The growth of Netflix is stalling, particularly in its largest and most saturated market in the U.S.
This means that the streaming service, like its rival Amazon Prime Video, is looking to places like Europe where SVOD penetration is still under 17 percent to boost its numbers. But Netflix isn’t finding Europe as easy as it might have hoped. Europe is not the United States; it’s full of complexities, different viewing habits and varying tastes.
The U.K.’s top-rated single show of 2017 was a documentary, Germany’s was a news program, Portugal’s a cooking show and reality TV came top in Greece.
It’s the same story on YouTube, where different genres appeal in different European countries. The French, as you might guess, love food and drink best, Brits love music and dance, Italians flock to kids’ entertainment, Germans dream of travel, and Spain sees fashion and style way ahead of other genres.
Yet Netflix, banking on the global dominance of American culture, has not always taken local preferences seriously: 60 percent of its European content is made in the U.S., and, except in the U.K., only 13 percent is made in the country in which it is broadcast.
Ten years ago, Netflix would have been on firmer ground. Back then, U.S. shows were in the top 10 in most European countries, but that’s changed as local markets get better at creating their own content. As Europeans increasingly embrace local TV, program creators are gaining confidence and have started to borrow successful creative techniques from popular U.S. shows, which help them reach a wider audience. Now, 73 percent of the top series in 24 European markets are locally-produced.
For La Casa de Papel, Spain’s Antena 3 brought in U.S. writers who created a show that was sold to Netflix as Money Heist and became a global hit. German TV used humor, character and tension for Cold War hit Deutschland 83, which now shows on Sundance TV in the U.S.
The popularity of locally produced European TV is reflected in the continued strength of format shows, which are easy to adapt for local markets and still bring in big live audiences. Got Talent, The X Factor, Dancing With the Stars and The Voice are resilient shows, with Love Island—which started in the U.K. on ITV and now runs in Germany, Sweden, Italy, the U.S., Japan, Australia and Malta—the latest addition.
Despite the success of these broadcast shows, local providers are taking the SVOD threat seriously. Maxdome in Germany, and Freeview in the U.K. offer rival services to Netflix but suffer from a lack of exclusive content, so many of the local broadcasters are joining together to create hybrid AVOD models that may have a better chance of competing with SVODs, such as Salto in France. It shows that Netflix and its kind can be impacted by broadcasters’ new VOD offers and alliances and that, unlike Netflix, are proposing local content, homegrown productions and exclusive content.
Netflix and Amazon Prime Video are working hard to fend off this competition and maintain global growth, but they can only do that by increasing penetration beyond English speaking countries.
In the summer, Netflix announced plans for its first European production hub in Spain and launched three new French original series. Amazon, meanwhile, announced a new wave of European shows, including a German language kids’ series called Bibi & Tina.
As Netflix and Amazon ramp up their local investments, new legislation passed by the European Parliament in October could be the final push they need: It requires that at least 30 percent of content on all VOD platforms must be of local origin.
TV is reinventing itself on a daily basis, and although the new laws will undoubtedly force the pace of change, in the end, expanding local language programming is not enough on its own. The same goes for advertising: attempting to refit ads created in the U.S. or U.K. across other markets just isn’t good enough. Just like TV, in advertising, only great content will win the battle for attention.
So what is the solution?
Netflix isn’t the threat it is in the U.S. It won’t erase the competition. This isn’t a fight for advertisers; it’s an opportunity. With a growing trend for content to launch across both TV and SVOD. the only way for advertisers to get into both spaces while telling a compelling story is TV.
Fight for local budgets and executions. Europe is not the United States of Europe. It’s not just language barriers but cultural differences and tastes across the continent that need to be catered to.
Get access to multi-layered local information. Invest in understanding local audiences and how they consume content. Work with the right partners who can help find the right space and message for your brand.
Europe presents a wonderful opportunity for advertisers, but so many take a one-size-fits-all approach. There are still too many dubbed ads that miss the mark because they just aren’t locally relevant.
There is such a plurality of formats and tastes across Europe. This is an opportunity, not a challenge. Now more than ever we have the insight and tools at our disposal to make content that connects with this hugely diverse audience.
