Chyron – The streaming shake-up: what’s next for media companies and tech vendors
Alain Polgar, Senior Vice President of Sales EMEA & APAC, Chyron
The rise of the mega streamer has brought the broadcast media industry into a period of volatility, uncertainty, complexity, and ambiguity. The acronym VUCA first described the complex and challenging geopolitical situation in 1987 following the Cold War, and now aptly defines the current media landscape. It’s an environment characterized by volatility in that challenges are unexpected and sometimes incomprehensible; by uncertainty in that change may happen, or not; by complexity in that it is influenced by numerous variables; and by ambiguity in that causal relationships can be difficult or impossible to define.
The emergence of the mega streamer
Since the VUCA concept was conceived, the broadcast media industry has evolved, moving through a series of disruptions into a new era. Early on, the digitization of production and distribution over cable, satellite and then terrestrial infrastructure technically enabled the multiplication of TV channels funded by a combination of ad sales, carriage fees from cable and satellite operators and, outside the U.S., significantly, through public/tax money.
Structurally, the market was divided between a few global American media groups, such as Fox, Disney and Warner, and domestic players in every country. The global media groups produced content, largely recouping production costs and then further monetizing it throughout the world. Media groups then maximized revenue across multiple distribution channels and platforms: cinemas, home entertainment, pay-TV and free to air. Licensing content to cinemas, as well as selling DVDs and Blu-ray Discs through retailers and thematic channels through operators, these groups were fundamentally B2B organizations. (Even ad-funded free-to-air channels had only a “statistical” relationship with audiences.)
In recent years this model has experienced vulnerabilities, exacerbated by the pandemic. Online services began capturing an increasing share of ad revenues, with increasingly vertically integrated mega streamers such as Amazon, Disney or WBD capturing the majority of viewing time and subscription spend. Between mid-2021 and mid-2023, according to Nielsen, the share of U.S. TV screen time captured by streamers jumped from 26% to 37.7%. By mid-2022, it was clear that subscription-only business models offered little hope of growth or profitability. Thus began the launch of ad-funded services that now successfully capture a further share of ad revenue. In response, virtually every media company has pivoted to become a direct-to-consumer/B2C or B2B2C organization while trying to maintain their profitable historical business.
According to the European Audiovisual Observatory, with only 11% in 2020, the cumulative revenue of streaming (S-VOD and T-VOD) in the extended European Union is still relatively small compared to other revenue sources such as TV advertising (24%), pay TV (32%) or public funding (25%). Its rapid yearly double-digit growth is impacting the balance with, according to Ampere, 45% of internet users watching little to no linear TV compared to 22% just two years ago.
This reinforces the asymmetric competition between these significantly larger and diversified groups. Disney’s market cap is about 25 times larger than that of RTL Group and Amazon’s 257 times! They do not rely solely on their media business, and at least until recently, they have had no short-term profitability targets in uncertain times.
Disruption at the structural level
Globally, the most visible impact of volatility is that, but for Disney, all major Hollywood studios founded in the 1920s (20th Century Fox, Universal, Columbia, Paramount, Warner, MGM) have been acquired within the past 10 years (since Netflix entered the market), typically by non-pure media companies (Comcast, Sony, AT&T, Amazon). According to data compiled by the Media Leader from public earnings reports, the cumulative 2020-2022 losses of D2C streaming services (Disney, NBCU/Comcast, Paramount, WBD) amounts to $18.32 billion. In recent months, mega streamers have been working to restore profitability through painful restructuring in a time of high interest rates. Meanwhile, more traditional European media companies like ProSiebenSat.1, RTL Group, TF1 or ITV remain profitable even if their ad revenue is under attack.
The impact on TV groups has been significant shareholder shifts. In Europe RTL Group is progressively divesting its assets in markets where it is not leading. Since 2019 RTL Nederland, Belgium and Croatia have been sold, and the French M6 is still on sale after its failed merger with TF1. Inversely, Vivendi-owned Canal+ is on the offensive and has entered the international growth competition. After the acquisition of M7 with its 3 million subscribers and a significant stake increase in Multichoice in Africa, Canal+ has overtaken OCS from Orange in France and SPI and more recently invested in Viaplay and PCCW. In the U.S., ongoing consolidation has brought groups like Gray, Nexstar, Sinclair, Scripps and Tegna to hundreds of markets through affiliate stations. Disney’s $8.6 billion acquisition of the remaining Comcast stake in Hulu, triggering rumors on the future of ABC, ESPN, or Star, is the ultimate evidence of these changes.
Even production companies that benefited most from demand for original exclusive content now feel the pressure and are adapting. Vivendi-controlled Banijay has become a production giant after its acquisition of Endemol Shine Group, which includes Brainpool and Zodiak. The investment company KKR, with its combined investment in Mediawan and Leonine, has created a European major similar to another Vivendi subsidiary: Studio Canal. This restores some balance in the licensing power game and increases pressure on the broader ecosystem — particularly those production service providers and technology vendors that increasingly depend on fewer and fewer very large customers.
The VUCA concept also applies to content that is produced live, such as sports or other events that viewers want to watch in real time. Live content offers a degree of certainty: fans will always tune in to see their favorite team, and communities always want to be informed of important events. The more than $4 billion yearly investment by mega streamers like Amazon (NFL, Ligue 1), Apple (MLS, MLB) or DAZN (Serie A, La Liga) in sports licensing rights indicates that the industry perceives real value in live sports content. However, volatility arises in a constantly shifting sports rights holder landscape. The recent demise of RSN (regional sports networks) in North America merits study, and additional variables include a somewhat blurred-line between athlete and influencer, which affects viewership and sponsorship, along with ever-evolving technologies that enable production of live content by anyone from anywhere.
How tech vendors can respond
As the IABM’s “Adapt or Die”-themed annual conference suggested, vendors can serve as valuable partners to media companies in addressing the challenges and opportunity associated with uncertain times. This means, among other things, helping customers streamline their production workflows to minimize production time and staff requirements when talent is scarce, mitigating technology deployment risks through close collaboration that yields interoperable solutions, and proposing creative, agile business models.
Even if the transformations are faster and more brutal in VUCA times than in the past, technology vendors and media companies always find new, increasingly collaborative ways to overcome them in a mutually profitable way. Turbulence presents risk, but also opportunity. The greatest opportunities for media companies and the technology vendors may be found through a truly collaborative approach, not just vendors selling features or media companies requesting specific functionalities. Bringing the best development talent, the best UI/UX design and the highest level
