Where do the Dutch TV media go?

This year for the first time less advertising budget went to TV. Digital parties gain market share. The Dutch public and commercial broadcasters are faced with three difficult choices. The TV was always the most important distribution channel for video content, but in the past two years we have seen a decline in the Dutch market

This year for the first time less advertising budget went to TV. Digital parties gain market share. The Dutch public and commercial broadcasters are faced with three difficult choices.

The TV was always the most important distribution channel for video content, but in the past two years we have seen a decline in the Dutch market. The time people spend on linear and delayed viewing has decreased by nine percent. In the age category twenty to twenty-nine years, the shrinkage is already thirty percent. Those are big numbers.

In addition, this year for the first time the TV advertising market (good for about 1 billion euros) has shrunk. Historically, TV was stable but now advertisers really choose to move their budget to other channels. This has led to unrest and debate on the Dutch market among both public and commercial broadcasters. Where does the market go and what should we do? Three answers: take care of a lot of content, make targeted targeting possible and choose what your strategic position will be compared to the streaming services (also called OTT platforms) like Netflix and Amazon Prime, whose market share is increasing.

The success of Netflix: bingewatching

In the Netherlands, 2.2 million households subscribe to Netflix. Videoland occupies the second position with 400, 000 users and NLziet stands at three with 100.0000.

In order to understand where the media market is going, it is first and foremost important to indicate the success of Netflix. The series and the phenomenon of bingewatching underlie the popularity of the streaming service. That is why Netflix adds a new series at least once a week, which you can usually watch all episodes immediately after each other. Eighty per cent of those series, however, does not reach the second season.

Issue 1: how do you get sufficient content as a smaller player?

That brings us to the first challenge of the broadcasters. They need to create a high volume of good content so that the viewer has a lot of choice. But the investments that go with this are at high risk because it is very difficult to have an impact with a specific piece of content. You have to develop and purchase many series in the hope that a few will turn out to be successful.

That puts broadcasters, certainly from small language areas like the Netherlands, in a difficult situation. They simply do not have the means to develop fifteen series per year. As a result you see two directions of thought arise. In Scandinavia they clearly go for internationalization, or series that are made there must also be attractive for foreign markets. Second possibility is cooperation, such as between Telenet (originally a cable operator) and VTM, which make series together. But you can also think of co-productions with foreign broadcasters. Media groups also invest more in local content, such as news and sports.

Issue 2: how do you equate the targeted targeting of an online provider?

The second challenge is about personalization. Advertisers want to convey their message in a focused way. Here online players have a clear competitive advantage. There the customer must identify himself before he or she can look. With linear and delayed viewing, on the other hand, you have no idea who the viewer is.

In other countries, this issue has led to collaborations between broadcasters and telecom companies in order to arrive at customer profiles. The telecom provider knows when the TV is turned on, what the household looks at, what the family composition is, the age of the family members, the postcode area and the socio-economic background. This information is a lot more specific than the generic, extrapolated viewing figures that the broadcasters can offer.

The next step is of course to determine whether the father of 45 or the daughter of fifteen is watching. You can do that by analyzing mobile data. After all, a smartphone is usually not shared and based on the GPS you can find out who is watching TV. In Norway, it is possible to predict this in 91% of cases.

Every broadcaster will have to find a way to collect and analyze effective real-time data about individuals - naturally within the framework of the privacy rules. The next step is to do something with it, in the form of a platform that allows you to serve advertisements to different customers at different times.

The online world in which you can advertise in a targeted way is in some way recreated in a TV environment. This has two major advantages. Because advertisers can target more efficiently, the value of the ad is greater. In addition, you can investigate who looks effectively in the 'off-peak hours' (such as at night) and adjusts ads accordingly and thus makes them more valuable.

Issue 3: are you going to compete with OTT platforms or collaborate?

The third issue concerns the position of the broadcaster in relation to streaming services. In the Netherlands, each broadcaster has taken the initiative for its own OTT or streaming content. This implies that they do not view Netflix as a distribution channel, but as a threat. The Belgian public broadcaster sees this differently: VRT wants to make content available via Netflix.

The question is of course whether customers want to subscribe to five different OTT platforms. Probably not. They go for at most two generic and two niche players, such as sports and film channels. In a fragmented landscape, achieving the scale that is required to be minimally cost-effective is therefore difficult. Broadcasters have to think about that.

In short, the recurring theme for Dutch broadcasters that are engaged in their survival strategy is cooperation: with other links in the supply chain, foreign counterparts and / or the streaming platforms themselves. In the coming period we will undoubtedly see interesting initiatives in this area.