Pieter Ballon and Olivier Braet on the war in Medialand

Open Forum: War in Medialand?

Tension between the Flemish television broadcasting companies and the network operators seems to be mounting.
In recent months a letter from VRT, VMMA and SBS to Telenet and Belgacom TV was leaked.In this letter they stated that the facility offered by digital TV for recording programmes was undermining their relationship with viewers and decimating their revenues.

The broadcasting companies lashed back: “They are killing our product”. They are possibly referring to the disappointing revenues of On Demand services such as iWatch and Net Gemist, that in 2009 produced just 10% of what had been (even though perhaps rather optimistically) forecast in terms of revenue. Moreover, it seems for instance that, in the United Kingdom, up to 30% of digital viewers record their programmes beforehand and are therefore able to avoid any advertising. But the response from Belgacom —“If channels broadcast ten repeats of ‘FC De Kampioenen’ then it’s not surprising that nobody wants it any more”— could also count as an aggressive retort.

It is tempting to reduce this conflict to an isolated question of money, where the channels and the operators oppose each other with knives drawn. In this sense, it recalls a previous dispute between Telenet and the private broadcasting companies about previews of American top series that led in 2009 to an agreement about sharing preview revenues. But there is more to it than this. The letter from the broadcasting companies must, in our opinion, be seen as a sign of their fear for the future, rather than a reaction to their disappointing revenues today.

At first sight there’s not much wrong with the TV product today. ‘Linear’ television, which is consumed in real time today from comfy armchairs, remains a popular product. Information from the IBBT Digimeter reveals that Flemish people still watch an average of between 2.5 and 3 hours of TV per day and that prime time viewing remains unchanged at between 7 and 10 p.m. The market for TV advertising also continues to increase strongly, as Roularta announced this month. ’Non linear’ viewing, whether via the digicorder or via YouTube, appears for the time being to still be a complementary phenomenon.

Nonetheless, broadcasting channels have good reason to be concerned about their position over the longer term. Last year, Belgacom already suggested that the broadcasting channels will soon be paying operators to broadcast their programmes, rather than the other way around. The stirring declaration of Duco Sickinghe, who sees his Telenet like a kind of supermarket and the broadcasting channels as Unilevers that need to fight in order to secure good shelf space, has got through to a large number of people. In essence it comes down to the fact that the broadcasting channels as well as the operators want to be the TV platform that viewers feel bound to and they want to be able to sell access to these viewers to the advertisers.

That’s the story of this battle so far. There is also a common interest, which threatens to become snowed under in this war of words. It will soon be possible to download Hollywood films directly on your TV via the Internet without needing to go via a local broadcasting company or operator. And while we are on the subject of access to viewers, there are an increasing number of reactions and interactions of consumers about TV programmes on Facebook each day than the broadcasting channels or operators could ever hope to dream of. This platform function could very well move to other players, therefore.

How can we ensure constructive progress in this matter? In the first place, operators need to see that it is not just a question of social importance, but that it is also in their own interest to make sure sufficient money reverts back to people who make new, locally produced programmes. Operators that allow media production companies to bleed dry in their own region are cutting off the branch they are sitting on.  The first step towards an honest division of earnings is more transparency about where the money from digital TV ends up. At the moment, there is practically none, not just for the broadcasting companies but even more so for independent production companies and other stakeholders.
At the same time the broadcasting companies must understand that holding back non-linear TV viewing as a fully-fledged complement to (and in some cases replacement of) linear TV is impossible. They also need to recognise that the investments made by network operators in digitalisation and in the accompanying advertising campaigns also make TV more attractive, as can be seen by the massive shift of Flemish people to the digital platforms of Telenet and Belgacom. And finally, it is also up to the broadcasting companies themselves to come up with new formats, new services and new ways of attracting TV viewers to their own product. In addition to digital TV, PCs, Smartphones and iPads also offer a multitude of different possibilities.

So now it is up to the broadcasting companies to prove their oft boasted creativity.