Highlights‎ > ‎

No More "Plus" on Canal + ?

posted Jul 27, 2012, 8:45 AM by Julien Pillot   [ updated Jul 27, 2012, 11:58 PM ]

Since its very launch in November 1984, the French premium pay TV channel holds a clear-cut policy aiming at offering “more” to its subscribers. More movies, more TV shows, more sport and cultural events, more entertainment… the entire business-model of CANAL + lies on that promise made to customers. Such a strategy asks CANAL + to constantly “create the buzz”, for example in obtaining broadcast exclusivities on major shows (such as the French football championship or soaps like Desperate Housewives and Dexter), in order to present a TV grid attractive and unique enough to incite viewers to subscribe. However, while this business-model has been the very source of CANAL + successful development for years, it seems now on its way out. Indeed, ensuring the continuity of such strategy assumes that customers’ willingness to pay and operating costs grows symmetrically… a requirement far from being self-evident while the monthly subscription has never been higher (€39.90 in 2012, €18.29 in 1984).

The sound and swift mutation of the market in which CANAL + compete is at the very core of the problem. In a nutshell, we could divide TV programs in two categories depending on shows are “live” or not. Concerning non-live TV shows such as movies or soaps, CANAL + has to face evolving habits of more and more connected and advised consumers. Due to numerical convergence, customers are able to download (on a legal or illegal basis) TV programs at the earliest (sometimes the very next day following the first broadcast) and, consequently, have no reasons to wait for their spreading on Canal + (which is subject to regulatory constraints relative to the “media chronology”). Not only customers can access programs earlier, but moreover they are free to (potentially) pay for what they really chose to see. In this context, CANAL + offers cannot be seen as valuable as they used to be: subscribers are linked to a non-exhaustive TV grid unilaterally defined by CANAL + and, in addition, have to pay for programs they do not plan to watch. On the upstream side of the market, several actors implement Internet solutions to offer programs directly to consumers. Among these actors looking for new revenue opportunities, we observe both traditional companies such as TV shows’ producers and new players like Apple or Youtube. If TV channels are still important elements of the value chain, they do not appear indispensable anymore and CANAL + is no exception.  


As an illustration of problems encountered by CANAL + on live shows, the case of TV broadcasting rights for main football competitions (already discussed on these pages) is particularly evocative. With the entry of such vigorous competitor as Al-Jazeera (whose premium channel Be in Sports 1 is available since June 1st on main TV and Internet providers), CANAL + is now challenged on its historic market. Indeed, as two loss leaders, the LFP’s Ligue 1 (L1) and the UEFA’s Champions League (C1) are two products who have greatly contributed to CANAL +’s growth during the three last decades. Reshuffling the cards of the competition game, Al-Jazeera undermines CANAL +’s opportunities to obtain (and communicate on) exclusivities on these flagship products (see the graphics on the related post).


Even if switching costs are obstacles to immediate consumers’ mobility, one might ponder on the capacity of CANAL + to remain attractive enough in the mid-term while its very business-model sounds now outdated. Almost 30 years after its launch, the French premium channel has to redefine its strategy in order to keep going. In this way, recent strategic moves set by CANAL + on each side of the market sounds likely to operate this essential change. Rather than offering “more” content, CANAL + has to offer “the best” content … like in football where the French operator keeps exclusivity on the main L1 and C1 games. Concerning non-live shows, CANAL + tends to limit broadcasting of soaps to American blockbusters and, in the meantime, to more and more promote homemade products (called “créations originales”) which present the advantage of being exclusive and far cheaper than third products. If that strategy seems clear and relevant, the question is really about the ability of CANAL + to negotiate this crucial bend without throwing subscribers – especially first adopters – into confusion. In a word, a true industrial challenge in a changing market…