The application of measures concerning the promotion of distribution and production of European works in audiovisual media services, including television

“The application of measures concerning the promotion of distribution and production of European works in audiovisual media services,

including television programmes and non-linear services”

Public Presentation File for the Final Study Report for The European Commission (DG Information Society and Media)

Study completed by: Attentional Limited, Oliver & Ohlbaum Associates, Rambøll Management and Headway International

20th March 2009

Introduction

Overall goal• Provide the European Commission with the elements

required to continue monitoring Articles 4 and 5, and with the elements required to commence monitoring of Article 3i

Key objectives

• Description and analysis of the implementing measures taken by Member States pursuant to Articles 3i, 4 and 5 of the Directive as of the end 2007

• Description and analysis of the production industry and market for audiovisual works

• Independent evaluation of the application of Articles 4 and 5 to specific linear broadcast channels

• Review of non-linear audiovisual services in Europe in 2007• Suggestions for operational procedures and performance indicators for

monitoring the application of Article 3i to non-linear services

“Part 1: Modes of Implementation”

1.2

Objectives and Approach

• Analysis of Member State rules at the beginning of 2008 regarding:

– Broadcasting (linear services)• How Articles 4 and 5 are implemented • Stricter measures• Implementation modes

– On-demand (non-linear services)• Pre-existing national legislation• Implementation of Article 3i

• Data collected via questionnaires to Member State regulatory authorities in early 2008

1.3

Broadcasting (Linear Services) How Articles 4 and 5 Are Implemented

• Significant variations in how Member States apply Articles 4 and 5 to broadcasters:

– Some Member States set fixed targets that must always be met, while others set targets to be met ”where practicable”, (exceptionally) lower targets for new broadcasters, etc.

– Some Member States rely solely on broadcasters’ transmission returns, while others take steps to verify data

– Some Member States authorities cannot really sanction non-compliance, while others may use warnings and fines, or even revoke the broadcasting licence

1.4

Broadcasting (Linear Services) How Articles 4 and 5 Are Implemented

• Particularly large differences between Member States regarding independent productions:

– Definition of ”independent producer”

• In some Member States, the term is not defined in the legislation at all

• In other Member States, specific legal definitions have been adopted:

– Criteria used in definitions: ownership, programme supply, secondary rights and autonomy

– Target for independent productions

• In most Member States, set as a proportion of transmission time

• In a few Member States, set as a proportion of programming budget, or even of total turnover

1.5

Broadcasting (Linear Services) Stricter Measures

• Nearly all Member States apply stricter measures to broadcasters, but the requirements differ greatly:

– A few Member States require higher proportions of European works/independent productions than the Directive(particularly from public service broadcasters)

– Most Member States have some specific requirements on content type, language and/or regional issues

– About half the Member States require a proportion of programming to be originally produced in a specific language

– Some Member States require contributions to indigenous film production, either directly or as contributions/taxes to central film funds.

1.6

Broadcasting (Linear Services) Scoring - Implementation Modes

• Each Member State have been assigned scores for

– How Articles 4 and 5 are implemented

– Stricter measures

• The higher the score, the stricter the regulatory regime

• Member States have then been grouped in four “implementation modes”:

– Flexible: low score for how Articles 4 and 5 are implemented

– Prescriptive: high score for how Articles 4 and 5 are implemented

– High: high score for stricter measures

– Low: low score for stricter measures

1.7

Broadcasting (Linear Services) Member State Implementation Modes

Belgium Estonia

Greece Norway

Hungary Slovakia

Latvia Slovenia

Austria Iceland

Cyprus Ireland

Czech Rep. Lithuania

Denmark Luxembourg

Germany Malta

Low

Bulgaria Romania

Italy Poland

Finland Portugal

France United Kingdom

Netherlands

Spain

Sweden

High

Stricter req

uirem

ents

PrescriptiveFlexible

How Articles 4 and 5 are implemented

1.8

On-demand (Non-Linear Services) Pre-Existing National Legislation

• Prior to implementing Article 3i, only very few Member States have adopted legislation that is in line with Article 3i :

• Belgium (French Community)– Technology-neutral legislation

– Non-linear services are subject to the same requirements as linear services

• France– Taxes on on-demand service providers, with the proceeds

going to (cinema) film production

– A voluntary cinema-on-demand agreement with investment quotas existed for 2006, but it expired without being renewed

1.9

On-demand (Non-Linear Services) Implementation of Article 3i

• Deadline for implementation of the new Directive: 19 December 2009

• The majority of Member States expect implementation to take place in 2009

• Some Member States have held public consultations and working groups in 2008

1.10

“Part 2: The European TV Supply Chain and Audiovisual Content Creation”

2.1

Objectives of Our Research

• To develop an informed analysis of the market for audiovisual works in the EU and EEA

• Explore the structure of the broadcasting industry on a country by country basis

• Quantify sources of turnover: advertising, consumer payments (pay TV), licence fees and ancillary revenues

