Media companies in Europe have an investment problem. Stagnating revenues and limited capacity to get private financing hamper EU media investments in content, technology or skills. This impacts the ability to address trends and to compete with global players, a Media Outlook from the European Commission concludes.
The future competitiveness of the European news media depends on its capacity to invest and innovate and monetize content and data, the outlook says.
“Yet, reductions in revenues, number of companies, investment capacities, employment (as well as other factors, such as, for example, the rise in prices of paper pulp prices) imply that the sustainability of some parts of the sector might be at stake.”
The Commission VP, Margrethe Vestager, says the outlook underlines how critical it is to sustain efforts in helping European Media enterprises digitalise.
“We have to position ourselves early enough on new technological segments. To avoid that others impose standards, we might not agree to. From immersive content to virtual production.”
The main news source in the EU is TV at 75% of the population but online media is already the second most used medium today, ahead of radio and the printed press.
“This trend is likely to continue, driven by digital infrastructure and devices and consumer preferences, especially of younger generations. Yet, significant parts of the population now access news through other sources, and most notably social media”, the outlook says and notes that the drop in printed press revenue is not compensated by the rise of digital revenue.
The combined effect of these trends is a revenue shortfall for the press, as the drop in printed press revenues is not compensated for by the rise of digital news revenues.
The audiovisual industry in the EU can be broken down into broadcasting (83.7% of revenues in 2021), VoD (12.8%), cinema (2.5%) and physical video (1%).
Overall audiovisual sector is growing by 3%, driven by VoD at 35% whereas the main sources of revenue – pay TV subscriptions, TV advertising and public funding – have stagnated in recent years.
The US footprint in the EU market shows: Of the top 20 companies active in the EU, US companies accounted for 44% of revenues in 2021. The top three SVoD providers reached 71% of 177 million subscriptions in Europe: Netflix – 36%, Amazon Prime – 23% and Disney+ – 12%.
“On the future of EU productions, the overall perception among producers is that the risks have increased in the EU for European producers. The main reason is the upstream costs mainly for creative talent and technical crew but also other services, resulting from the increased demand and supply of competing films and series”, the outlook says.
The report notes that video gaming has grown to an impressive 3 billion players’ community globally, among which 125 million in Europe.
“The main driver for growth is mobile: games played on tablets and smartphones now make up more than half of the total market, both globally and in the EU.”
“The digital shift is transforming the sector, where new business models are providing new ways to monetise games. Many games are now initially free to play, and instead focus on making revenue from ads, subscriptions and/or microtransactions. The latter can include selling in-game items.”
“When looking at video gaming in the wider media environment, it looks clear that intellectual property has become an important competitive asset: existing video games provide content that can build on an existing fanbase for subsequent transmedia adaptations. Some video games are also proving to be a key gateway to virtual worlds.”
The report notes that the development of gaming has blurred the line between gaming, social platforms, music venue or fashion retailer.