Monday, November 30, 2015

Has Vivendi a strategy?

Vincent Bollore, the powerful chairman of the Vivendi media group is facing a strategic quandary. He must answer rapidly to the challenge of Vivendi's subsidiary Canal Plus, the prestigious pay TV channel that enjoys 7 million subscribers spread in France but also in Poland and in Africa.

Since its creation in 1984, Canal as users call it has been a very successful French HBO, building its offer on highly rated movies and series and first league soccer matches. To have access to its premium menu, customers were willing to pay 40€ a month. Until recently the company was very profitable and brought a lot of prestige to Vivendi whose other branches are working in less glamorous fields such as music and telecom.

However its managers did not grasp in time major upheavals in the media field. These last 5 years, incentives to subscribe have greatly diminished. The offer of free channels has gone up to 23. Moreover, two new competitors have attacked the French market, investing in what used to be Canal's main assets. Bein TV financed by illimited Quatar funds offers for 11 € a month a large choice of sports competitions. Netflix started last year with American and French series for 10€ monthly. Its not a big surprise if the number of subscribers is going down at a fairly fast pace.

A few weeks ago, Vincent Bollore who took over Vivendi last year stated that he was willing to invest as much as 2 billion € to develop and improve Canal's offer. Yet, to everybody's surprise he let Canal lose the British soccer first league bought for 300 millions by Altice, the ambitious media group owned by Patrick Drahi.

It appears that by now Canal subscription rate is much too expansive. Bollore finds himself in the uncomfortable position of Air France chairman facing the low cost companies such as Easyjet. In television, as in Air transport lowcost is now the rule.

What can be done to save  French television major player? We shall discuss solutions in this blog's second part.