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Europe’s RTL Group to Invest $400 Million in Expanding Its Streaming Services

With TV advertising in decline and stark competition from the likes of Netflix and Amazon, European broadcasting giant RTL Group is looking to significantly boost its own streaming services in its major markets.

The company, which owns London-based production and distribution powerhouse Fremantle, said this week that it would invest at least €350 million ($396 million) in expanding its streaming services over the next three years. About €300 million ($339 million) of that would be dedicated to content production across all genres, with the rest slated for the development of its technical platform.

The investment adds to the approximately €2 billion ($2.3 billion) that the company’s broadcasters already spend annually on programming. RTL Group media holdings include broadcasting operations in Germany, France, the Netherlands, Spain, Belgium, Croatia and Hungary.

RTL Group CEO Bert Habets said the company would not try to compete directly with Netflix and Amazon, which would remain the top two streamers. He said the battle was for third and fourth place, with the fight set to become more heated with Disney and WarnerMedia preparing their own direct-to-consumer offerings.

Habets said that RTL would build on its broadcasters’ inherent advantages, namely their local focus. The company has already passed the 1 million mark of combined paying subscribers in Germany and the Netherlands, where it operates streaming platforms TV Now and Videoland, respectively.

Habets said RTL Group would continue to differentiate itself with exclusive local content such as “M – A City Hunts a Murderer,” the updated remake of Fritz Lang’s classic 1931 thriller “M,” which premiered last month on TV Now, and “Temptation Island,” the local version of the hit reality format, which also streams on the platform. TV Now relaunched in December with an expanded premium package, while also offering a free ad-supported version, and is set to premiere eight new shows this year.

RTL is planning to launch similar services in its other territories and aims to grow its total number of paying subscribers to at least 3 million in the next three years, Habets said.

As part of its new strategy, RTL Group is looking to increase the cooperation between its various channels and Fremantle, which currently generates 11% of its total revenue from RTL broadcasters and last year accounted for 24.5% of RTL Group’s total revenue. Habets said there was huge potential for closer collaboration between Fremantle and the group’s broadcasters.

Fremantle’s productions include such international hits as the Starz fantasy series “American Gods” and ABC’s “American Idol.”

On the free-TV front, Habets said linear TV viewing would continue to decline but that viewers would still tune in to key programming such as news, sports and local shows.

“Program bouquets will be reshuffled, which will create scarcity, and that scarcity will have to be paid for,” Habets noted.

RTL Group is also increasing its focus on independent news as a commodity, particularly in the current political climate and the era of “fake news,” Habets said, noting that, in Hungary, RTL offered one of the few major sources of independent news.

RTL Group’s annual revenue last year rose 2.1% to a record €6.5 billion ($7.3 million), due largely to its rapidly growing digital businesses and strong performances by Fremantle and Dutch broadcaster RTL Nederland. The group nevertheless posted a 9.6% fall in net profit to €668 million ($755 million), which it attributed to a goodwill impairment against Lost Angeles-based marketing services and media subsidiary StyleHaul amounting to €105 million ($119 million).

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