Smart Home; Smart-Home-System; Intelligentes Wohnen | © GettyImages/DragonImages The film industry plays an important role in Germany. | © GettyImages/Anna Frank

Film Industry

Germany’s diverse film landscape

Germany has a long film-making tradition and a rich culture of public and private TV stations. The first production studio was Studio Babelsberg, founded in 1912 just outside of Berlin and it is still one of the biggest German studios to date. But there are also a lot more film studios as well as other companies from the industry. In total, there are more than 19 thousand companies involved in the film industry. They recorded revenues of EUR 18.9 billion in 2018 and employ around 71,000 film industry professionals.

Streaming in Times of Corona

With free time options dramatically reduced by Covid-19 restrictions, Germans are turning to streaming providers to help pass the time.

Streaming services on the rise during lockdown

The corona crisis has seen many countries around the world implement a partial or complete lock down of their societies. Germany also took this path – shutting down retailers, bars, restaurants, gyms and movie theaters. This left many Germans scrambling for alternative ways to spend their time. Confined to their homes, the already popular pastime of streaming movies and music has become even more popular. 

Streaming providers report higher demand than expected

This is not only a German trend, but one evident worldwide. Netflix, for example, has reported a global user growth of 15.7 million in Q1/20. This is almost twice the forecast growth of 8.2 million new users. The user base grew by 7 million In the EMEA region, compared to 4.7 million for the same period in 2019. The Swedish music streaming provider Spotify also reports in its quarterly report that it expects to come out stronger from the crisis.

Video streaming subscriptions widely used 

Streaming has clearly been on the rise in Germany for some time. In 2018, consumers used streaming services around 29 percent more than in the previous year. Free video platforms are used by more than 34 percent of Germans, with YouTube – frequented by nearly all of those users – being the most popular platform. More than 31 percent use the media libraries of the TV channels and over 29 percent use subscription streaming, with Netflix and Amazon Prime being the most used services – both enjoying above 19 percent of usage.

Younger demographic groups are particularly interested in these services, with over 65 percent of people under 30 years of age paying for video services. For nearly 56 percent of them, video-on-demand (VoD) services are the primary source of motion picture entertainment. In the 30 to 49 year old age group, 27 percent primarily use VoD, with this figure falling off to seven percent for those over 50 years of age.

Drama is the most popular genre over all platforms, with around 62 percent of viewed content belonging to this category. Comedy is the second most viewed genre at 32 percent. The comedy series ”Big Bang Theory“ was the most viewed content on all platforms in 2019.

Production in Germany makes sense

The European Union has decreed that 30 percent of the content catalogues of streaming providers need to be European productions by 2021. This has led streaming providers to invest substantial amounts into creating content made in the EU. Netflix, for example, produced 141 European “Originals” in 2018 for around EUR 1 billion. This was increased to a planned investment in 221 content productions in 2019.

Apart for streaming productions, 157 theater movies were produced in Germany last year. Almost 39 percent of these were co-produced with foreign studios. Germany offers different public funding options for movie companies in order to facilitate production and support the movie industry as a whole.

Total annual funding tops out at  almost Euro 194 million.

The production studios are clustered in four film hotspots. Berlin is the biggest movie hub with 200 production companies, followed by North Rhine-Westphalia with 166 production companies, Bavaria with 158 production companies, and Hamburg with 84 production companies.

German market still open for new entrants

More and more companies are choosing to enter the German market in order to take advantage of German receptiveness towards streaming. In November, Apple TV Plus launched their service in Germany. The latest addition to the German streaming market has been Disney Plus which began operations in March. The launch date had been set long before the outbreak of the coronavirus crisis, but in hindsight, the timing has proved impeccable. The service jumped from zero to 10 percent of subscription buyers using the new streaming provider.

The public and private television model of the Film Industry

The television market is split in two. On the one hand, there are the private stations, of which ProSiebenSat1 and RTL are the biggest ones. On the other hand, there are the state-funded public stations. The main ones are ARD and ZDF. But there are also a number of more regional public television stations. The revenues of the film industry are distributed as below.

Film and television consumption

On average, Germans watch 328 minutes of television. Of this time, 51.8 percent is spent on private channels. RTL group has the biggest market share with 22 percent, followed by ProSiebenSat1 with a share of 17.8 percent. When it comes to the technology used to receive the programming, satellite ranks first with 17.5 million households. After that, cable is the second biggest solutions with 16.2 million households, followed by IPTV (2.8 million households), and terrestrial (1.9 million households). 

