Netflix's European Push Upends Local TV Broadcasters: "It's a Gold Rush"
The streamer kick-starts a frenzy in high-end drama on the continent even as it faces unique hurdles and competitors rush to bankroll more ambitious foreign series.
After having dramatically reshaped the U.S. television market, Netflix is making a big bet on Europe by copying its own playbook: disrupt the landscape by spending billions on original content. In Europe, where the streamer is on track to spend close to $1 billion on original productions in 2019, Netflix has forced local networks to significantly increase the number of originals they produce.
But on the continent, Netflix faces the unique challenges of serving a market of more than 700 million viewers split up over dozens of countries, languages and cultures — not to mention competition in the form of Europe’s powerful public broadcasters, whose programming budget for originals, at close to $17 billion annually, dwarfs what Netflix is willing, or at this point able, to pay European producers.
Netflix’s upcoming European projects range from Damien Chazelle’s Paris-set jazz club drama The Eddy to the Spanish drug-trafficking thriller Hache to Tribes of Europa, a German science fiction saga from the producers of Oscar winner The Lives of Others. In late 2018, the trickle of Euro commissions from the streaming giant had become a flood: five new series in Germany, seven fresh titles from France, a half-dozen new original shows for Spain.
Netflix does not break out its international subscriber figures by territory, but analysts estimate 30 million to 40 million of its total 137 million subscribers are in Europe, and the company is forecast to add another 15 million to 20 million over the next five years, greatly outpacing its growth in the U.S. Besides providing a direct boost to the European TV industry — Netflix estimates it employed more than 13,000 cast, crew and extras on its original productions in Spain alone this year — Netflix’s Euro push has had a ripple effect on local broadcasters. Pay TV network Sky joined forces (and budgets) with German public broadcaster ARD to bankroll the $45 million German-language period noir Babylon Berlin.
Moviestar+ in Spain has pledged $112 million (100 million euros) a year for original productions, including The Plague, an action-drama set during an epidemic in 16th century Seville.
“When Netflix said they would launch a show in Spain — our show, Cable Girls — Moviestar+ immediately said they would launch two,” recalls Spanish producer Teresa Fernandez-Valdes, who is currently in production on the fourth season of Cable Girls and is executive producing High Seas, a 1940s-set mystery drama for Netflix that will bow next year. “Now Moviestar+ is premiering a new series every month! That would have been unimaginable before.”
“The entrance of Netflix in Spain has generated a tsunami that has broken the status quo,” agrees Alvaro Longoria of Madrid's Morena Films, whose Spanish-language horror series Diablero will bow on Netflix worldwide Dec. 21. “Before, Spain was a very oligopolistic market. There were very few players and they followed the same patterns. Now the whole thing is wide open.”
A leading French producer tells THR that local commercial networks TF1 and M6 are “investing much more than three years ago because of the competition,” with budgets 20 to 25 percent higher, much of that going to top talent.
“For the top producers, the top writers, it's a new gold rush,” agreed an in-demand showrunner in London. “It started with Netflix but now there's Sky, HBO, Amazon Prime — all are bidding up the market.”
Increasing above-the-line costs may be one reason Netflix has set up its first production hub in relatively inexpensive Spain. The company has also moved to lock in top Euro talent with its first overall series deals in the territory, signing exclusive production agreements with Spain's Alex Pina, creator of Netflix hit Money Heist, and with Jantje Friese and Baran bo Odar, the duo behind German mystery series Dark.
But Netflix’s aggressive approach is running into some opposition in Europe, particularly the tech giant’s desire to buy up all rights, worldwide, to international series it commissions. This top-down, studio-style approach is foreign to many European creators, who are accustomed, after a certain exclusive window for the host broadcaster has expired, to having rights to their shows revert to them.
Martin Moszkowicz, CEO of Germany’s Constantin Film, which has sold its German crime series Perfume to the streamer, says licensing foreign-language series to the likes of Netflix and Amazon Prime can be good business, “but there are alternatives with the same upside. Producers need to ensure they participate in the potential success of their premium series.”
For Perfume, Constantin split up the rights, giving the first broadcast window to German public broadcaster ZDF Neo and selling Netflix second-window rights as well as all online rights outside German-speaking Europe. Netflix has done similar split territory deals with shows like Germany's Babylon Berlin and Brit series Bodyguard, which premiered on the BBC to huge ratings — more than 10.4 million viewers —before going out on the streamer worldwide.
“If Netflix wants to just do the vertical integration model and build up a wholly owned studio that just produces in our market, I think they will miss out on opportunities,” says John McVay, chief executive of PACT, Britain's association of independent producers, who argues Netflix has more to gain by cooperating, and not competing, with local player in Europe. “Working with the big local broadcasters, and with the more entrepreneurial local talent, will grow the TV business for everyone.”
A version of this story appears in the Jan. 4 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.