Foreign affairs

The market for channels targeting expatriate and other minorities in Europe is now larger and more varied than ever, and so are the business models that support it. Andy Fry reports.

The market for foreign-language channels in Europe is, by its very nature, a complex and fragmented one. The only thing that can be said with any certainty is that it is viewed as an important part of the multi-channel world.
International channels add a point of difference to a pay-TV platform’s overall proposition. As one channel distributor observes: “There comes a point when platforms don’t need any more entertainment or factual channels in their portfolio. But if they add a channel which appeals to a specific ethnic or language group then they are diversifying the consumer offer.”

Sub-categories

In crude terms, there are four sub-categories within the international channel market (though they do overlap to an extent). First, there are channels for ethnic communities that have put down strong roots in foreign territories (often over several generations). Examples in Europe target Indian, Pakistani, Chinese, Turkish and Arabic-speaking communities.
Then there are the channels that primarily target transient populations. This group includes channels that cater, for example, for Polish or Romanian migrant workers who may only stay in another territory for a few months or years. This migrant worker market has expanded dramatically since the European Union opened up to new members in central and eastern Europe.

Third, there are the channels that trade off common cultural links or shared editorial tastes. We’re all used to US channels putting down roots in Europe but tend not to think of them as “international”. However you can see a similar kind of expansionism by Latin American-based broadcasters including Televisa and Globo. For this sub-group, Spain and Portugal are obvious targets. So too, to a lesser extent, are central and eastern European markets where there is robust demand among audiences for Latin American telenovelas.

 “We’ve been investing in the development of programmes produced overseas, with content especially directed at those who live outside the country.”
Marcelo Spínola, TVGI

The final group consists of channels that are essentially public service in character. Although they are still expected to operate along commercial lines, the primary goal for channels such as TV5, Deutsche Welle and CCTV China is the dissemination of domestic culture abroad. This is achieved by providing a combination of news, educational content and “best of class” entertainment.

Of all these variations, the most sophisticated is the distribution of South Asian channels into the UK. There are three reasons for this. The first is that the British Asian market is so significant. Although it sub-divides into a number of distinct ethnic/lingustic/religious groups, the UK’s 2.3 million South Asian population is big enough (and wealthy enough) to present a major commercial opportunity.
The second reason is that there is still a strong cultural bond between British Asians and their sub-continent counterparts. While the community has assimilated well, a large proportion of the population still enjoys South Asian content. This isn’t just true for older members of the community either. For many young British Asians, Bollywood film and music is every bit as aspirational as Hollywood content is for the wider UK population.

This leads into the third reason, which is that the Indian film and TV business continues to grow at a remarkable rate. In addition to its traditional strengths in movie and drama production, India has become a key market for local versions of international entertainment formats. The result is that there is a rich pool of content for channels seeking to reach out to the Indian diaspora.

As important for this story, India’s pay-TV market is expanding rapidly, with the result that many new Hindi channels have launched. Many of these have now joined the battle for British Asian audiences, which means established players have had to sharpen their act.

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A few years back, for example, the likes of Zee, B4U and Sony Entertainment Television (SET) were able to offer a fairly standard premium package that would consists of one or two channels at a price point of around £10-15 (€11-16) per month. But with the arrival of Star, 9X, NDTV Imagine and a host of channels that focus on narrower ethnic niches, that simplistic model is now obsolete. Today, the South Asian channel sector is every bit as sophisticated as its more mainstream counterparts.

Zee, for example, has developed a bouquet of five channels, two of which cater specifically for Gujarati and Punjabi communities. Four of the channels still carry a premium subscription but Zee Muzic is available in the clear as a low-cost entry point into the brand.
Variable price points and channel segmentation are not the only ways the South Asian proposition has developed. With the arrival of localised channels such as Brit Asia TV, the major players have also focused more on territory-specific activity.
There has also been a lot of activity in terms of portfolio marketing. While Zee and Star have developed stand-alone propositions, the UK market has seen players like SET, ARY and Sahara One club together within the Max Mix bundle. The beauty of this approach is that it provides the parties involved with greater scale and flexibility. It is also useful for launches – for example when SET debuted sister channel SAB TV in the UK.

