European media transformation: A unique opportunity

Dear readers, We live in turbulent times. We face growing global challenges, geopolitical tensions, inflation and supply chain disruptions. Navigating these challenges is part of all our daily reality.

In addition, the international media industry is experiencing a massive transformation.

Video viewing is changing structurally and permanently. In July 2023, linear TV viewing dropped below 50% of video usage in the United States for the first time. In Europe, linear TV viewing is still significantly higher than in the United States. But the trends are similar: decreasing reach for linear TV channels, while streaming usage continues to grow substantially.

I am, however, convinced that these structural shifts hold huge opportunities for those stepping up to shape the future.

For the successful transformation of RTL Group, two factors are particularly important: Maximising reach and monetisation.

For us, reach has become a function of linear and non-linear viewing, which requires investments in content, marketing, and state-of-the-art streaming services. Better monetisation is driven by targeting, personalisation, and content recommendations, which requires investments in advertising technology and data.

At RTL Group, we follow a strategic framework based on three priorities: core, growth, and alliances & partnerships.

Core means strengthening our families of channels, investing in premium content as well as continuous cost and portfolio management. Growth areas are our streaming services, expanding our global content business Fremantle and investing in technology to boost addressable TV advertising. And with alliances & partnerships we focus on national advertising sales consolidation, international advertising sales with RTL AdAlliance, as well as joint investments in advertising and streaming technology solutions through Smartclip and Bedrock.

Competing with global tech platforms in the respective national markets will not be successful without scale.

RTL Group is building national streaming champions in the European countries where it has leading families of TV channels. Our streaming services will continue to grow if we cater to the needs of our more than 6 million paying subscribers – with exclusive, local content and the right mix of funding models. These range from lower-priced packages that are predominantly financed by advertising to entirely subscription-based premium packages.

Our key advantage is the combination of linear TV and streaming. First, they address complementary viewer groups. I’m a Celebrity – Get Me Out of Here!, for example, is one of our most successful formats on our main German channel RTL. The show performs very strongly on streaming, reaching a much younger audience in their mid-30s. Second, our established brands and successful TV formats not only drive streaming inflow and retention, but also enable us to source and share content between both platforms. This improves our overall access to content and positions us as a partner of choice for major studios and content rights holders. And third, we optimise our marketing spend by cross-promotion and advertising of our streaming services on our linear TV channels.

Looking at the wider European media landscape, in time, market consolidation will be necessary. And it will happen sooner or later. We unfortunately did not succeed with two larger consolidation moves for our broadcasting businesses in France and the Netherlands. In both countries, the competition authorities did not consider the speed and extent of the changes in the European media landscape and the impact of these changes on local media companies. A missed opportunity.

Instead, we are scaling with a series of different steps. One example is the full acquisition of children’s channel Super RTL in Germany. We are actively exploring several opportunities for advertising sales consolidation in our key territories. For example, we are currently in talks with the German TV channel RTL Zwei – in which we hold a minority shareholding – to take over advertising sales for RTL Zwei. This remains subject to a review by the German Federal Cartel Office.

In the past years, the demand from advertisers and agencies for global ad-buying opportunities has increased substantially. As a result, we created RTL AdAlliance, an international advertising sales champion.

RTL AdAlliance spans the entire RTL portfolio from TV channels, streaming services, radio stations to digital publishing. And complemented by the advertising inventory of high-quality partners such as ITV in the UK, RAI in Italy or NBC Universal in the United States. RTL AdAlliance has become a one-stop shop for the development of cross-media solutions and innovative advertising products. With simplified access to a unique portfolio in a brand-safe environment.

Combining the strengths of RTL Group’s core business – high reach, brand safety and emotional storytelling – with data and targeting offers great potential for advertising. Addressable TV will leverage the available inventory, attract new advertisers, and offer distinguished targeting. RTL Group already made significant progress in building an open European ad-tech platform and tapping into the high-growth market of addressable TV advertising.

We live in turbulent times and the next challenges are just around the corner. The rise of artificial intelligence, for example, will transform our business. From supporting content generation to efficiency gains in many areas, such as in advertising planning.

By embracing creativity, entrepreneurship, and taking decisive action, we can shape the media landscape of tomorrow. I hope this magazine provides you with insight and inspiration to do so.

Thomas Rabe, CEO at RTL Group