• Understand in detail the role of on-demand services and their operators

• Explore developments in independent production in each Member State

2.2

Methodology

Flow of Funds Model

-Programming spend

-Pay TV ARPUs-Programming funds

-Regulation -Compliance-Pay TV Penetration

-Advertising -Pay TV -Licence Fee-Ancillary revenues

TOTAL EUROPEAN BROADCASTING VALUE CHAIN

MICRO DATA MACRO DATAMEMBER STATE

Bottom Up

Top down

x30 Member States

2.3

Total Industry Income by Segment

15.2 17.2 17.8

22.6

25.828.3

12.7

18.7

19.86.3

5.4

6.50.4

0.4

4.3

4.9

5.3

10

20

30

40

50

60

70

80

90

2002 E17 2006 E17 2006 E30

€ BN

LICENCE FEES

ADVERTISING

PAY TV

CABLE RELAY

VOD

OTHER BROADCAST REVENUE

61.2

72.4

78.1

• Pay TV continues to be the main driver of growth in the overall market

• Advertising has

grown at just over 3% for E17, faster for new Member States

• Decline in revenue generated from cable relay as customers migrate to digital

2.4SOURCE: OLIVER & OHLBAUM ANALYSIS

TV Revenue by Member State

The five largest states represent over 71% of total

TV revenue


REVENUE IS THE AGGREGATION OF LICENCE FEE PAYMENTS, CONSUMER PAYMENTS, ADVERTISING REVENUE AND OTHER ANCILLARY REVENUES

Differences in TV Revenue Structure by Member State

LICENCE FEES

ADVERTISING

PAY TV

CABLE RELAY

VOD

OTHER BROADCAST REVENUE

• Market structure differs significantly by Member State

• Over 40% revenue from pay TV in France and Ireland

• Almost 60% of revenue from advertising in Lithuania and Greece

• Licence fee in Germany accounts for 41% while in Poland accounts for just 5%


TV Household by Reception Method in EU

FREE TV = 138M

67

3142

3131

39

1723

29

28

28

19 29

29

16

25

25

5

5

5

2

2

50

100

150

200

250

E17 '02 E17 '07 E30 '07

TV HHS (M)

3 TO 7 CHANNELS

10 TO 40 CHANNELS

50 TO 200 CHANNELS

20 TO 40 CHANNELS

100 TO 700 CHANNELS

60 TO 200 CHANNELS

20 TO 60 CHANNELS

1 CHANNEL

PAY TV = 62M156

174IPTV

PAY TERRESTRIAL

PAY SATELLITE

PAY CABLE

FREE SATELLITE

FREE DTT

CABLE RELAY

ANALOGUE TERRESTRIAL

200

• Significant fall in the number of analogue terrestrial homes

• Free DTT now reaching over 28m homes

• Number of premium subscription TV (pay cable, satellite and IPTV) homes has increased

• IPTV starting to gain traction in certain markets (France and Spain)


Differences in TV Reception Method by Member State


Digital Switchover (DSO) dates by member state

LUXEMBOURG

NETHERLANDS

AUSTRIA

FINLAND

SWEDEN

GERMANY

BELGIUM

DENMARK

NORWAY

SPAIN

CZECH REPUBLIC

GREECE

SLOVENIA

MALTA

UK

ITALY

ROMANIA

PORTUGAL

FRANCE

HUNGARY

BULGARIA

SLOVAKIA

LITHUANIA

IRELAND

LATVIA

ESTONIA

CYPRUS

POLAND

LIECHTENSTEIN

ICELAND

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

1 SEPTEMBER 2006

11 DECEMBER 2006

1 SEPTEMBER 2007

5 MARCH 2007

15 OCTOBER 2007

31 DECEMBER 2008

1 DECEMBER 2008

1 SEPTEMBER 2009

3 APRIL 2010

1 SEPTEMBER 2010

1 DECEMBER 2011

1 DECEMBER 20101 DECEMBER 2009

1 DECEMBER 2012

1 DECEMBER 2014

-

NO DIGITAL SERVICES


The Comparable Size of the Estimated Video-on-Demand Market

0.4

78.1

10

20

30

40

50

60

70

80

90

TOTAL E30 TV MARKET TOTAL EST. VOD MARKET

€BN

• Still a nascent market

• By end of 2006, generating little revenue

• Majority of offerings are catch-up services with no access charge

• Commercial services still struggling to monetise services other than pay-per-view


TV Content Creation and the Independent Sector

IN HOUSE

NEWS

EXTERNAL

FILM AND TV IMPORTS

SPORTS RIGHTS

16.6

18.4

• 47% on rights acquisitions• 17% on sports• 30% on film and

TV imports

• 53% on commissions • 25% in house• ~7% on news

• €6.9bn external production market*

*Refers to independent production and broadcaster affiliate production 2.11SOURCE: OLIVER & OHLBAUM ANALYSIS

The Overall European TV Value Chain


PAY TV REVENUES

LICENCE FEE

ADVERTISING

OTHER REVENUES

SPORTS RIGHTS

FILM AND TV IMPORTS

EXTERNAL

NEWS

IN HOUSE

The Overall European TV Value Chain – the key figures explained


• Of the €78.1 billion in total TV revenue:• Delivery platforms retain €13.6 billion• The remainder of €64.5 billion flowed to broadcasters of which:

• €5.0 billion is spent on transmission • €35.0 billion is invested in programming• And the remaining €24.5 billion covers all profits,

administration and management costs

• Of the €35.0 billion programme spend • €16.6 billion was spent on acquiring rights of various kinds

• €6.2 billion on sports rights • €10.4 billion on film and TV acquisitions

• The remaining €18.4 billion was invested in original programming • €8.9 billion on in house production • €2.6 billion on the production of news programming • And €6.9 billion invested in the external production market

“Part 3: Views from the Industry: Broadcasters and Producers”

3.1

Objectives of the Questionnaires

Overall goal• Understand the key implications of Articles 4 and 5 from

the TVWF Directive

Key objectives• Identify the determinants of programme spending decisions

• Understand the dynamics of co-productions and trade in programming

• Develop a more detailed understanding of the economic performance of the audiovisual sector and content producers (inc. terms of trade)

