CREATIVE MEDIA EUROPE Audiovisual Content and Online Growth
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CREATIVE MEDIA EUROPE Audiovisual Content and Online Growth March 2012 A study for the Association of Commercial Television in Europe © e‐Media Research Ltd. / Association of Commercial Television in Europe Acknowledgments e‐Media Institute would like to thank the ACT and all member companies for their contribution to this study. In particular, e‐Media Institute would like to acknowledge the support received by BSkyB, Canal+, Central European Media Enterprises, C More Entertainment, Eurosport, Mediaset, Modern Times Group, Sky Deutschland, RTL Group, TF1, TV4, TVN, Viacom for their precious time during research data collection and their resourceful contributions. Special thanks to the companies who funded the study: BSkyB, Canal+, C More Entertainment, Mediaset, Modern Times Group, RTL Group, Sky Deutschland and Viacom. This study would not have been possbile without their contribution of the crucial information about their cases. 2 | CREATIVE MEDIA EUROPE | e‐Media Institute CREATIVE MEDIA EUROPE Audiovisual Content and Online Growth March 2012 CREATIVE MEDIA EUROPE | e‐Media Institute | 3 About e‐Media Institute e‐Media Institute is an independent organization founded in 1998 and based in London and Milan. e‐Media Institute provides multidisciplinary economic and socio‐economic research‐related services on audiovisual, publishing and new media markets, including qualitative and quantitative analysis of emerging trends, market opportunities and competitive strategies in the communications industry. About ACT The Association of Commercial Television in Europe (ACT) is a trade association representing the interests of the commercial broadcasting sector in Europe. Formed in 1989, the ACT has thirty‐three member companies active in 36 European countries. Our members are operating several hundred free‐to‐air and pay‐tv channels and distributing several hundred channels and new services. The ACT members encompass several business models ranging from free‐to‐air television broadcasters and pay‐TV players to digital platform operators and multimedia groups. By offering a wide range of choice and variety to the viewer, commercial broadcasters are a leading source of entertainment and information to millions of European citizens. CREATIVE MEDIA EUROPE | e‐Media Institute | 4 INTRODUCTION The European television business has never been healthier. European consumers, despite the vast array of competing demands for their leisure time, are watching more television than ever before – on average, 228 minutes per day in 2010, the tenth successive year in which that key indicator had increased. European broadcasting isy toda an €84 billion sector – but, crucially, a sector which reinvests up to 50% of its revenues back into content – whether this is sport, news, entertainment programmes, movie rights or documentaries. In inviting e‐Media Institute to write this study, we sought to respond to some recent thinking at the European Commission. The e‐Media Institute research is intended to be read in conjunction with the formal response of the Association of Commercial Television to the European Commission consultation on the “Green Paper on Audiovisual Content” ‐ COM(2011) 427. e‐Media were asked to examine four broad areas • INVESTMENT IN CONTENT: here, the intention is to put a pan‐European figure on major commercial broadcasters’ annual investment in original content; • FROM BROADCASTERS TO CROSS‐PLATFORM OPERATORS: we aim to show the extent to which European broadcasters are embracing the Internet as an opportunity, not fearing it as a threat. The once‐ fashionable belief that the Internet would “kill off” television has lost all credibility (rather, one might ask what the Internet would look like without television content?) as broadcasters have enthusiastically launched new online services to grow and complement our existing broadcast businesses. We asked e‐Media Institute to examine a representative sample of European markets to illustrate this point; • DOES CONTENT CROSS FRONTIERS?: the European Commission, legitimately, wishes to create a single market in digital content. Might the Commission perhaps underestimate the extent to which content already crosses frontiers, maybe because it is distributed via niche channels or because it is the programme format rather than the original‐language programme which is exported? • ARE “RIGHTS PROBLEMS” BEHIND A [PERCEIVED] LACK OF TRANSFRONTIER DISTRIBUTION?: there is, we hope, common ground between the European Commission, established stakeholders, and new entrants that rightsholders and creators have a right to be paid for the distribution of their work. If we accept that rightsholders must be paid, then clearly acquisition of