With the recent rollout of Disney Plus to the major European markets, the competition between the many streaming services seem to have arrived at a stage of an active international land grab.
Flixes now run after Netflix, who rolled out virtually everywhere in one go.
From a European perspective this means already saturated major markets, and the proximity of services moving beyond the major markets to enter regions which were considered secondary when phasing roll outs.
Think places like the Nordics, with their high spending power, or Central Europe, which consist of many smaller markets, but when combined together is home to 80 million people.
These audiences are harder to service, mainly due to their different languages (versioning costs will occur with less scale of economy), but operations done right hold the potential of creating prosperous businesses. It is possible to operate effectively in smaller, cluttered markets, as the example of the expansion of US owned TV networks in the early 2000’s proves.
The situation is not entirely dissimilar to that time. This time again, it is mainly American companies (with of course exceptions, such as Barcelona based Rakuten TV to name just one example) who compete for the money Europeans are ready to spend, but now on streaming services. The players aren’t the same though (with the exception of Disney and HBO), so many brands will have to learn now what the companies already present some time ago in the form of TV operations learned back at the start of the millennium.
From the perspective of a U.S brand that operated primarily on their domestic market so far, the .whole of Europe might seem like a cluttered place, and it really is, something that requires putting into consideration a number of factors not encountered in the domestic market.
To start with, there could be a consideration on what launching a service really means.
Is making the service simply available on the market (sorting out rights and lifting off geo filtering) enough?
Netflix is available in (almost) every country, but in many countries, that still really only means being able to access the English language service.
So they do a gradual approach, first just being available, then starting to create native language versions of more and more of their library, then initiating marketing activities, adjusting their programming to local needs and investing in local programming and production.
This is the Netflix way, but given that they are already at an advanced stage in this process, and with Disney Plus having language versioned services at launch, it is doubtful that it will be enough for the players who follow them to simply “be available.” They will need to come full swing, starting with proper localized operations straight away.
As for local operations, one thing that can be learned from the US TV networks operations across smaller markets is how they are structured in a way that allows them to remain cost effective.
TV networks regional operations are typically organised around regional head offices, that can handle a region of 5-10-20 countries, complemented by very small satellite offices in the respective countries. This setup can work well if the regional office is tasked to handle a region that consists of relatively similar countries. Regions such as the Nordics or Central Europe cannot be treated as one homogenous market, there always will be cultural and of course language specific differences, but they are similar enough so they can be run from one regional head office, as numerous TV networks have successfully done.
The marketing and distribution side also needs to be an area of heavy focus for brands that are less well known in Europe. While Netflix and Disney did not need to introduce themselves, other players like Roku, Viacom owned Pluto, Tubi or even Rakuten TV will have to do a lot more work to create brand awareness and get viewers to their services. That will be done partly through marketing spend, but striking the right distribution/bundle deals will also be crucial.
Distribution deals are a bottleneck for the industry as there are only a small number of significant TV manufacturers you can strike a deal with to get a branded remote control button, and there are only a small number of telcos you can make significant bundle deals with in any market.
Companies with different business models (AVOD/SVOD/TVOD) and different content offering are competing against each other for these distribution deals, and so a premium sports streaming service like DAZN becomes a Netflix competitor, even though Netflix does not hold any sports rights.
Building relationships with local players from distribution partners to a wide range of other providers can be crucial too. Companies that seem less like faceless international giants and more like services tailored at local markets will win over hearts. U.S. companies need to be aware that a smaller market is not a smaller America, countries will always have different characteristics. Using local expertise wisely to learn about the market will be key.
Challenges in different market characteristics include pricing too, with spending power and competition pricing to be considered when setting the price of each service. Billing in foreign currency, meeting local tax regulation and exchange rate fluctuation of current challenging times can elevate pricing decisions to existential relevance.
The international rollouts of the Flixes is speeding up, and the differences that will make or break these companies are no longer global decisions but local ones.
Getting these small national markets right is the next big challenge for the streaming industry.
Gergo is a digital video expert with deep EMEA and CEE insight. He held senior roles at HBO, Disney and Sony Pictures before founding and running his own video company, Special Effects Media.