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Movistar +: Telefonica Shakes Up Europe’s Pay-TV Business With High-End Scripted Drama

After more than two decades of talk about the convergence of entertainment and telecommunications, Spain’s Telefonica became Europe’s first telecom to launch a massive premium scripted drama slate. Telefonica premiered “Velvet Collection,” a romantic drama centered on a high-fashion house, on Sept. 7, via pay-TV platform, Movistar Plus.

Indeed, of national pay-TV players in Europe, only Sky in the U.K. may match Movistar Plus’ production volume as it unleashes three original series this year and plans on 10-11 in 2018.

Velvet Collection” is a sequel to TV series “Velvet,” which helped persuade Studiocanal buy into its producer, Madrid’s Bambu Producciones, and Netflix to commission from the shingle its first Spanish original series.

“The Zone,” a crime thriller from brothers Jorge and Alberto Sánchez-Cabezudo — creators of one of Spain’s very few pay-TV series, “Crematorium” — will bow in October. It is followed by “Spanish Shame,” a pioneering — for Spain — “Curb Your Enthusiasm”-style sitcom about a cringe-inducing Spanish couple.

In January, Movistar bows “The Plague,” the first TV series in official selection at the San Sebastián Film Festival, from Alberto Rodriguez (“Marshland”). Six-part series is a political crime thriller set in a spectacular but corrupt 16th century Seville. It is budgeted at €10 million ($12 million), three times the cost of average Spanish series.

Telefonica-Movistar Plus’ commitment to TV content and high-end series is clear. In 2014, Telefonica bought Canal Plus, Spain’s biggest pay-TV operator, for $1 billion.

Last September, Luis Miguel Gilpérez, president of Telefonica España, announced that Movistar Plus was plowing $84 million into the development and production of 12-15 scripted series over 2017, and $36 million more for Movistar Plus channel Canal 0.

Why Movistar Plus is driving into high-end TV series is another matter.

“We need to be different from telecom competitors, which is hard to achieve in the rest of the telecom market where mobile and fiber connections are highly regulated,” Gilpérez says. “Where there’s growth potential and a large capacity to achieve that differentiation is TV.”

Anti-trust regulation introduced after the Canal Plus buy obliges Movistar Plus to share acquired premium content — think soccer — with its telecom rivals in Spain. That restriction does not apply to original productions, however.

Certainly, Spain has pay-TV growth potential. Only about 35% of Spanish households have pay-TV. But the market could double pay-TV penetration to 70% or 80% by 2020, Gilpérez says.

But the Canal Plus subscription base never really caught fire.

“Premium-priced pay-TV has not been successful in Spain, a country where piracy is very high,” notes María Rua Aguete, at research and analysis firm IHS Technology.

Telefonica is convinced that growth can be achieved by what Gilpérez terms a “democratizing” of TV: Offering TV at highly attractive rates bundled with fiber-optic broadband and mobile telephony — commodities Spaniards are certainly prepared to pay for.

“People have to sense that they’re missing out on something if they don’t subscribe to Movistar Plus.”
Domingo Corral

In a first step, on July 7 Telefonica announced two new basic package offers, both bundled with broadband and advanced mobile telephony and priced at $54-$68 per month (Movistar Fusion #0, for weekly series) and $72-$86, Movistar Fusion Series, which allows full-season binging).

Movistar Plus’ original series mark a revolution for Spain in their business model.

They also represent a sea-change, anticipated in part by select series made for free-to-air TV, in the kind of scripted drama being made in Spain.
The “most radical change,” says “Velvet Collection” producer Teresa Fernández-Valdés, is that the original series are made at international standard lengths of 50 minutes, not the 70 minutes or more of Spanish free-to-air series.

“Respecting creators’ visions,” says Fernández-Valdés, Telefonica’s original series also target audience segments, rather than traditional made-for-all audiences fare of Spanish free-to-air networks. “That’s marvelous, opening up the possibility of offering content not only to traditional audiences but maybe younger viewers who no longer watch free-to-air or linear TV.”

“The quality of some series in Spain is already very high. So it’s not a question or being better or worse but different,” says Domingo Corral, Movistar Plus original fiction director.

That comes from a combination of traits, he says.

“The dramas have a cinematic look and high production values,” according to Corral.

Shot in 170 locations with two units, “The Zone” is “hyper-realist,” delineating a post-nuclear accident area down to the last detail while character arcs constantly evolve, says Jorge Sánchez-Cabezudo.

“The key cost with series is time,” Corral says.

Average shoot time on a Movi-star Plus series is two weeks per episode.

The Cabezudos took a year-and-a-half to write “The Zone.”

The series are also “very character-driven, not plot-driven,” says Corral. Every character is thought through thoroughly, he says.

Movistar Plus will also make Spanish series at a volume that no other operator, including Netflix, is likely to match.

“People have to sense that they’re missing out on something if they don’t subscribe to Movistar Plus. Four series a year are just drops in the ocean,” Corral says.

Gilpérez adds: “This is just the beginning of a very long journey.”

The biggest question is whether Movistar Plus series will click. In that, San Sebastian, for decades an arbiter of the best in Spanish cinema, may have an early but indicative say.

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