Vivendi, the major American film and other media companies in Southern Europe, Mediaset and Telefonica. An unprecedented alliance that aims to combat the monster called Netflix that the United States has challenged and revolutionized the world of pay-TV. In the headquarters of Vivendi in Paris, the giant media content driven with bold strokes by Vincent Bolloré and Arnaud de Puyfontaine, at least one year the main topic of discussion concerns the threat to their business is coming from American TV streaming. The major labels, Universal, Paramount, Warner Bros., Columbia, to name a few, are caught between two fires and they are the ones that are suffering most of transformation. But they have to cry on themselves.
When did Netflix in 2008, and began the era of TV over the internet, have been well happy to sell their old catalogs to this new medium. But in doing so they have helped to create a powerful brand that since 2011 began to invest to produce content on their own competing with its own suppliers. By now it is quite settled that the business model SVOD (Subscription VOD) is a winner because it allows the user to access the entire catalog at reasonable prices and no other costs. And without piracy. So all are adapting learning from the company led by Reed Hastings in a few years has exceeded 74 million paying subscribers and plans to reach the threshold of 100 million over the next two years. A huge customer base that enables the use of large resources in their production of content: “Content is king”, it says in the United States for some years now. And the threat in perspective also comes from large digital aggregators like Amazon, Facebook and Apple, who can count on a very broad customer bases and are approaching the world of content production to offer them to their customers monetizing as much as possible.
the other players who are fighting in the lead are the pay TV base their offer mainly on sporting events. Pay as much for the rights and need for expensive subscriptions to return of these costs. In most sports it is a product that is consumed and throws, are not resold in time. Sky has moved first to defend their positions in Europe by joining forces where there was, the UK, cutting costs and investing more and more resources in their production, Germany, Italy, Austria and Ireland as Gomorra or the Young Pope .
Canal Plus in France has instead suffered the attack of the Qatari Bein who won the football rights to the sound of petrodollars. And Mediaset had no brilliant idea to leave Endemol and investing great resources in creating the second largest pay TV operator in a market still limited as Italy. But now the chickens are coming home to roost, and is gaining the idea that the more weaknesses union can give birth to a champion.
Netflix is already very strong in Northern Europe, Scandinavia and Great Britain It reached penetration rates of 25-30%, while there is still time, but not too much, to create a new Over the top in Southern Europe markets. At the head of this platoon is put Vivendi, a bit ‘by choice and a little’ out of necessity, as owner of feverish Canal Plus and also great producer of content (music Universal controls 40% of the global music market). Cement to bring together two or three American majors in a new Over the top alternative to Netflix as is manufacturing Tarak Ben Ammar, for years Tunisian franc contractor active in film production sector and called by Bolloré also in the Vivendi board. Last year he spent some time in the United States to study the phenomenon but above Netflix has picked up the availability of some big names in cinema to take part in such a project. Either as minority shareholders and as a new platform to content providers. Putting together Canal Play (Canal Plus), Infinity (Mediaset), Yomvi (Telefonica) and Watchever (Vivendi in Germany) and two or three majors which have mollifying speeches, it could arise entity with a good firepower. The idea is to produce between 5 and 10 TV series a year in 10-hour format for customer loyalty. Means an investment of about 400 million per year since the production of each series costs about 40 million. The name of anti Netflix, though not definitive, could be just Watchever (see everywhere TV series, movies, games, music, live concerts) that would sell their content at a price of 10-11 Euros, that is in direct competition with the colossus created by Hastings. And this also explains the recent campaign of Vivendi purchases in the field of television production companies, such as 26.2% in Banijai Zodiac for 390 million euro, or negotiations with Cattleya.
This project, in but for which it is adding a queue not initially planned. Negotiations between Bolloré and the family Berlusconi took a different turn for the particular condition in which the Mediaset Premium pay-TV and in general the group founded by the current leader of Forza Italy. Mediaset Premium is the bet of Pier Silvio Berlusconi against Sky, present in Italy since 2003 with pay TV. To win the Champions League rights, Premium has had to fork out a figure beyond his means, 710 million in three years, in hopes of capturing new subscribers able to justify the operation. But for the moment the customer growth is far below expectations and Berlusconi is trying to aggregate premium to some other media group with strong shoulders. Negotiations with Sky than a year ago have not gone to good end also for the enormous price charged by Mediaset, about one billion euro, and so even those with Al Jazeera and Qatar who initially had shown interest. Now Berlusconi is trying to attack the ballast of a premium to the joint venture of over-the-top doing glimpse synergies from a hypothetical merger with Canal Plus in the acquisition of rights to sports events. But it seems that the benefits are significant, whereas the only security for the French would be the absorption of losses which inevitably Premium will face over the next three years. The only interest of Bollorè would be to take a premium to its entire Mediaset at a later time, by entering into the field of television, “free to air Italian” who earns and you still won a big chunk of the advertising business.
However, the Berlusconi family does not yet seem ready for a step in this direction even if the parent is 80 years old and Pier Silvio does not seem to have that vision needed to grow the group into a competitive field of new media. Mediaset had had an intuition correct when in the mid-2000s had entered Endemol, producer of content internationally. But the euphoria of those years he packed an operation with a too high leverage that forced the Alfa Group in 2012 to let go to focus resources on the pay TV business. A choice that is proving to be wrong given the subsequent dynamics: just think that Endemol, which today has a turnover 2 billion and produces an EBITDA of about 230 million was purchased by Fox of Rupert Murdoch. Twice misstep by Pier Silvio is likely to influence considerably on the future of Cologno Monzese and the entire group of Italian media system.
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