Most FANGAs have rapidly seized power in the media world, mainly through their breakthrough technology and focus on consumer desires.
Broadcast Magazine has been around for 30 years. In the still young media industry, the magazine is a survivor, because several revolutions have taken place during this period. Time for a look back.
Commercial TV changed fundamentally in the years that this magazine was founded. In the United States, the triopoly of CBS, NBC and ABC was broken. These companies had built up unprecedented market power in the 1970s and 1980s and ruled the media. This kingdom suddenly collapsed phenomenally, not least because of the arrogance of the networks themselves. The book Three blind mice described this development clearly and should still be mandatory for today's broadcasters. At the same time, commercial TV broke through in Europe, with American managers such as Harry Sloan (the founder of SBS) playing an important role in addition to new European media companies. The first revolution, set in the 1990s when the world economy developed phenomenally, was dominated by commercial TV.
The first decade of this century marked the breakthrough of large-scale TV production. Endemol reached its current (!) Size, Fremantle emerged from the womb of Pearson and CLT-UFA and a number of ITV executives founded All3 Media. It was the second great revolution, the emergence of the Superindies. Every self-respecting media company has now set up its own studio and we live in a world where television production has taken off unprecedented.
The first major transition took place in adjacent markets in these years. Publishers saw their position weaken and the music industry underwent a fundamental change. This first form of disruption had enormous consequences for these sectors, but television continued to develop relatively slowly. Until large numbers of governments started to wonder (after the great financial crisis at the end of the first decade) why people invested so much in public broadcasting. Budgets were cut almost everywhere in Europe and with the exception of a single southern European country (such as Greece, where the existing public broadcaster ERT was even discontinued, there is now a successor), the Netherlands was even a leader in cutbacks. It was the third revolution, the fundamentally different, suspicious view of public broadcasting in Europe.
However, all these revolutions are dwarfed by the massive disruption that is taking place at the moment, the digital media revolution. It all started (as it often does) in the US and reached Europe via Scandinavia. The emergence of new digital players, both in the field of social media and online video, has had an unimaginable impact. Most FANGAs have rapidly seized power in the media world, mainly through their breakthrough technology and focus on consumer desires. Traditional media outlets are trying to fend off these new developments and perhaps, contrary to what happened in the music industry, are doing the right thing. They are adopting a new digital strategy and increasing their scale through massive transactions. Examples abound in the last 2 years: the takeover of Time Warner by AT&T, of Sky by Comcast, of Scripps by Discovery and the merger between CBS and Viacom this summer. These companies are now also targeting consumers directly, with Disney impressing most with a range of SVOD initiatives, from Disney + to Hulu and ESPN.
Four major revolutions in 30 years, no wonder it is so interesting to work in the media. I am curious about the outcome of the latest revolution (which according to colleague Mark Ramakers will result in world domination of only a few companies) and I am eagerly looking forward to the fifth… ..
The streaming market is gradually becoming mature. There will still be significant growth, but the tumultuous numbers from the early phase are now behind us. The number of new entrants of any significant size is also drying up, so we can gradually begin to take stock: which companies will survive, which will fail, and what new developments can we still expect?
Let's start with the latter. A few years ago, it seemed that local players could only compete with the big American Tech competitors by working together intensively. In hindsight, this has not materialized at all. Initiatives like the French Salto went under, Britbox eventually became a ‘BBC only’ endeavor (ITV sold its share), we hear little about the Flemish Streamz, and NLZiet in the Netherlands is now cleverly positioned as an alternative to cable, while NPO and RTL are building their own streaming platforms.
Most broadcasters have now realized the critical importance of their brand and are eager to add a +, Play, or MAX behind their names to establish their presence in the digital world. By using the content budget both analog and digital and coming up with smart combinations, they are able to create a new future. With good technology now widely available and no longer a significant barrier, there is no doubt that local broadcasters take charge of their own digital future to survive. The latest in that lineup is Channel 5 in the United Kingdom, which is going to exploit all digital activities under one brand name, 5.
Moreover, the major international media players face significant challenges in keeping their traditional businesses afloat. The write-offs that Paramount and Warner Discovery (WBD) have taken in recent months (each amounting to nearly ten billion dollars!) speak volumes. The traditional business is increasingly under pressure, and investors see that too. For instance, WBD’s stock received a downgrade from Standard & Poor's (to negative). That must cause a lot of pain in the boardrooms.
