As a seasoned gamer and a passionate consumer of various forms of entertainment, I find the strategies outlined by Canal+ CEO Maxime Saada to be nothing short of ingenious. His vision for partnership rather than competition with streaming giants like Netflix is a breath of fresh air in today’s content-driven world.
As a passionate gamer, I’m excited about the strategic plans unveiled by Canal+, a division of Vivendi, the French media and telecom powerhouse. In preparation for their forthcoming separation as a standalone company listed in London, they’ve laid out their core values and strategies.
In a gathering at the firm’s capital markets day in London, streamed live, Saada stated, “Competitors I’ve witnessed rise and fall all share one characteristic: excessive spending. My opinion is that survival hinges on the moment you write the check – whether it’s for content, technology, or mergers and acquisitions. In our industry, overspending is often what leads to a company’s demise. At Canal+, we don’t endorse what others might call ‘expensive strategies without a clear benefit to the profit and loss statements.’
On Monday, the CEO underscored eight fundamental principles, and among them was the point that pay-TV is a thriving and expanding market. Another key point he made was that Canal+ has intentionally expanded its reach to 52 countries across three continents. Saada stressed that while these markets may have various growth drivers, they all share a common trait: each one is experiencing growth.
A significant emphasis lies in our varied content offerings. The CEO elaborated, “Our multi-faceted value proposition is distinctive, and it’s a successful strategy for two primary reasons.” Firstly, providing cinema, series, sports documentaries, children’s programs, blending local and international content, and integrating third-party and self-produced content caters to everyone in the household, boosting satisfaction, average revenue per user (ARPU), and loyalty. Secondly, this diverse content strategy helps us lessen our reliance on any specific type of content.” He used the instances of the COVID pandemic, where sports were absent from TV, and the dual Hollywood strikes, when the company was lacking U.S. originals as illustrations.
Canal+ places great importance on agility as one of its fundamental principles. Even with operations spanning over 50 countries and a subscriber base of 27 million, swift decision-making is crucial, according to Saada. “Speed is vital, and the capacity to adapt when necessary is equally important,” he stated. A demonstration of this agility can be seen in their response to the rise of subscription video on-demand platforms. “Instead of viewing them as a threat, we saw an opportunity and acted upon it,” said the CEO of Canal+. “Much like in judo, we’ve leveraged the power of others to our advantage in our multi-platform strategy.
One key method employed by the Canal+ team is emphasizing the necessity of controlling distribution, as they believe it’s vital. Similarly, they value the idea that large-scale operations and a locally tailored approach work hand in hand.
In the gaming world, I’d rephrase it as: “As a gamer, I understand that there are two key strategies left. Firstly, just like Canal+, I recognize that my role goes beyond just making profits; I have a responsibility towards the environment and society at large. Secondly, much like how I adore the character Paddington, they believe in something with equal passion.
Next, the well-known Peruvian bear graced the screen, sharing additional details about Canal+ and announcing that they were now in his native land where their upcoming third movie, titled “Paddington in Peru“, will take place.
Saada on Monday also mentioned Netflix several times. Over a decade ago, when he ran marketing, pay-TV penetration in France was stable at around 30 percent. “The reality was, we hit a wall,” he recalled. “We simply did not prove our ability to grow the market. Our growth potential was totally constrained. Then, Netflix arrived with a new value proposition, low price, no commitment, and an impressive user experience, and was later joined by Amazon, Disney+, and others. As a result, these platforms convinced an entirely new spectrum of the population to do something they had never done before – pay for content.”
And he emphasized: “Pay-TV penetration in France jumped from 35 to 71 percent over the last eight years. SVOD platforms literally doubled the size of the market.”
In 2016, I visited Los Gatos to converse with Reed Hastings, the head of Netflix. During a recent investors’ gathering, Saada humorously stated, “Indeed, I went to Los Gatos.” This is referring to the fact that third-party streaming platforms like Netflix are now accessible on Canal+.
The head of Canal+ recollected that he had asserted, “Though we might appear as rivals, in truth, we were allies, promoting the concept of people paying for content.” As a consequence, Canal+ became one of the pioneering service providers and undoubtedly the initial established firm to broadcast Netflix on its platform. This was the beginning of numerous deals we struck with streaming platforms. However, these aren’t mere contractual arrangements. They are genuine collaborations.
With streaming agreements along with free-to-air networks, basic cable channels, and premium in-house options, Canal+ stands out from the competition. “This unique stance cannot be mirrored by other rivals,” said Saada. “We do not offer Apple TV+ or Max or Paramount+ on Netflix. This is a defining aspect of our service.
Under the guidance of Yannick Bolloré (chairman) and Arnaud de Puyfontaine (CEO), Vivendi’s board has endorsed a four-way division of the company. This proposed split will be put to shareholders for a vote on December 9th. If passed, it would result in the isolation of Canal+, marketing giant Havas, and publishing company Louis Hachette Group from Vivendi. This separation involves Vivendi’s 66.53% stake in Lagardère and full control over Prisma Media. Bolloré will assume the role of chairman at Canal+, while Saada continues as CEO.
On Monday, Vivendi stated that Canal+ anticipates its 2024 revenue to be roughly comparable to 2023 levels. For 2025, they expect organic growth, but this expansion will be dampened and largely counterbalanced by the expected conclusion of broadcasting for their French free-to-air channel C8, as well as the termination of sub-licensing contracts and burdensome third-party content contracts in France. Looking ahead and keeping the current asset mix constant, Canal+ projects its revenue to increase moderately, as stated by the firm.
Over the intermediate period, Canal+ anticipates that its earnings before interest, taxes, and amortization margin will gradually improve moderately. This improvement is attributed to cost reduction efforts, increased efficiency from operational leverage, and the anticipated profitability of assets recently integrated from Vivendi. Furthermore, the company projects that its operational cash flow in 2025 will revert to a level comparable to 2023. However, there might be a dip in 2024 due to an accumulation of payments from recent content contract renewals and signings, as well as potential one-time tax adjustment payments.
Canal+’s announcement about their proposed acquisition of control over MultiChoice, an African pay-TV leader, comes with a notable condition. If the deal goes through, it could markedly alter the financial landscape of the group within the medium term in Africa and overall. This transformation would bring about a new revenue expansion opportunity while potentially offering substantial cost synergies.
Vivendi’s separation strategy is intended to maximize the growth potential across its various business sectors, acknowledging that the company has faced a substantial conglomerate discount since the distribution and stock market listing of Universal Music Group (UMG) in 2021. Trading for the new shares will commence on December 16th.
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2024-11-18 18:25