3.2

Methodology

Questionnaire Design

ORGANISATIONINTERVIEWS CONDUCTED /

QUESTIONNAIRES RETURNED

PUBLICLY FUNDED BROADCASTER 12

COMMERCIAL BROADCASTER 23

INDEPENDENT PRODUCER 6

REGULATOR 13

TRADE BODY 2

PURE VoD PLAYER 15

TOTAL 71

230 Questionnaires

distributed

71 Completed Responses

3.3

Interview Sample – State Representation in the Survey

STATE REPRESENTATION IN SURVEY

29

83%88%

17%12%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

NUMBER OF STATES* TOTAL REVENUE

PERCENTAGE

PROPORTION REPRESENTED

*LIECHTENSTEIN EXCLUDED

€78.1m

• 83% (24 states) of all states included in the study have been represented in the findings

• These 24 states represent over 88% of total European TV revenue


Spend on Genre and Channel Programme Spend Allocation

58

18

32

25

31

29

16

51

39

10 20 30 40 50 60 70 80 90 100

PUBLIC BROADCASTE

RS

COMMERCIAL BROADCASTE

RS

ALL CHANNELS

PERCENTAGE OF PROGRAMMING SPEND (EXC. NEWS, SPORT & GAMES)

IN-HOUSEEXTERNAL COMMISSION ACQUIRED

GENRE PROPORTION OF TOTAL SPEND

FICTION 32%

ENTERTAINMENT 16%

NEWS 13%

SPORT 10%

CINEMA FILM 8%

FACTUAL MAGAZINES 8%

DOCUMENTARIES 8%

GAMES 4%

2007 SPEND ON PROGRAMMES BY GENRE


Commissioning New Programmes

83

52

45

38

36

26

17

17

9

17

20

10

8

4

40

38

42

53

66

79

100

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

NEWS

FACTUAL MAGAZINE

SPORT

GAMES

ENTERTAINMENT

FICTION

DOCUMENTARIES

CINEMA FILM

PERCENTAGE OF TOTAL COMMISSIONING SPEND

IN-HOUSE

EXTERNAL NON-INDEPENDENT PRODUCER

INDEPENDENT PRODUCER

• Majority of news programming produced in house

• Cinema film and documentaries tend to be produced externally

• In news, sport and games over 15% of programming is made by other broadcasters


Programme Acquisition Decisions – Costs, Recency and Sourcing

98

97

97

96

96

91

90

84

69

2

3

3

4

4

9

10

16

31

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

ENTERTAINMENT

SPORT

FACTUAL MAGAZINES

GAMES

NEWS

DOCUMENTARIES

AVERAGE

FICTION

CINEMA FILM

PROPORTION OF TOTAL ACQUISTION SPEND

LESS THAN 5 YRS MORE THAN 5 YRS

• Fiction, film and documentaries found to be the only genres where proportion of acquisition spend > 5%

• Relative to commissioning costs, the acquisition of sport and fiction was reported be high

• 56% of all acquisitions are from the US


Financing New Programmes

DOCUMENTARY

ENTERTAINMENT

FACTUAL MAGAZINE

87

89

93

94

97

97

99

6

2

3

5

0

2

0

1

2

2

0

0

0

0

0

0

0

2

3

7

1

1

1

1

1

3

0

0

0

80% 82% 84% 86% 88% 90% 92% 94% 96% 98% 100%

FICTION

GAMES

SPORT

NEWS

PROPORTION OF TOTAL PROGRAMME FUNDING

PRIMARY BROADCASTER

CO-PRODUCTION

SECONDARY BROADCASTER*

R

DISTRIBUTOR FOR NON-DOMESTIC

RIGHTS

ADVANCES AGAINST MERCHANDISING

PUBLIC FUNDING BODY

PRIVATE FUNDING LINKED TO TAX BREAKS

NEW MEDIA RIGHTS AND ADVANCES FOR REVENUES

• Majority of funding (>85%) still comes from the primary broadcaster

• Fiction/ Documentaries can have the most complex funding structures

• In sport some funding flows from merchandising

3.8*Secondary broadcaster in this instance refers to any funding from a broadcaster other than the primary broadcaster e.g. Other broadcaster invests in production in exchange for first look in a particular territory

SOURCE: OLIVER & OHLBAUM ANALYSIS

Co-Productions

0

0

17

22

44

44

50

56

10% 20% 30% 40% 50% 60%

SPORT

NEWS

FACTUAL MAGAZINE

GAMES

DOCUMENTARIES

CINEMA FILM

FICTION

ENTERTAINMENT

PERCENTAGE OF RESPONDENTS

GENRES MOST COMMONLY CO-PRODUCED BY EUROPEAN BROADCASTERS • Approximately 86%

of broadcasters co-produce programming

• Entertainment is most commonly co-produced

• News and sport are rarely co-produced

• Domestic and intra-European co-productions are most popular


Terms of trade and the balance of trade in programming


Terms of trade between broadcasters and producers (slide 3.11)• The large majority of broadcasters across Europe expect to retain all domestic rights

for programming they commission• In some of the larger markets, producers have some leverage around ancillary rights• Exploitation in the overseas market tends to be the responsibility of producers - under

22% of broadcasters stated they expect to retain overseas rights for programming. • With the introduction of a number of on-demand services across Europe, all

broadcasters surveyed expect to retain internet and new media rights

Trade in programming – Fully produced programming* (slide 3.12) • European fiction and feature films were assessed by broadcasters as being the most

successful in the international export market while non-European fiction and film was deemed the most attractive in terms of successful non-European imports

• News and factual magazines were seen as inherently local and therefore unlikely to sell well abroad or be imported

Trade in programming – Formats/Ideas (slide 3.13)• Only entertainment and factual entertainment/reality formats were rated above 50%

as potentially exportable formats• Relatively high level of European intra-trade of formats evidenced by high rating of

European reality, entertainment and games formats

* ‘Fully produced’: a programme that is traded with the same cast/crew/script/set e.g. a direct acquisition such as a drama from the US that is aired in a European country without any changes to the original programme.

