The need of European audiences for local content in local languages compounds the upcoming content explosion — challenging Pan-European media hopefuls to re-engineer their value chain — according to a new Report from Forrester Research B.V. (Nasdaq: FORR). The company asserts that only a handful of big portals and multichannel media firms that leverage their offline content will succeed.
“To thrive with international Web properties, multicountry localizers must wield their most effective lever — economies of scale from Pan-European online offerings — to consolidate assets and cut costs across their local operations,” said Forrester analyst Diana Janssen. “They will be challenged to do so while producing the skyrocketing amounts of content needed to populate Pan-European multimedia sites. Even large firms will struggle to make the savings from shared technology infrastructure offset their content bill.”
To face the upcoming content explosion, international media firms will seek cheaper forms of local content acquisition than local production. Publishers will try to repurpose a common body of global content by localizing it, or they will buy local content from an outside source. But many will be forced to set up local production to guarantee quality and style. Buying in content from third parties is by far the cheapest option for localization; international portals that typically buy in most of their content will enjoy a major cost advantage. Conversely, media firms publishing highly local content cannot afford to repurpose existing content — they need local teams producing original copy. However, technology savings cut across the value chain, and tools standardization and sharing the content management and distribution infrastructure will offer the greatest savings opportunity to international online media.
“Pan-European portals like Terra Lycos, Wanadoo, T-Online, Yahoo!, MSN, and AOL are well-positioned to survive localizing their sites for multiple European countries because they can cheaply purchase 75% to 80% of their local content from syndicators and other local suppliers, and they can keep overheads low,” Janssen added. “Equally, an elite of large international multichannel media firms — like ENDEMOL, Condé Nast, or MTV — will successfully integrate their international Web properties. But most of these firms will have to restructure their currently distributed management and production structures to deliver economies of scale. To succeed they must set up centralized localization facilities and partner with likeminded local media companies — as The Wall Street Journal did with Germany’s Handelsblatt.
“Online-only media targeting a narrow segment with quality content will face the highest localization costs — having to produce 60% to 100% of their content locally to match local tastes and interests. Plagued in addition by high local marketing costs, international pure-play specialists will become very vulnerable. To survive, they should set up local cobranded sites with media partners, sell content to businesses beyond media sites, or sell original content only and give up localization.”
For the Report “The Multicountry Media Challenge,” Forrester surveyed 40 multicountry localizers: 21 multichannel publishers with print or broadcast editions and 19 online pure plays. All these firms localize content for at least three European regions.