Spain

Contributed by Deborah Castro

August 2017

 Key takeaways

• Viewing culture in Spain is primarily driven by the consumption of free TV content.

• By the end of 2016, Netflix was used in 3.4% of the households with internet connection, that is, approximately 540,000 households in Spain.

• Spanish subscribers have access to less content than their North American counterparts. Netflix-Spain offers only 20.4% of the TV shows and 22.69% of films included in the US catalogue.

• Netflix’s original Spanish content arrived one year after the portal’s advent. 7 años (2016) was Netflix’s first Spanish original movie; and Las chicas del cable (2017) was Netflix-Spain’s first TV series.

Market

Netflix officially arrived in Spain on 20th October 2015, one and two days before Portugal and Italy, respectively. As in other countries, this service offers three types of subscriptions (basic, standard and premium) and is available on a diverse number of internet-capable devices (e.g. Smart TV, tablets, Apple TV, Google Chromecast, gaming consoles, etc.). Vodafone TV was the first operator to integrate Netflix in its menu, followed by Orange. Both operators have provided their clients with special offers (e.g. three months of free Netflix access).

Spanish viewing culture is primarily driven by the consumption of free TV content through digital terrestrial TV, which represented 78.7% of the TV consumption in 2016 (Barlovento, 2017). Despite this, pay TV (cable TV: e.g. Ono, Euskaltel, MundoR, Telecable; IPTV: e.g. Movistar TV, Vodafone One, Orange TV and Jazztelia; satellite: Canal+ and OTT) reached a record high in 2016, representing on average of 20.4% of the total TV consumption (18.8% in 2015 and 17.4% in 2014), according to Barlovento (2017, 2016[1]). Specifically, 10.5% of the TV consumption in 2016 was through cable TV, 7.0% through IPTV and 2.9% through satellite (Barlovento, 2017). Other studies conclude that 51% of the internet users in Spain pay for IPTV and/or other services such as Netflix or HBO; and that 16% of them pay for both (The Cocktail Analysis, 2017). The report published by the Observatorio Nacional de Telecomunicaciones y la SI (2016) indicated that 44.3% of the internet users used services linked to TV channels for consuming digital content in 2016, whilst 27.0% used on-demand services from companies such as Movistar+, Vodafone, Netflix, or HBO (Ontsi, 2016). The absence of an agreement upon the categories different organizations use to explore the penetration of on-demand video services makes arriving to a conclusion difficult.

Having said this, Netflix’s arrival in Spain was slowed down by not only the high copyright prices in the Spanish audiovisual market (which seem to be two or three times higher than in countries such as France and Germany), but also by high rates of piracy[2]. The online survey carried out by The Cocktail Analysis (2017) concludes that 67% of the internet users aged 18 to 55 years consume pirated content. Despite these high numbers, the expansion of quadruple play services in Spain, ones that include Internet, landline and mobile phones, and a wide variety of TV channels, is contributing to slightly decreased rates of piracy (The Cocktail Analysis, 2017).

According to Comisión Nacional de los Mercados y la Competencia report (CNMC, IV-2016), 4 out of 10 people watched audiovisual content through the Internet at least once a week, and half of them decided to rewatch their favorite programs. Atresplayer[3] and Flooxer, two services launched by the private company Atresmedia (channels: Antena3, LaSexta, etc.) are used by 46.4% of the subjects that: (a) watch audiovisual content online at least once per week, and (b) are used to watch TV shows à la carte on the Internet. Rtve.es, the portal of the Spanish public television (Televisión Española; channels: La1, La2, etc.), is used by 39.3% of the users. Mitele, owned by the private company Mediaset (channels: Tele5, Cuatro, etc.) attracts 37.6% of the users.[4] With regards to pay on-demand video services, 88% of the households with Internet connection do not use them, 7.6% use Yomvi, 3.4% use Netflix and 1.3% Wuaki. [5]

OTT services have begun to be included in CNMC reports since 2011.[6] Subscribers increased significantly, 20,216%, from 2011 (1,059 subscribers) to 2015 (215,148 subscribers). The sharpest increase happened from 2011 to 2012 (1,240%) and a more moderate increase from 2014 to 2015 (49%).

Although CNMC has not released the number of Pay TV subscribers in 2016 yet, the organization estimates that 540,000 households in Spain subscribed to Netflix in the fourth quarter of 2016 ─3.4% of the households with internet access. Despite a significant increase in the number of homes (it doubled its subscribers in 6 months), Movistar+[7] is the most popular subscription platform in Spain. 7.6% of households with access to the Internet have Movistar+ (928,000 households). The fact that Movistar+ is included in a quadruple play package offered by Movistar might explain its penetration. Wuaki is only available in 1.3% (127,000 households) of the homes with access to the Internet.

