SME #3: What the sale of French streamer, Salto, says about streaming
Streaming Made Easy #3
Welcome back to Streaming Made Easy. This week, we take a look at Salto, the French Britbox, at the time where its backers put it for sale.
Today at a glance:
Analysis: What the sale of French streamer, Salto, says about streaming
Streamer snapshot: Warner Music gets into FAST
Content recommendation: “Long Way Up”, a docu-series to stream and travel
💡 Analysis:
1. Background
Salto is a Subscription Video on Demand service created by France Télévisions (French Public Broadcaster), TF1 (Private Commercial Broadcaster) and M6 (another Private Commercial Broadcaster).
Back in June 2018, the three companies announced their joint venture and their ambitions for Salto, namely that it would be the local response to global SVOD streamers like Netflix or Prime Video.
Throughout 2019, the joint venture went through the standard competition reviewing process whereby authorities ensured that the soon to be launch service wouldn’t constitute an abuse of dominant position. The petitioners had to commit that Salto wouldn’t become the exclusive home of their Free TV channels and associated services, nor could they program free advertising for the service.
Salto was eventually launched in October 2020 in France. In the meantime, Netflix grew its market penetration from 23% to 38% according to Médiamétrie, Prime Video secured the rights to French Tennis tournament Roland Garros and Disney+ launched in March 2020.
2. Service offering
To explain what Salto is to International executives, I often say it’s the French Britbox but it’s a bit reductive.
Yes Salto offers premium and library content from its shareholders but it also built a solid third-party acquisition pipeline (e.g. they secured the Harry Potter reunion or the Sex and the city special). On top of the on demand component, it had the particularity of offering live feeds from TF1, M6 and France Télévisions which made them closer to a skinny vMVPD (Virtual Multichannel Video Programming Distributor) like a Youtube TV or a Hulu.
In terms of pricing, nothing out of the ordinary:
➡️ 7.99€ / month
➡️ 69.99€ / year
➡️ 1 month trial
➡️ 3 simultaneous users
➡️ Compatible devices: web, iOS, Android, Android TV, Apple TV, LG, Samsung, Boyugues & Free set-top boxes, Fire TV, Amazon channel
➡️ 15K hours of programming
3. Market reception
When they launched, the industry was skeptical to say the least.
Why pay for a service that mostly brings what we can get for free already?
Commendable ambition to compete with global giants but isn’t it too late already?
Now let's talk numbers. Did Salto find a sizeable audience?
According to Médiamétrie (the French BARB or Nielsen), 4% of French SVOD subscribers (aged 6 and above) declared using the service in March 2022. For reference, Netflix stood at 82% (22.2M users incl. 9.9M paid subs). Exact numbers on their subscriber base have ranged from 500K (according to the Centre National de la Cinématographie) to 700K (according to France Télévisions CEO, Delphine Ernotte) or most recently the number 900K floated around.
To me, it’s not bad in two years’ time:
In a very competitive market,
With limited funds (15-45M€ of initial budget),
With an incomplete distribution network,
And at a time where wallets tighten.
Then why are the shareholders pulling out of Salto?
Why is it for sale?
It was simply not good enough. By the end of 2021, they only generated 17M€ of revenues for 180M€ of losses (since launch) and felt short of their 1M subscribers goal (according to Capital).
But most importantly it wasn’t meant to be. Let me explain.
Distribution
Despite a solid distribution network, Salto is missing three important outlets: Orange & SFR, Canal+. In France, SVOD services still need a strong Pay TV/MVPD distribution to maximise reach. I suspect these deals didn’t happen because said distributors may have felt like they pay twice. TF1 & M6 indeed have carriage deals in place with all three and these last few years there has been tensions, threats and legal actions around the renewal of these deals.
Timing
October 2020 is already too late. Netflix entered the French market in 2014 and now have 10M+ subscribers according to Reed Hastings. Better late than never doesn’t cut it in streaming.