Around eight million households subscribe to payTV, which generates revenues of EUR 2.4 billion. Other subscriptions that are not based on content (e.g. fees for cable usage) account for EUR 3.3 billion in revenue.

In total, there are 1,672 movie theatres with 4,849 screening rooms in Germany. In 2018, those cinemas sold 105 million movie tickets – equivalent to 1.27 annual movie visits per German citizen. Around 53 percent of cinema goers are female and 47 percent are male. The average ticket price was around Euro 8.53.

Streaming is clearly on the rise in Germany. In 2018, consumers used streaming around 29.1 percent more than in the previous year. Video platforms are used by 34.5 percent of Germans, with YouTube being the most popular platform frequented by nearly all of those users. Some 31.2 percent use the media libraries of the TV channels, with 29.3 percent using subscription streaming where Netflix and Amazon Prime are the most used services with just over 19 percent of usage respectively. Younger cohorts in particular use subscription services, with 65.2 percent of people under 30 years of age paying for video services.

Film Production

In 2019, there were 157 movie productions, of which 38.9 percent were co-productions with foreign studios. The production studios are clustered in four film hotspots. The Berlin-Brandenburg cluster leads the way with 215 production companies, followed by North Rhine-Westphalia (166 production companies), Bavaria with (158 production companies), and Hamburg (84 production companies).

Film Funding

A majority of the movies produced in Germany are partly funded by one of the many public film-funding programs. These are divided into national and regional funding programs. National funding programs have a funding volume of EUR 193.6 million. This is divided between the Filmförderfonds (Euro 125 million), Filmförderanstalt (Euro 36 million), German Motion Picture Fund (Euro 15 million), and the “Deutsche Kinematik” Foundation  (Euro 8.7 million). As with the national funding programs, the regional funding programs require some reference to the region covering the subsidies. This could, for example, be that parts of the film are shot locally or that part of the funding is spent in other ways in the region.

Film Industry Trends

Non-linear television

Classic linear television remains the main type of television usage, with 64.9 percent of users in 2018 stating it as being their primary source of film consumption. This number fell by 6.1 percent compared to 2017. Video-on-demand (VoD) rose by nearly 30 percent during that period, with 23.1 percent of Germans saying that they primarily use this form of consumption. Younger audiences in particular prefer VoD to linear television consumption. Around 56 percent of 14-29 year-olds favor this type of film consumption. 

Apart from the big players such as Netflix and Amazon, the German private television stations and payTV providers are also trying to gain a foothold in the streaming market. All of the big players (ProSiebenSat1, RTL, Sky) have launched their own streaming services. They feature national and international series and films as well as their own productions in order to gain a competitive edge. The shifting trend towards VoD will continue in the coming years. Nevertheless, linear television will remain a big part of television consumption for the foreseeable future.

Social TV

Social media has been on the rise for some years now and most entertainment options have some form of social media element. This may be Twitter hashtags while discussing political issues or fans posting live concert photos of their favorite artist on Instagram. 

It comes as no surprise then, that consumers also use their telephones and other mobile devices while they follow their favorite television program. This second screen is often used to comment on and discuss the programs being watched. This not only increases the reach of the content to the contacts of the people that use the social media options. It can also help to expand advertising messages onto the second screen. Because smartphones collect different user data points than smart TVs, the marketing messages on the TV screen can be enriched and personalized even more.

Programmatic advertising

Programmatic advertising is a technology that lets marketers show targeted marketing messages on individual television devices subject to audience, time and day as well as more granular demographic data. This feature increases the efficiency as well as the effectiveness of the marketing approach. This instrument is often used in combination with artificial intelligence in order to further optimize targeting. 

Programmatic advertising has already been used for online marketing on the web and in apps for a long time. Thanks to the increased spread of smart TVs and their connection to the internet, that marketing technology also gets used for linear television more and more. Some 51.6 percent of German households already own a smart television and are therefore targetable via programmatic advertising. 

Original content

Original content is one of the main reasons for consumers selecting a certain streaming provider. And as the number of streaming services increases, providers are hard pressed to find ways to distinguish their offering. That is why it becomes more crucial for the streaming providers to create and produce their own content that only they offer. 

The attractiveness of original content also increases when local storylines and movies are produced, as customers feel more at home with these motion pictures. The trend towards increased local productions is also supported by a European directive: the streaming providers’ catalogues need to consist of 30 percent European content. This led Netflix to invest around EUR 1 billion in 2018 to produce 141 European original and co-productions with the goal of increasing that number to 221 films and series in 2019.

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