Traditional broadcasters have had their work cut out defending their businesses from the rising tide of streaming services, but based on a leading media and tech analyst, it’s a battle they most likely won’t win.

“In 5-10 years, I'll be very surprised if our TV and video landscape is not increasingly covered with Apple, Facebook, Google, Netflix and Amazon Prime,” Alex DeGroote told our sister publication Mediatel Newsline at Videoscape Europe this week.

“It’s nice to think that traditional free-to-air would be able to withstand these massive companies, but in reality I think they’ll continue to take share of the market making it a very difficult competitive environment.”

According to DeGroote, owner of DeGroote Consulting, the truth is that traditional broadcaster budgets cannot compare to the large content budgets of the big tech disruptors. Whilst ITV’s content plan for 2021 is lb1 billion, Amazon’s finances are $5 billion and Netflix’s is $8 billion. “ITV is brilliant, but it’s dealing with limited resources,” he said.

Some commercial channels have also been held back through the “burden” of public service requirements, DeGroote said. Commercial public service channels (ITV, Channel 4, Channel 5) are restricted to an average of seven minutes an hour of adverts throughout the day (rising to eight minutes between 6pm and 11pm) and are necessary to broadcast 15-minute local news segments 4 times each day – which, without “onerous”, is now “irrelevant.”

“YouTube doesn’t have to meet public service requirements, nor does Netflix or Amazon Prime. We need to examine the regulatory structure behind these businesses,” he explained.

It’s not every doom and gloom, however, as DeGroote said you may still find avenues open to broadcasters that provide strong opportunities for growth. “Alliances, alliances, alliances, as well as an intelligent approach towards original content production – which ITV has got proficient at within the last few years,” he said. But he added that to achieve success, the sector will require help from the government, regulators, and supportive advertisers.

 

UK investors are extremely risk-averse

Meanwhile, DeGroote argued that UK and European investors are significantly more risk-averse than investors in the US and are less prepared to fund losses for a long period of time – which means they are pulling the plug too soon on investments.

He cited the “savage cut-backs” currently taking place at Buzzfeed, Vox and VICE, in addition to UK-based social video company, Brave Bison, that they said is “pretty unloved” by investors. “When it comes to its operating performance, it’s actually doing very well. They’re growing their revenue – however, it is slightly loss making.”

According to DeGroote, U.S. investors are willing to wait to determine profit returns, because they did during Amazon’s first 10 years. “[UK and European investors] possess a a little more short-term, profit-focused thought process about things. There is a cultural difference between investors in the two markets.”

If innovative new information mill to achieve their full potential, investors will have to note the long-term planning that went into building the FAANG companies rather than demanding cuts too soon, he explained.

Mediatel Newsline provides media and advertising industry news and some from the sharpest opinions in the market. Check it out here.