(Bloomberg Opinion) -- In Europe, people are used to watching their TV for free. Or sort of. In much of the region – France, Germany, the U.K. – there’s a license fee: anyone with a TV set has to pay an annual fee of $100 to $200 for the privilege. The levies help to fund public-service broadcasters like the BBC and ARD.
The problem is that broadcasters are hemorrhaging viewers to streaming platforms like Netflix Inc. or Amazon.com Inc.’s Prime video service. And for TV stations whose biggest revenue stream is advertising, fewer viewers mean fewer ad dollars, compounding the flight to digital ad platforms like Facebook Inc. and Google.
In response, broadcasters want to create their own Netflix rivals to buttress themselves against the tech firms’ incursions. The streaming video giants’ advantage is their scale: They can justify the investment in major new productions because they can reach large global audiences. That, in theory, helps them charge higher prices, since they have better content and more of it.
That’s harder when you’re a local European player, which is why commercial and public-funded broadcasters are trying to join forces. But they’re also butting up against regulators who are wary of giving too much power to one organization, or of consumers losing access to content for which they’ve theoretically already paid through a licence fee.
On Friday, it was the U.K.’s turn. ITV Plc, the maker of the Golden Globe-nominated series Bodyguard, and the publicly owned British Broadcasting Corp. announced they were teaming up to offer Britbox in their home market. (A version of it already has 500,000 subscribers in the U.S.)
It’s easy to find the problems with the service. For 5.99 pounds ($7.50) a month, customers will get a handful of new shows as well as access to both broadcasters’ back catalogs. For ITV, that means programs that have been on its existing video-on-demand platform for at least a month, and, for the BBC, a year. This could be a tough sell to domestic viewers who will have already had the chance to view them for free. That the regulator, Ofcom, was so quick to approve the arrangement suggests that the two have hardly created a new titan.
In the circumstances, ITV Chief Executive Officer Carolyn McCall deserves some credit for getting the project across the line at all. It was an uphill struggle to get this far, with the BBC reportedly reluctant to share its treasure trove of content. It should now become easier to find further broadcast and distribution partners: Viacom Inc.’s Channel 5 or BT Group Plc are obvious potential candidates.
French broadcasters are having similar issues. France Televisions, M6-Metropole Television SA and Television Francaise 1’s joint offering, Salto, has been struggling to secure regulatory clearance. It’s had to make 20 undertakings, including that it will get no more than 40% of content under exclusivity from its parent firms, according to a report this week in newspaper Les Echos.
The European players may be following the lead of their American peers in steadily pulling more shows from Netflix in order to run them on their own rival platforms. But to reach the scale they need in order to compete, they are also encountering regulatory difficulties that the likes of Comcast Corp., AT&T Inc.’s WarnerMedia and Walt Disney Co. don’t face.
Life is going to get tougher for Netflix and Amazon in Europe, for sure. But as long as the publicly-funded titans zealously guard their content and regulators remain reluctant to bless closer alliances, the region’s traditional commercial broadcasters are going to find it far harder to beef up and steal subscribers than their counterparts in the U.S.
To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Alex Webb is a Bloomberg Opinion columnist covering Europe's technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.
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