Cord Cutting Is Not A Global Phenomenon, Says German TV Giant

WahlFor German TV provider ProSieben, programmatic video and original content are among its top investment priorities.

In acquiring programmatic video platform Smartstream.tv last Wednesday, and by purchasing a majority stake in YouTube multichannel network Collective Digital Studio in early July, ProSieben joins European media giant like RTL Group and Sky, which are also testing North American markets through organic growth and acquisition.

“We are under the impression that the market is going to shift from direct sales to programmatic at some speed and we want to be prepared with all of our media assets and franchises to be in that market,” said Christof Wahl, managing director of ProSiebenSat.1 Digital, the broadcaster's division dedicated to video and mobile.

“We are in a market where broadcast is not declining. It’s still growing due to the fact that we don’t have a lot of cord cutters.”

The German TV advertising market is fairly robust – its net revenue increased 4% to $4.8 billion in 2014, according to broadcaster association VPRT, which expects additional growth between 2-3% this year. This slight growth contrasts with the flat or declining US markets. 

Despite dwindling traditional TV numbers, the uptick in over-the-top streaming services and original content is attractive to outside investors.

“We’ve seen for considerable time that there’s no replacement for TV advertising to reach audience in context, and our advertising market is very rich due to the fact that the average cable subscription in German markets is €15,” Wahl said. “On top of that, if you combine it with social media and a digital video presence, the inventory gets even more attractive for fast-moving consumer goods companies.”

ProSieben’s reach is considerable. It owns six commercial broadcast stations and operates 50 online and mobile video platforms, including web video portal Maxdome and streaming TV service 7TV.

It claimed 48% market share and more than 2 million video views in 2013, but significantly increased that footprint with the Smartstream acquisition, which estimates 300 million video views per month.

ProSieben is evaluating investments that will add more English-speaking content to its portfolio, according to Wahl. One way it intends to do so is through partnerships with YouTube, Instagram and Snapchat, whose audience adoption in European nations like Belgium, Ireland and Sweden rivals that of America.

“We have a joint marketing arm where we combine TV and digital media in our strategy for advertisers,” Wahl said. “With programmatic, because there are different variances, whether it’s selling on fixed price, real time or auction, there is a lot of education to be done with a traditional industry. We want to be prepared for that shift to the extent that so we can take advantage of it when it comes.”

 

 

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