Netflix gauged the climate in Europe perfectly, first by increasing funding to produce more local content in order to offset EU regulations, and then by forging licensing deals with European broadcasters.
In a reversal of Netflix’s original strategy, the company signed several agreements with digital broadcast cable and pay television providers in order to expand into European households.
Netflix now has various ongoing agreements in Europe including with Virgin Media and BT TV in the UK, TIM in Italy, and DT in Germany.
Doubling Down in Europe
In 2018, Netflix spent $1 billion producing 141 projects on the continent. Most projects (81) were original productions. There are 40 co-productions and another 20 or so projects that are licensed from external rights holders or producers.
Interestingly, Netflix has taken measures to reduce their dependency on subscription revenue in Europe by licensing its original content to local services, such as Altice in France and Sky in the UK.
Responding to Netflix’s Advance
However, local broadcasters are beginning to strike deals in response to the growth of Netflix and other streaming services. Discovery, the US media group that owns Eurosport, and ProSiebenSat.1, the German media company, is developing a subscription streaming service in Germany that will integrate their programming and digital services.
In April 2018, EU lawmakers signed a preliminary regulation allowing countries to force online streaming services to fund more European film and television projects.
The regulation will extend the EU’s broadcasting rules to include a 30% quota for European content on SVOD services. A version of the law became a Directive in October 2018, which requires member states to adopt the regulation into national law in the next two years.
In short, these rules could change the type of content that Netflix and other non-EU streaming services make available throughout Europe.