Distribution

There isn’t anything quite like the South Asian/UK model in continental Europe (for recent developments in this sector, see sidebar, p.20). But that’s not to say the rest of the international channel business is less dynamic.
This is noticeable in terms of distribution. Traditionally, international/ethnic channels have tended to reach their target audiences via DTH satellite. Typically, this would involve a single channel feed being beamed across the continent and appearing at the bottom of a satellite platform’s EPG. The main variation came in the shape of premium channels such as Zee or Hong Kong-originated TVB, which would use on-the-ground representatives to manage subscriptions and fulfilment.

More recently, however, there have been a greater number of examples of culturally-related channels working together via brokers. For the most part, this strategy is designed to reach out to cable operators. But in some cases, it also involves the creation of satellite bouquets.

A classic case in point is the Turkish channel package which has been put together by channel distribution veteran André Vroegindeweij via his Netherlands-based company MBPA: “We have just added two new channels to the portfolio, which means we represent a total of eight Turkish channels. These are offered as a package to cable operators and IP providers across Europe [excluding Germany]. So far, we are in Benelux, France, Scandinavia and parts of Central and Eastern Europe.”

Interestingly, the creation of the Turkish package was demand-driven, says Vroegindeweij: “The leading Turkish channels already had an international presence via satellite, so there wasn’t a huge incentive for them to do something like this. The initiative came from cable operators in Holland that wanted to extend their offering to customers. They came to MBPA and we mobilised a number of Turkish channels to take part.”

Vroegindeweij keeps the offering as flexible as possible. “It’s really up to the platform how they want to price and position the channels because they know their market,” he says. “They also decide how many channels they want. Israel takes just one. The only thing that stays constant is the need for top quality programming. We are fortunate to be supported by leading Turkish media group Dogan, the provider of channels like Euro D and Euro Star. Any distributor which goes this route needs the best channels because that drives platform and consumer take-up.”

This aggregation model works for a couple of key reasons. First, platform operators can rely on trusted intermediaries to source channels and manage the ongoing relationship. Second, it provides a focal point around which platforms can market to customers.

You see a similar situation with mainland Chinese channels, which are presented to the world under the Great Wall TV banner. There are about 20 channels in the Great Wall portfolio, which is overseen in China by state corporation CITVC. Internationally CITVC grants regional rights to platforms and representatives which market Great Wall on its behalf.
In Europe, the Great Wall package is managed by France-based Tang Media, which markets the channels to cable and IPTV players. The company has had success within France, securing a deal with Neuf Cegetel. Tang’s president Xu Jiong says he also wants to target an estimated two million Chinese settled in other major European countries, but he admits progress has been slow: “We get some interest but the size of the Chinese market is not always big enough,” he says.

As a result, says Xu Jiong, Tang Media is developing an internet TV model for Great Wall as a way of targeting Chinese consumers directly. In doing so, it is echoing the way CITVC operates in the US. In that market, the Great Wall package of channels is available via IPTV platform KyLinTV. Although KyLinTV is based in New York, it is underpinned by a technology platform provided by Beijing-based Transvideo (see sidebar, p.24).
Many of the South Asian channels also have a portfolio approach to mainland Europe, where the volume and concentration of ethnic Indians is lower than in the UK.  South Asian subscribers can get the likes of SET Asia, Star Plus, NDTV 24×7 and Sahara One from GlobeCast’s WorldTV platform. A 10-channel All-Star package is ?387 a year. Once acquired, fulfilment is handled by a Europe-wide installer team (an approach that offers obvious economies of scale).

WorldTV isn’t the only source of South Asian content. Since October, it has also been possible to get a package of ARY Network (Ary Digital, QTV), B4U (B4U Music, B4U Movies) and TEN Sports courtesy of Roots Global, a new pan-European platform for South Asians in EMEA. Located on Eutelsat’s Eurobird 9 satellite, the new platform is managed by Singapore-based Spize TV, which again underlines the breakdown in more traditional geographic command structures.

Go it alone

Not all ethnic/international channels work within portfolios. Some are sufficiently strong that they have no need to partner with rivals. Others go it alone because they are ethnically or editorially distinct from other players.
India’s Zee, for example, makes its content available via DTH satellite and handles customer fulfilment in-house, except in the US where it partners with DTH and cable platforms. It’s similar with Hong Kong-based TVB, which launched a five-channel package into Europe last year (an upgrade on its pre-existing offer). Located on the same satellite as Roots Global, TVB offers flagship channel TVBS-Europe, news channel TVBN and three thematic channels: TVB Entertainment News; TVB Classic and TVB Lifestyle.

