Apple TV Plus and Disney Plus are the next global streaming services slated to roll into Europe, joining Netflix and Amazon Prime Video in some of the world’s most lucrative markets. But along with the opportunities come local programming and investment obligations that the new players — including upcoming services Peacock and HBO Max — may struggle to meet.
Chief among these is a requirement that their catalogs offer at least 30% European content by the end of 2020. It’s still unclear how that 30% will be assessed — according to number of hours or number of titles — but officials are expected to clarify the issue by the end of this year. “It’s going to be a challenge for the European Commission to come up with a fair system for the quota,” says Ed Border of London-based consultancy Ampere Analysis. Counting either by titles or hours could be open to abuse.
Regardless, Netflix and Amazon Prime Video have a head start. The two streaming giants have known about the quota for more than a year and are close to achieving it, according to Ampere. Netflix and Amazon average about 5,000 and 3,000 titles, respectively, in European markets (except in the U.K., where the numbers are significantly higher). Going by number of titles, European works account for 20%-30% of the two platforms’ offerings in the biggest markets, thanks to a mix of acquisitions and original productions in countries such as the U.K., France, Germany, Italy and Spain.
Disney Plus and Apple TV Plus won’t have nearly as much content at launch, but meeting the 30% threshold is likely to take a while. (Reps for the two companies did not respond to requests for comment.) Ampere estimates that Apple TV Plus will bow in Europe with 38 titles, including movies and seasons of TV series, only 6.2% of which are from Europe. Disney Plus is expected to launch with about 982 titles, 4.7% of which are from Europe.
Apple TV will rely on original content to make up the shortfall, industry sources say. “Unlike Netflix and Amazon, which have been doing a lot of acquisitions to bulk up their libraries, Apple TV’s strategy in Europe looks as if it will be to focus on making a select amount of original films and series with big stars and creatives attached,” says Tim Westcott of IHS Markit. “If they take all the rights, they can roll out the titles globally instead of acquiring shows for specific markets.”
European titles in negotiation to join Apple TV’s pipeline include “Faceless,” a thriller produced by France’s Leonis and Britain’s Artists Studio and co-written by Virginie Brac (“Spiral”), and an English-language period series also produced between Britain and France. Apple also has an animated show in development with Gaumont.
Disney Plus’ approximately 1,000 titles are expected to include 25 original series and 10 original films during the first year, notably “The Mandalorian” and the reboot of “Lady and the Tramp.” Disney is likely to make some acquisitions in Europe to fill the quota but will also be banking on originals. The company is looking to hire a programming director for Disney Plus Europe and Africa, according to a recent job ad posted on LinkedIn.
Since Disney has licensing deals in key European markets — with Sky in the U.K., Italy and Germany and with Canal Plus in France — its streaming offer will differ by market. Whether it’ll snatch back content when those deals expire, in the same way NBCUniversal is reclaiming “Friends” from Netflix, is unclear. Canal Plus CEO Maxime Saada said recently his company is in talks with Disney Plus, but those discussions could be about distributing the new streaming service via the French pay-TV group, which recently inked such a pact with Netflix.
“Disney cut ties with Netflix in the U.S. but has not yet ruled out deals with major European platforms like Sky and Canal Plus,” says Ampere’s Border. “Obviously they’ll make a calculation to see whether they will get enough subscribers to potentially offset the loss of those deals.” HBO Max will face a similar situation in France with the pay-TV group OCS, with which HBO has a licensing deal, Border says.
Quota requirements aside, upping the amount of local fare in Europe makes good business sense as a way to attract local audiences. “Disney Plus, Apple TV Plus and the other streamers, like HBO Max and NBCUniversal’s Peacock, will have to offer local content if they want to thrive globally,” says former TF1 Studio boss Tristan du Laz, who just launched production company Originals Factory. “The music labels were the first to understand that investing in local artists was key, and today we see that Universal Music Group, for instance, gets almost half of its [annual revenue] from local artists.”
The 30% quota isn’t the only challenge for global streamers in Europe. The French government recently said it intends to require all international streaming services to set aside at least 16% of their annual revenues in France for investment in local and European content. The proposed requirement will be introduced in the French senate in January.
Culture Minister Franck Riester warns that if the bill passes, streaming services that don’t comply could be shut down in France. Those that obey would gain access to films before the full 36-month wait for international streamers, making it a more level playing field for local and global players. “It’s a revolution,” Riester says.