Streaming Strategy

RTL responds to media landscape ruled by Netflix, Amazon Prime

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Old school goes modern. Source: DPA/Ulrich Baumgarten

The digital age has changed traditional viewing habits and TV networks like RTL, a European broadcaster, are devising strategies to combat the incursion on their traditional business.

Currently, the media company generates nearly half of its revenue from TV ads but as viewer habits change – deciding which films or shows to watch at whichever time – the group is focusing on expanding its on-demand services, like TV Now.

“In our core markets, we’ll offer the same as Netflix,” said Bert Habets, CEO of the Luxembourg broadcast company, who helped set up the streaming service Videoland in the Netherlands.

Content is king

The model for Germany will be a hybrid of a free, ad-supported version flanked by a subscription offering without ads. The subscriptions would be priced between €4 to €8 per month. Netflix subscriptions run between €8 and €20 per month.

Still, it’s a costly investment: Mr. Habets estimates the group will invest well over €100 million over the next few years. Much of that money will go towards creating exclusive content. The CEO is convinced original, local content will help the Bertelsmann subsidiary reach its audience.

He is so confident of the plan that he withdrew the group’s interest in buying Endemol Shine, a Dutch production company, in favor of growing RTL’s own digital products. The announcement was made as the group posted a stronger-than-anticipated, second-quarter Wednesday – sales rose by 2.3 percent to €3 billion in the first half of 2018 and the adjusted Ebitda increased by 1.9 percent to €638 million.

The group expects full-year, sales-growth of between 2.5 percent and 5 percent, with its digital business one of the strongest growth drivers.

Taking on giants

RTL’s German competitor, ProSiebenSat.1 Media, is teaming up with US media company Discover to fend off the likes of YouTube, Netflix and Amazon Prime. ProSieben invited RTL to join the partnership, but Mr. Habets said he wants to focus on the group’s own services, though he’s “open-minded” about the idea.

So far, RTL has adopted a country-by-country strategy, creating a joint venture with France’s Salto and taking over Videoland. Though Germany is a critical market for RTL, Mr. Habets previously told the Frankfurter Allgemeine Zeitung that the group would offer its video-on-demand services in other markets as well, including Croatia, France, Hungary, Belgium, the Netherlands and Luxembourg.

Catrin Bialek is an editor for the ‘companies and markets’ section at Handelsblatt. Christine Coester is an editor for Handelsblatt Global. To contact the author: bialek@handelsblatt.com

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