There’s an arms race in Hollywood, with film studios, television networks, and big tech companies all trying to woo “cord cutters” by launching new streaming entertainment platforms.
Disney, Warner Bros., and Apple will soon rollout their highly anticipated streaming services, prepping for battle with Netflix, which continues to expand its already-vast library of original content. Content-rich networks like CBS (now even more formidable as it prepares to re-integrate with Viacom), NBC, and HBO are continually beefing up their streaming options.
As each platform tries to out-gun the other—spending big bucks for top talent and premiere properties—these U.S. media giants are facing an additional overlooked-but-growing threat across the pond: European streamers.
European media companies are rattling the sabers of a streaming Cold War, launching their own streaming platforms to compete against their juggernaut U.S. competitors.
In France, rival television broadcasters M6 and TF1 are uniting to develop a joint streaming service called “Salto.” It’s touted as a first-of-its-kind French venture, with the executives at Salto’s helm calling it “a new way for the French and European creative industries to engage with their public.”
Across the Channel in the United Kingdom, British broadcasting giants ITV and the BBC have joined forces to create a streaming service called “BritBox”—the digital home to an enviable content library, including many of the biggest hits in British drama, comedy, mysteries, and soaps. BritBox is already available to U.S. subscribers, and pending final U.K. regulatory approval, BritBox will soon be available to British audiences, as well.
With media companies expressing an ever-increasing interest in global markets and methods of exploitation, these high-profile entries of European media companies into the streaming marketplace are the beginning of an increasingly competitive trend, and U.S. streamers need to be aware.
The European market is a prime target for streaming media companies. Recent studies predict that Western Europe will boast an estimated 131.2 million video-on-demand subscriptions by 2024, doubling 2018’s 65.19 million subscriptions.
Forward-looking media companies will likely next set their sights on Norway, Sweden, and Italy.
In Norway, research shows video-on-demand penetration will reach nearly two-thirds of Norwegian TV households in 2024. Sweden is also expected to experience a similar uptick in online video consumption, with Swedish audiences showing a significant tolerance for ad-supported services.
Further south, Italy presents another appealing market, especially since the insatiable global demand for streaming content has led to an Italian video production renaissance.
The 5G Factor
With the fight for streaming subscribers heating up, the looming emergence of 5G mobile technology in Europe will dramatically change the battlefield. In many ways, Europeans are far earlier adopters of emerging technology when compared to Americans. Europeans helped push the global trend of increased mobile use. Now, European tech adoption is set to outpace the U.S. again, as Europe prepares its 5G mobile networks.
5G strengthens the average mobile user’s internet connection, decreasing data loss and making the connection more efficient than 4G. A 5G Europe will bring mobile streaming video quality that is noticeably better and likely cheaper, changing the way consumers use their devices and causing more Europeans to join the cord-cutting ranks.
Streaming companies that capitalize on European 5G will put themselves in a strong position for success.
European-Specific Regulatory Challenges
Building a European streaming empire comes with a unique set of regulatory challenges.
Media companies are already licking the wounds inflicted by Europe’s General Data Protection Regulation (GDPR), which dramatically alters the way companies must obtain users’ consent for their data, while also imposing stiff penalties for companies that fail to protect that data. And while the GDPR presents streamers with a potential regulatory minefield, it is just the beginning of Europe’s purposeful advancement of regulations to expand privacy protections.
The anticipated adoption of the EU’s new proposed ePrivacy Regulation (ePR) takes GDPR even further and is a regulatory missile aimed directly at media companies. The ePR broadens the scope of privacy protection in Europe, making it even less likely for media companies to dodge regulatory compliance.
The Brexit cloud also hangs low over any plans to capitalize in the European streaming market.
Navigating the flow of data (which is heavily tied to compliance with the GDPR and ePR) as seamlessly as possible post-Brexit will be essential for those European streaming entrants who aspire to expand beyond their country of origin. And companies should not fool themselves into thinking that Brexit will allow expansion into the U.K. without having to adhere to GDPR and ePR. In fact, the U.K. has been a major contributor to EU privacy regulations and, in a post-Brexit world, is expected to continue wielding its privacy sword.
Europe’s privacy regulations will no doubt prove onerous, but they will also create a de facto barrier for unsophisticated would-be entrants in the expanding European streaming market. Only the strong and savvy will survive.
U.S. film studios, television networks, and big tech companies should find a way to compete in the European market if they want to win the broader streaming media world war. If U.S. media companies want to bring or expand their platforms overseas, they need to recognize that there are inherent and sizable legal complexities that need to be managed.
To mitigate these risks, U.S. streamers should consider alternatives to venturing alone in foreign jurisdictions. Partnering with local, well-known brands could help U.S. players exploit cross-continent synergies and solidify bona fides.
Hollywood needs to focus on the European front to maintain its dominance in streaming media and should marshal the resources of experienced brands and advisers to avoid falling behind.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Silvia Vannini is a partner in the Century City office of O’Melveny. She is a leader on the firm’s widely respected entertainment transactions team, representing entertainment giants in ground-breaking, industry-shaping deals. A native of Italy, she has particular experience in the growing field of cross-border entertainment transactions and regularly represents motion picture studios, television networks, private equity funds, domestic and foreign companies, and entrepreneurial clients in corporate transactions, including company formation and structuring, acquisitions, partnerships, joint ventures, strategic alliances, financings, and dispositions.
Evie Whiting is counsel in O’Melveny’s Century City office. She is a skilled transactional lawyer with extensive entertainment, sports and media experience and regularly represents motion picture studios, television studios, production companies, investment funds, team owners and acquirers of professional sports teams, and financial institutions in matters related to film slate financing, single picture financing, corporate finance transactions, television financing, production and the distribution of motion pictures, television and short-form content.