It’s Still About Getting The Message On The Head Of a Pin

Michael Hedges June 8, 2015 Follow on Twitter

Famous executives, media and otherwise, are easily quotable. Their careers depend on invigorating board meetings and shareholders, insight notwithstanding. Those chosen to lead the most prominent in today’s media sector know very well the importance of the right words at the right time and memories can be quite short. For that they are thankful.

When Netflix CEO Reed Hastings recently described broadcast TV as “like the fax machine,” ultimately doomed to the dustbin of media culture within the next two decades, the entire television industry issued a collective moan. Some were certainly doing a bit of arithmetic to figure if they would make it to retirement. Newspaper people did the same back in 1981 when Ted Turner, a year into that start-up CNN, said newspapers were “becoming very rapidly technologically obsolete” and would be “gone in ten years or certainly serving a very reduced role.” And that was well before the World Wide Web emerged.

As the subscription video on demand service (SVOD) prepares to enter Spain, Italy and Portugal, Mr. Hastings has verbalized, like Ted Turner a generation ago, what everybody knows and few willing to shout it out. Rampant piracy created “a public used to viewing content on the internet,” he said to El Mundo (June 3), thus opening a market for Netflix. The target launch for Netflix in Spain, Italy and Portugal is October. The company intends to be available in 200 countries by the end of 2016.

"We offer a simpler and immediate alternative to finding a torrent (BitTorrent file-sharing sites),” he explained. "In Holland we had a similar situation. It was a country with a high rate of piracy. And the same thing happened in Canada. In both we are a successful service. We can think of this as the bottled water business. Tap water can be drunk and is free, but there is still a public that demands bottled water.”

Television operators, broadly cast, have had several months to prepare. In Spain, commercial broadcasters Atresmedia and Mediaset España as well as public broadcaster RTVE now offer video material through their respective websites, on mobile devices and smart TVs. With more experience in subscription models, cable operators Canal+ and Telefónica have Yomovi and Movistar, respectively, priced slightly lower than Netflix €8 per month. Both have premium services, more expensive, for new releases. Atresmedia is principally owned by Planeta-DeAgostini and RTL Group. Mediaset España is a joint venture of Italy’s biggest broadcaster Mediaset, principally owned by the Berlusconi family, and Spanish media house Grupo Prisa, which owns Portugal’s biggest private broadcaster Media Capital.

Then, too, Wuaki.tv is the SVOD market leader in Spain with different pricing and subscription models and international hit TV series. A year ago they acquired rights to two seasons of House of Cards, well before Netflix announced the schedule for entering southern Europe. Wuaki.tv was launched in Spain by local owners in 2009 and two years later acquired by Japanese e-commerce company Rakuten. The service is also available in the UK, France, Germany and Italy.

“We define ourselves as the first European streaming service,” said co-founder Josep Mitjà to tech.eu (April 27). “Amazon and Netflix are both from the Unites States and very focused on American content, which is fine, but we’re better specialists in EU content given our local presence with offices and teams in each of our key European countries.” In addition to the Netflix icon series House of Cards, Wuaki.tv acquired Spanish rights to BBC crime drama Peaky Blinders and spy thriller The Game.

The official Italian launch announcement arrived via Twitter (June 6), of course. “By the way, how do you say binge-watching in Italian?,” it said in Italian. The future of TV “will be a big iPad,” said Mr. Hastings in the official pre-launch interview with Wired Italia (June 5). He also indicated openness to distribution deals with Italian providers, non-exclusive only.

Quite clearly, Italian broadcasters and telecoms see the arrival of Netflix - Amazon Prime, too - as a wonderful opportunity. “This is more an opportunity than a threat,” said Sky Italia director of strategies and business development Davide Tesoro Tess, reported news agency ANSA (May 29) preceding the official word from Netflix. Mediaset, La7 (Cairo Communications) and public broadcaster RAI announced creation of their own VOD platform TivùOn, which will appear later this year and introduced to subscribers for the low, low price of ZERO.

Several southern European broadcasters have shifted strategies to distribution from content production - Mediaset and Atresmedia specifically noted by Variety (May 28) - because of falling ad revenues. French media house Lagardère Active recently acquired a significant majority stake in Spanish production house Boomerang TV, which sells shows to Netflix for Latin American markets.

Discovery Communications, owner of Eurosport, is expanding Norwegian VOD portal DPlay into Sweden, Denmark and Italy. “We own all of our content, which is a huge advantage,” said CEO David Zaslav to Bloomberg (June 4). “We’re transitioning into a direct-to-consumer company. Europe for us is the next emerging market.”

Mr. Hastings made another pronouncement recently, reiterated actually. "No advertising coming onto Netflix. Period.,” said the Facebook message. There will be, however, “cool trailers (promos)” for its shows and movies. If he goes back on his word, suggested an anonymous media buyer to Warc (June 5), TV networks "would be up a creek.”

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