It appears that the television industry is being haunted by a ghost named FANGA. An acronym for the companies that bring a lot of different emotions to the board rooms of big television companies: excitement and joy to the international production companies who are welcoming new customers, but fear to broadcasters and others who depend on the ad revenue of their channels.
Facebook, Amazon, Netflix, Google and Apple have been watching the television market with eager eyes. Apparently, video is the best way forward to effectively reach consumers online – which is no different from television. And except for Netflix, all these companies have been struggling a long time to become a successful part of television’s magic.
Today, it’s slowly becoming clear what traditional media companies are to expect… BBC‘s Tony Hall and ProSiebenSat1 ’s Thomas Ebeling are two of many execs who are a warning for big threats that are developing right now. Hall came up with a reasonably thought-through analysis and concluded that the FANGAs would gain substantial market share. Because these companies would invest relatively little in British content, he said he expected that this would cost the British production sector £ 500 million in five years’ time. Hall’s analyses are always valued in the British TV sector and raised many eyebrows.
Ebeling, who saved ProSiebenSat1 from bankruptcy, was even more blunt on the subject. He also came to the not so startling conclusion that TV viewing time is under pressure and, as a result, the TV advertising market is going to stagnate. His conclusions were remarkable: TV channels should focus mainly on the elderly and during the last briefing to investors he qualified this group as a ‘couch potato’ audience. It resulted in a storm of criticism and even led to the fall of this decisive manager.
The FANGAs are already making victims before they have even seriously started. There is a lot ahead of us. Netflix has been a blessing for producers so far, but will undoubtedly produce more under its own label. Moreover, Netflix always buys global rights, which means that producers lose income from lucrative international sales. Apple takes it a step further and will invest heavily in content: they hired Jay Hunt (former program director of the British Channel 4) and will undoubtedly also introduce a OTT proposition.
The broadcasters are also facing a considerable challenge in the field of sports rights. Amazon has already manifested itself in the field of tennis and they’re also hunting for sports rights. FNG & A are on the lookout as well. Thanks to their worldwide presence, they can make much larger budgets available and further hurt the broadcasters’ business model. After all, live broadcast of sports is an important way for broadcasters to remain relevant and attract a mass audience.
Another fundamental development is cord cutting, which is already booming in the US. This development is also noticeable in the Netherlands. Consumers are less and less interested in buying a package with channels that they do not really look at. Broadcasters in Holland were used to the consistent revenue stream of cable fees for many years (retransmission fees), but here too, the demand curve will shift to the left.
The traditional players are challenged in all areas. The game has started, in the boardrooms top managers are busy finding solutions. Disney appears to have found one with the acquisition of a number of 21st Century Fox assets. Hollywood is building defence walls against Silicon Valley …