Mindset
I have little faith in joint ventures when it gathers companies with very different strategies and positioning. All three companies have a free and advertising based mindset meaning that going premium may be something they look to achieve but it goes against their true DNA. Without realizing it, they will fuel their free to air / ad-based content proposition to the detriment of the subscription-based service.
Why would you subscribe to Salto when you can go into the myTF1, 6play or FTV apps to get pretty much the same content proposition? What you bring on top must be exceptional and exclusive (they had only 1.2% of original content).
To me, it was a distraction for these companies. With the failure of the TF1/M6 merger, the uncertainty around advertising revenues and the end of the license fee for FTV, they all have other fishes to fry so they put the “For sale” sign.
So who could snatch Salto?
5. Potential buyers
Amazon, Molotov TV (Fubo TV) and Canal+ are rumoured as potential interested parties. The value of Salto mostly lies in the TF1, M6 and FTV programming and channels. You buy Salto, you buy the assurance of featuring content from France’s top broadcasters.
Let me do my Madame Irma for a second 🔮 and say that Amazon makes the most sense. They already distribute Salto as a Prime Video channel, Fire TV still misses the myTF1 & 6play apps on its channel store. There’s a play here for them.
Let’s see where the streamer executes its final salto…
To see for yourself what Salto is all about, head over to their website
📺 Streamer snapshot:
Have you noticed how US Music Majors (Universal, Warner or Sony) stay clear of launching their own D2C streaming services? Music streaming services are operated by pure players like Spotify, Deezer, Apple, Amazon Music or Tidal. Record labels license their content but don’t seem to have any interest in building their own branded services.
But getting into FAST makes perfect sense for them. It’s a light touch approach to D2C streaming.
This week, Warner Music Group made the news with the launch of 3 genre-based FAST channels exclusively on the Roku Channel: WMX Pop, WMX Rock and WMX Hip-Hop.
The channels will feature:
Music videos and concerts from their global artist roaster.
Original programming from media brands like Uproxx, HipHopDX, Songkick, Cover Nation, The Pit and Lasso Nation.
Premiere exclusive new series, starting with “Iconic Records: Life After Death,” a new show exploring the legacy of late music artists.
The exclusivity with Roku is 3-month long signalling that Warner has plans to expand the US distribution to more FAST platforms.
I expect more record labels to launch in 2023. Could FAST be the new MTV?
🎬 Content recommendation: “Long Way Up”
You know how you bookmark programs and never watch them? Well, this docu-series has been on our list for quite some time but we only got to it this Fall. I wasn’t familiar with the format (Long Way Up is the 3rd iteration after Long Way Round & Long Way Down) and up until recently I didn’t like Ewan McGregor much (I know, how is that even possible?) so I had a bias towards the show.
We pressed play one night and were immediately hooked. It has all the ingredients of a great docu-series:
A storyline: The goal to go from Ushuaia to Los Angeles within 3 months
Drama: But they decide to do it on electric motorbikes with 80km/day of autonomy!
Characters: A duo of adventurers with distinct personalities
Emotions: Friendship, hard work, team spirit, generosity and kindness from the locals they meet, and more
Scene setting: Amazing landscapes of South America
Give it a try, it will bring you a bit of happiness during the cold long winter nights.
To travel from your own home 👉 “Long Way Up” on Apple TV+
That’s it folks. I hope you found this interesting and if you did, please don’t hesitate to tell your colleagues, bosses, friends & families about it.
Enjoy your weekend and see you next Friday for another edition of Streaming Made Easy!
At night, I write Streaming Made Easy and post each working day on Linkedin.
By day, I run The Local Act, a streaming video consultancy.
Whenever you’re ready, there are 3 ways I can help you:
If you’re looking to understand FAST (Free Ad-Supported Streaming TV), I'd recommend starting with a 4-week Discovery Program (Book a call to discuss).
Then, go further with a dedicated "How to get into FAST" Program where I fast-track the launch of your FAST Channel Business in 90 days (Book a call to discuss).
Last but not least, work with me 1:1 to grow your streaming video business in Europe (new market entries, distribution expansion etc.).