This section describes RTL Group’s strategy in three areas – broadcast, content and digital. In short, RTL Group’s general strategic goal within the Total Video universe is to maximise consumers’ attention to its broad variety of video offers, across all devices.
Broadcast: building local, integrated Total Video champions
Strengthening RTL Group’s broadcast business remains a key part of the Group’s strategy. Building and extending families of TV channels has been key to tackling increasing audience fragmentation and competition in a digital, multi-channel world. In recent years, RTL Group’s families of channels have been enhanced by the addition of several digital channels with clearly defined profiles, including Nitro, RTL Plus, W9, 6ter, and RTL Z.
Most recently, Groupe M6 announced its plan to acquire Lagardère’s TV business, to complement its offering for families and to strengthen its overall position in the French media market, both in TV advertising and digital. This major project provides for the acquisition of the entire capital in the following assets: Gulli (the country’s leading free-to-air digital channel for children); two pay-TV channels dedicated to younger viewers (Canal J and Tiji), four entertainment and music pay-TV channels (Elle Girl TV, MCM, RFM TV and MCM Top), plus the on-demand offerings of the various channels, including Gulli Replay and the SVOD service Gulli Max.
The next step of RTL Group’s strategy for its broadcast units is to build local Total Video champions in the markets in which the Group has strong families of channels, complemented by VOD services designed to attract mass audiences.
RTL Group’s TV operations will gradually adopt a hybrid VOD model – combining a free, advertising-funded offer with a premium pay content bundle that offers RTL Group TV programmes (both live and on demand) with licensed content from third parties and exclusive content productions (originals) for these services.
By creating these hybrid models, RTL Group is building the next generation of TV and aiming to provide consumers in its various local markets with fully integrated linear and non-linear services via platform operators or direct-to-consumer OTT services.
Over the next three years, RTL Group will invest at least an additional €350 million to boost the expansion of its local streaming services:
By the end of 2018, RTL Group had passed the first million paying subscribers, combining the subscriber bases of TV Now Premium in Germany and Videoland in the Netherlands. Over the next three years, RTL Group aims to grow the number of paying subscribers for its various VOD services to at least 3 million and to increase its VOD revenue, from €216 million in 2018 to at least €360 million in 2021, further diversifying its revenue streams by doing so.
Another focus of the Group’s strategy in broadcast is to significantly increase non-advertising revenue, by further growing the revenue 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 services such as high-definition TV channels, on-demand platforms and digital pay channels.
Next to a cross-platform distribution strategy, RTL Group envisages driving its monetisation capabilities across markets and screens, as there is more and more interest for global ad buying opportunities from advertisers and agencies. As a consequence, RTL Group grows its international sales house, RTL AdConnect, to give international advertisers and agencies easy access to RTL Group’s large portfolio of linear TV channels, streaming services and companies for short-form video content, in a brand-safe environment. To be more relevant in all key European markets, RTL AdConnect’s portfolio also encompasses leading partners such as ITV in the UK, RAI in Italy and Medialaan in Belgium. Thanks to these partnerships, RTL Group is one of the only media companies in Europe that can offer advertisers pan-European digital video campaigns.
The strategic pillar of content and IP creation is mainly served by RTL Group’s production arm, Fremantle. Fremantle’s strategy has three pillars:
1) Maintaining the company’s position as a leading producer of quality programming by nurturing established brands such as Idols, Got Talent and The Farmer Wants a Wife, while investing in creating new formats and brands.
2) Diversifying Fremantle’s portfolio by strengthening its local businesses and increasing prime-time drama. Fremantle has made a series of investments in recent years (with options to buy the remaining stakes in the future), to strengthen its capabilities in the scripted, entertainment and factual genres, and in building a new client base in the OTT and digital video arena.
Since 2012, Fremantle has invested heavily in high-end productions, to accelerate its growth in prime-time drama. Following the premiere of The Young Pope – produced by Fremantle’s Italian production arm, Wildside – and Fremantle adaptation of Neil Gaiman’s acclaimed contemporary fantasy novel, American Gods, Fremantle’s push into drama continued in 2018 with distinctive productions such as My Brilliant Friend, Deutschland 86, The Miracle and Picnic at Hanging Rock.
