Ovum: The future of TV: first globalisation, then localisation – now nationalism

A couple of years ago, we at Ovum predicted that the globalisation of TV by the likes of Netflix and Amazon would be followed by an intense period of investment and innovation in local video content (see Ovum’s opinion piece “The future of TV: First globalisation, now localisation”). In 2019 and beyond, the battle will get political.

Why? The challenge posed to local players by global tech giants is nearing a tipping point. Even in the UK, where national broadcasters and pay TV operators have done more than most to evolve, an Ovum survey of over 1,000 consumers in December found the following:

• More respondents had access to Netflix (29.7%) than Sky (28.8%), the country’s most popular pay TV service and a world-leader by national market share.
• Among the much-coveted 16-34-year-old demographic, Netflix had more users (47.0%) than Sky and its Netflix-like Now TV service combined (40.2%).
• Netflix is also nipping at the heels of broadcaster apps such as BBC iPlayer and ITV Hub for 16-34-year-old users, despite requiring a subscription fee.
• Nearly half (42.0%) of Netflix users said they watch the service more than any other pay-TV or online video app or platform.
• About three in five (59.0%) of 16-34-year-olds said they watch YouTube every day, and one in three (31.8%) said they watch it more than any other service.

Commercial moves to defend against these trends are already underway. Broadcasters in the UK, France, Spain, and the Netherlands have forged alliances aimed at creating national platforms that can adequately compete with the tech giants. In the coming months and years, the debate will take on a political tone in three key ways:

• Local players will call for regulatory concessions in “the national interest. “National broadcasters will seek the green light for joint ventures, mergers and acquisitions, and other strategies that might otherwise be – or already have been – blocked by the authorities. They will highlight their role in creating trustworthy content that drives social cohesion, in investing in local creative industries, and in generally contributing to their host country’s global soft power, while painting the tech giants as biased and opaque, prone to “fake news,” and uninterested in local culture or economies.
• Telco incumbents will look to broadcaster alliances to boost their “local champion” brands. As competition from the global tech giants grows on a variety of fronts, former telco monopolies will seek to differentiate using their local credentials. In the TV and video market, this could mean aligning with other “national institutions” loved by many local people – broadcasters. BT, for example, has reportedly been exploring making a multi-million pound investment in the BritBox online video venture being spearheaded by the BBC and ITV.
• Broadcasters will call for top billing on tomorrow’s TV and video platforms by law Historically, TV channels from public service broadcasters (PSBs) such as the BBC have enjoyed placement at the top of traditional TV platforms’ electronic programme guides. PSBs will argue that their content should remain similarly easy to find on the emerging video platforms of Amazon, Apple, Google, and others for many of the “national interest” reasons outlined above. Some have already made progress. On July 4, UK regulator Ofcom issued recommendations to the government aimed at ensuring such “prominence.”

The so-called FAANG companies – Facebook, Amazon, Apple, Netflix, and Google – will no doubt use their financial might to curry favour with regulators and governments by increasing their investments in local productions, infrastructure, and partnerships and, of course, lobbying.

But putting a winning local spin on their global agendas won’t be easy. To paraphrase the former Amazon executive we quoted in our previous piece on localisation: You can have a global service, but there are no global politicians…. There are only local politicians.

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