RTL, Europe's biggest television broadcaster, may set up a European video streaming service to take on U.S. online rivals such as Netflix and Amazon, the company's co-chief executive Guillaume de Posch told Handelsblatt.
“The wide variety of digital playback devices such as smartphones or tablets has changed our media,” he said ahead of an industry conference in Cannes this week. “For us, TV is not just the classic linear TV, but includes any video format that runs on today's popular devices. This brave new world of television probably makes new business models necessary.”
Mr. de Posch, said the key to creating a European streaming platform would be the ability to acquire program rights for all of Europe, which would give RTL the benefits of economies of scale.
“We currently cannot hope for a discount from the U.S. studios,” he said.
So far, RTL’s moves in this segment have been more modest. In the relatively small Dutch market it operates the online platform Videoland and in Germany it has a streaming service Kividoo, tailored for children.
I believe that millennials will consume television differently than we do today. In the young target groups there is a strong trend toward short videos that are watched on mobile devices and on-demand. Guillaume de Posch, RTL co-CEO
The 58-year-old Belgian, who shares the CEO position with German Anke Schäferkordt and has been with RTL since 2012, said there are several differences between Europe and the United States that could affect the viability of a European streaming service. There are more free television channels in Europe, he said, adding that nothing beats free television. Currently pay TV is not RTL’s core business.
That said, Mr. de Posch sees change coming. “I believe that millennials will consume television differently than we do today,” he said. “In the young target groups there is a strong trend toward short videos that are watched on mobile devices and on-demand.”
According to Mr. de Posh, 90 percent of European viewing is still traditional television consumption. He predicts that this will shift to favor non-linear TV in the next few generations, but added that “for viewers this distinction plays less and less of a role.”
RTL is already seeing some success with multi-channel networks, known as MCNs, which partner with video platforms like YouTube. “Our MCNs such as BroadbandTV or StyleHaul bundle thousands of channels with short, made-for-internet videos, with which we reach especially the very young audiences,” Mr. de Posch said.
If RTL were to start its own European online video platform, it would be in direct competition with other global streaming services.
In the last quarter, Netflix added 5.6 million new members, more new users than it ever has before. The company now has approximately 75 million subscribers worldwide. The jump is due to the recent expansion in 130 new countries, including India, Singapore and Turkey.
Netflix has two millions subscribers in Germany and France alone. In the United States, the video service accounts for almost one-third of all internet traffic on some evenings.
In January, Consumer Intelligence Research Partners released analysis of buyer shopping patterns for Amazon, Inc. for the October-December 2015 quarter indicating that Amazon Prime now has 54 million U.S. members, spending on average about $1,100 per year, compared to about $600 per year for non-members.
The current membership estimate compares to an estimated 40 million U.S. members at the end of 2015, or an increase of 35 percent. Amazon Prime subscribers can stream much of the web giant’s video catalog and original programming.
According to Mr. de Posch there are three revenue sources from multi-channel networks: traditional advertising, promoted content and a hybrid model that he described as a “special form of e-commerce.”
“StyleHaul has already produced videos for Amazon in which YouTube stars present products that they particularly like on Amazon. You can then order these products with just a few clicks,” he said.
There can be more flexibility for advertising online than on traditional television.
“For instance, when a cosmetic brand like Maybelline wants a viral campaign with Youtube-Stars, we can arrange that. In the classic television would not. The regulation of product placement is very restrictive in Europe.”
But, Mr. de Posch is wary of making too many promises via product placement. Asked if RTL make money in this arena, his response was: “In the short term, certainly not."
Kai-Hinrich Renner reports on the media industry for Handelsblatt. To contact the author:[email protected].