European TV Giant RTL Pushes Into VOD as Profits Slump

Courtesy of Ian Watson/USA Network
'Suits'

Europe's leading commercial TV company launched three new national VOD platforms this year as it tries to fight off Netflix & Co.

RTL Group, Europe's leading commercial television company, is pushing into online video services in a bid to offset a declining free TV business and better compete with streaming companies, such as Netflix and Amazon Prime.

In the first three months of 2018, RTL launched three new VOD platforms — in Hungary, Croatia and Belgium — all based on the group's French 6play platform. By collaborating between its national networks — RTL operates 61 television channels in 30 European countries — the Bertelsmann-controlled group hopes to quickly scale up its digital businesses.

RTL says it will invest heavily in VOD, focusing on local, exclusive content and offering a hybrid model of a free, advertising-supported VOD alongside a premium, Netflix-style pay product.

RTL is hoping it can seamlessly integrate its traditional television businesses with VOD to offset the decline in free-to-air viewing that has accompanied the rise of streaming services across Europe.

Germany, RTL's largest market, is a primary test case. In March, RTL launched Now US, a new, free-to-air digital channel stocked with American series such as Suits, Modern Family, Glee and Breaking Bad. Viewers can live stream episodes on RTL's over-the-top service TV Now or use its catch-up service to screen shows up to 30 days after broadcast. Or they can subscribe to TV Now Plus, a SVOD channel that bundles Now US together with RTL Germany's other free-to-air networks, for a $3.50 (€2.99) monthly fee.

Reporting its quarterly figures on Thursday, RTL said subscribers for TV Now Plus were up 61 percent compared to the first quarter last year. RTL's Dutch VOD offering, Videoland, recorded a 82 percent increase in subscriber figures.

The big question is whether RTL's online push will be sufficient to compensate for falling revenue elsewhere. The group posted decent figures on Thursday — with revenue up slightly at $1.67 billion (€1.4 billion) and operating profit (EBITDA) down just 1.9 percent at $305 million (€259 million). Digital revenue was up 6.7 percent to $224 million (€190 million). 

The company's debt burden is also light — at just $430 million (€365 million). But net profit was down sharply, off 17 percent for the quarter at $151 million (€128 million). RTL expects 2018 to be a tough year, with the soccer World Cup this summer cutting into audience figures as fans shift over to the public broadcasters carrying the matches.

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