RTL’s ‘Total Video’ Strategy Pays Off as Digital Revenue Grows by 23 Percent

German broadcaster RTL Group released its financial results for 2017 today, showing digital revenue growing 23.3 percent to €826 million. This helped the company maintain overall revenue growth of 2.2 percent, reaching €6,373 million, despite facing challenging conditions in its TV advertising markets. RTL says the results are a vindication of its ‘total video’ strategy which has seen it diversify its business into areas like TV production and ad tech, and the company plans to accelerate this strategy going forward.

TV advertising is still RTL’s primary source of income, but it now accounts for less than half of the group’s total revenue. Content makes up 20 percent of revenue, digital contributes 13 percent, and five percent comes from its distribution platforms (i.e subscription fees and retransmission fees).

These non-advertising income sources have grown quickly too, with digital income growing 23.3 percent compared to 2016, and platform revenue growing 13.5 percent year-on-year. RTL says this diversification away from advertising has helped it maintain overall growth while operating in what it calls “challenging TV advertising markets across the Group’s footprint”.

In Germany however, RTL’s TV advertising revenue actually increased, which it says was against the national trend as it estimates the German TV advertising market to have been down in 2017.

RTL’s CEO Bert Habets says the company will continue to expand its ‘total video’ strategy to help drive further growth. “While we have a highly profitable, cash-generating core business in TV broadcasting, growth in our ‘total video’ industry mainly comes from non-linear or streaming services. To tap into this significant growth potential, we will increase investment in our on-demand services in the countries where we have strong families of channels,” he said.

Habets says RTL will launch new video on-demand (VOD) services in Belgium, Hungary and Croatia over the next few months, which will all follow the model of its existing 6play platform in France.

The company will also continue to invest more in high-end drama production through its FremantleMedia production company, and to build and develop its multi-platform networks (MPNs) and ad tech businesses. RTL has already been active on these front this year, having bought MPN United Screens merged its ad tech holdings SpotX and Smartclip back in January.

The Group expects continued steady growth over 2018, with total revenue growth predicted to fall between 2.5 and 5 percent, and digital revenue growth projected to be over ten percent.

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