Terms of Trade Between Broadcastersand Producers

100 100

81 81

24 24 2420

95

10

20

30

40

50

60

70

80

90

100

FIRSTSHOWING –TERRESTRIAL

REPEATSHOWING(S) –TERRESTRIAL

REPEATSHOWINGS –SECONDARY

ANCILLARYRIGHTS

INTERNET AND/OR

OTHER NEW MEDIA RIGHTS

DOMESTIC OVERSEAS

% OF BROADCASTERS

ANCILLARYRIGHTS

REPEATSHOWINGS –SECONDARY

FIRSTSHOWING –TERRESTRIAL

REPEATSHOWING(S) –TERRESTRIAL


Trade in Programming - Fully Produced Programming

83

80

100

89

71

100

62

73

87

42

60

87

40

87

57

55

45

54

17

46

43

20

25

17

20% 40% 60% 80% 100%

SUCCESSFULEXPORTS

SUCCESSFULEURO

IMPORTS

SUCCESSFULNON-EUROIMPORTS


FICTIONFEATURE FILMS

DOCUMENTARIES

ENTERTAINMENTSPORT

GAMESFACTUAL MAGAZINES

NEWS

FICTIONFEATURE FILMSDOCUMENTARIES

ENTERTAINMENTSPORT

GAMESFACTUAL MAGAZINES

NEWS

FICTIONFEATURE FILMS

DOCUMENTARIESENTERTAINMENT

SPORT GAMES

FACTUAL MAGAZINESNEWS


Trade in Programming - Formats/Ideas

62

93

93

67

81

87

45

86

80

42

67

73

42

63

73

20

63

43

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

SUCCESSFULEXPORTS

SUCCESSFULEURO

IMPORTS

SUCESSFULNON-EUROIMPORTS


ENTERTAINMENT

FACTUAL ENTERNAINMENT/REALITY

GAMES

FACTUAL MAGAZINES

FICTION

OTHER

ENTERTAINMENT


GAMES

FACTUAL MAGAZINES

FICTION

OTHER

ENTERTAINMENT


GAMES

FACTUAL MAGAZINES

FICTION

OTHER


“Part 4: EU-wide Analysis of Linear Services”

4.1

• Produce a consistent measure of Articles 4 and 5 across Member States, and apply this to linear broadcast channels in Europe.

• A representative sample of 11 European Member States covering the main types of European markets was selected.

• A sample of 54 channels* representative of the diversity of European broadcasters in terms of audience size, ownership and revenue model was selected.

• A set of data based on two non-consecutive sample weeks selected in the Spring and Fall periods in 2007 was acquired.

• This data was coded for the following criteria: Qualifying works/European works/Independent works/Recent works.

Methodology

4.2

* In some markets, we have included broadcasters that are regulated by authorities from another Member State than the Member State in which it finds its audience. This is due to our methodological choice to favour channel choice in terms of viewing.

• Qualifying programmes’ cover approximately two thirds of all hours either transmitted over television channels or watched by television viewers.

• Qualifying programmes are less prominent on the television schedules of leading channels compared with non-leaders.

• Qualifying programmes are more prominent on the television schedules of subscription channels compared with both publicly funded and privately funded channels.

Proportion of Qualifying Works

4.3

Proportion of European Works

4.4

Ratio of Qualifying

European to Total Qualifying

Hours (%)

Ratio of Qualifying


Viewer Hours (%)

Ratio of Qualifying


Hours (%)

Ratio of Qualifying


Viewer Hours (%)

No 52,5% 59,7% No 49,7% 59,5%

Yes 72,6% 79,6% Yes 76,6% 81,9%

Private 54,1% 66,4% Private 55,0% 69,0%

Public 78,0% 84,5% Public 78,6% 84,9%

Ad 57,5% 66,7% Ad 59,6% 69,4%

Gvt 78,0% 84,5% Gvt 78,6% 84,9%

Subs 32,7% 53,5% Subs 27,2% 50,9%

North 60,9% 77,8% North 63,1% 78,1%

South 64,6% 70,2% South 62,5% 72,5%

New 56,2% 66,1% New 55,4% 63,7%

Old 64,4% 75,5% Old 64,9% 77,6%

Large 66,9% 74,6% Large 63,7% 75,8%

Small 53,0% 67,4% Small 61,1% 72,6%

62,4% 74,0% 62,8% 75,5%

Recency

Size

Result for Member States Sample Result for Member States Sample

GeographyGeography

Grouping of Sample by:


Channel Type

Leader?

Ownership

Revenue Model

Country Type

Country Type

Recency

Size

All Day Peak Time

Channel Type

Leader?

Ownership

Revenue Model

• European works make up an average of 62.4% of the total qualifying transmission hours (62.8% in peak-time).

• Most European broadcasters are significantly above the 50% requirement for European works.

• They also make up an average of 74% of the total viewer hours (75.5 % in peak-time), which indicated the strong appeal of European works to European audiences and the broadcasters’ reliance on European content to build their ratings.

• Channels with the highest proportions of European works are leading, public channels from Southern, old and large European countries*.

• Subscription channels typically feature less European works in their schedule than privately funded or by publicly funded channels.

