HBO Max, Disney+, Voyo, Prima+, and others. The Czech market is being home to a wide range of paid VOD services, backed by both global as well as local television players. Streaming services have become a hot topic of discussion, with an increasing interest in paid video-on-demand services. According to our Atmedia Index research study in the second half of last year, it was revealed that 2.5 million individuals – accounting for 40% of Czechs aged 15–69, did regularly use at least one paid VOD service. Undoubtedly, this figure is poised to witness further growth in the upcoming years, considering that our market is far from reaching the level of saturation observed in some global markets. Hence, it comes as no surprise that local television groups are channelling increased investments into the content, exclusively featured on their respective streaming services. The objective, naturally, is to attract new customers, boost the number of subscribers, and establish a strong position alongside major global streaming giants like Netflix or Disney+. Given this scenario, one cannot help but wonder: What is the current position and significance of television channels within today’s media landscape of television players?
The answer sheds some light on the dynamics of the television channel market in recent years. Despite the increased investment from both global and local players in paid VOD services, linear television broadcasting continues to thrive, with various individual operators introducing new television channels onto the Czech market. Local commercial television groups have effectively leveraged digitalisation and the transition to DVB-T2 to capitalize on digital terrestrial multiplexes by introducing new channels. Starting 2018, they have successfully launched several channels, including Prima Star, Prima Show, CNN Prima News, and Nova Lady. The country has a well-established tradition of terrestrial broadcasting, and a considerable number of viewers still rely on this method to receive their television broadcasts. As a result, even the media companies that formerly provided solely Pay-TV channels, such as AMC, have ventured into the market for Free-to-Air channels. As of February this year, their lifestyle channel – Spektrum Home – has also been accessible through one of the digital terrestrial multiplexes. The clear objective behind this decision is to increase their viewership and, consequently, boost their advertising revenue.
Over the past few years, the Pay-TV channels’ market has seen some remarkable progress. In 2018, people meters measured 17 channels, whereas this year, the number has increased to 22 measured TV channels. One of the quite notable contributors to this expansion is AMC, which has, since 2018, expanded its portfolio of measured TV channels by introducing two Pay-TV channels – AMC and TV Paprika. The increasing prominence of Pay-TV on the Czech market is underscored by the entry of entirely new television players, namely, the media groups Warner Bros. Discovery and CANAL+. Since 2018, the first mentioned group has made some significant strides in television viewership measurement by introducing three thematic Pay-TV channels – Discovery Channel, Eurosport 1, and TLC. On the other hand, the CANAL+ media group has announced its entry onto the Czech market with the launch of CANAL+ Action, a movie and series channel. In addition, CANAL+ strengthened its position by acquiring SPI International, thereby gaining access to the FilmBox movie channel as well as their sister channel FilmBox Stars.
The notable rise in the number of measured TV channels in recent years indicates that linear television does continue to hold a significant importance as the individual media companies do all recognise the potential it offers. This comes as not surprise, given that almost 70% of viewers aged 15–69 do watch television on a daily basis, spending over 3 hours per day in front of their TV screens. Indeed, it is true that the television viewership has witnessed a slight decline among the younger age groups in recent years, as they increasingly gravitate towards the streaming services. However, this shift in viewing habits doesn’t necessarily imply that the paid VOD services should completely replace traditional television channels. Adopting a perspective of symbiosis rather than replacement or rivalry, we can acknowledge the coexistence of both mediums. On any given day, I might find myself inclined to enjoy my preferred series on a paid VOD platform, whereas on another occasion, particularly after a busy workday, I may not wish to navigate through an extensive array of content and would instead opt for traditional television broadcasting. Moreover, television consumption today has undergone some significant changes, especially when compared to a decade ago. An increasing number of viewers now access their television channels through Pay-TV operators. As per the findings of our Atmedia Index, in the second half of last year, 57% of viewers aged 15–69 did have the Pay-TV subscriptions. This provides them with the convenience of watching their favourite shows on-demand and simultaneously on multiple devices.
Television players are adeptly adjusting to the evolving media behaviour of viewers. They acknowledge the existence of a demographic that willingly pays for content and subscribes to multiple streaming services at the same time. Simultaneously, they recognise another segment of viewers who prefer not to pay for the content and will remain reluctant to do so. Moreover, they are also aware of a third group of viewers who actively consume both paid VOD services and traditional television channels. In response to these diverse preferences, media companies are making strategic investments in both streaming services and television channels. The rationale behind this approach is quite straightforward – they aim to provide content wherever viewers seek it. Recognising the distinct roles of streaming services and television channels, both have their respective places in the media ecosystem of television players. Moreover, television channels will remain a significant pillar of their business for a long time to come. Television advertising revenue, in particular, does make up a substantial portion of their income. As evidenced by foreign markets, most television players eventually rely on advertising as an essential stream of their revenue.
A Look Abroad
A case in point could be the American market, where the media landscape is, naturally, quite distinct from our own. While the number of households with Pay-TV is on the rise in our own country, the American market has been dealing with the phenomenon of the so-called cord-cutters for several years. While the paid VOD service market in our country still has an ample potential for growth, the American market has already reached its saturation. The time when individual streaming services were experiencing rapid double-digit year-on-year growth in subscriber numbers has now become a thing of the past. Content production costs are steadily rising, and the majority of streaming services have been operating at a loss for quite an extended period. Despite their subscription revenues, they fall far short of compensating for the losses incurred due to a declining television advertising income. In an article published in May this year, media expert, Doug Shapiro, emphasised this point, drawing attention to a comparison of the revenues generated by media houses from one hour of viewers consuming their content. Based on the analysis’s conclusions, it was revealed that revenues from streaming services, on average, fall short by less than half of what linear television generates.[1]
Global media conglomerates, not only in the American market but also in other regions, are actively exploring avenues to build sustainable business models. As the streaming service market approaches saturation and subscriber growth levels off, individual players are redirecting their focus towards advertising as a means to bolster their revenue streams. The long-standing rule that the paid VOD services do remain ad-free is no longer set in stone. These players are now shaking things up by offering different subscription levels – for instance, they provide full subscriptions without any advertising as well discounted subscriptions with commercials ads. Media companies are effectively responding to their viewers’ demands, ensuring content is accessible wherever they seek it, and presenting them with a diverse range of consumption options. While the American and Czech markets may significantly vary, the individual television players’ strategies reveal a common theme – striking a balance. In the realm of television channels, paid VOD services, and ad-supported streaming platforms, the aim is to create a cohesive ecosystem where each product harmoniously complements the others instead of competing to their detriment.
Michaela Suráková, Managing Director, Atmedia Czech
[1] https://dougshapiro.medium.com/videos-fundamental-problem-it-over-monetizes-d2c7263b92ef