The entrance of HBO and Amazon Prime Video in the Spanish market in the last two months of 2016 further increased the competition. Consequently, Movistar+, which had previously been distributing HBO content, decided to invest in original content produced by recognized names from the film industry (e.g. La Peste, by Alberto Rodríguez). The service Now TV, from Sky, expects to launch in Spain in September 2017.

Regulation

Understanding why new digital intermediaries deliberately define themselves as technology companies instead of media companies has become crucial due to the impact it has on the media system (Enli & Syvertsen, 2016).[8] Napoli (2014: online) views this decision as a way to “restrict the scope of discussions about how they should be governed” and, hence, be freed from what serving the public interest entails, such as the inclusion of a certain amount of locally-produced content. Because these companies are not geographically confined, current, nation-based regulation and taxation systems do not apply to them. Consequently, this has created some friction between the new entrants and the legacy, nation-based operators.

The controversial “Ley General de Comunicación Audiovisual” (General Law of Audiovisual Communication) compels those companies that offer their services in Spain and have their headquarters in the country to reserve 30% of its catalog to European productions (half of which must be in one of the official Spanish languages). Due to the fact that Netflix does not have a physical office in Spain, the company can avoid these national laws. This has generated friction between Netflix and organizations such as Uteca (Unión de Televisiones Comerciales Asociadas).

Netflix is also subject to EU media law. In particular, the EU’s revised Audiovisual Media Services Directive looks likely to include U.S.-based on-demand players such as Netflix and Amazon Prime Video within its scope for the first time. Consequently, on-demand services would have to contribute to the promotion of European works by ensuring that a percentage of their catalogue is made up of European productions. The specific percentage has not been decided yet, though a 30% quota is currently being discussed. This has created some discord among European member states. Current EU media law also requires “portability” of digital services (allowing subscribers to access their accounts from other countries while travelling).

Viewing Habits

No specific data on Netflix consumption is available. In general, the most popular screen for watching audiovisual content in Spain is the television set, despite the existence of multiple devices (smartphone, tablet, etc.). The possibility of connecting the TV sets to the Internet directly or indirectly is key for the success of services providing access to distributed online video (Ontsi, 2016). According to The Cocktail Analysis (2017) half of the households with internet access have a Smart TV, and 24% of them engage in non-linear viewing on a daily basis. Almost 29% of the internet users use their smartphones to watch audiovisual content at least 4 or more hours per week.

Internet Pricing and Availability

In 2016, 81.9% of Spanish households, with at least one member between 16 and 74 years old, had access to the Internet, 3.2% more than in the previous year. 81.2% of the households used broadband (ADSL, cable, etc.), half a million more than in 2015. Broadband connections were mostly accessed through a mobile device (80.1% of the households with access), followed by ADSL (48.3% of the households with access) and cable or optic fiber (37.5%). However, ADSL usage decreased in 2016 by more than 10 points, whilst cable and optic fiber increased by 9.6 points (INE, 2016). According to the Instituto Nacional de Estadística (INE), the main reasons given by those households who do not have internet access are: (a) they do not need Internet, (b) they do not have the required knowledge to use Internet, (c) equipment prices are very high, (d) Internet connection prices are very high. However, the impact of the latter two reasons was reduced in 2016 (INE, 2016).

There is increasing media scrutiny of the Spanish ISPs’ download speeds. Movistar (Telefónica) reportedly offers significantly worse Netflix performance during prime time in Spain according to the Netflix ISP Speed Index. As Netflix indicates on its website, this index does not measure the “overall performance for other services/data that may travel across the specific ISP network.” This issue with Movistar has been in the press since Netflix’s entrance in Spain, and it can be summarized as follows: Movistar requires Netflix to sign on for a peering agreement, and Netflix disagrees since it says it is already offering a free interconnection through one of its peering points located in Madrid. Consequently, Movistar clients have discussed and complained about bad Netflix performance, as the following post illustrates: “Hi. I’m one of those with a shabby fiber connection from Movistar. I’m accessing Netflix and the quality is even worse than a screener one can download from the Internet. I’ve called the 1004 and they do not have evidence of any problem, and that its [Movistar’s] fiber connection is the best one, etc. etc. (…) I’m really considering the idea of switching to Orange”.

Content
Netflix arrived in Spain with approximately 900 titles. Due to territorial licensing and copyrights, Spanish subscribers have access to less content than their North American counterparts. While Netflix has not made any official data available about the catalogue sizes, data published in February 2017 by Finder indicates that Netflix-Spain included only 20.4% (236 titles) and 22.69% (1,042 titles) of the TV shows and films included in the US catalogue, respectively. Ranked by catalogue sizes, Spain occupies the 99th position from the top (Finder, 2017).

The quantity of titles in the Spanish catalog has been increasing over time. Unogs, another unofficial tool that gives information about the titles included in and deleted from the catalogue indicates that Netflix-Spain currently contains 2,092 movies and 565 series (as of June 19th, 2017).

