How European Networks Are Trying to Fight Off Streaming Rivals

While U.K. broadcasters commission multiple seasons of hit shows like 'Peaky Blinders' to keep them away from Netflix and Amazon, European networks are pooling resources to match the spending of streaming giants.

Peaky Blinders fans were likely thrilled this May when the BBC handed its hit show a double endorsement, renewing the historical gangland drama for not one but two seasons, taking it to four and five, before season three had even finished. Just over a month later, Channel 4 did the same with Catastrophe, recommissioning the close-to-the-bone relationship comedy for seasons three and four, in one go.

In Britain, such a move is almost unheard of. A network virtually never gives the green light to a new season until the current run is over — and has proved successful. And when it does, it's for a single season. In Britain, double bookings just aren't done.

"It's so un-BBC, it's fantastic," Peaky Blinders creator Steven Knight told The Hollywood Reporter.

Knight said being handed two seasons gave him a far bigger arc to play with and made him feel as if he would be “writing 12 hours of television rather than six.”

Something has changed in the U.K. television market and across Europe. The actions of deep-pocketed streaming services Netflix and Amazon are forcing European networks to change how they do business if they want to compete. For some, this means taking bigger risks and moving fast to avoid losing a hit series to an SVOD competitor. For others, it means building alliances across borders to pool resources.

How "Black Mirror-Gate" Changed Everything

For the U.K., what happened with Black Mirror, a cult sci-fi series created by British writer Charlie Brooker, served as a cautionary tale. The dark anthology series first aired on Channel 4 in 2011, earning critical and ratings acclaim. Channel 4 renewed it for a second season in 2013 but put off a third-season commission.

Along came Netflix. The SVOD giant picked up U.S. rights for Mirror in 2014. Word-of-mouth, and Netflix's master algorithm, soon made the show a hit, winning over an American fan base, including the likes of Stephen King.

Sensing it could have another global phenomenon on its hands, Netflix swooped in, commissioning a 12-part third season of Black Mirror last year for a reported $40 million. (The first two seasons were three episodes each). Netflix took worldwide rights for the new Mirror, including in the U.K., leaving Channel 4 in the dark (and suitably pissed).

“I think it’s apt to say that, particularly in the U.K., programmers have been burned by not renewing things quickly,” says Mike Goodman, director of digital media strategies at Strategy Analytics. “They’ve opened up that door to allow Netflix to come in and steal some programming.”

Netflix's strategy of "stealing" hit U.K. shows differs from its U.S. approach where, so far, the company has revived series after they've been canceled by their original networks (think Gilmore Girls, Arrested Development and Full House). But this is probably more a contractual factor in the U.S., with its multitude of competing networks (something the U.K. isn't used to), meaning right of first refusal is something automatically written into deals.

But less than half a year after Black Mirror-gate, Channel 4 and the BBC were determined not to get shut out again from one of their own hit series. The danger is real: Peaky Blinders is a success on Netflix in the U.S. and Catastrophe is one of the hottest new shows on Amazon Prime's American streaming service.

Speaking to THR about the Catastrophe renewal, Channel 4 controller Jay Hunt said the deal was about “showing confidence in the teams and allowing them to secure the talent to grow a show into a hit over the long term.”

Peaky Blinders and Catastrophe aren’t the only British shows benefiting from the Netflix effect. The past few months have also seen Line of Duty, Jed Mercurio’s acclaimed British police procedural series, which Netflix also carries, renewed for seasons four and five by the BBC, while the broadcaster announced a return of its period drama Poldark, which streams on Amazon Prime in the U.S., for a third outing before the second had even started.

The Anti-Netflix Alliance

Across Europe, established national broadcasters have decided the best way to fight off Netflix is to band together. Regional pay-TV giants Canal Plus and 21st Century Fox-controlled Sky, which operates in the U.K., Ireland, Italy, Germany and Austria, have reportedly held meetings to discuss pooling their budgets to jointly bid on top series for the European market, to prevent Netflix from snatching them away in global licensing agreements like the company's recent global deal for the new Star Trek series.

CanalPlus parent Vivendi is looking to go further, announcing plans to buy the pay-TV division of Italy's Mediaset, in a bid to create a pan-European operation to challenge Netflix. The deal, announced in April, has stalled, with both sides currently unable to agree on terms, but the logic behind it is clear: outflank Netflix by simultaneously buying rights to top series in multiple territories. It marks a sea change from the traditional TV licensing business, which had always been done country by country.

Wuaki.tv, a Pan-European video-on-demand service owned by Japanese e-commerce giant Rakuten, is following a similar strategy. The SVOD service operates across seven European countries and is strongest in Spain, where it boasts 2.5 million subscribers.

And it isn't just Europe where Netflix competitors are looking to team up. Viaplay, a Nordic streaming service run by Sweden's Modern Times Group, has been in talks with U.S. group Hulu, Australian SVOD service Stan and New Zealand's Lightbox with an eye to forming a bidding alliance. Sky is talking to Canada's Bell Media and Foxtel in Australia about a similar arrangement and has invested $45 million in iFlix, a Netflix competitor that is strong in Southeast Asia.

European broadcasters are also teaming up to finance in-house series with budgets that can (almost) match those of Netflix originals. Sky and Canal Plus have partnered on high-end shows, such as thriller series The Last Panthers and crime serial The Tunnel, and threw in with HBO for upcoming drama The Young Pope, starring Jude Law and directed by Oscar-winner Paolo Sorrentino (The Great Beauty). In a ground-breaking move, Sky in Germany has thrown in with local public broadcaster ARD to bankroll Babylon Berlin, an ambitious period drama set in 1920s Germany.

“A European broadcaster, by themselves, struggles to finance a series with a budget of $3 million - $4 million an episode,” a veteran European TV producer told THR. “The only way to do it is to band together.”

Elsewhere, European commercial broadcasters are hoping to fend off Netflix by investing in local content, an area where Reed Hastings' streaming giant still lags behind. Maxdome, an online video portal run by German broadcaster ProSiebenSat.1, recently announced its first original series, a comedy from local stars Christian Ulmen and Fahri Yardim. In Scandinavia, Viaplay has green-lit Swedish Dicks, its first home-grown series, which will star Keanu Reeves, Peter Stormare and Swedish comedian Johan Glans. The comedy is currently shooting in Los Angeles and will premiere on the Nordic SVOD service this fall.

Despite some high-profile investments in original series in France, Italy and Germany, the vast majority of Netflix's library in Europe is in English. That's a problem, particularly in big territories like Germany, Italy and Spain, where the audience prefers its shows dubbed or home-grown. Netflix so far has seen its strongest European growth in countries that either speak English (the U.K. and Ireland) or are used to watching series in the original language with subtitles (The Netherlands and Scandinavia).

In fact, analyst Ian Whittaker of London-based Liberum, argues that Netflix is not a real threat to European broadcasters. He points to Netflix's weaker-than-expected second-quarter results, which showed a slowdown in subscriber growth as an indication that “Netflix might have reached a saturated market” and that the streaming giant is “not a real threat to free-to-air broadcasters as its offering seems to be complementary.”