• As we will see in the next section, European works in practice mean a vast majority of domestic works…

Proportion of European Works

*For this Study, we have classified Member States as followed: 7 Member States are located in the Northern part of Europe (Belgium, Estonia, Germany, Ireland, Poland, Sweden and the United Kingdom); 4 Member States are located in the Southern part of Europe (France, Italy, Romania and Spain).Moreover, as regards the recency criterion: 8 Member States joined the EU before 2004 (Belgium, France, Germany, Italy, Ireland, Spain, Sweden and the United Kingdom) and thus are counted as ‘old’ Member States; 3 Member States have joined the EU after 2004 (Estonia, Poland and Romania) and thus are counted as ‘new’ Member States.

4.5

Proportion of Non-domesticEuropean Works

4.6

Ratio of Non-Domestic Qualifying


Hours (%)



Viewer Hours (%)



Hours (%)



Viewer Hours (%)

No 7,1% 4,4% No 6,8% 3,0%

Yes 9,3% 4,3% Yes 7,1% 2,9%

Private 6,9% 3,6% Private 6,5% 2,7%

Public 10,7% 5,3% Public 7,8% 3,3%

Ad 6,8% 3,6% Ad 6,2% 2,6%

Gvt 10,7% 5,3% Gvt 7,8% 3,3%

Subs 7,0% 5,7% Subs 8,6% 6,2%

North 9,4% 4,1% North 9,3% 3,9%

South 6,5% 4,5% South 3,3% 1,7%

New 11,1% 6,9% New 9,4% 5,6%

Old 7,3% 3,8% Old 6,3% 2,4%

Large 5,1% 4,0% Large 3,7% 2,4%

Small 14,7% 9,1% Small 13,5% 8,3%

8,2% 4,3% 7,0% 2,9%

Geography Geography

Recency Recency

Channel Type

Leader?

Channel Type

Leader?

Ownership Ownership

Country Type

Country Type

Revenue Model

Revenue Model

All Day Peak Time

Size Size




• Non-domestic European works make up 8.2% of the total qualifying transmission hours in 2007, compared to 4.3% of total qualifying viewer hours.

• Public channels offer, on average, higher proportions of non-domestic European qualifying hours than private channels, a gap that is reduced in peak-time

• Subscription channels show, on average, the highest proportion of non-domestic European qualifying hours in peak-time. Interestingly, that strategy is paying off when we look at proportions in viewer hours

• Channels from southern, old and large European countries show average proportions between 5.1% and 7.3% of non-domestic European works, whereas channels from Northern, new and small European countries show proportions between 9.4% and 14.7%.

Proportion of Non-domesticEuropean Works

4.7

Proportion of IndependentEuropean Works

4.8

Ratio of Qualifying

Independent European to

Total Qualifying Hours (%)

Ratio of Qualifying


Total Qualifying Viewer Hours

(%)

Ratio of Qualifying


Total Qualifying Hours (%)

Ratio of Qualifying


Total Qualifying Viewer Hours

(%)No 31,2% 33,7% No 31,4% 36,4%

Yes 30,8% 33,3% Yes 37,8% 37,1%

Private 31,9% 34,2% Private 34,9% 36,9%

Public 29,3% 32,2% Public 33,8% 36,9%

Ad 33,5% 34,7% Ad 38,2% 37,7%

Gvt 29,3% 32,2% Gvt 33,8% 36,9%

Subs 21,2% 11,6% Subs 15,4% 7,9%

North 32,1% 33,2% North 34,6% 33,4%

South 29,4% 33,6% South 34,5% 41,1%

New 26,7% 23,0% New 29,0% 25,1%

Old 32,3% 35,4% Old 36,2% 38,9%

Large 32,4% 33,5% Large 34,2% 36,5%

Small 28,0% 32,6% Small 35,3% 40,8%

31,0% 33,4% 34,6% 36,9%

Geography Geography

Recency Recency

Channel Type

Leader?

Ownership Ownership

Country Type

Country Type

Revenue Model

Revenue Model

All Day Peak Time

Size Size

Grouping of Sample by: Grouping of Sample by:

Channel Type

Leader?


• Independent European works make up 31% of the total qualifying transmission hours in 2007, compared to 33.4% of total qualifying viewer hours. Proportions are higher when looking specifically at peak-time.

• Most European broadcasters are significantly above the 10% requirement for independent works.

• Differences between channel types are rather small across all-day, both when looking at transmission and viewer hours.

• Subscription channels show a somewhat different situation than other channels in our sample: their qualifying schedules are made of 21.2% of independent productions vs. 31% for the entire sample.

• There are important differences when we look specifically at the peak-time situation. Leading, public channels from small and old Member States offer significantly more independent productions than during all-day.

Proportion of IndependentEuropean Works

4.9

Proportion of Recent IndependentEuropean Works

4.10

Ratio of Recent Qualifying


Total Qualifying Independent

European Hours(%)




European Viewer Hours(%)




European Hours(%)




European Viewer Hours(%)

No 85,4% 92,3% No 90,7% 96,6%

Yes 83,4% 91,4% Yes 94,0% 95,0%

Private 86,7% 93,1% Private 91,7% 95,5%

Public 79,6% 89,5% Public 94,1% 95,5%

Ad 86,9% 93,1% Ad 91,7% 95,5%

Gvt 79,6% 89,5% Gvt 94,1% 95,5%

Subs 84,8% 96,1% Subs 91,4% 99,3%

North 87,0% 92,9% North 93,3% 95,5%

South 80,2% 90,4% South 91,1% 95,5%

New 78,5% 83,4% New 86,5% 88,1%

Old 86,0% 92,7% Old 93,8% 96,3%

Large 85,5% 91,9% Large 93,3% 95,8%

Small 82,0% 88,8% Small 90,7% 92,7%

84,4% 91,7% 92,4% 95,5%

Geography Geography

Recency Recency

Channel Type

Leader?