The inequality between catalogues has stimulated the search for alternative ways of accessing content available in other countries (e.g. through Virtual Private Networks).[9] Moreover, some of Netflix’s most popular programs are not available in Spain—or other non-US markets because Netflix did not secure international rights for its first series including House of Cards and Orange is the New Black. Movistar Series obtaining the rights and distributes these series.

From the trailer for 7 años

The first Netflix original content set in Spain arrived one year after the portal’s launch in Spain. The psychological drama 7 años (7 years, directed by Roger Gual) Netflix’s first Spanish original movie. It was released on October 28th, 2016 in 190 different countries which made it the “Best distributed Spanish movie in the History [of the country]”, according to actress Juana Acosta. Las Chicas del Cable (Cable Girls, Bambú Producciones), the first Netflix original series from Spain, was released on April 28th, 2017.

From the trailer for Las chicas del cable

In June 2017, Netflix published data about viewing patterns in Spain. As in other countries, Spanish viewers prefer family-oriented content to start the day, with titles such as A Series of Unfortunate Events, Beat Bugs, and Skylanders Academy being popular. Interestingly, the consumption of this type of content goes on until about 7pm in Spain. In the afternoon, fantasy and horror shows are the most popular programs (e.g. American Horror Story, Hannibal, Once Upon a Time) whilst the average international viewer opts to watch dramas during this part of the day. Following international patterns, thrillers are the most popular genre in the evening (e.g. The Walking Dead, Dexter, Breaking Bad, Stranger Things). After 1am, Spanish viewers tend to watch comedies (e.g. The Unbreakable Kimmy Schmidt, Friends, Master of None) and documentaries (e.g. Making a Murderer, Planet Earth). During prime time hours, Narcos, Stranger Things, Friends, Breaking Bad and Suits are the five favorite programs of Spanish viewers.

Consumer and Press Reaction
Netflix’s arrival was extensively announced and celebrated by Spanish news media, which actively promoted the features of the Netflix service to potential users. Some newspaper articles and media reports emphasized the “long wait” preceding its entrance into the Spanish market. Spanish media also regularly promote new Netflix releases.

One year after its arrival, VayaTele ran a survey on Facebook to explore Netflix users’ opinions.[10] The ability to watch the content on multiple devices, the price, the personalized recommendations, along with the possibility of creating multiple profiles within the same account (including specific ones for Kids) are widely seen as some of Netflix’s strengths. With regards to the pitfalls, critics were focused on the limited catalogue, the operation of some apps, and the search systems on Smart TVs, as well as the inability to watch content offline ─which Netflix started to offer by the end of 2016.

Sole subscribers of services such as Netflix tend to be on the younger side (57% are less than 35 year-old) and are predominantly male (57%). They are used to watching foreign TV series and films. For them, the low price is an important consideration for maintaining their subscription. On the other hand, sole IPTV clients are characterized by having a particular interest in the main content of the service they are subscribed to (e.g. football or films), and a low interest in other types of content. Clients that subscribe to both IPTV and services such as Netflix are big consumers of every type of content, like football, films, TV series, and so on. About 60% of them are between 25 and 45 year-old. What they really value is having access to services that satisfy their needs. Thus, they do not see the subscription price as an obstacle. Finally, internet users without a pay TV subscription (49%) are on the older side (65% are older than 35 years) and, moreover, are mainly female. This group of consumers is particularly interested in the content offered by linear DTT (e.g. news, Spanish TV series, music) (The Cocktail Analysis, 2017).

Local Netflix Office

Netflix does not have a Spanish office.

Notes

[1] See Barlovento Comunicación (2016). “Análisis Televisivo 2015”.

[2] For more information about piracy habits in Spain, see: http://lacoalicion.es/wp-content/uploads/observatorio-pirateria-esp.pdf

[3] Atresplayer offers premium viewing which gives the viewer the possibility to acquire the episodes around 48 hours before they air, for weekly content; or 24 hours before, in the case of daily shows. However, it is not included as a pay platform in the CNMC report.

[4] The questions allowed multiple responses.

[5] See https://blog.cnmc.es/2017/05/26/panel-de-hogares-cnmc-netflix-se-cuela-en-mas-de-medio-millon-de-hogares/

[6] CNMC uses the category “others” to refer to “those Pay TV services offered through OTT Services which have been reported by both Terrestrial TV broadcasters and operators which offer audiovisual services through Pay TV platforms”.

[7] Movistar+ is the new name of the platform Yomvi.

[8] Enli, Gunn and Syvertsen, Trine (2016). “The End of Television – Again! How TV is still influenced by cultural factors and the age of digital intermediaries”. Media and Communication, 4(3), pp. 142-153. doi: 10.17645/mac.v4i3.547

[9] Netflix announced that it would stiffen its rules against VPNs. See https://media.netflix.com/en/company-blog/evolving-proxy-detection-as-a-global-service

[10] The results of this exploration are just exploratory and, hence, cannot be considered as scientific. Although the survey was non-representative, it gives an idea of the users’ feedback.