Decoding the Future: Insights from the European Media Industry Outlook Report
Pioneering the future of media, the European Commission has recently published a comprehensive report on the European Media Industry Outlook. This report, a part of the Commission’s Media and Audiovisual Action Plan, provides an in-depth analysis of the current state and future trends of the media industry in Europe. Covering key sectors such as audiovisual, video games, and news media, it offers valuable insights into market trends, consumer preferences, and the challenges and opportunities that the digital shift presents. Dive into our detailed overview of this report and discover what the future holds for the European media industry.
In an era where digital transformation is reshaping industries, understanding the media landscape is crucial. The European Commission's report on the European Media Industry Outlook provides valuable insights into this evolving sector. This report, announced as part of the Commission’s Media and Audiovisual Action Plan in December 2020, delves into three key media sectors, offering a comprehensive overview of market trends, technology advancements, and emerging production and consumption patterns at the EU level.
The report is based on a variety of sources, including consumer surveys, questionnaires, structured stakeholders input, and secondary sources. It aims to shed light on the competitiveness of the EU industry and the opportunities and challenges it faces in the digital age. As the digital shift advances and audiences move online, the media industry is adapting to meet new skills needs, seize business opportunities, and remain relevant. This involves embracing new formats, user-centric strategies, and innovative technologies.
You can find the full report in PDF (3.5Mb) here: https://ec.europa.eu/newsroom/dae/redirection/document/95881
Official article: https://digital-strategy.ec.europa.eu/en/library/european-media-industry-outlook
Understanding the European Media Industry Outlook
The European Media Industry Outlook report provides a comprehensive analysis of the media industry, focusing on three key sectors: audiovisual, video games, and news media. Each of these sectors is examined in detail, with a focus on market trends, consumer preferences, business models, financing, intellectual property, and monetization challenges.
The audiovisual sector is undergoing significant changes due to the digital shift. The report highlights that Video on Demand (VoD) is growing rapidly, while broadcasting remains resilient. However, the cinema sector is slow to recover, and physical video is vanishing. The report also reveals imbalances in the retention and ownership of intellectual property rights, particularly between European producers and broadcasters/streamers. Producers report a tendency to include in contracts the transfer of all intellectual property rights in European works in exchange for an upfront payment, a practice referred to as 'buyout practices'.
Video Games and Immersive Reality
The video games sector has emerged as one of the main media sectors, with revenues continuously growing, primarily driven by mobile games. The report also highlights that gaming technologies are increasingly being used in other industrial sectors. Games are becoming platforms to develop other activities, such as social interactions, concerts, and shopping, opening new grounds to exploit intellectual property rights. The use and deployment of new technologies call for new skills, for example in virtual production.
News Media Sector
The news media sector is facing a shift in media use as a result of the development of digital platforms, new devices, and new consumer preferences. This shift has exposed several news media segments to a problem of monetization online. Publishers expect the share of their revenues generated from the online use of their publications to increase, thanks to the licensing agreements concluded with tech platforms. Protecting the intellectual property assets of content creators, particularly against online piracy, is crucial to ensure the sustainability of the media industry.
The future competitiveness of the media industry will depend on its capacity to invest and innovate, manage and monetize their content and data. The early uptake of emerging technologies and innovative tools may appear as a solution to embrace automated processes and data analytics supporting original news content.
Findings related to the audiovisual sector
Chapter 1: The Digital Shift: Transforming the Audiovisual Sector
The audiovisual industry, encompassing cinema, television, and video-on-demand services, is a key economic sector and a vector of Europe’s diversity and cultural autonomy. This industry has been undergoing rapid and profound changes, directly influenced by the digital transition and the COVID-19 pandemic. The emergence of distribution channels such as Video on Demand (VoD) in the 2010s has significantly impacted consumption patterns and market dynamics. As a result, the way content is financed, distributed, and consumed has undergone a significant transformation over the past few years.
The Rise of Video on Demand (VoD)
The VoD sector has been growing at a rapid pace, driving the overall growth of the audiovisual sector. The VoD market has seen a 35% growth, while the overall audiovisual sector has grown by 3%. This growth is primarily due to the arrival of streaming platforms, which have led to an increase in production in the EU. The top three SVoD providers, Netflix, Amazon Prime, and Disney+, have reached 71% of the 177 million subscriptions in Europe.
Despite the rapid growth of VoD, broadcasting remains resilient, accounting for 83.7% of revenues in the audiovisual sector. This resilience is partly due to sustained public support for public service broadcasting and independent film production. In 2020, the total public funding of Public Service Media (PSM) in the EU amounted to EUR 26.2 billion, representing 80% of their total revenues.
The Slow Recovery of Cinema
The cinema sector has been hit hardest by the COVID-19 pandemic, with physical video (e.g., DVDs) vanishing. However, the sector is slowly recovering from the pandemic's impact. After a 5.5% dip from 2019 to 2020, revenues picked up by over 8% the following year, reaching EUR 91.4 billion in 2021.
The digital shift in the audiovisual sector has led to significant changes in the way content is financed, distributed, and consumed. The rise of VoD and the resilience of broadcasting have reshaped the sector, while the cinema sector is slowly recovering from the impact of the COVID-19 pandemic. As the sector continues to adapt to these changes, it is expected to see further growth and transformation in the coming years.