TVB’s target is the half million Cantonese speakers who live within the Eurobird 9 footprint. Although its main market is the UK, it has also held road-shows in Berlin and Rotterdam since the start of the year as it seeks to extend its customer-base.

Channel One Russia targets Russian-speaking residents in countries across western Europe, offering a mix of information, entertainment programmes, sports coverage and original films, series and movies. According to Tatiana Lobanova, senior manager, marketing communications, the channel’s mission is to keep Russian-speaking viewers around the world informed of Russian news and to present the Russian perspective on world events.  Channel One has introduced its own package of thematic channels, which has, however, yet to be introduced to Europe. “A couple of years ago Channel One Russia launched Digital TV Family, which turned out to be a highly successful project in thematic programming. Five channels – TV Nanny, Telecafe, Dom Kino, Muzika and Vremiya – offer their viewers a unique set of high-quality entertaining programs, children’s and musical films and motion pictures – 24 hours a day, without any commercial breaks,” says Lobanova. “DTF is not available in Europe yet, but we hope that soon we will be able to present the unique project to our European viewers.”

There’s a temptation to think of IPTV as the main source of expansion in the thematic channels business right now. But it’s clear from examples including these that Eutelsat has also played a key role in the international/ethnic channels market’s growth. Not only does it have Roots Global and TVB up on Eurobird 9, its German office acts as cable distribution agent for Middle Eastern pay-TV broadcaster Orbit. The partnership, which began in 2007, saw three Orbit channels join Eutelsat’s KabelKiosk, a platform that partners with 230 cable network operators in Germany, Austria, Switzerland, Luxembourg and Denmark. Echoing other players in the market, Eutelsat commercial director Olivier Milliès-Lacroix emphasises the opportunity for cable operators “to raise the attraction of their offer and address a new target group.”

Eutelsat is also home to Antena International, a Romanian channel which “brings together the best shows on Antena 1, Antena 2, Antena 3 and Euphoria,” says Sabin Cutas, vice-president at Antena’s owner Intact Media Group.
According to Cutas, the power of this proposition is that it is a reminder of home (since there are many ethnic Romanians living in markets like Spain and France): “It’s a liaison between Romanians abroad and Romanians at home,” he says, “a place where they can remember home. We offer entertainment, talk shows, lifestyle content and news bulletins transmitted in real time.”

Cutas says there is no one way to deliver or price such content as it depends on the level of demand and the platform strategy: “In Europe, for example, Antena International is distributed through Eutelsat W2 satellite, so anyone can have the signal. But in the US, it is distributed by Romanian Satellite Network. In that market, RSN has decided to distribute Antena International as a premium channel.”

Another string to this story has been the rise of the Latin American networks. Mexican media giant Televisa, for example, operates six networks in Europe, of which the best-known are Canal de las Estrellas and Telenovelas. In Spain (which shares a language with Mexico), these networks effectively operate in the heartland of basic pay-TV. But go elsewhere in Europe and the Televisa channels have more in common with Zee or TVB (which are also production powerhouses in their own markets).

In France, for example, five of Televisa’s channels are available for ?4.99 under the heading Pack Hispanique. Clearly, this makes Televisa more of a niche player, but it works well, according to the company’s head of European sales, Valentina Lauria Romero. According to Romero, this kind of signposting has been a very effective way of reaching the Spanish-speaking audience and is something she would like to replicate in other European markets including Germany, Austria and Portugal.

Maximising ARPU

Televisa has also started exploring the internet TV space, joining forces with Move Networks to create entertainment-based portal www.tvolucion.com.  Implicit in this example is a judgment call about whether it makes sense for international channels to chase the largest possible audience or focus on maximising their ARPU.
For Zee, 200,000 subs in the UK is a valuable business. And you get a similar situation with Brazil’s Globo. As a programme producer and distributor, Globo is massive. But its international channel TV Globo Internacional (TVGI) only reaches 550,000 subs worldwide after 10 years in operation. That sounds low until you realise its target market of expat Brazilians and Portuguese speakers pay US$10-15 (e8-11) a month. Last year, for example, TVGI launched on the French IPTV platform Neuf Cegetel, where it became a premium offering after a three-week free trial.

