Broadcasting German-speaking: Interview with Thomas Wagner and Wolfgang Link

Six billion hours of video material are viewed on YouTube every month; additionally there are streaming services such as Netflix, and videos on numerous websites. Is the business model of linear television still viable?

Thomas Wagner: The power of television remains unbroken. It will continue to generate positive results for us for a long time – the best years are still ahead of us. TV has benefited more than any other medium from digitalization: In 2014, we once again played a significant part in ensuring very strong growth of around 3 % of the net TV advertising market. Despite all the prophecies of doom, television grew for the fifth consecutive year. Moreover, all forecasts predict growth of about 2 % net for the TV market over the next three years.

Young viewers are watching less television and more online videos. What makes you so optimistic?

Wolfgang Link: We’re in an industry that is constantly reinventing itself, in terms of both content and technology. Naturally the market is going to change, and there are two ways of dealing with this. I can sit there saying: “Oh God, the market is becoming fragmented. ” Or I can see an incredible number of new opportunities in this and can find ways to exploit them. We’re not a victim of fragmentation – we have actively helped shape it from the beginning.

Thomas Wagner: I’m convinced that there is no alternative to television for our customers. The more the fragmentation of media use advances, the more significant it becomes that TV is the only medium that can build up a high reach in a short time. Non-linear use, particularly mobile use, will increase. But just because I might watch a short program at the bus stop in the morning, doesn’t mean I’ve stopped wanting to watch big shows on television in the evenings.

You are now marketing over 60 digital platforms. Is it worth following the viewer everywhere?

Thomas Wagner: We have freed ourselves from the idea that television only happens on a big screen in the living room. Television is consumed differently via digital distribution channels than it was consumed in the past. If we manage to design content attractively for every type of use, we will be able to generate a high reach across all platforms and to market integrated concepts successfully. Television still remains the strong basis on which all other communication activities are based.

Wolfgang Link: Viewers are also becoming more demanding. In the past, a TV show used to have a website. Now we’re creating whole experience worlds. For “Promi Big Brother”, for example, there was a show in SAT.1, a web show on SAT1.de, a late show on sixx, a pay service on maxdome and a 24-hour live stream. Yes, video use is increasing, but it is mainly driven by TV content and what we do with it on the internet. Our station brands are reaching enormous figures there. Up to 500,000 video views for “Germany’s next Topmodel” and over 120,000 for “Circus HalliGalli” show that the appeal of TV goes well beyond the big screen.

Anyone can become a TV producer on the internet. Is there such a thing as mainstream taste anymore?

Wolfgang Link: It still exists, and we can see this from the success of big shows like “The Voice of Germany”. Naturally, as the variety of programs available increases, so does the challenge to establish blockbuster formats. You also need courage: A few years ago, everyone thought that talent shows were finished. Then “The Voice of Germany” came along and revolutionized the genre. It was the same thing with Joko and Klaas. The two of them came from a niche and now they’re providing major evening entertainment on ProSieben.

You’ve established new stations with sixx, SAT.1 Gold and ProSieben MAXX. Is your station portfolio now complete?

Wolfgang Link: Our target group stations made a significant contribution to our growth in reach and revenues last year. They can complement offers on the major stations and they allow us to try out formats and develop them. Of course, we regularly analyze the market to see what useful additions we could make to our portfolio.

Has multiscreen become a permanent feature of program planning?

Wolfgang Link: We are already looking in the creation process at how a format can be played across 360 degrees, i.e. on all available platforms, and we’re getting together with the marketing team to sound out potential. But our first question is always: Is this exciting entertainment for the mass market in Germany? Only then will we look at which additions are suitable.

Advertising customers would prefer to make their own television anyway, by producing content themselves, for example.

Thomas Wagner: That’s true, but we mustn’t get tired of looking at reality from the right perspective. It won’t be possible to build up brands based on viral content alone. Look at Coca Cola or Red Bull. It wasn’t web campaigns or live events like a space jump that made these brands big. Classic television advertising was what gave Red Bull wings. Storytelling remains TV’s major strength.

What are the biggest challenges in marketing in the multiscreen age?

Thomas Wagner: Competent employees who move with technological progress are of enormous importance. In the last five years, we have developed from a classic marketer of reach into a marketer of concepts. More and more customers are looking for tailor-made communication solutions, and many different types of knowledge about the interplay of different media are necessary to fulfill this requirement. The second major challenge as a multiscreen marketer is to offer an overall reach that the customer can book with one order for all devices.

Until now, your biggest competitor in your core business was the media group RTL Deutschland – now you have to think about Google, Facebook and Co., too. The US groups are courting TV customers and winning budgets at international level.

Thomas Wagner: We would be ill-advised if we did not take the new competitors just as seriously as the long-established ones. But it’s worth having a close look at the figures: On YouTube, for example, 8 % of users account for two thirds of traffic, while on Facebook it’s 9 %.The argument to build up additional net reach here is way off track. Heavy YouTube users actually watch more television than the average of TV viewers.

How do you plan to grow in the next five years, assuming that the situation on the audience and advertising market remains largely stable?

Wolfgang Link: We will grow by taking advantage of the opportunities offered by fragmentation, while creating strong events in linear television at the same time. There is room in Germany for stations aimed at specific target groups as well as for the major station brands. This is one of the key differences between us and the Scandinavian and US markets. Big sports events, shows, blockbusters – you can see all this on free TV in Germany. For this reason, linear television is also under less pressure here.

Thomas Wagner: The battle for market share between different types of media is intensifying. Surely, the new internet players will also take up more and more of the budgets. But we will perform very well, because what ultimately matters to the customer is reach and impact. TV offers both as a reliable partner.<