rights is an issue for any operator, new or established, national or transfrontier. But this does not mean that “rights” are a barrier to new services, and we asked e‐Media Institute to explore and quantify some of the non‐rights factors which will influence a decision on which territories to target. To conclude, the European Commission is posing a range of very pertinent questions at a crucial time in the development of our sector. It is a common belief in the media business that the television sector is a vehicle for growth and innovation. But at a time when our sector is changing faster than ever, andg bein scrutinised more than ever by EU regulators, we felt the need to illustrate via this report the benefits that the commercial broadcasters’ multi‐billion euros’ annual investment in original content can bring to the European economy. We believe that we share with the European Commission at least some starting points: most importantly, CREATIVE MEDIA EUROPE | e‐Media Institute | 5 INTRODUCTION neither we nor the Commission wish to see regulators intervening to shore up specific business models. If consumers wish to see a different form or content, or the same content via a new platform or in a new way, it is our duty to anticipate and serve that demand, rather than it being the role of the EU to protect the established way of doing things. In its “EU Digital Agenda” from 2010 and the more recent “Green Paper on Audiovisual Content” of July 2011, the European Commission has rightly restricted its role to asking questions of broadcasters and other operators. Running through many of these questions is a clear theme: are current arrangements for the production and distribution of audiovisual content optimal in ensuring consumer satisfaction, and in encouraging European players to exploit the full potential of the Internet? We hope that e‐Media Institute’s work provides evidence for our answer to these questions, and look forward to continuing the debate. CREATIVE MEDIA EUROPE | e‐Media Institute | 6 EXECUTIVE SUMMARY OVERVIEW The size, audiences and cultural contribution of the audiovisual industry makes it one of the most important in the European digital economy. By carrying out an analysis of the value created by this sector and the role of its primary players – commercial broadcasters – this study aims to demonstrate how the content they produce is driving European success in new media and enabling consumers access to it across borders. This report analyses and shows evidence supporting the following key concepts: • In Europe, commercial broadcasters are key contributors in terms of growth, jobs, innovation and, most importantly, the creation of audiovisual content – the engine for the development of a culturally‐rich digital society. • While the great majority of audiovisual consumption still takes place in people’s living rooms, demand for online video has surged over the past few years and the public consumes more video on more devices now than ever before. Commercial broadcasters are embracing this consumer demand by investing significantly in content for online and multi‐device distribution, thereby accounting for a growing proportion of video consumed online, with broadcasters’ own sites among the most popular online video destinations in most European countries. • Content, in both linear and non‐linear form, circulates widely across borders within the EU on several platforms. Online cross‐border distribution may represent an opportunity for some broadcasters to reach wider audiences beyond their domestic remit, and current copyright licensing frameworks are able to encourage this development in a Single Market, rather than presenting obstacles to online cross‐border distribution. A VITAL ECONOMIC CONTRIBUTION The editorial content sector (print, music and radio, audiovisual, Internet and multimedia publishing industries) is one of the key pillars around which the Digital Economy is built. The content produced by these industries stimulates demand for new media devices, boosting innovation and growth in the consumer electronics and information technology sectors (TV sets, music players, personal computers, videogame consoles, DVD and Blu‐ray Disc players, smartphones, tablets, etc.). Telecommunication networks and services are increasingly fed by the circulation of editorial content, which largely comprises audiovisual content. • The editorial content sector is worth around €279 billion in the EU, which is equal to 2.3% of GDP. • The audiovisual industry makes up one of the largest components of the editorial content sector, generating around €95 billion in turnover, equal to 34% of the sector’s total. CREATIVE MEDIA EUROPE | e‐Media Institute | 7 EXECUTIVE SUMMARY • The audiovisual industry’s contribution to the overall editorial content sector is broken