Vivendi's plan to develop a European Netflix remains on hold, with a recent report on French technology news site Journal du Net (JDN) stating the company was merging two of its struggling online streaming divisions, Dailymotion and Watchever, in order to gain greater "strategic clarity" and "operational efficiency."

JDN claims it has procured the internal documents laying out the merger. Watchever is to be absorbed into Dailymotion, with Watchever heads Simon Gillham and Karim Ayari now reporting to Maxime Saada, chairman of Dailymotion and CEO of Canal Plus.

Dailymotion , originally launched as a destination for user-generated content (UGC), has struggled to differentiate itself from the far larger and more popular YouTube. In June this year, Saada led a major relaunch, pushing the site away from its UGC roots, and from the adult and pirated content that tends to end up there. Instead, the site is now focused on professionally produced content, with news, sports, music and entertainment, with an emphasis on current, topical content.

The site does have upwards of 300 million unique visitors and a streaming platform which it wants to grow and monetize more effectively. UGC content will still exist, but Saada's strategy appears to be to broaden its appeal to include slightly older demographics (25-49), create a social network feel to the user experience and emphasize live-streaming events.

Acquired from Orange (NYSE: FTE) a few years ago, Dailymotion has struggled under Vivendi . Revenues for the first half of 2017 are €22 million ($26.6 million), a disheartening 41% down over the previous year. Full-year revenues are estimated to be about €50 million ($60.33 million), which would be about a third of the target set and less than half of revenues from two years ago.

Watchever, an SVoD service which brings together WatchMusic and Studio + (Vivendi's mobile-oriented service), also faces challenges. Its German SVoD service was shuttered last year after losses of €171.3 million ($206.7 million), and the division has needed a fresh infusion of capital from parent Vivendi. Even so, Watchever lost €22.9 million ($27.6 million) last year and €5.2 million ($6.3 million) in the first half of this year.

Putting two negatives together doesn't usually result in a positive for most businesses, but it seems that's the plan for Vivendi CEO Arnaud de Puyfontaine. At least combining the two units will reduce operational costs and complexity, and market fragmentation. This is particularly true now that Dailymotion is not a UGC site anymore, but one aimed at content genres that might overlap with Watchever in some way.

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Still unclear is what Vivendi plans to do with CanalPlay, a streaming service from Canal Plus. While the Canal Plus brand is powerful in the Francophile world, the French streaming service has gained only 500,000 subscribers -- compared to the 1.6 million who have signed up for Netflix.

If the French media conglomerate wants to combine its streaming services into one, it would make sense to merge everything under the strongest brand -- which is Canal Plus. But it would seem that Dailymotion and Watchever are seen as more youth-focused, experimental, mobile-first services, while CanalPlay will offer more traditional long-form content, such as TV shows and movies.

Vivendi is also using Canal Plus to launch a new channel and production house in Italy, along with Telecom Italia, in which it is the largest shareholder. But with a fractured relationship with former partner Mediaset, and regulatory hurdles to clear, Italy may pose its own challenges for the French media giant. (See Vivendi to Launch New Italian TV Offensive With TIM, Canal Plus and Vivendi-Mediaset: Bad Romance Gets Worse.)

At least for now, that pan-European Netflix-like service is not looking likely.

— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation