Why TV equals “Total Video”

Published on Wednesday 6 April 2016 at 14:14

On 4 April 2016, Guillaume de Posch, Co-CEO of RTL Group, held a keynote speech at Mip TV in Cannes, explaining why TV nowadays is more than a device in the living room and called on European legislation to thoroughly review the Audiovisual Media Services Directive.

Guillaume de Posch kicked off his keynote speech by laying out the rapid changes in the media industry. Guillaume de Posch explained: “The medium TV has been confused with the TV device, the actual box in the corner of the living room,” he said. “This is no longer the case.” Following the technological advancements with ever more video-enabled devices, people watch more video content than ever – in long and short-form, linear and non-linear, on the TV screen and on mobile devices. According to Guillaume de Posch this not only resulted in more channels, both linear and non-linear, but also more content, making it increasingly difficult to reach large audiences and generate hits.  “In the next few years you will have a new normal in what we call a hit,” he said. “Hits are still possible, but they will be smaller in size as a direct consequence of the fragmentation.”

He laid out how RTL Group invested heavily in online video over the past few years, in particular with BroadbandTV, StyleHaul as well as the programmatic advertising platform SpotX. Today, digital accounts for 8.4 per cent of RTL Groups total revenue, making it a strong third pillar of RTL Group’s business. “Are we happy with that? Yes, Guillaume de Posch said. “Do we want to stop here? No.”

Guillaume de Posch explained how these digital investments fit into RTL Group’s strategy which is based on the key pillars broadcast, content and digital. “We see a lot of interaction between our strategic pillars,” he said, “Programming is and will remain key, and that’s what we are focusing on: producing, aggregating and monetising content on all platforms and devices. That’s why, for us, TV now stands for ‘Total Video’.

He went on to explain that RTL Group’s management  needs to define where the Group has to act on a local stage and where it makes sense to act from on global perspective. In the Q&A with Marcel Fenez, Senior Advisor for PriceWaterhouseCoopers, he emphasised: “We have teams in all territories who operate flexible in their fields. Our executives are used to change. But we need to find the right balance between local and global which is probably at a ratio of around 70 to 30. Our strategy is clearly defined: we know where we want to go. But sometimes you need to figure out how to get there.

Guillaume de Posch closed his keynote by calling on European legislation to secure a strong and much more flexible broadcasting business. Guillaume de Posch: “Global players are playing against us. It’s not only about M6 against TF1, or ProSieben against RTL Television, or RTL Belgium against RTBF. It’s about Facebook, YouTube and other players coming in and rolling out of California trying to grab our business. I believe it is important that the new EU Media Directive is properly drafted.”

“Like the early days of commercial television”

On 4 April 2016, the German business newspaper Handelsblatt published an interview with Guillaume de Posch, in which he explained the total video market ahead of his keynote speech at Cannes. He explained: “It’s still true today that ‘nothing beats free’, meaning free-to-air television,” but viewing behaviour is shifting, especially with young audiences, the so-called millennials, he said. “Anke Schäferkordt and I both believe that the way ‘millennials’ consume TV will differ from how we watch it today. Among young target groups there is a marked trend towards watching short-form, on-demand and on mobile devices. Hence our significant investments in multi-channel networks.”

Additionally, RTL Group investigates all options on the market. Referring to long-form content, Guillaume de Posch said: “We’re looking into the option whether it could make sense for us to launch a Europe-wide SVOD platform within the next two to three years.”

Asked about the MCN business model and if they can match the high margins of the free-to-air broadcasting business, Guillaume de Posch said: “Definitely not in the short term. But over the next few generations we’ll see a shift between linear and non-linear television. Perhaps in 30 years’ time people will be watching just as much non-linear as linear television. One thing is certain: linear television is not going to disappear. And for viewers, the distinction between the two will become less and less important anyway.”

Contrary to the strong local presence of RTL Group’s free-to-air channels and their catch-up services in Europe, the MCN businesses are operating on a global level, generating around 50 per cent of their revenue in the United States and the remaining 50 per cent in the rest of the world. Guillaume de Posch explained: “Niche offerings for topics such as video games or hip-hop music can build up an economically viable scale because of their global distribution – because when all is said and done, advertisers’ money always follows the eyeballs of the viewers. For this reason our MCNs remind us somewhat of the early days of commercials television in the 1980s.”