It’s not an easy comparison – in many ways.
Netflix is a global technology company, with revenues in 2021 of $29bn and profits of $5bn. RTÉ is the national broadcaster serving a tiny market, with revenues in 2021 of €344m and a net surplus of €2.4m.
Netflix’s remit is to create shareholder value. RTÉ’s remit is outlined in legislation, and its output encompasses TV, radio and web.
Like for like, it ain’t.
However, both are struggling with changing consumer habits in an increasingly complex media landscape.
Netflix has had the video on demand market to itself for years, but now faces serious competition from Disney, Amazon, Apple, HBO, Hulu and more. In Q2 of this year it lost almost 1 million subscribers.
RTÉ’s precarious situation has been well-flagged for a long time. Here’s how the Future of Media Commission put it: “The survival of today’s media organisations, and the emergence of new ones, hinges on their capacity to innovate, adapt to the competitive landscape, and meet the changing needs of audiences.
"Government, regulators and media organisations need to develop a more strategic, collaborative response to investment, digital transformation, business model evolution, skills development and diversity within the workforce and output.”
The Future of Media Commission is spot on. Netflix and co, including the likes of TikTok and YouTube, are well placed to allocate capital in the right strategic areas – whether it’s content production, licensing, engineering, or sales and marketing.
RTÉ, on the other hand, can sometimes seem like an anachronism in the modern media landscape, despite often excellent programming and strong commercial performance.
Let’s look at what Netflix is doing.
In response to post-pandemic commercial challenges, it has two main focuses. The first is cracking down on password sharing. The company estimates about 120 million accounts share login details with other homes. It is testing a solution in South America which would charge for sharing passwords, or block access.
The second focus is around creating a new advertising revenue stream. Some of Netflix’s streaming competitors have already rolled out a cheaper subscription bundle, which includes advertising.
And the idea is being pitched as a win-win for consumers and advertisers.
“Our long-term goal is clear,” said Netflix COO, Greg Peters. “More choice for consumers, and a premium, better-than-linear TV brand experience for advertisers.”
So maybe the challenges aren’t so different for Netflix and RTÉ. Both need to shore up B2C revenues and grow B2B revenues. Can RTÉ raise prices? Block access? Announce new technical partnerships?
Not on a meaningful scale, not like Netflix. RTÉ’s hands are tied by the Government, which won’t even reform the license fee.
In Europe, 31 countries have exchequer-funded public media. Just four (Ireland, Albania, Poland, Bosnia–Herzegovina) have a license fee.
Despite a strong recommendation from the Future of Media Commission to go for an exchequer-funded model, the Government is sticking with the license fee – albeit with a promise to crackdown on evasion.
RTÉ could take a leaf out of Netflix’s playbook – if given the chance. Imagine an updated funding model based on exchequer funding (as recommended by the Future of Media Commission), where households provide first-party data that RTÉ uses to increase advertising margins.
Not only would this offer a stable funding model, it would also allow RTÉ to rebalance the relationship between media and Big Tech (another recommendation of the Future of Media Commission), at least in relation to advertising in the Irish market.
Sure, there’d be some additional GDPR headaches in Montrose. With big data comes big headaches.
The current radio ad about TV licenses proclaims “When you buy a TV license, you’re buying much more than a TV license.” It’s lazy, non-compelling copywriting. The same laziness applies to the Government’s thinking on the license fee and its engagement with the innovation required to meet the changing needs of audiences and advertisers.
Netflix’s strategic aim used to be to become HBO faster than HBO could become Netflix.
The Government needs to understand that RTÉ needs to be able to become a little more like Netflix, while protecting its public service remit.