Billed as a “new kind of partnership,” Netflix‘s deal to distribute French network TF1 could open the floodgates in other territories, leading media analysts are predicting.
Ampere Analysis and Enders Analysis have both suggested it is now a matter of when, not if, Netflix strikes more aggregator-style deals after the agreement in France, as it seeks to attract linear audiences and legacy players hope to leverage the power of its global streaming platform.
This week at Cannes Lions, Netflix and TF1 unexpectedly announced they were teaming up to stream all five of the French giant’s channels on the streamer, while making more than 30,000 hours of programming available on-demand. The landmark agreement is the equivalent of NBC, or another major American commercial network, handing over its output to Netflix.
Taking to LinkedIn, NBCUniversal Creative Products Director S.J. Mckenzie said the move “should have every U.S. media exec on alert,” writing: “While U.S. teams are still stuck optimizing bundles and measuring ‘attention’, Europe is building the next evolution of streaming.”
Subscription streamer Netflix had offered little evidence of wanting to enter the aggregation space before, while some onlookers were surprised TF1 was willing to risk its decreasing linear TV viewership by distributing through a streaming rival. However, Netflix has been pushing deeper into the traditional network space – launching an ad tier in 2022, for example – and for some it came as less of a surprise.
Ampere Analysis called the deal “a perfect example of ‘diagonal’ integration and co-operation,” which effectively means where one player with “a declining market opportunity” such as TF1 leverages the “reach, power and growth of a global, streamed production and distribution platform” like Netflix.
UK-based Ampere released a report earlier this year coining the “diagonal” term and predicting such dealmaking was in the cards. Prime Video has been aggregating rival services for years, but the Netflix agreement marks the first time a major broadcaster and global streamer have agreed to such an extensive pact.
However, while this might just sound like a good deal for TF1, the agreement is “not all one-way,” Ampere’s The Amp report suggested.
Netflix will gain the “viewer retention and acquisition power of TF1’s local premium content as it rationalizes its own original content spend” and the opportunity to draw older, more traditional linear viewers onto the platform, while at the same time engaging younger viewers with a linear schedule “designed to encourage regular rather than binge viewing.”
“Similar deals in other markets will surely now follow,” added Ampere.
Reaction in the U.S., by contrast with the continent, has been generally muted. Stock markets were closed Thursday for the Juneteenth holiday, but on Wednesday shares in pay-TV stakeholders like Comcast, Disney, Warner Bros. Discovery and Charter were largely unchanged after the Netflix-TF1 news. Execs in the pay-TV sector contacted by MyRumors said they were monitoring developments closely but didn’t expect any near-term disruptions.
That outlook is largely a reflection of the long-established packaging that makes up the U.S. pay bundle, which is shrinking but still throwing off enormous amounts of cash. Netflix may be acting more and more like conventional TV networks, presenting live NFL games and WWE bouts and selling ads, but becoming a full-fledged distributor would entail grinding out carriage deals with programmers with large network portfolios. Even mighty YouTube is seeing the challenge of operating a scaled pay-TV business, with subscriber levels dropping by 500,000 in the first quarter, by one Wall Street analysts’ estimate. Disney also has seen Hulu + Live TV flatline over the past couple of years, though the media giant has shown an appetite to further blend content with distribution by proposing to acquire the sports-focused Fubo.
In an interview with the FT following the deal, Netflix Co-CEO Greg Peters said the streamer would use the partnership as a testbed before “exploring further tie-ups with other broadcasters.” Though TF1 won’t join Netflix until summer 2026, the deal is further evidence of how traditional TV and digital players increasingly see the other side as a vital jigsaw piece in their respective futures.
That being said, Tom Harrington, Enders Analysis Head of Television, pointed out that Netflix and TF1 have had a close relationship for some time.
He noted that TF1 boss Rodolphe Belmer used to sit on Netflix’s board and that the two companies are working on Tout Pour La Lumière, the streamer’s first daily drama series, or soap, in France, which was itself branded game-changing when unveiled late last year.
“[TF1] has also no doubt noticed the performance of some of its programming that has been licensed to Netflix compared to on [on-demand service] TF1+ – the ability of certain broadcaster content to find a new audience on Netflix and thrive has been a recurrent theme in most territories over the past decade,” he wrote. Only last year, we explored how the UK was experiencing a Suits effect, as older, rather parochial British broadcaster shows found themselves being given a second lease of life on the Netflix most-watched list.
Harrington was therefore in no doubt “that there will be similar deals” in other markets,” adding: “The development required just to be able to integrate a live stream from a third-party to the standard expected on Netflix is unlikely to be utilized on just a single partnership.”
One element that remains unclear is what financial agreement is in place, with Peters declining to say how subscription and advertising revenues would be shared between the partners, or if Netflix has simply paid a sizeable upfront fee for TF1 content.
These partnerships will, of course, help traditional networks battle against arguably their greatest modern foe – saturated viewing and declining youth audiences. While “there has been a proliferation of announcements from free-to-air operators increasing their presence on YouTube” of late, Harrington said Netflix provides a more stable home than the Google-owned social behemoth.
“It is hard to put much confidence in the potential growth of [YouTube] viewing given the vagaries of the service’s recommendation algorithm and the incredible volume of competing content,” he added. “The likelihood of your content being seen is probably much higher [on Netflix]. For free-to-air operators this deal highlights a possible template to maintain some stability in reach, with less of the uncertainty of content distribution on YouTube.”
Harrington’s colleague, Enders Media and Telecoms Analyst François Godard, said the deal would increase the “stickiness” of Netflix, and demonstrated that TF1 “knows that there is a sell-by date on the terrestrial platform.”
Netflix passed the 10 million subscribers in France in 2022, while TF1’s TV channels reach 58 million and its TF1+ streaming service commands around 35 million users per month. The partners have not said whether the deal is exclusive. “I would guess there is a level of exclusivity in the deal,” ventured Enders’ Harrington. While he added that Netflix in his estimation doesn’t want to become “Cable TV V2, I think this deal makes sense for Netflix only because TF1 is No. 1 in France.”
Godard told MyRumors the agreement was, in some ways, a marriage of convenience with Netflix and TF1 being the biggest streamer and broadcaster in France, respectively, and that deals with smaller players were unlikely.
“The gap between Netflix and smaller streamers is so big that TF1 would not find it very attractive to do this deal with anybody else but Netflix,” he said.
“Conversely, I don’t think Netflix wants to dilute the consistency and quality of its content offering. I don’t think it wants to become cable TV V2. This deal makes sense for Netflix only because TF1 is number one in France, and I would guess there is a level of exclusivity.”
He also suggested that similar agreements could not take place in the U.S. as all linear networks in the states receive retransmission fees, effectively making them pay channels.
Netflix declined further comment on the deal and TF1 couldn’t reached before press time.
Dade Hayes contributed to this report.