ProSiebenSat.1’s Max Conze on Red Arrow’s Future, Plans for Joyn

Max Conze, CEO of ProSiebenSat.1, told World Screen about the rationale behind a potential sale of Red Arrow Studios during a press roundtable at MIPCOM today.

“I love Red Arrow Studios as a business. It’s a set of super production assets. They do wonderful things. The reason I’m strategically looking at it is that even though all those things are great, the international part doesn’t have a lot of synergy with my German entertainment footprint. And in a world where everything is getting bigger, Red Arrow Studios is meaningfully sizable but is not big, big. So I felt it would be good for us to explore options to partner and combine into something bigger. I think it’s quite a hot market and we understand what somebody would be willing to pay if we let go of it. We could use that cash to reinforce our German infrastructure, both on the entertainment and commerce ends. We’ll see where that process takes us by the end of the year.”

On the group’s content needs, Conze said that local is paramount, both in terms of format adaptations and original IP that could also be pitched to broadcasters around the world, such as Beat the Channel. “We are looking at building out a broader production network in Germany,” Conze said.

On the exclusive talent deals that streamers are inking around the world, Conze noted, “I think they worked in the early days of streaming, I don’t think they are working today. The talent has gotten very savvy and smart. If you’re a thin-sliced piece within Amazon or Netflix, you’re losing [a position of relevance]. In Germany, I’m not that worried. Talent is quite savvy to not sign their fortunes away behind a limiting paywall.”

Conze said that he and his team are “transforming ProSiebenSat.1 fundamentally on two theses. One is that a combination of entertainment assets and commerce assets is synergistic and value-creating because they feed each other and learn off each other, and it gives you a much more diversified footprint than if you are only a media or commerce company. Two, in entertainment, what we do, which is be a large-scale, free-to-air broadcaster that creates relevant content for large audiences, the chance to reach 60 million Germans every week, fundamentally is meaningful and has a meaningful role to play in the future regardless of how many Disney+s or others are coming. We all live in local worlds, local communities. We want access to the news, the entertainment, the infotainment, the factual, all the things that surround us in our lives. We also want to see Star Wars and Jack Ryan and that’s fine. There’s nothing wrong with that. But it’s not that one need goes away and the other takes over everything. If that is true, if you have a broadcast footprint like we do, you have to make sure that your content becomes even more local, more live, stickier, and available barrier-free, to viewers and consumers wherever and however they want to see it.”

It was that rationale that led ProSiebenSat.1 and Discovery, Inc. to launch their joint-venture platform Joyn as an AVOD offering at first, “with the broadest free offering in Europe, possibly in the world.” An SVOD tier will launch at a later date. Joyn delivers 55 channels and 20,000 hours of content and has already done seven originals since its June launch.

The platform wants to reach 10 million users—up from about 4.5 million—over a two-year period. “I expect the balance in that number will be tilted towards free. I find Spotify to be not a bad analogous business model. It’s probably 50-50 [free and premium]. I quite like that. Success is not how many subscribers we get; it’s how many people we get engaged in our content in totality. Some of whom choose to not pay. That’s OK because we make money with advertising. And advertising is a good business model, possibly better than subscription.”

The group’s free-to-air assets could be used as a promotional window for Joyn’s originals, Conze told World Screen. “In this battlefield, the strength we have is that we have a connection with 60 million Germans every week. That’s very powerful. Disney doesn’t have that in Germany, Amazon doesn’t have that, Netflix doesn’t have that. We have fan communities. I’m very open to giving a two-hour exclusive free preview of a Joyn original on ProSieben, but if you want to continue you need to go to Joyn. Using the muscle of that access to 60 million in a way that is meaningful is really powerful. It was a fight internally. Broadcasters are worried the digital will cannibalize the TV infrastructure. The answer to that is yes a little bit, but the synergy effect is much bigger than the cannibalization effect. We’re either going to cannibalize ourselves or someone else will, so pick your poison. I think one is much more pleasant than the other one.”

Expansion of Joyn into other European markets is possible, Conze said, “one step at a time.”

On the ad market, Conze sees a future where linear TV will have a lighter ad load, at a higher price point. “For the advertisers, it’s a less polluted environment, with people who have higher completion rates. In an advertising environment completion really matters because the shorter breaks in a digital world mean people don’t walk about for the breaks, whereas the long breaks in TV, people will go away.”

Having access to analytics from its digital platforms has been transformative, Conze said. “I can see every millisecond of every day what people are watching, how long they are watching, how they are switching. Your intelligence goes up dramatically, versus the old world of Nielsen and GfK giving you marginally reliable data on 3,000 households. It changes your intelligence and the connectivity of your business.”