EAO identifies Key Trends of Audiovisual Sector for 2017/2018

posted on 05 June, 2018   (public)

Convergence, disintermediation and uberisation among latest trends

The European Audiovisual Observatory has issued in May 2018 its annual Key Trends publication, which is available for free for the first time. This 70-page compact report presents an overview of the major developments in the film, VOD and television sectors in 41 European countries for the past year.

The "Key Trends" represents an executive summary of all the data contained in the Observatory’s Yearbook.

The document notes that a new phase of convergence has opened up competition in the audiovisual sector to Internet-native companies and that Internet has also tended to simplify the value chain by disintermediating players - usually the legacy services distributors. A potentially even more radical disruption is the uberisation of the audiovisual sector - a concept referring to the rise of intermediary peer-to-peer platforms that connect users with owners of goods not fully used. These evolution dynamics are occurring at a time when the consumption of video is increasing, driven by time-shifted TV consumption, more video-enabled devices and new content formats. However, there is no indication about how - or even if - this will translate into additional revenue for the audiovisual sector.

Amongst the noteworthy findings of the report:

  • Films on TV: Films produced in Europe accounted for 28% of film broadcasts by the TV channels of the sample. Public TV channels tended to broadcast more European films than private TV channels.
  • EU Films in SVOD catalogues: the average share of EU films for the 37 SVOD country catalogues was 20%. However, significant differences among services appeared. Whereas the share of EU films in Sky Now’s and Netflix’s 27-country catalogues hovered at around 15% and 17%, respectively, the catalogues of C More had an EU film share of 53%, and Flimmit 84%.
  • European films on TVOD: European films were allocated, on average, 23% of promotional spots, with figures varying from 34% (FR) to 13% (UK). Among promotional spots allocated to European films, the majority were allocated to national films in France, the UK and Germany, whereas in the Netherlands and Belgium the majority were allocated to European non-national films.
  • Audiovisual services in Europe: the EU was in 2017 home to a total of 4 208 television services and 2 270 on-demand audiovisual media services, half of which were concentrated in the UK, Germany, France and Italy. The vast majority of these were private networks, with public service channels holding 7%.
  • Services targeting other countries: at the end of 2016, around one third of all television channels and on-demand services established in the EU were specifically targeting foreign markets. The major establishment hubs for TV channels and on-demand services tend to overlap, with the United Kingdom the leading European hub for audiovisual services targeting foreign markets. Other major hubs for both types of services include the Czech Republic, the Netherlands and Luxembourg.
  • Audiovisual services and the financing of audiovisual works: as the audiovisual industry remains dominated by American productions, the need for promotion tools and remedies is vital for the sustainability of the European audiovisual industry, which relies on many different sources of financing. Some are market-driven from the producer’s revenues, collaboration agreements like co-production, private equity, in-kind investments and the pre-sales of rights; and some are legal – and public policy-driven, guaranteed by a series of legislations and public policy measures, enforced by assigned institutions at national, regional and European levels, such as public support, fiscal incentives, quotas and investment obligations.
  • TV advertising: Internet is the top advertising medium in the EU, with a 36.4% market share in 2016, growing mainly at the expense of advertising in newspapers (14.3% share in 2016, down from 23% in 2011) and in magazines. The total TV advertising market was valued at EUR 31.4 billion in 2015 in the EU and EUR 36.7 billion in Europe. Discounting inflation, the size of the TV advertising market in the EU decreased by 8% between 2008 – before the economic downturn – and 2016. Beyond the economic climate, several factors affected the market: Internet has increasingly become a video medium; television viewing time is no longer growing, and is even decreasing among young viewers; the proliferation of TV channels has led to competition around advertising tariffs and has increased the market power of advertisers.
  • SVOD: despite its rapid growth in revenues and subscribers, SVOD still represents a relatively small market compared to traditional pay-TV; SVOD revenues accounted for 6.8% of all pay services revenues (pay-TV and SVOD combined) and 18% of all subscriptions to pay services. In 2016, the average penetration of SVOD among TV households in the EU was 17%, varying between 50% in Denmark and 1% in Estonia.
  • Public service broadcasters: pressure on public funding and the advertising crisis explain the stagnation of public service revenues, as PSBs generally rely on these two resources, although in different proportions. On average in the EU, public funding accounted for 77.7% of PSB resources in 2016 (up from 75.8% in 2011) but the share varied between over 95% in Finland, Greece, Estonia and Luxembourg, and less than 50% in Poland or Malta.

In general, the European audiovisual market grew by only 1.3% in 2016. After an important 4.3% growth in 2015, due to the on-going recovery of TV advertising revenue, the figure shows that television in Europe has entered a phase of – at best – maturity. Between 2011 and 2016, the market registered an average annual growth of 1.7%.

Source: European Audiovisual Observatory