CANNES — Was Guillaume de Posch’s MipTV Media Mastermind Keynote false modesty? Addressing an audience Monday afternoon in the Grand Auditorium of Cannes’ Palais des Festivals – where the big MipTV talks go down – the co-CEO of RTL, one of Europe’s largest broadcast groups – used words that are normally no-gos for chief execs. Such as “problem” and “difficulty” (industry dictat: say “challenges”). He suggested that RTL’s thinking had legacy issues, with territory-based execs being a touch too “local” when they had to think more structural (a good balance for them, he thought, was 70% local/30% structural). He even suggested that RTL’s drive into the digital vid business was a long march and it could take 10 years to master the sector.
Yet RTL’s fundamentals, flashed up on a pie-chart, are ones many chef execs at other European broadcast groups would die for: 49.4% of RTL’s total €6 billion ($ billion) revenues, no more, last year came from advertising, so are exposed to cyclical economic vagaries (even then, as the owner of France’s M6, and a big chunk of Spain’s Atresmedia, RTL has diversified risk outside one national economy). And 22% are from content (RTL owns FremantleMedia which owns “The Idol” and “X-Factor”). And 8.3% are from digital, understood as just the digital vid biz. RTL would like that figure past 10% in the next three years.
And, while many broadcasters just don’t understand the digital content business, Morgan Spurlock suggested Saturday, RTL is not only talking the talk of a multi-platform operator – his strategy is “total video,” he said – but taken an early walk.
Driving hard into short-form content – favored by mobile-watching millennials – from four years ago, RTL has invested in North American multi-channel networks (MCNs): BroadbandTV, a YouTube aggregator, ranked No. 1 last month in terms of short-form vid distribution; in StyleHaul, a highly-specialized” YouTube women’s fashion lifestyle and beauty-themed video content network; and in the Denver Colorado-based SpotX, a video inventory management platform, fielding 10 billion online ad enquiries per day. In online advertising, after Google and Facebook, SpotX ranks No. 3 in the sector.
One result has been that RTL Group companies, in January and February 2016, generated over 11 billion video views a month, including catch-up and replay services, De Posch said.
The question. Longterm, is how to monetize this content, De Posch commented. The market isn’t necessarily looking for short-term answers, however.
“Despite the claimed billions of views of videos from MCNs, the financial contribution of the acquired MCN properties to the group’s bottom line is relatively small – MCNs typically have slim margins and the monetization models are still evolving,” said Richard Broughton, at Ampere Analysis.
However, he added, the investments are all about the mid-to-long term challenges being faced by broadcast groups like RTL: ”Plateau-ing broadcast viewing, the loss of younger viewers to OTT platforms and services, stagnating home media markets. MCNs allow such broadcast groups to escape this trap – they’re global by nature and capture these ‘lost’ younger audiences.”
De Posch would no doubt agree. Owing to technological breakthrough, the advance of the Internet, “the good old life of a TV set being confused with a video is probably over: TV content overall needs to be distributed on all multiple platforms,” he added, underpinning his Media Mastermind lecture with a slew of stats: 900 million 4G-enabled smartphones will be sold in 2017 vs 600 million smart TV sets.” Also, there has been a explosion in the number of TV channels, so more content is now available. “We as providers – RTL Group, any provider – have a huge battle for attention,” De Posch added.
In a new world, RTL’s future will turn on “programming, scale and globalization,” De Posch said. “More and more broadband content now has capacity to be exported,” he added.
And MCNs give RTL scale. “We believe hits are possible. But if you recall, 30 years ago, hits were making 30 million-50 million viewers on American TV. Now if you lucky – “Idol,” “The Voice” you reach 10 million. Hits in the future will be smaller in size. So you’ll need to have global scale to make sure that the hits you produce actually travel internationally,” he said, suggesting it might take ten years to master the enticing but still strategic digital vid business.
RTL’s strategy also lays to market realities, said Broughton. “The MCN model is becoming increasingly attractive as distribution outlets expand beyond YouTube – Facebook, Snapchat, Instagram, Twitter are all becoming viable outlets for content, Broughton argues.
Broughton adds: “Having large scale global portfolios also helps groups like RTL tap into new advertising budgets – those dedicated to targeted programmatic trading, as well as budgets belonging to large global brands (who may increasingly – over a longer timescale – consider global platforms attractive from a brand consistency and cost-effectiveness perspective).”
If RTL had to learn the digital vid business, so bought into its assets, skills and technology, as De Posch observed, what are other former broadcast network groups doing?