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ZDF calls out German regulator on broadcaster-bred OTT projects

The first half of 2018 was a period in which European broadcasters decided to fight back. Here at Faultline Online Reporter, we have been openly critical concerning the various anti-Netflix initiatives announced across the continent’s major economies in recent months, now ZDF has decided to approach the situation in a rather efficient German manner – by asking the Federal Cartel Office if conditions for a joint OTT platform have somehow changed.

ZDF’s call for clarity implies a zero-tolerance strategy in terms of potential stumbling blocks in executing a successful OTT project – and the broadcaster certainly doesn’t plan on allowing regulators to get in its way as the Federal Office has historically.

It was ZDF’s General Director Dr Thomas Bellut, speaking at the company’s board assembly in Mainz last week, who quizzed Germany’s national competition regulator. His speech reflects the cautious manner in which ZDF is tackling discussions with Discovery and ProSiebenSat.1, which have just fired up plans for a German OTT video platform combining maxdome, Eurosport Player and their existing streaming service 7TV.

The service is being described as Hulu-esque, offering up both free and paid content, set to launch sometime in the first half of next year. Strangely enough, the opening line of something we wrote two months ago implored, “The supposed success of Hulu’s live TV offering has fallen on deaf ears over in Europe, as a bunch of broadcasters have botched together the ground workings for a futile resistance against Netflix.” Apparently, we have quite the German fan base. It hasn’t helped that the regulator has held the broadcasters at bay from competing with Netflix for about 6 years.

German commercial broadcaster ProSiebenSat.1 and Discovery first announced the re-launch of a free, ad-supported version of 7TV back in October, at the time teasing a small but significant one-liner about 7TV planning to include sports content. So sports is now confirmed with the integration of Discovery’s Eurosport, with Bundesliga soccer rights providing a pivotal piece of the streaming puzzle in Germany – rights which are now shared between Eurosport and Sky Deutschland where Eurosport shows 45 matches. The ability to have immediate access to highlights and clips will be a highly valuable asset, particularly as Eurosport still has no official pay TV distribution partner for the rights.

Belut’s words might not sound like much of a plan of attack from ZDF but, in choosing to go by the book, the German public broadcaster is essentially calling the Bundeskartellamt’s bluff – referencing how the regulator has blocked broadcaster-led OTT tie ups in the past. Specifically, the Cartel Office extinguished plans for ZDF and ARD back in 2013 to launch a service known as Germany’s Gold, as well as similar plans from RTL and ProSiebenSat.1 called project Amazonas in 2012.

Blocking the latest plans would be unthinkable in the modern age as pooling together resources to take on streaming titans is the only realistic way for broadcasters to survive and thrive for years to come. However, the joint platforms were blocked in the past on the grounds of fear they would create monopolies in the TV advertising industry, therefore throttling other smaller players in the ad-supported video market.

This time around could be different, as broadcasters across Europe will soon be embracing subscription-based online TV businesses – making regulatory approval more likely. However, ZDF’s recent declaration suggests otherwise and, if a joint ad-supported OTT offering is indeed the intention rather than partnering with ProSiebenSat.1 and Discovery, we suspect the Federal Cartel Office will have to factor in the advertising duopoly of Facebook and Google before assuming regulations which were relevant 6 years ago, still apply today.

Even all the broadcasters in Germany couldn’t match the content investments being made by Netflix, hence plans to breach borders with ZDF forming a blatant revolt against Netflix with Italy’s RAI and France Televisions, aptly named the Alliance. There will be hefty content investments and the initial plan seems to be for a continent-wide service, expanding beyond the three broadcasters’ native territories of France, Italy and Germany – by striking partnerships with RTVE in Spain, RTS in Switzerland, plus RTBF and VRT in Belgium.

This brings the Alliance’s total clout to 7 European broadcasters as it stands, which the three founding members are hungry to build on having reached out to others – to create some sort of mass broadcaster uprising. The European Commission perversely may still have something to say about broadcasters in 7 countries ganging up on Netflix.

Bellut agrees with us, stating, “One thing is certain, ZDF is still looking for a platform where German content – fiction, documentaries – can be offered. We are convinced that only a collaboration with many broadcasters makes it possible to offer content in a meaningful way.”

As well as broadcasters’ plans to take OTT by storm in Germany, similar beachheads are appearing in the UK, between the BBC, ITV and Channel 4, as well as in the Nordics between DR (Denmark), NRK (Norway), SVT (Sweden), RUV (Iceland) and YLE (Finland).

Addressing 2018’s broadcast cooperative trend, Belut said: “How much does it cost, how much staff do you need, does the platform have the chance to be really successful in the long term? Is it a cooperation between public broadcasters offering free content to users? That is relatively simple. When it comes to fee-based VoD, it always becomes more difficult. The model must be right.”

ARD and ZDF haven’t exactly kept squeaky clean reputations of late, having recently been ordered to remove activities from Facebook by German cable operator association FRK. The broadcasters apparently supplied Facebook with “millions of user data of their viewers while nobody knows how they are exploited and who uses them in the end,” according to FRK Chairman Heinz-Peter Labonte.

While we believe the broadcaster-driven revolt happening in Europe is a necessary transition, for many it comes too late in the day and failures are inevitable. The key takeaway this week, however, as alluded to by ZDF, is that regulators should at least let them try.

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