A global force in video production, aggregation and monetisation
TV doesn’t just mean ‘television’ anymore, it means ‘total video’. RTL Group has built market-leading positions across this new market’s value chain. With its families of channels, RTL Group’s subsidiaries are either number one or number two in the European markets in which they operate in. RTL Group’s production arm, FremantleMedia, is a global leader in content production. And with the recent digital investments in North America – BroadbandTV, StyleHaul and SpotX – RTL Group reached critical mass in online video. With further investments in broadcast, content and digital, RTL Group will transform into a global force in video production, aggregation and monetisation. To do so, the strategy focuses on three main investment areas: broadcast, content, and digital.
In the years ahead, strengthening RTL Group’s core business remains a key part of the Group’s strategy. The building and extension of families of channels remains an important task in responding to increasing audience fragmentation in a digital, multi-channel world. The Group has already established strong families of channels in Western Europe, all of which are either number one or two in their respective markets. These activities were enhanced with the addition of a number of digital channels with clearly defined profiles, such as RTL Nitro, W9, 6ter and RTL Z.
One focus of the broadcast strategy is a significant increase in non-advertising revenue by establishing a second revenue stream from platform operators. RTL Group aims to receive a fair revenue share for its brands and programmes from the major distribution platforms – cable network operators, satellite companies and internet TV providers – for new services such as high-definition TV channels, on-demand platforms and digital pay channels.
Geographical expansion in high-growth regions also remains on RTL Group’s agenda. In August 2013, RTL Group announced the launch of a company with CBS Studios International to launch two pay-TV channels in South East Asia, targeting a potential market of 113 million TV households. The two channels – RTL CBS Entertainment HD and RTL CBS Extreme HD – are already on air in numerous countries across South East Asia. By joining forces with a global partner as renowned as CBS, RTL Group continues its tried-and-tested build strategy, expanding its business to more countries in Asia with high growth potential.
Investing in top-quality content that will attract high audience shares is vital for today’s broadcasting industry as ‘must-see’ content becomes ever more valuable in the digital age. In addition to nurturing and refreshing established popular shows, news, daily soaps and reality formats, RTL Group’s broadcasters invest significantly in developing new, exclusive formats and in acquiring premium content, because they contribute towards image, strengthen the brand and – most importantly of all – command exclusivity in the marketplace. That's the major task for linear TV channels in the future: to have a clear profile, something that makes them stand out as unique.
The strategy of RTL Group’s production arm FremantleMedia has four pillars:
Firstly, maintaining the company’s position as a leading producer of quality programming by nurturing established brands such as Got Talent and The Farmer Wants A Wife, and investing to create new formats and brands.
Secondly, diversifying FremantleMedia’s portfolio by strengthening its local businesses and increasing prime-time drama. The company acquired a majority stake in 495 Productions, a leading US-based reality production company renowned for its cutting edge, female-skewed programming. FremantleMedia also acquired the Danish drama production company Miso Film in 2013. FremantleMedia made a series of eight investments in 2015 (with options to buy the remaining stakes in the future), strengthening capabilities in the scripted, entertainment and factual genres.
Meanwhile, investments in high-end productions further accelerate FremantleMedia’s growth in prime-time drama. The riveting eight-part UFA Fiction series Deutschland 83 premiered on Sundance TV in the US in June 2015 to huge critical acclaim and has since sold to a total of 20 channels and platforms. Starz, a leading US premium cable channel, has greenlit FremantleMedia North America’s adaptation of Neil Gaiman’s acclaimed contemporary fantasy novel American Gods.
Thirdly, maximising the global FremantleMedia network by increasing scale in strategic markets. In recent years, the company has strengthened its Scandinavian and Southern European footprint with the opening of new offices in Sweden, Norway and Spain. In 2015, FremantleMedia made several investments throughout Europe, among them Wildside, an Italian TV and feature film production company, and French scripted producer Kwaï.
Fourthly, building a scalable digital business. FremantleMedia’s goal is to become as successful a creator, producer and distributor in the digital space as it is in traditional television. To do this, the company is building on its heritage of ground-breaking second screen activity and its leading position on YouTube, creating more original digital content and building scale. The company operates original digital production studios in the US (Tiny Riot), UK (Shotglass Media), Germany (UFA Lab) and Australia (Spring) and produces for partners such as Vice Media, StyleHaul, BroadbandTV and for FremantleMedia’s TV brands. The company acquired a majority stake in Divimove, Europe’s number one multi-channel network with an aggregated network of 1,300 third-party channels of independent influencers and content creators, and 1.5 billion monthly video views. This approach is in line with RTL Group’s digital strategy which has online video at its heart.
Developing profitable business models for rapidly growing trends in non-linear viewing is one of the most important tasks for RTL Group in the years ahead. RTL Group aims to have a strong presence in all segments of the total video market:
First extending its premium linear TV content into the non-linear world. RTL Group channels have quickly succeeded in establishing their own on-demand platforms with catch-up TV services, making their programmes available on all devices – PCs, smartphones, tablets and internet-connected TV sets. Examples include TV Now in Germany, Groupe M6’s 6play service in France and RTL XL in the Netherlands. Steep growth rates show that audiences appreciate the service: whenever they miss an episode or show, they can watch it free online. The Group is also branching out into new business models such as subscription-based on-demand services, for example with Videoland Unlimited in the Netherlands.
A second goal in online video is to assume the same leading role in development, production, and distribution of content on digital platforms as the Group already has in the mainstream television world. To achieve this, the Group is identifying and generating more original content made specifically for digital platforms (‘web originals’) – via FremantleMedia’s digital content studios in the US, the UK, Germany and Australia, for example. Groupe M6’s successful platform Golden Moustache provides a medium for a new generation of talented young comedians.
Moreover, RTL Group aims for a strong short-form video presence via its own platforms and multi-channel networks (MCNs). This is an important opportunity for the Group, as MCNs offer access to global audiences on a significant scale. Over 80 per cent of RTL Group’s 11 billion monthly video views are generated outside the Group’s core broadcasting territories.
Through key digital investments, RTL Group has become a leader in the YouTube ecosystem. In June 2013, RTL Group acquired a 51 per cent majority stake (on a fully diluted basis) in BroadbandTV. BroadbandTV manages 70,000 partners and achieves around 6.5 billion video views per month. According to Comscore, BroadbandTV is the world’s largest MCN. In November 2014, RTL Group increased its shareholding in StyleHaul – the largest fashion beauty and women’s lifestyle network on YouTube – to 93.6 per cent.
Further substantial growth of RTL Group’s digital revenue will also require new skills in advertising technology. In July 2014, RTL Group acquired a 65 per cent majority stake (on a fully diluted basis) in the programmatic video advertising platform, SpotX. The company provides a comprehensive video advertising monetisation service to hundreds of publishers around the globe, who use the platform to maximise revenue for their desktop, mobile and connected TV video advertising inventory while driving down operational costs. Online video advertising is currently the fastest growing digital advertising segment, and is expected to grow globally by 24 per cent per year between 2014 and 2018, driven primarily by programmatic video advertising.
In June 2015, RTL Group founded the RTL Digital Hub to bundle these recent acquisitions. A dedicated team develops the Group’s investments in the areas of MCNs and digital advertising investments, particularly BroadbandTV, StyleHaul, SpotX, Clypd and VideoAmp. The RTL Digital Hub will maximise the value of this highly complementary portfolio of digital video businesses to further strengthen RTL Group’s leadership position in a high growth market.
Last updated: July 2016