Ownership Ownership

Country Type

Country Type

Revenue Model

Revenue Model

All Day Peak Time

Size Size

Grouping of Sample by: Grouping of Sample by:

Channel Type

Leader?


• Across our sample, recent independent European works make up an average of 84.4% of the total independent European hours in 2007, compared to 91.7% of total independent European viewer hours. Proportions are higher in peak-time.

• Non-leading channels show more recent independent productions than leading channels during all-day but fewer of them in peak-time.

• Private channels show more recent independent productions than public channels during all-day but fewer of them in peak-time.

• Proportions of recent independent productions are higher on channels from Northern, old and large Member States.

Proportion of Recent IndependentEuropean Works

4.11

Comparison with Past Data

4.12


4.13


30,0%

40,0%

50,0%

60,0%

70,0%

80,0%

90,0%

1993 1996 1999 2002 2006/2007

European works

Germany Flemish Community of BelgiumFrance ItalySpain UKFrench Community of Belgium IrelandSweden Total

4.14


4.15

• As a general rule, European broadcasters are significantly above the 50% requirement for European works and the 10% requirement for independent works. Also, a vast majority of independent works are less than five years old.

• Proportions of European works and independent works have increased by an average of +15 percentage points between 1993 and 2007.

• Whereas European channels from our sample offered on average around 50% of European works and 17% of independent works in 1993, they offered an average of 66.5% of European works and of 32.8% of independent works in 2007.

• Public, leading channels, which are offering the highest proportions of European works, have also showed the largest increase for this requirement over the past 15 years.

• Private, leading channels, which are offering the highest proportions of independent works, have also showed the largest increase for this requirement over the past 15 years.

• The situations of individual channels depend heavily on their market environment and cultural dynamics.

Linear Services’ Conclusions

4.16

“Part 5: Views from the Industry – On-demand Services”

5.1

Methodology

• Methodology was designed to identify key non-linear services and analyse their contents. Work is based on questionnaires and interviews with stakeholders and desk research.

• Questionnaires were designed to collect declarations from 50 non-linear services (35 broadcasters and 15 pure VoD players*) covering 22 Member States with regards to the contents of their non-linear services by genre and origin of production, as well as views on the importance of European works in their programming strategies.

• In addition, the offerings of 29 non-linear services were analysed independently in order to provide background information on the concept of “prominence”.

5.2

*Pure VoD player: a provider of a VoD service not linked to a service run by traditional linear broadcasters offering catch-up (and sometimes broadcaster-specific library content), generally operated by cable companies, telecommunications companies, film industries or independent internet players).

Title-Level Data

Type Group Proportion of EU Titles Average for GroupPure VoD Player Independent 10%Pure VoD Player Independent 70%Pure VoD Player Independent 43%Pure VoD Player Independent 99%Pure VoD Player Independent 25%Pure VoD Player Independent 81%

Broadcaster Private 100%Broadcaster Private 100%Broadcaster Private 100%Broadcaster Private 100%Broadcaster Private 100%Broadcaster Private 85%Broadcaster Private 7%Broadcaster Private 92%Broadcaster Public 85%Broadcaster Public 100%Broadcaster Public 100%Broadcaster Public 100%Broadcaster Public 100%Broadcaster Public 14%Broadcaster Public 100%Broadcaster Public 100%Broadcaster Public 100%

54.7%

85.4%

88.8%

• Asked to provide proportion of titles in their catalogue that are European

• Majority of broadcaster’s services are 100% European content

• Greater variety among pure VoD player services

5.3

Hours-Level Data

Type Group Proportion of EU Hours Average for GroupPure VoD Player Independent 10%Pure VoD Player Independent 67%Pure VoD Player Independent 68%Pure VoD Player Independent 80%

Broadcaster Private 100%Broadcaster Private 100%Broadcaster Private 100%Broadcaster Private 100%Broadcaster Private 100%Broadcaster Private 90%Broadcaster Public 85%Broadcaster Public 100%Broadcaster Public 100%Broadcaster Public 100%Broadcaster Public 100%Broadcaster Public 3%Broadcaster Public 100%Broadcaster Public 100%Broadcaster Public 100%

56.2%

98.3%

87.5%

• Asked to provide proportion of total hours of content in catalogue that are European.

• Again high proportion of broadcasters have 100% of their hours being EU content.

5.4

Proportion of Budget Spent

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

National commissions

European, non-national

commissions

Non-European commissions

National acquisitions

European non-National

acquisitions

Non-European acquisitions

Broadcaster Pure VoD Player

5.5

Proportion of Budget Spent

• Pure VoD players allocate 100% of their programme budget to acquisitions, with non-European imports representing almost half of the total, meaning that the pure VoD players from this survey have spent no money at all to commission new programmes.

• By contrast, on-demand services operated by broadcasters say they spend around 75% of their on-demand budgets on national commissions, although this figure is a proportion of an extremely limited budget.

• Reminder: in 2006, on-demand services generated approximately €400m of revenue in the E30, representing just 0.5% of the TV industry.

5.6

Proportion of Budget Spent by Genre

0%

10%

20%

30%

40%

50%

60%

70%

80%

Broadcaster Pure VoD Player

Entertainment Fiction Cinema film

Documentaries Factual magazines News

Sport Games Other

5.7

European Programming

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

70,0%

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European programming ensures compliance with national

obligations (and thus will help me to comply with the AVMS in

the future).

