{"id":111,"date":"2019-04-16T09:21:05","date_gmt":"2019-04-16T13:21:05","guid":{"rendered":"https:\/\/blog.iese.edu\/the-media-industry\/?p=111"},"modified":"2019-04-16T10:00:44","modified_gmt":"2019-04-16T14:00:44","slug":"will-incumbent-tv-companies-in-spain-get-consumers-to-pay-for-content","status":"publish","type":"post","link":"https:\/\/blog.iese.edu\/the-media-industry\/2019\/04\/16\/will-incumbent-tv-companies-in-spain-get-consumers-to-pay-for-content\/","title":{"rendered":"Will incumbent TV companies in Spain get consumers to pay for content?"},"content":{"rendered":"

Since Netflix entered Spain in 2015, Mediaset and Atresmedia, the two largest private TV companies, have struggled to compete with the streaming platform. Now, the majority of their revenues comes from advertising. But as their audience decreases, both Mediaset and Atresmedia need new sources of revenue and strategies to retain viewers. The obvious solution is making consumers pay for content and abandon the \u2018free-TV\u2019 model they have always had.<\/p>\n

Online streaming services have changed viewer habits forever. Now, like in every other market, Spanish consumers expect immediacy, choices and the capacity to watch a show whenever they want. What they expect is on-demand high-quality content and they are willing to pay for it. According to the National Competition and Market Commission (CNMC), one every three households connected to the Internet are subscribed to online platforms. The most important service nation-wide is Netflix with 2.1 million users in the country.<\/p>\n

This trend has investors worried. In 2018, both Mediaset and Atresmedia fell in the stock market. But this January their values dropped even more when Bank of America Merrill Lynch reassessed their value. At the same time, TV audience has slowly decreased. The CNMC revealed last November that the percentage of people consuming free TV is at a historical minimum<\/a>. The reason, they argued, is the rise in subscriptions to paid-TV.<\/p>\n

\"\"<\/p>\n

If advertising is the primary revenue source for these open over the air TV channels, they need large audiences to make it profitable for the advertiser. But audiences are decreasing, and advertisers are going online. Spanish TVs need to find new revenue sources and paid-content seems to be the direction they want to take. However, this might just not work.<\/p>\n

First, subscribers pay for on-demand high-quality content. They think Netflix or HBO is worth their money. They get to see \u201cGame of Thrones,\u201d \u201cStranger Things\u201d and even the Spanish show \u201cLas Chicas del Cable.\u201d But why would anyone pay for reality TV shows such as the gossip show \u201cGran Hermano\u201d (Big Brother) from Mediaset? Mediaset could argue that their audience numbers are strong (Telecinco has a 12.9% of media share) and the show is a hit (just this Sunday \u201cGran Hermano D\u00fao\u201d was the most watched show of the day.) But let\u2019s keep in mind: it is free to watch it, and we are probably more willing to watch \u201cgarbage\u201d TV when we don\u2019t pay for it than when we do. Mediaset needs signature high-quality programs to make their viewers subscribe. A source of minimal hope for reality shows in the pay-per-view arena is that they are somewhat time sensitive and perishable, and truly perishable content, soccer in the Spanish market, is the most paid-for content.<\/p>\n

Second, subscribers must have the economic power to buy content. 2014 data from Kantar Media<\/a> showed that the Mediaset channel Telecinco\u2019s viewers belong primarily to low and middle-income households. That is, they are less likely to pay for content. The story is different for Antena3\u2014Atresmedia,\u2014as its viewers, who are in their late forties, belong to the middle class and are more likely to pay for content. But then, these TV companies will stumble upon another obstacle: if they have the economic capacity to subscribe, why subscribe to Mediaset content? They probably have subscriptions to other online streaming platforms; and how many subscriptions are they willing to pay for? The content offered by Spanish TV channels would have to excel, proving viewers that it\u2019s worth their money (and their time.) They may even have to convince them that their content is better than Netflix\u2019s. Or, in a smart way, they could partner with these streaming services (which they are doing to an extent.)<\/p>\n

For now, Mediaset and Atresmedia are resorting to other revenue sources. Atresmedia is producing content for platforms like Amazon, Netflix and Movistar. The company is also exploring new types of advertising, for example, media for equity\u2014promoting startups in exchange for equity. Mediaset is following a similar strategy. The Italian-owned media company is producing content for HBO and Netflix. A different matter is who will capture most of the value for the created content: the producer (Spanish TVs) or the distribution channel (online streaming platform.)<\/p>\n

Spanish free TV companies must not fear for their livelihood, at least not yet. Their hold over the Spanish audience has weakened but not waned. Still, Mediaset remains number one in terms of audience and both Atresmedia and Mediaset get around 80% of TV advertising. But they must not remain idle either. Online streaming platforms will slowly gain ground, and over-the-air open TV will deteriorate at the same pace. If Mediaset and Atresmedia intent to survive, they must either produce high-quality content to gain paying viewers or increase their base audiences online to fund themselves through ads. For the moment, they are trying to do both.<\/p>\n","protected":false},"excerpt":{"rendered":"

Since Netflix entered Spain in 2015, Mediaset and Atresmedia, the two largest private TV companies, have struggled to compete with the streaming platform. Now, the majority of their revenues comes from advertising. But as their audience decreases, both Mediaset and Atresmedia need new sources of revenue and strategies to retain viewers. The obvious solution is […]<\/p>\n","protected":false},"author":175,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6,47,7145],"tags":[373,24494,17406,61403,12513],"coauthors":[109008,108574],"class_list":["post-111","post","type-post","status-publish","format-standard","hentry","category-digital","category-television","category-video","tag-business-models","tag-netflix","tag-streaming","tag-subscriptions","tag-television","megacategoria-mc-media"],"_links":{"self":[{"href":"https:\/\/blog.iese.edu\/the-media-industry\/wp-json\/wp\/v2\/posts\/111","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.iese.edu\/the-media-industry\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.iese.edu\/the-media-industry\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.iese.edu\/the-media-industry\/wp-json\/wp\/v2\/users\/175"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.iese.edu\/the-media-industry\/wp-json\/wp\/v2\/comments?post=111"}],"version-history":[{"count":5,"href":"https:\/\/blog.iese.edu\/the-media-industry\/wp-json\/wp\/v2\/posts\/111\/revisions"}],"predecessor-version":[{"id":119,"href":"https:\/\/blog.iese.edu\/the-media-industry\/wp-json\/wp\/v2\/posts\/111\/revisions\/119"}],"wp:attachment":[{"href":"https:\/\/blog.iese.edu\/the-media-industry\/wp-json\/wp\/v2\/media?parent=111"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.iese.edu\/the-media-industry\/wp-json\/wp\/v2\/categories?post=111"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.iese.edu\/the-media-industry\/wp-json\/wp\/v2\/tags?post=111"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/blog.iese.edu\/the-media-industry\/wp-json\/wp\/v2\/coauthors?post=111"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}