What does all this mean for the streaming market? First of all, it means that many more local brands will survive than previously thought. All traditional broadcasters are rapidly transforming into digital media companies because they know that otherwise their days are numbered. While the number of local players increases, the number of international players will, however, shrink. The large American media companies are under immense pressure and can no longer afford the investments needed to build international streaming services.
Who will be left standing? Netflix, of course, which systematically expands its first-mover advantage. Prime Video, backed by Amazon's commercial engine. Disney, naturally, with its broad portfolio, will survive despite the painful managerial road it has traveled. And the aforementioned WBD, which continues to invest heavily in (HBO)MAX. Finally, DAZN, though it is still burning through cash. With Apple, you never know. But the other international players are not going to make it. That is certainly something few could have predicted three years ago...
Change in the media sector occurs at the speed of light. Just over ten years ago, Netflix was a relatively unknown phenomenon and began its first major original production, House of Cards. This month, Dutch Telecom Paper came with remarkable news: in the Netherlands, streaming has surpassed broadcast in terms of viewing time. It's not different in other countries in Northwestern Europe, not to mention the USA. A true paradigm shift!
It is clear that broadcasters, both public and commercial, need to change fundamentally. A paradigm shift, like the one mentioned above, requires profound changes in business operations. After all, these organizations all face the task of changing from traditional broadcasters into digital media organizations. Top-notch change management is required, and the question is whether they have the courage to take major steps. Some broadcasters believe they can keep their heads above water with a few minor adjustments. Often, they talk about transformation, but in reality, there is little of it. Simply tweaking things isn't enough; a fundamental change of course is needed. Thinking digital-first becomes essential, which has a massive impact on business operations.
Ask TV4 in Sweden and TV2 in Norway, and in their wake SVT and NRK. In Scandinavia, Netflix and Amazon Prime had an early impact. The leadership of these broadcasters quickly realized that these new competitors would make life difficult for them. As is typical in Scandinavia, swift interventions were undertaken, and strategies were overhauled. It soon became clear that this was not going smoothly: two years after formulating a new strategy (with a strong focus on streaming) then-CEO of TV4, Casten Almqvist, concluded that the TV4 ship had not yet changed course. What became apparent? The existing management had no incentive to change and was blocking the necessary transformation. Taking employees along on that journey and, if necessary, replacing them is the core of a successful transformation.
In Britain this now is understood. The BBC was early with its iPlayer. ITV has been fully committed to ITVX for the past two years and is making significant strides. Lastly, Channel 4 is moving full steam ahead, with more than thirty percent of its revenue coming from digital. RTL Nederland is the uncrowned king in the Netherlands and has managed to turn Videoland from a problem child into a promising digital platform. In Germany, broadcasters are also beginning to undergo a profound transition, with commercial channels operating a lot faster than their more conservative public counterparts.
Netflix founder Reed Hastings once called Sven Sauvé, CEO of RTL Nederland, a dinosaur when he refused a licensing deal. But it wouldn't surprise me if a large number of European broadcasters will manage to survive in these turbulent times. As long as they transform!
Jonatan bracht in 2013 het Multi Channel Network Mediakraft naar de Benelux en was daarmee de eerste die hier op grote schaal een business model introduceerde voor social media influencers. Vandaag de dag geeft hij advies aan allerlei publieke figuren en organisaties over hun (social) media strategie, was hij recent interim COO bij Buma/Stemra en vervult hij nu de rol van interim Director Broadcasting bij NEP.
Tess en Britt startten zo’n 3,5 jaar geleden For You Agency. Dit begon met het managen van TikTok-creators maar is inmiddels uitgegroeid tot een allround social media marketing agency dat merken helpt om Gen Z te begrijpen, te bereiken en zich daarmee te verbinden. For You Agency doet dit door social media accounts te beheren, creators te managen en allerlei campagnes te bedenken en te produceren.
- Waarom groeit TikTok van alle social media platforms het snelst, voornamelijk in de jongste doelgroepen?
- Wat is het grote verschil tussen het media maken met en voor Gen Z, ten opzichte van bijvoorbeeld Millennials?
- En welke (media)bedrijven begrijpen dit spel? Welke nog niet? En waar zit dat in?
De antwoorden hoor je in de 3Rivers: Joost Mag Het Weten podcast