European programming is all-in-all a very good option for my

service.

European programming is easier to acquire because we are

European.

European programming is more affordable and thus enables a

higher profit.

European programming is the best way to attract European

audiences.

European Programming Decisions

Broadcasters Pure VoD Players

5.8

European Programming

• The majority of respondents think that, all-in-all, European programming is a very good option for their services.

• European programmes are seen as expensive.

• When asked whether European programmes are easier to acquire, a majority of respondents rather disagree.

• The idea that European programmes are the best way to attract European consumers is not clearly supported by the

providers we talked to.

• No clear link is established between European programmes and regulatory obligations, reflecting the fact that the debate

over the AVMS directive has in most cases not started yet at Member State level.

5.9

Prominence on On-demand Services

• Prominence is a key concept in addressing how European works are being promoted by on-demand services, and one that cannot necessarily be approached in a similar fashion to the promotion of European content on linear services.

• Active prominence: does the service offer the possibility of searching titles by origin of production and does it provide information on the origin of production together with the description of the titles ?

• Passive prominence: what is the proportion of European works among the titles that are pushed to the consumers when they access the service via its homepage and browse its main sections?

5.10

Prominence - Search by Country of Origin

• On-demand services rarely enable consumers to select titles by origin of production (nor by language). Among the 30 on-demand services included in this analysis, only 2 allow users to select titles by country of origin.

• Most non-linear services we spoke to say “origin” of work is not a criteria that users are willing to have.

5.11

Prominence – Search by Country of Origin

5.12

Prominence – Indication of the Countryof Origin

• Half of the services from our sample indicate the country of origin in the description of the titles, mostly pure VoD players (13), with this happening only very rarely among the services operated by broadcasters (2).

5.13


5.14


5.15


5.16

Prominence – European Works’Promotion

• When considering the origin of the titles that appeared “by default” on the screen, the proportion of titles of European origin that were ‘pushed’ by the 29 on-demand services from our sample was 54%, on average. There were large differences from one service to another though, as this proportion, for our sample, ranged from 0% to 100%.

• Pure VoD players pushed significantly fewer European titles, as their proportion was 39% on average compared with 75% for the services operated by broadcasters.

• Proportions were different depending on genres, with entertainment, animation and news typically comprising more European works than cinema and TV fiction.

• Differences could also be seen within specific genres. For example, in the cinema category, subgenres such as comedies and dramas typically contained more European works than action or horror movies.

5.17

Prominence – European Works’Promotion

• Not all titles were given the same level of importance, with US content being generally given a primary position both in terms of share of the screen and rank of appearance.

• However, some on-demand services were making significant efforts to promote European works.

5.18

Prominence – Share of Screen

5.19


5.20


5.21

Prominence – Share of Screen/Selection

5.22

Prominence

Type Group

Functionalities ("Can we search by country of origin?")

Averages for Group

Is the country of origin indicated

somewhere?Averages for

Group

Evaluation of the proportion of EW

on HomepageAverages for Group

Pure VoD Player Independent Yes Yes 40%Pure VoD Player Independent Yes Yes 80%Pure VoD Player Independent No Yes 25%Pure VoD Player Independent No Yes 25%Pure VoD Player Independent No Yes 50%Pure VoD Player Independent No Yes 10%Pure VoD Player Independent No Yes 75%Pure VoD Player Independent No Yes 80%Pure VoD Player Independent No Yes 0%Pure VoD Player Independent No Yes 60%Pure VoD Player Independent No Yes 20%Pure VoD Player Independent No Yes 45%Pure VoD Player Independent No No 40%Pure VoD Player Independent No No 5%Pure VoD Player Independent No No 45%Pure VoD Player Independent No No 20%

Broadcaster Private No Yes 30%Broadcaster Private No Yes 40%Broadcaster Private No No 80%Broadcaster Private No No 90%Broadcaster Private No No 85%Broadcaster Private No No 70%Broadcaster Private No No 25%Broadcaster Private No No 90%Broadcaster Private No No 50%Broadcaster Private No No 90%

Broadcaster Public No No 100%Broadcaster Public No No 100%Broadcaster Public No No 100%

39%

65%

100%

12.5% YES

0% YES

0% YES

75% YES

20% YES

0% YES

• Search by country-of-origin is used very rarely.

• Pure VoD players often indicate country-of-origin somewhere on their service. Broadcasters do this less (but often have 100% domestic, or European content).

• The concept of prominence is particularly interesting in comparison with figures for share of catalogue, where figures for prominence of European content are often lower than the proportion of the catalogue that is European.

5.23

“Part 6: Possible Monitoring Methods for Article 3i”

6.1

Aims and Methodology

• Evaluate possible performance indicators and operational procedures for monitoring Article 3i of the AVMS Directive.

• Provide a view as to the best procedures and indicators to apply to non-linear services.

• Conclusions derived here are based on:– A detailed survey on non-linear services – Interviews– Desk research– Extensive internal discussion within the consortium.

