IBC2013 Conference Report

TV industry assembled to traditional annual IBC event in Amsterdam during last week and weekend. Timo Argillander reports key findings.

IMG_1395

International TV companies challenge national broadcasters

At the conference international TV industry companies such as Viacom, Discovery and Fremantle stressed their power and IPR portfolios. The message was that even that Netflix is regarded as a major disrupter (which it also is) there are many other companies that intend to prosper in TV business despite of digital turmoil. Discovery’s John Honeycutt reminded that they have globally 333 million paying subscribers, compared with Netflix’s 36 million. (Well, I remind that major chunk of 333 million are pay TV package subscribers.)

Content format producer Fremantle’s digital unit CEO Keith Hindle goes for global brand building. According to Hindle “people throughout the world are much more similar than they are different”. On the other hand Rob Webster, Sky, stated that UK viewers want UK content. The truth probably depends on content and market area size.

Sky is a good example of a strong national player. This is true especially in its home market UK, where its customer households spend an average of 600 pounds a year for Sky’s services.

There are clearly two strategic approaches: internationally operating companies invest in own IPRs, which they can monetize on both traditional and new digital delivery channels. The other group comprises nationally operating broadcasters that have developed good relationships with their subscribers and customer databases. Netflix actually is doing both of these. At IBC it was, however, left unanswered, what will be the role of national free-to-air and pay broadcasters in toughening competitive environment.

 

Social media found its role in viewer engagement and audience analyses

TV companies have adopted social media tools for their everyday work. Social media is used to enhance relationship with audiences by providing viewers ways to engage with TV content during the shows but also before and after a program is televised.

YLE’s Tuija Aalto told that social media is for them a way to address such (young) people, who are not otherwise consuming their content. The pubcaster’s target is to reach 80 % of Finns daily and social media is a means to target the last missing percentage points of the target.

The other role for social media is to provide analysis on how people react to a certain TV show. Several statistics were shown that illustrate how development in TV drama narrative affects the intensity how many tweets about the show are sent at which time point. Twitter’s UK director Tony Wang drummed that 60 % of tweeters tweet also during TV shows. What he didn’t tell, how many of the TV viewers are Twitter users. Twitter statistics are important for advertisers following how their ads are discussed. The analysis methods are still in their early days: even though there exist single success stories how Twitter affects TV ratings, these examples seem to be very hand-picked.

“Second screen” was often mentioned as a way to implement social interactions. The term refers to mobiles or tablets that are used simultaneously as viewing the “first screen”, the TV screen. This illustrates TV industry’s thinking that TV screen would always be the primary screen.

So far, social media seems to be something that supports TV program engagement and measurement but does not contribute to the actual content. One cross-media case was presented by production company All3Media. Their game show “A Million Second Quiz” started with a mobile game app. Best players were then selected to televised show. The show airs on NBC.

 

TV companies making friends with old enemy YouTube

YouTube is by far the world’s most popular online video service, boasting currently 1 billion monthly visitors. It has also been a major headache for content owners and broadcasters, whose content is often illegally spread on YouTube. Tides are changing however and TV companies are giving up their intentions to sue YouTube and instead try to utilize the service to promote their content and also gather advertising and pay revenues.

Fremantle’s Hindle reported that they are reaching 8 billion YouTube views this year. For Fremantle their success on YouTube is now a strategic goal they are metering. Even though their YouTube user numbers are high for a television company (they rank 12th), YouTube viewing rankings are topped by new aggregators or multi-channel networks (MCNs) specialized on YouTube content. Among such companies are Fullscreen, Maker, Zefr, Machinima, BroadbandTV and Base79.

YouTube was also speaking at IBC. Their EMEA director Matt Glotzbach assured that “at the end of the day, YouTube is a technology platform, we are not in the content business”.

 

Data and analytics can be disruptor, real-life cases still scarce

Big data hype has reached TV industry as well. Data and analytics can help TV companies to plan their program offering, provide viewers recommendation functionalities and develop targeted advertising.

The most interesting case presented was Tesco TV. The UK retailer acquired video platform company Blinkbox in 2011 and has now launched a general interest online TV channel. Tesco consolidates data from their loyalty program with Clubcard TV viewing. On this basis they can deliver targeted TV advertising based on Tesco Clubcard data and also analyze how TV advertising affects real purchase actions at Tesco’s stores.

UK’s public advertising-funded broadcaster Channel4 made in 2011 a strategic decision to be a data driven company. Channel4 has now achieved 9 million registered viewers.

 

Threat for today’s TV advertising is not the demise of 30 secs but automation and real-time pricing

Debate on the future of advertising has now moved beyond the old discussion on the alleged demise of 30 second spots. The key question now is how to deliver targeted advertising and how to introduce dynamic web-like pricing models for the sales of TV advertising.

Media develops from silos to cross-media offering. At the same time advertising will develop to cover several forms of media. Virgin Media’s Mark Brandon drew a picture where TV advertising merges with online. There will be advertising platforms that deliver advertising content to both TV and online. Data tools provide basis for media planning and data provides feedback about the effects of advertising. Also selling and pricing of TV advertising will develop in the direction of online with automated pricing and bidding mechanisms. This will weaken the role of broadcaster’s current sales organizations.

According to Brandon, media agencies also enjoy better margins with digital media than with TV media and that TV needs to respond to this.

 

4K or not 4K?

The successor of current HD resolution is called 4K (4K refers to horizontal resolution of 4000 pixels, approximately twice as much as HD resolution). All technology vendors at IBC’s exhibition are unanimous that 4K will come fast and that TV companies need to start to upgrade their equipment now.

Opposing views were heard in conference rooms, where e.g. ZDF’s CTO Andreas Bereczky sighed that “we have just invested 500 million in HD, we are not going to go to 4K now”. Bereczky reminded, that in broadcasting technology cycles are long and infrastructure cannot be renewed as fast as in Internet business.

A key question is whether there is a real consumer demand for resolutions better than HD.

 

Timo Argillander

Timo toimii sijoitusyhtiö IPR.VC:n managing partnerina ja Digital Media Finlandissa neuvonantajana. Timolla on pitkä kokemus strategiatyöstä ja muutoshankkeiden läpivienneistä yrittäjän, ammattijohtajan, konsultin ja sijoittajan rooleissa. Timon erikoisalaa ovat muuttuvien liiketoimintaympäristöjen ansaintamallit ja teknologiamuutosten tulkinta.

Kommentit