Marcelo Spínola, director at TVGI, says that the company always prices the service as a premium product: “TV Globo Internacional is offered as a premium à la carte product with some operators. There are also regions where we are included in packages with other premium ethnic channels, some with content exclusively in Portuguese. But in all 115 countries where it’s present, TVGI’s business model is to be premium.”

Sustaining that position does, however, require constant strategic development: “One of our main objectives right now is to increase our range of multi-platform distribution solutions. After accumulating experience in cable and satellite, we’re now in negotiations with operators that enable TVGI to reach subscribers via IPTV. To this end, we’ve negotiated important contracts in strategic regions like France and Canada, and we’re in negotiations with operators in other markets too.”
Echoing developments in the South Asia market, TVGI is also placing increasing emphasis on localisation. “The programming is basically produced by TV Globo in Brazil. However, in the last few years, we’ve been investing in the development of programmes produced overseas, with content especially directed at those who live outside the country. This type of programme has brought us even closer to our subscribers, who want to feel close to Brazil, but at the same time need to be informed about things that happen around day-to-day. We have Cá Estamos, which is produced in Portugal; Revista África in Angola; and two editions of Planeta Brasil, which are produced and shown to subscribers in the USA and Japan.”
TVGI has also expanded its service offering, according to Spínola: “In addition to TVGI, we also offer PFC (Premiere Football Club), a 24-hour football channel that broadcasts the Brazilian championships and several programmes that are fully dedicated to this sport. Just like TVGI, PFC is transmitted in Portuguese for Brazilians and Portuguese-speakers who live overseas.”

Public service

Most of the channels referred to thus far have been commercial in nature. But as already observed, some important players in the international sector are public service in character. In response to questions from Digital TV Europe, for example, a spokesperson at Arabic-language children’s channels JCC and Baraem TV explained how both channels are “are public mission edutainment channels” that were developed because of “the lack of free-to-view Pan-Arabic children channels and the absence of age appropriate Arabic programmes.” Funded by the Qatar Foundation for Education, Science and Community Development, this means that the goal is broad-based distribution across as many platforms as possible: “JCC and Baraem [a preschool channel that was launched at the start of 2009] are free-to-view across a range of satellites,” says the spokesperson. “But we definitely are focusing more on our online offering in order to reach children outside the coverage area. Both channels offer multimedia content through their websites. JCC is also available via mobile TV in Qatar.”

The desire for widespread distribution explains why these Al Jazeera-controlled channels have brought in help. Since the start of this year, France-based Thema has been the exclusive agent for the channel’s distribution, with a brief to increase the channels’ coverage via cable, DTH, IPTV and TV on mobile.

Berlin-based Deutsche Welle (DW) is a different proposition to JCC. But as a publicly-funded channel it has a similar philosophy when it comes to distribution. Its primarily role, explains director of distribution Petra Schneider, is to offer “a European perspective on world issues. This includes everything from daily news to in-depth features about how German design influences the latest fashions.”

This public service agenda explains why DW can be received by 210 million TV homes (as opposed to the few hundred thousand locked into premium commercial channels). Typically it sits on basic pay tiers amid news, information and infotainment channels. But, there have also been efforts to broaden the range of platforms the service can be viewed on: “We have a live stream on DW-World.de and have started offering video segments on mobile portals,” says Schneider. “We have made huge strides recently with broadband, IPTV, online and mobile – especially in Asia where new platforms are introduced constantly.”

Interestingly, Deutsche Welle has also started segmenting its offering. “In the last few years we have gone from broadcasting to narrowcasting by offering specific, regionalised feeds around the world,” says Schneider. “In Asia, we offer our viewers two dedicated channels – one with a focus on English programming and one with a focus on German. We also have regional windows for Latin America and the Arab world, with content in Spanish and Arabic respectively. We have also started work on projects like Youth Across Borders, a co-production from DW and the Egyptian television station ERTU.”

With so many variants on the international channel theme, the one outstanding question is this: is the market’s growth driven by the availability of technology or by consumer demand? Schneider’s view is that it’s a combination of the two: “Digital technologies have made it possible to reach viewers who don’t necessarily subscribe to traditional means of reception, like those who use online platforms. I think European TV is becoming a staple niche for a loyal target audience. This audience is not only interested in their community, but are also concerned about world issues and differing perspectives.”