German broadcaster ProSiebenSat.1 posted its full financial results for Q1 this morning, reporting a five percent year-on-year increase in advertising revenues in the German speaking region. Joyn, ProSieben’s free ad-supported streaming service, was a major contributor, as audiences grow and monetisation of those audiences increase. But ProSieben is still investing significantly in linear TV too, with plans to ramp up content spend as it seeks further growth across its linear channels and streaming service.
Group CFO Martin Mildner said that while the market and economic environment remains challenging, continued signs of recovery in the advertising market mean ProSieben is increasingly confident about the rest of the year. The company confirmed its outlook for 2024, projecting roughly two percent growth in total revenues across the year. Linear TV ad revenues are expected to be flat across the whole year, with the German economy still in rocky waters, but ProSieben says Joyn and other digital offerings will continue to grow.
Content investments pay off
Total group revenues were up six percent year-on-year, with growth in ProSieben’s entertainment and commerce & ventures segments, but a dip in revenues in its dating and video segment.
Entertainment revenues, which make up nearly two-thirds of ProSieben’s total revenues, were up five percent, matching the five percent growth in total ad revenues. A lot of this came from ProSieben’s traditional linear TV business – the company said it recorded “solid growth” of four percent in TV advertising revenues across the German speaking region for the first quarter. The broadcaster’s digital and smart advertising offerings also contributed, up nine percent year-on-year in the German speaking region.
Joyn, which sits within this ‘digital and smart advertising’ category, was a standout performer. The streaming service reached an average 6.5 million monthly video users in Q1, a 42 percent increase on Q1 last year. Total viewing time meanwhile was up 21 percent. But revenues from Joyn’s ad-supported video on demand revenues (separate from ad revenues for other media types distributed via Joyn) rose 50 percent year-on-year. The implication is that Joyn viewership is growing, but also that ProSieben is better able to monetise that viewership too, since ad growth outpaced viewership growth.
On the viewership front, ProSieben says Joyn’s growth shows its content investments are paying off. Despite cost-cutting efforts across the company as a whole, ProSieben has pledged to increase its spending on content, with a particular focus on local and live TV shows, two areas where it believes it has competitive advantage over international streaming rivals. The broadcaster cited March’s launch of Big Brother, which it described as the most successful launch of a reality-based Joyn Original, as an example.
The company isn’t solely focussing content spend on Joyn. ProSieben says it wants to grow its share of linear TV viewing too. Oftentimes, ProSieben is running shows across Joyn and its linear channels, using Joyn to pick up audiences not found on traditional TV. For example, Germany’s Next Top Model, one of the broadcaster’s most popular shows during the quarter, found 11 percent incremental net reach through Joyn.
On the advertising front, ProSieben says that partnerships related to programmatic ad trading are helping grow monetisation. The company pointed to its ad tech partnership with RTL Deutschland, announced back in February, as an example. ProSieben expects the deal, which will make it easier to buy across RTL and ProSieben’s content, to grow ad spend on Joyn.
Streamlining to fuel spending
ProSieben says it will continue to ramp up content spend as it seeks further growth. The company expects to spend around €80 million more on content this year than it did in 2023.
Some of this money may come from ProSieben selling off some of its assets less related to its core entertainment business. The company has been under pressure from major shareholder and fellow European broadcaster MFE to shed assets not directly related to its media business (a move which would also make ProSieben easier to acquire, a likely ambition of MFE). And while ProSieben defended its strategy in a recent shareholder vote, it is preparing to offload a few assets, such as price-comparison website Verivox and perfume retailer Flaconi.
Content investment will continue to be directed across both Joyn and ProSieben’s linear channels. Joyn is very much the strategic focus for ProSieben – the broadcaster wants to establish Joyn as the number one free streaming platform in the German-speaking world. Long term, as viewership on traditional TV continues to decline, Joyn may truly take centre stage.
But for the time being, it’s still relatively small. Core TV ad revenues in Q1 sat at €326 million, while total digital and smart ad revenues (which Joyn sits within) were €66 million. Joyn is growing rapidly, but its ad business is still very much secondary compared with ProSieben’s linear channels.
