As Americans cut the cord, Europeans subscribe to more pay TV

0

TTHE GREATEST the television dramas of the past decade have been the story of how people watch them. Ten years ago, nearly nine out of ten American households subscribed to cable or satellite. Today, just over half do. The collapse of wagesTV, in the midst of the advance of online streaming, has revolutionized the television industry and forced Hollywood giants like Disney to rethink their business model. And the rate at which consumers are “cutting the cord” of cable companies is only increasing.

Listen to this story

Enjoy more audio and podcasts on ios Where Android.

But not everywhere. Across the Atlantic there are more string cutters than string knotters. As Americans tear up their contracts, Europeans are subscribing to cable and satellite in greater numbers than ever. To pay-TV penetration in Britain will exceed that of the United States this year, according to Ampere Analysis, a research firm. In France and Germany, this is already the case (see graph).

Why has America’s media mega-trend missed Europe? One of the reasons is the price. The US cable industry may appear competitive: the largest player, Comcast, has only a quarter of the market. But it’s very regionalized, so most homes have few options, explains Richard Broughton of Ampère. The result is an average monthly cable bill of almost $ 100. British households pay less than half. Tax loopholes have madeTV an even better deal in parts of Europe. Demand in France fell from 30% to 90% between 2004 and 2014, after the government imposed a reduction in the rate of VAT on television services than on telecoms, unintentionally prompting telephone companies to launch a cheap offer TV package and pay the lowest tax rate. The loophole has been closed, but subscriptions remain high.

A second factor is content. american cable TV is running out of shows as studios move their best to their own streaming platforms. In Europe, where some streamers have not yet launched,TV companies retain the rights to many of the most popular titles. Britons looking for the third season of WarnerMedia’s “Succession”, for example, should turn to Sky, a satellite company owned by Comcast, since Warner’s HBO Max has yet to broadcast outside of the Americas.

The last reason Europe still favors cable is that American streamers have partnered with European pay channels.TV companies rather than competing with them. In the race for subscribers, the fastest way for streamers to gain strength in Europe has been to partner with incumbent satellite and cable operators. They are the ones who have access to consumers and who have the capacity to manage local marketing and advertising sales. In Spain, Vodafone offers bundled subscriptions to Netflix, Disney + and others. Next year ViacomSCSParamount + will be launched in six European countries on the Sky platform.

Will the rope end up crossing the Atlantic? As long as Hollywood studios continue to license their programming to local players, consumers will have every reason to stick to payment.TV. For the studios themselves, these offers are lucrative, says Broughton: “Doing a Disney and canceling all these contracts, then replacing them with your direct-to-consumer service, leaves you a little bit of a gap in your finances.

In the long run, however, studios prefer to bring viewers to their own platforms, such as America. In this scenario, payTV companies may not have much to offer other than sports, alongside streaming packages like those offered by Orange in France or Virgin Media in Great Britain. Warner plans a gradual European deployment of HBO Max over the next few years. As the fourth season of “Succession” is released, audiences can watch it online.

For a more in-depth analysis of the biggest stories in economics, business and markets, sign up for Money Talks, our weekly newsletter.

This article appeared in the Business section of the print edition under the title “Cable Ties”

Leave A Reply

Your email address will not be published.