The development of the TV & video market
Starting from the end of the last decade, the audiovisual industry and market have been recording extremely important transformations: video consumption on the Internet platform has been growing remarkably and new operators are taking place on the market. On a global scale, these players offer amateur and professional content, contributing to the development of a real “new” audiovisual environment. In its first phase, these platforms were seen as distinct and far from traditional free broadcasting and appeared to be entirely linked to the distribution and consumption methods typical of the Internet. Consumption was mainly carried out on the screen of a personal computer and the new offers seemed to be nothing more than a sort of audiovisual offshoot of what was once called the multimedia content market.
Progressively, the weight of the online video offer and consumption started growing and the new audiovisual arena became increasingly significant until it reached and then eventually more or less directly impacted traditional television. Also thanks to connected TVs, the diffusion of these video services and the development of original products by the new operators involved have reached a significant and completely unexpected dimension to the point that today we can no longer understand the television market without wading in the borders of a broader TV & video market. With the launch and the vigorous development of the SVoD (Subscription Video on Demand) offer, Netflix has revolutionized the online home video market, first in the US and then internationally. Its features have increasingly affected the traditional television offer. Yet, the real transformation it implies doesn’t necessarily concern the direct competition between platforms: it’s not about replacing the traditional television offer with other services as Netflix. The real transformation lies in the “new” nature of the internationalization process which is faced by the new market players with a strategically pioneering attitude.
The new nature of the globalization process
New players, such as Netflix, Apple, Amazon, Alphabet / Youtube or others that offer video content on a global scale or are about to do so, oversee international markets through platforms that are global on their own. They were global before becoming domestic or international. These operators do not consider themselves international based on the distribution of their content across borders (programs, channels), nor on their direct investments or acquisitions abroad. They are direct-to-consumer platforms that were global since their start: their entrance on a specific domestic market (by investing in content, partnerships, alliances etc.) was actually a way to complete their own strategy and marketing, an achievement that aimed at strengthening the global platform itself. The process described above is radically different from the internationalization of historical media groups (think of Disney, Time Warner, Discovery etc.). These operators, which were exclusively direct-to-consumer platforms till now, reckon internationalization on criteria and methods of the last century, meaning before the platform economy took shape. Today, internationalization follows routes that are directly linked to the platform economy structure. This is the ground where the most significant competition between market players will unfold and their strategic future assessed.
The core feature of the globalization process, the drive that determines its current and future development, doesn’t lie in the global flow increase of products or the number of their foreign offices but in the creation of globally connected direct-to-consumer platforms.
Media groups and broadcasters
The transformation that’s taking place is therefore structural, and urges traditional media groups to drastically rethink their strategies. As known, larger media groups, starting with Disney, conceive and develop their own global platforms trying to compensate for this sort of historical gap between the two types of internationalizations. It isn’t an easy challenge, also because in the meantime the new players, Netflix in the lead, have developed a consistent production capacity and created extremely strong local branches and brands within the new video market acknowledged as important “institutions”. Even Apple’s most recent decision to launch a new TV platform indicates that the OTT offer is gradually gaining more and more weight on the TV & video market. Amazon, on the other hand, apparently wants to extend the success of its Prime Video platform and expand its offer far beyond the traditional boundaries of home video. Over the next decade the challenge will shift from a video market (meant as the evolution of traditional home video) to a strictly TV market, also including other publishing genres that go beyond TV series and movies.
If it’s easy to guess how large media groups that are already on the global and local markets shall develop and respond (or could respond) to all this, it isn’t easy to understand how European national broadcasters that presently dominate their domestic audiovisual markets shall tackle the platform economy.
For broadcasters, internationalization has always been a slippery terrain. Over the past thirty years, there have been few successful attempts in branching across borders: Mediaset with Mediaset España, RTL Group with offices in France (M6) and in other European countries, and little more. Public broadcasters have always operated as domestic groups by definition, although in some cases carrying out important activities abroad (BBC). All in all, although often evoked, internationalization was considered an unnecessary challenge by both, public and private platforms, on the basis that markets were and are fully national (as for products and platforms): foreign and sometimes global products (shows, formats) could be easily purchased, adapted and distributed locally, and internationalization could wait because the TV market, armored behind the borders of national platforms, was a domestic market, with internationalization ambitions consisting only of B2B distribution – then and forever. This belief guaranteed product diffusion without ever doubting the strength of domestic platforms.
Currently, having gradually shifted towards a platform economy, the new TV & video market competition has acquired a globalized nature, so the internationalization strategies of the last century aren’t adequate anymore.
Today, national broadcasters aim at creating a European consortium platform. Although perhaps not easy, this is actually the only possible way to go but it would be better if the effort to create a consortium platform were deployed domestically first. This way, the participation of public broadcasters would give this European project greater incentive.
In the past, there have been a few attempts to create consortia, but they were shortsightedly blocked by antitrust authorities: nearly ten years ago, in the UK, the Competition Commission blocked the Kangaroo project that was a joint venture between BBC (via BBC Worldwide), ITV and Channel 4. The decision was taken to avoid an alleged dominant position of these players on the online market. In the light of the subsequent development of the audiovisual stage, the decision sounds bizarre, to say the least. The same happened to a similar project in Germany, a sort of consortium between operators, blocked by the German Cartel Office.
Generally speaking, public and private-commercial broadcasters have missed the opportunity to create a “domestic” consortium to adequately compete with the key players of the platform economy. These national consortium platforms (BritBox in the United Kingdom is an example, but it concerns a few foreign markets only, although today it is also present also on the domestic market) could be the starting point of a more extensive project in order to create a European TV & video platform that could be a flywheel for the production industry.
In summary, a stronger presence of broadcasters within the TV & video industry today can be developed on the basis of two consortium routes: within single domestic markets and at a European level. Actually, the two paths can be considered one alone which takes shape from a more direct strategic understanding of the shifting of television into a context basically dominated by the platform economy.