Chapter 2: Intellectual Property Rights in the Audiovisual Sector: Challenges and Opportunities
Intellectual property rights have become a strategic asset for media companies in the face of fierce international competition. The ability of the European media industry, including content creators, to retain, acquire, and exploit intellectual property rights is fundamental to increasing revenues, investing, and maintaining independence. However, the research reveals imbalances in the retention and ownership of intellectual property rights, particularly between European producers and broadcasters/streamers.
The Imbalance of Rights
The European audiovisual industry is characterized by a high number of small, independent audiovisual companies reflecting Europe’s cultural diversity. However, revenues are highly concentrated. The largest 100 AV companies have been growing twice as much as the overall audiovisual market, reaching 17% growth between 2015 and 2021. US companies accounted for 30% of revenues by the end of 2021, their share rising in recent years due to the SVoD.
Producers reported increasing business with streamers (for 74% of them) and expect the importance of exploitation of intellectual property linked to streaming to grow in the coming years. They shared that the most valuable type of intellectual property was primary exploitation on TV and streaming rights in national markets.
The Issue of Buyout Practices
The research provided evidence of full buy-out practices, where all intellectual property rights in European works are transferred in exchange for an upfront payment. This practice appears to be significant for relatively bigger producers with a larger volume of productions. Producers also indicated that broadcasters kept all the international property rights in 11-35% of contracts, and that streamers kept all the intellectual property on average in 38-62% of contracts. They also perceived an increasing tendency of the latter to demand full ownership, and that non-EU streamers and broadcasters would be significantly more likely to keep the intellectual property compared to EU players.
The intellectual property rights in the audiovisual sector present both challenges and opportunities. While the ability to retain, acquire, and exploit these rights is crucial for the growth and independence of the European media industry, the current imbalances and practices such as buyouts pose significant challenges. Addressing these issues will be key to ensuring the sustainability and competitiveness of the European audiovisual sector.
Chapter 3: The Future of the Audiovisual Sector: Innovation, Investment, and Monetization
The future of the audiovisual sector is shaped by the rapid adoption and usage of new technologies, which are key to adapting and opening new markets. Growth in media has been driven by non-EU players, often global tech companies, which have established strategic positions in media markets. These companies are investing in virtual worlds and building on their research and innovation efforts. Media companies are looking to take advantage of recent and disruptive technological advances across the value chain - from AI to virtual productions and extended reality.
The Need for Investment and Innovation
The market is dynamic and converging in the context of the digital shift. European broadcasters, for example, have launched on-demand services, while streaming services increasingly offer new formats originally made for TV, and launch ad-supported services. Convergence also takes place between consumers and creators, with growing monetization of user-generated content in video games platforms. Linked to this, new skill needs are emerging based on a new combination of digital, tech, and creative skills. As a result, new market niches may emerge.
However, media companies in Europe continue to encounter difficulties to invest. Stagnating revenues and limited capacity to access private financing hamper EU media investments in content, technology, or skills. This impacts the ability to address the above trends and to compete with global players.
Monetizing Content and Data
Data remains a key resource in new distribution and business models. Due to their scale, large online players can collect and analyze great amounts of data on users. This allows them to optimize their business models, better monetize content, and invest in new markets. On the other hand, SMEs are unable to harness data the same way.
The Role of Emerging Technologies
Generative AI, in particular, appears as a technology that the industry is approaching as a tool to enhance their processes (e.g., creative ones). The early uptake of emerging technologies and innovative tools, today used by bigger companies, may appear as a solution to embrace automated processes and data analytics supporting original content also for smaller organizations.
The future competitiveness of the audiovisual sector will depend on its capacity to invest and innovate, as well as to manage and monetize their content and data. Yet, reductions in revenues, the number of companies, investment capacities, employment, and other factors imply that the sustainability of some parts of the sector might be at stake. As the sector navigates these challenges, it will be crucial to leverage emerging technologies and innovative strategies to ensure its continued growth and success.
The European Media Industry Outlook report provides a comprehensive analysis of the current state and future trends of the media industry in Europe. It highlights the rapid growth of the audiovisual and video games sectors, the shift in media use in the news media sector, and the challenges and opportunities these changes present.
The report underscores the importance of innovation, investment, and the effective management and monetization of content and data in ensuring the future competitiveness of the media industry. It also highlights the potential of emerging technologies and innovative tools in supporting original content creation and enhancing user engagement.
As the media industry continues to evolve, it is crucial for all stakeholders, including production companies, broadcasters, streamers, and policymakers, to stay informed about these trends and adapt their strategies accordingly. By doing so, they can seize the opportunities presented by the digital shift, meet the changing needs and preferences of consumers, and contribute to the growth and sustainability of the media industry in Europe.
The future of the media industry is undoubtedly exciting, with numerous opportunities for growth and innovation. As we navigate this dynamic landscape, let's continue to celebrate the diversity and creativity of European media and look forward to a future filled with compelling stories, immersive experiences, and groundbreaking innovations.