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InContext / An inside look at the business of digital content

What the US and Europe TV markets can learn from each other

Each media company must clearly evaluate and understand its strengths and core competencies, and what these mean when moving in a new direction.

January 30, 2024 | By Christy Tanner, Founder – Coraly Partners and Senior Advisor Oaklins DeSilva & Phillips@christytanner and
Ian Whittaker, Managing Director – Liberty Sky Advisors

In an increasingly global market, it is vital to recognize that, while Europe and the U.S. may have many similarities, they also have notable differences. The good news is that there’s a lot to learn from these differences. No matter what your perspective, the “television” space is growing more complex by the day. Applying one world view to fundamentally different markets is a recipe for failure. Thus, it is critical that media executives realize the world is not black and white but consists of shades of grey.

When we talk about television, what we mean by “TV” can vary dramatically, depending on geography, distribution service, device and – increasingly – the type of content being viewed. These variations are critical to understanding opportunities in this space. For the purposes of our discussion here, “TV” includes but is not limited to: 

  • Over-the-air (OTA) broadcast channels
  • Cable & satellite-delivered channel
  • +s
  • FAST channels
  • SVOD services

All of the above may be accessed on mobile devices, laptops/desktops, and connected TVs. They are the primary (and most lucrative) content delivery formats for both traditional and new content creators and aggregators, who are most likely to be interested in our analysis. 

A key component of the challenges now faced by media companies is a false assumption that “one size fits all.” As we explore the strategic complexity of the streaming television market, compounded by the acceleration of AI integrations, taking a “one size fits all” approach is particularly risky.

Instead, each media company must clearly evaluate and understand its strengths and core competencies, and what these mean when moving in a new direction. In order to remain viable, it is imperative media players have the confidence to try new tactics. And, to truly innovate, they also need to get comfortable with the possibility of failure (as the tech industry has been).

The five key strategic questions

As they decide their next steps, media executives should be focused on five key long-term strategic questions:

  1. How can you prepare your media business for success and survival in a rapidly-changing, highly competitive environment?
  2. How can you attract and retain talent?
  3. How can you serve your current customers and acquire new customers?
  4. How can you grow revenue and profitability, sustainably?
  5. And, finally, what exactly is your end goal?

Streaming lessons the United States and Europe can learn from each other

What we present below are six key – deliberately brief – lessons that U.S. and European media companies can learn from each other as they develop and evolve their offerings in the global streaming TV marketplace.

Lesson #1: Ask the right questions

The number one lesson that European media companies can learn from the U.S. is that many major media companies neglected to ask those five questions soon enough. That particularly seems the case when it comes to the last question: The strategies of most of the major U.S.-based streaming companies seem to lack a clearly defined end goal. But the good news is that it’s not too late. In fact, late movers have an opportunity to learn key lessons from the U.S. streaming market and thus serve viewers more effectively.

Lesson #2: Understand the market

One of the major mistakes that the mainly U.S.-based SVOD streaming services made (at least up to now) was the assumption that the world looked like the United States and would act the same way. A study of the history of the U.S. and European television markets would have made it clear that, when it came to paying for television, both markets had fundamentally different characteristics.

For example, Americans are used to paying $100 or more for their television, Europeans are not. Also, European pay-tv penetration has typically been 30 to 40% lower than the U.S. (even lower in some markets). Europeans prefer national language content and use free to air content more. When it comes to streaming, both sides need to first understand the structure of their markets and then work out what solutions work best.

Lesson #3: Media tech is a long-term investment

Technology has forever changed the game for media, and every player in the content value chain needs to become tech-savvy. This means continuously educating oneself – and one’s team – on new developments in technology. AI is a perfect example of a technology that has already impacted media (and will continue to do so). And yet, many major media players still think that AI is something for their tech department or even a new “Chief AI Officer” to manage rather than something about which they personally need to invest time learning and educating their entire teams about.

It’s imperative to everyone in a media company – senior or junior – to understand how mass market consumers connect using technology. For example, have they experimented with writing a ChatGPT or Midjourney prompt? Have they recently visited Walmart, Best Buy or Amazon to learn how most consumers purchase a TV, and thus come to have built-in, bundled access to their products? Do they have TikTok accounts? YouTube, Facebook, Instagram, Twitter, or even LinkedIn? And so on. Technology is a constantly evolving space, both in terms of innovation and consumer behavior. Staying connected to these changes will allow media leaders to make better short-term decisions and long-term investments in their business.

Lesson #4: Do what you do best

When faced with the dominance of Netflix, instead of doing what they did best, many U.S. media companies simply tried to do what Netflix did – but not as well. This approach hasn’t made a significant dent in Netflix’s market dominance, which is measured as present in two thirds of U.S. households, according to Kantar, with 49% in 2023 viewing it as their most important streaming service.

While this short-term strategy has floundered, the top U.S. media companies have a) strong, resilient brands, b) expertise in creating world-class content and content pipelines and c) the best deal-making skills Hollywood can teach. So, their potential remains strong. The same holds true for European media players. If you aren’t U.S.-based, don’t assume that your media company should follow the same strategies as the U.S.-based media giants. Nobody wants or expects your company to be the next Netflix. Instead, your company should be the next version of itself.

Lesson #5 – Don’t lose sight of the bigger picture

CEOs and corporate boards face a multitude of pressures when it comes to decision making. They must actually run their companies and navigate continually changing sectors and wider trends. And, in most cases, they must do so under the scrutiny of shareholders who have a multitude of short and long-term interests. What management must not do is panic.

For European companies, one area this particularly relates to is the treatment of linear television. There is no doubt that linear television faces challenges, yet European executives must also be wary of writing off the medium. While viewing for “traditional” television in the U.S. hovers just above 50%, linear television programs still dominate the schedules in virtually all major European countries. That reflects both the history of how television developed in these respective markets and the demographics involved. Linear can still be a powerful tool for advertisers in Europe in a way that is becoming increasingly challenged in the United States.

Lesson #6: Be humble

Media executives must not fall into the trap of thinking that, just because they view the world in a certain way, then that will be representative across the population of their market, much less the globe. That kind of thinking can lead to severe business consequences. It is good business sense to recognize you do not know everything and act accordingly. If there is one lesson that can be said to be applied equally across both Europe and the United States, it is this one.

The bottom line

The bottom line is that whether European or U.S.-based, media companies are not in need of a one-time strategy implementation or new product launch. As our six lessons illustrate, these companies need flexibility of thought and to be prepared to accept the realities on the ground, instead of implementing “one-size fits all” strategies. As we move into a new phase of hybrid traditional TV-streaming business models and assess how to integrate AI, this is particularly important to keep front of mind.

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