Currently, Fremantle – together with broadcasters and streaming platforms – is working on the realisation of at least 35 scripted series ideas. As a consequence, international drama productions are forecast to generate more than 25 to 30 per cent of Fremantle’s total revenue in 2021 (2018: 19 per cent). RTL Group’s Board of Directors has approved an ambitious scripted content expansion plan, containing up to approximately €300 million of additional invested capital, and this is now ready to be deployed for the right ideas.
Drama series are also key for RTL Group’s VOD expansion plans. As a consequence, a VOD content working group has been established with Fremantle and RTL Group’s major broadcasters to explore the joint development of high-end drama series.
3) Maximising the global Fremantle 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.
Total Video means maximising consumers’ attention to RTL Group’s video offerings, across all platforms and devices. This also includes the Group’s companies for short-form video content such as BroadbandTV, Divimove and United Screens.
There are three key reasons:
As part of RTL Group’s Total Video 2.0 strategy, RTL Group will combine Divimove and United Screens to create Europe’s leading digital studio and home for digital content creators.
RTL Group’s Executive Committee has approved a growth plan to significantly expand Divimove’s capabilities in the areas of talent management, production of short-form video content, advertising sales and technology/data. Driven by the planned investments, the combined company’s revenue is expected to double to more than €100 million by 2022.
Divimove, RTL Group’s major broadcasting families and Fremantle have jointly developed numerous cooperation projects in the following areas:
Advertising sales: In Germany, Ad Alliance will offer Divimove as a one-stop-solution for branded content campaigns.
Talent management: Divimove will offer its creators partnerships with RTL broadcasters and Fremantle productions to expand their presence beyond the social media ecosystem. At the same time, the combined entity will also give established TV stars the opportunity to boost their social media presence and build their own personal brand.
Content production: Divimove will produce digital pilots, spin-offs and brand extensions of TV formats, positioning the combined entity as RTL Group’s most innovative digital studio and testing ground for new concepts.
Further substantial growth of RTL Group’s digital revenue also requires new skills in advertising technology. To grow its ad-tech business, RTL Group combined the operations of SpotX and Smartclip in 2018 and will now integrate the platforms and scale it up through additional capabilities and partnerships.
SpotX has successfully become a Total Video company, with a strong focus on OTT (including VOD and live TV), addressable TV, and online video. SpotX’s global strategy includes three pillars:
At the beginning of 2019, RTL Group announced it has signed an agreement to acquire control of the UK-based video technology company Yospace. The transaction closed on 1 February 2019. Yospace has developed one of the most advanced technologies for Server-Side Dynamic-Ad Insertion (SSDAI) which allows the replacement of existing commercials from a broadcast stream with more targeted, personalised advertising. Yospace focuses on the premium streaming segment, which is also the fastest-growing and most significant market for RTL Group’s global ad-tech company, SpotX. This market segment includes video-on-demand (VOD) and live video that can be streamed to any internet-connected device. As a result, the acquisition of Yospace complements RTL Group’s ad-tech stack by ensuring a key technology that can win, retain and scale premium media clients, including RTL Group’s broadcasters and streaming services.
In essence, the acquisition of Yospace furthers two strategic goals at the same time. First, RTL Group gains a competitive, fully integrated and profitable solution which is key to further grow SpotX. Secondly, the acquisition will also help build local streaming champions in the markets where RTL Group has strong families of channels. The Yospace technology makes advertising on streaming services more personal, which means a better consumer experience for superior monetisation of the Group’s premium advertising inventory.
RTL Group’s vision is to create an independent, global monetisation platform for video – a large, innovative, customer-friendly alternative for broadcasters, streaming services and publishers. RTL Group aims to grow its ad-tech revenue by additional €100 million by 2021.
Latest update: January 2020
Photo Collage: L'amour est dans le pré, My Brilliant Friend (© Eduardo Castaldo), Britain's Got Talent (© Dymond/Thames/Syco/REX/Shutterstock), American Gods (© Starz Entertainment, LLC), American Idol (© American Broadcasting Companies, Inc.) and Deutschland 86