6.2

Operational Procedures

• Two distinct legal scenarios within which operational procedures can exist:– 1) Self-declarations from service providers– 2) Independent evaluation

• For linear channels:• Self-declarations are supplied by broadcasters, and are then

verified by internal evaluation (as seen in the work on linear programming in this study)

• For non-linear services:• Independent evaluation is not currently appropriate, and

instead we have used self-declarations

6.3

Self-Declarations vs Independent Evaluation

+ Verifies data acquired from self-declarations

+ More directly comparable with independent evaluation of linear programming

+ Data via self-declarations is currently available

+ Precedent: linear broadcasters currently provide self-declarations

+ With legislation, data could be received from all non-linear service providers in a Member State

– No Television Audience Measurement (TAM) style data available

– Alternatives to TAM style data (‘web-harvesting’; direct evaluation of services) are inappropriate

– Data is unverified– Data can be compiled differently

by different providers

Independent evaluation of non-linear services

Self-declarations for non-linear services

6.4

Performance Indicators - Introduction

• After careful review of Article 3i, six possible indicators were proposed in our questionnaires:– Title-level data for entire catalogue– Hour-level data for entire catalogue– Consumption data at titles level– Consumption data at hours level– Prominence of European content– Financial contribution to European content

• We asked respondents to rank these indicators in terms of their appropriateness for measuring adherence to Article 3i

6.5

Quantitative Indicators: Titles and Hours

+ Most popular indicator for most respondents

+ In line with ‘lighter-touch’ approach

+ Easy to include metadata for country-of-origin

– No indication of consumption of content

– Possible for a provider to fill a catalogue with cheap/short EU content

– No indication of consumption of content

Titles in a catalogue that are European works

Hours in a catalogue that are European works

+ Generally popular with respondents

+ Duration data typically already in service provider databases

+ Would solve problem of catalogues being filled with lots of European titles with short durations.

6.6

Quantitative Indicators: Consumption and Financial Data

+ Important component of Article 3i+ Suggest a simple indicator: total

spent on content in a year, and an approximate proportion of this that is European content.

+ Shows what is actually being watched

+ At this time, general figures could be requested of providers, to be included in aggregate form in Member State country reports (as noted in Recital 48)

Financial Contribution

Consumption Data

– Split opinion: producers approve; service providers strongly oppose

– Highly confidential information – Very little money is actually spent – Difficult to ascertain exactly how

much is spent on European content

– Generally unpopular with respondents, except with producers

– Highly commercially sensitive – No TAM-style data – Not done for linear services – Provider cannot dictate what the

viewer watches

6.7

Qualitative Indicators

Prominence

• An important new addition to monitoring European content, with special relevance in the digital world

• A very open-term, with a wide variety of possible indicators • Prescriptive prominence indicators could limit creativity of new

services• At this time we think that co- and self-regulation may be best way

forward (‘guidelines’), but regardless of regulation method indicators will be required.

• We have chosen 3 initial indicators to test:– does the service offer search by country-of-origin?– is information on the origin of production provided by the

service?– what is the approximate proportion of European works among

the titles that are pushed to the consumer when they access the service via its homepage and browse its main sections?

6.8

Chosen Indicators

At this time we think that the following are suitable performance indicators:

• Title-level data for catalogue• Hour-level data for catalogue• Top-level figure on proportion of budget spent on European

programming• Non-prescriptive prominence indicators

Consumption-level data is not considered appropriate at this time. However, if a robust data source (similar to that currently available for linear services) for consumption data is successfully developed in the future, then consumption data for non-linear services should be strongly considered as an indicator.

6.9

Application of Key Indicators

• We have also, where possible applied key indicators to specific services

• This is based on data acquired via self-declarations

• Designed to show what the results could look like when indicators are applied in the future

• Several results at this level have been seen in earlier presentation on non-linear services

• Here we will show some examples of what declarations could look like

6.10

Example Declarations

Country Service Name Service Type Service Business

Model

Proportion Titles that are

European

Austria Example VoD Pure VoD Player Independent of Broadcaster; Advertising

Funded

70%

Country Service Name Service Type Service Business

Model

Proportion Hours that are

European

France Example Catch-Up

Broadcaster owned

Private funded (advertising

revenue)

70%

Country Service Name

Service Type

Service Business Model

Amount Spent on

Programming (€)

Proportion Spent on European

Programming (%)

UK Example PPV VoD

Pure VoD Player

Independent of broadcaster; Subscription

Revenue funded

10,000 60%

Titles

Hours

Financial

Contribution

6.11

General Conclusions - 1

• Transposition of Articles 4 and 5 varies from Member State to Member State based on the strictness of the application of the legislation, and the number of additional requirements.

• On-demand services and increased fragmentation are making the €78.1bn television industry in Europe more complex. But on-demand remains a relatively small component of this revenue, at €400m.

• Broadcaster-run non-linear services typically have near or exactly 100% European content in their catalogues, whereas pure VoD players have a much greater reliance on non-European content.

• We found that with the deadline for implementation of the AVMS Directive set for 19 December 2009 few Member States have implemented Article 3i or measures to its effect, and much discussion on the application of Article 3i is still to take place during 2009. The workshop indicated that there are still a wide variety of opinions on this topic, which require further discussions within Member States.

General Conclusions - 2

• At this time, we believe that self-declarations are the only suitable operational procedure for acquiring data to monitor adherence to Article 3i.

• At this time we believe the performance indicators that will provide the most robust data on European content on non-linear services are: proportion of catalogue titles that are European, proportion of catalogue hours that are European, total amount spent on content and proportion of this spent on European content.

• Consumption data is not appropriate at this time, largely because of its confidential nature and the lack of a robust data source. However, if a robust data source for consumption data is successfully developed in the future, then consumption data for non-linear services should be strongly considered as an indicator.

• ‘Prominence’ has been found to be the most contentious performance indicator we looked at, and was widely discussed at the workshop. The term is loosely defined, meaning that multiple interpretations are possible, and there are concerns from stakeholders that strict rules here could limit creative freedom for new services.

Documents

The application of measures concerning the promotion of distribution and production of European works in audiovisual media services, including television