major pubcasters, France Télévisions, Germany’s ZDF and Italy’s Rai. Again, there are questions over the scale this will achieve given that the countries have different languages.

There are some signs though that even in France some reality is breaking through with reducing hostility to Netflix from at least one broadcaster. TF1 collaborated with Netflix on the series “Le Bazar de la Charité”.