Gary Carter – former COO of Fremantle media – pointed out at the MPJC congress in 2012 that successful television formats travel in as many countries as possible. But with the arrival of social media as Twitter, Facebook and YouTube this is no longer the case.
Today format producers can monetize video productions in different ways. Amazon Video Direct – launched in May 2016 – offers producers a 55% share in advertisement revenues and YouTube offers a 68% share. A video as Gangam Style distributed by YouTube and reaching a billion views in 2013, yielded almost 8 million dollars of revenue.
It is one of the main reasons why traditional TV networks all around the world invest in the their own online distribution platforms or platforms as YouTube. This year Rupert’s Murdoch 21st Century FOX and Sky invested 15 million dollar in its own online streaming service FuboTV. A subscription to the service costs 10 US dollars per month, and the service offers different sport channels, series, documentaries in Portuguese, Spanish and English. A major player in the Dutch market RTL Nederland now provides a MCN, distributing Dutch spoken web series, celebrity video content and regular TV-content. The company also owns a majority stake in the MCNs Divimove and Stylehaul. The digital strategy of the organization is aimed at creating reach, content production and distribution of content.
Especially traditional TV-networks can’t hang back due to severe competition from different new media companies. On the one hand because a large international player as Netflix globalizes and distributes films and series in more than 130 territories including the major Asian markets as China, India and Korea. According to Netflix CEO Reed Hastings – keynote speaker at the Consumer Technology Assocation (2016) – this will continue in the coming years. On the other hand Netflix is also investing in the production of local fiction and non-fiction as series like Crown (UK), Marseille (France) and Suburra (Italy).
But also private video platforms like the Dutch Makers Channel (beauty, comedy and cooking etc.) and Belgiam WeZooZ (animal, recipes, mobility etc.) compete with traditional TV networks by producing their own content. And we not even mentioned important global players as YouTube and Apple Music, that produce their own web series. This year Apple Music (March) launched the Score, a docu series that explores local music scenes around the world like a new hip-hop style originating from the Ojibwa tribe living in the Minnesota’s Red Lake reservation. And Apple Music announced the launch of a six-episode drama – Vital Signs – produced by none other than Dr. Dre.
Even branded video channels of Burberry challenge traditional TV networks by debuting on Apple TV. The channel spotlights its fashion collections and offers beauty tutorials from make-up artist Wendy Rowe and shows original movies from Burberry’s Acoustic musicians.
The result of the emergence of new video platforms is that even the licensing of video formats is no longer the exclusive domain of traditional TV networks, producers and distributors. The American Fine Brothers Entertainment – owner of the famous YouTube REACT channel – started licensing various shows to other video channels. Shows included are the video formats Kids React, Teens React, Elders React, Adults React, React Gaming, Do They Know It, People Vs. Food, Lyric Breakdown, Try Not to Smile or Laugh, Opinions and People Vs Technology videos. The most well known format is ‘React format’. In Kids React one can see reactions of kids to a video game viewed at the Mine Cart channel, followed by clips of children reacting to questions as why they are watching or not watching the Mine Cart channel. The adult version of the ‘React format’ shows adults reacting to performances of the famous singer Prince.
But are traditional TV networks no longer suited to monetize on TV formats? Perhaps it is not so bad at all, because many video platforms like to bring their video formats to television. In 2015 the US video platform Vice announced to produce 37 news specials for the American pay channel HBO and the Dutch MCN Social 1nfluencers distributes its content of well known vloggers (the video format Nice friends/ Fijne Vrienden) at the lineair SBS channel Veronica and the SBS’s internet channel S1.tv.
Probably traditional TV networks can limit the damage of diminishing revenues by following a multi screen digital strategy.
Charles Vaneker
Senior Research and Media Consultant