Oege Boonstra (partner, 1958) has over 25 years of experience in media. He possesses comprehensive knowledge of the international television market and primarily focuses on strategy development, M&A and international market research. He serves clients in all European markets, the US, the Middle East and Australia and has undertaken multi-year assignments for companies such as Endemol, ProSiebenSat1, All3 Media and Warner Bros.
As an international strategy consultant, Oege has held a large number of board positions over the years. He has been involved in great projects with significant success, has also seen the other side of the coin and is able to apply these insights in the projects he engages with on a daily basis.
Oege’s specialty lays in translating ambiguous trends, complex situations and challenging interdependent decisions, into logical coherence and actionable insights to obtain strategic clarity. For over a decade, Oege has been writing columns on international strategy development in media.
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The saying 'what goes up, must come down' is an old piece of folk wisdom. In the audiovisual content market, this certainly isn’t different. Over the past 6 years, we have enjoyed a true boom in content development and - production, which was soon labeled as “the golden years of television”. This year brings the expected correction: media companies are issuing profit warnings left and right. Whether it's RTL or ProSiebenSat1 in Europe, or global giants like Disney, Paramount or WarnerDiscovery, tough times prevail.
A further analysis of the figures from these media companies, reveals several clear trends. The traditional television business is struggling due to declining advertising expenditures. Especially in Germany the market has collapsed, which significantly impacts financial results in the media sector. In the Netherlands, the situation has been somewhat cushioned by sharply increased GRP-prices, but in other countries, the storm clouds are gathering.
Another – more creeping – effect is the inevitable shift in viewing behavior. The UK's Ofcom, which unlike our Dutch Media Authority does consistently provide solid research reports, reported this month that the change in viewing behaviour is accelerating among older viewers also. Linear viewing time in Great Britain among those aged 64+ decreased by 8% in the past year. It doesn’t bode well for broadcasters, if even their most devoted audience shifts to online.
Many media companies are now inclined to make their figures look a bit less rosy, when the market is already somewhat unfavorable. In the current climate, financial engineering has become interesting again, with various profit concepts being mixed together. Playing around with deprecation charges on produced content seems to be a common practice, with the potential write-off by WarnerDiscovery on the already produced Batgirl film as the ‘highlight’. The message is clear: the commercial market is experiencing a dip. As is often the case when the market is down, the public broadcasters are the ones consistently continuing to invest. For this reason, among others, BBC Studios has had a successful year and will do this again in 2023.
Nevertheless, all media companies are subject to the same phenomena: if they don't establish a robust streaming operation, they’re destined to fail. The challenge is that there are still very few organizations capable of operating a streaming service at a break-even point, let alone profitably. This additional financial burden poses significant problems in both the public and commercial domain. Consequently, it's logical that producers are focusing on their traditional roles in the value chain: creating and producing compelling audiovisual content. While demand may be somewhat decreasing, this mostly means that the oversaturated market of the past few years is normalizing to some extent. A blessing in disguise for producers.
For the broadcasters however, it's all hands on deck. The easiest approach is to cut in the content costs, but that would mean falling further behind on the most successful global streamers (Netflix and Amazon). These are challenging times!
Investing in Media
Governments like to engage themselves in media policy. Every new cabinet wants to get involved on this sexy subject. It is striking that in the Netherlands, little attention is paid to the future in this field: through a maze of committees, the focus is mainly on looking back at everything that went wrong in the past. And when it comes to making decisions of any importance - such as the investment obligations of streamers - the result is, to put it mildly, underwhelming.
The way things are done in the United Kingdom differs significantly. The creative sector in that country has experienced unprecedented growth in the last twenty years. It began with the Communications Act in 2003, which, among other things, stipulated that intellectual property rights should remain with the creators and makers of audio-visual productions. This, combined with the investment drive of multiple broadcasters, led to an unprecedented boom in audiovisual content production.
The government's policy was also stimulating and successful in the digital creative field. Shoreditch - a neglected area in the eastern part of London ten years ago - was developed as a hub based on the government's long-term vision and attracted many creative, digital companies. The neighborhood now thrives, much like the long-established television stronghold Soho.
The Johnson government deviated from this stimulating policy and pursued an ultraconservative, politically charged course. Johnson wanted to substantially reduce funding for the BBC and sell Channel 4. Striking, because it is precisely these two organizations that pour a significant amount of money into the British creative sector. Fortunately, with the fall of this government, these initiatives were also discarded, allowing both the BBC and Channel 4 to refocus on what they excel at: developing creative, high-quality programming in collaboration with the highly successful independent production sector.
The Sunak government is picking up the thread again and will make significant investments in the British creative sector. Sunak is introducing a new 'moonshot' goal, aiming to grow the British creative sector by fifty billion pounds! The program aims to create one million jobs in the British creative sector by 2030. The old tradition of thinking big is being embraced again. Interestingly, this development is widely supported by both Tories and Labour. The British creative sector has risen to become the second largest in the world.
The Netherlands can learn a thing or two from that. Our audiovisual sector was put on the map a quarter of a century ago by visionary entrepreneurs like John de Mol and Joop van den Ende. In their wake, a highly successful creative sector emerged. However, the Dutch government has repeatedly failed to give this position a boost through concrete and stimulating policies. We look backward rather than forward, impose weak investment obligations on streamers and have no sense of the 'big picture.' We have become small-minded thinkers.
I am rapidly approaching my 65th birthday. This prompts the same question from many friends and acquaintances: when are you going to stop? That is certainly worth considering, but I am thoroughly enjoying our great 3rivers team and the amazing projects we undertake for our clients. So the answer is always the same: not yet. After all, the wonderful world of media is in constant motion and therefore a fascinating work environment.
However, many media company managers are busy with stopping. In recent years, initiative after initiative has been developed, both pre- and post-Covid. But now that the growth has slowed down everywhere, it's time to cut back. This is not only happening with regards to traditional media activities, but also in the wonderful world of "new" media.
This month's very striking news was the discontinuation of Salto in France. This streaming service, founded by the country's three main broadcasters (TF1, M6, France Télevision), is definitively closing down. Salto was supposed to be the answer of the local French players to the American streamers. However, the number of subscribers did not grow beyond 800,000, making Salto a real bleeder for the shareholders. Add to this the fact that almost every broadcaster prefers its own brand when it comes down to online activities and it's clear that it's every man for himself. I'm curious to see how initiatives such as Britbox, Streamz, NL Ziet, and Joyn will fare. Closer cooperation with local players in the German market seems to be the direction CEO Bert Habets has in mind with the latter platform.
Disney is also ruthlessly cutting back on non-profitable activities. The entire Metaverse division is being shut down in one fell swoop, with 800 people losing their jobs. It's remarkable how quickly the Metaverse (just a year ago, the Metaverse was the talk of the town at SXSW) is being discarded. Even Facebook, which changed its name to Meta (!), has scaled back its investments in the Metaverse.
I could go on and on about this phenomenon, because the number crunchers set the tone in the current era. Even the BBC is being forced to continue with cost-cutting measures, not only reducing staff but also cutting program budgets. Warner Discovery is the cost-cutting champion and the big Tech companies jobs are reducing jobs by the thousands.
Stopping activities is, of course, an energy drain that does not bring joy to anyone in an organization. That's why it's so crucial for companies to carefully consider what they especially do not want to do. As far back as the 1980s, Peters and Waterman recognized – while studying excellent companies – that the adage "stick to the knitting" is of great importance. In these difficult times, I wish this wisdom upon all media companies that want to take too big a risk.