Monday, 15 May 2017

Content concepts.

My favourite part of attending a conference is learning all the new buzzwords. These are from last week’s DTG Summit.

Every industry has its own peculiar patois, but it seems to me that the content industry tries harder than most to come up with pithy phrases. At first glance, they elicit a reaction of ‘groan – that’s doublespeak nonsense’. But sometimes – only sometimes – a closer examination yields interesting insights. Let me try some out on you.

Content Infidelity: In 2013 Netflix released a survey that said, “51% of those in a relationship would “cheat” on their spouse/partner/significant other by streaming a TV program(s) they agreed to watch together before their partner had a chance to watch it”. (Its survey of 2017 went on to find that 14% think content infidelity is worse than having an actual affair.)  
So what? Such a high percentage tells me that watching TV is a fiercely social activity, and still a centrepiece in our everyday lives. It feels comforting work in such an impactful industry.

Work, Sleep, Stream: A survey by Rovi in 2015 found that watching TV was the third biggest daily time commitment, after working then sleeping. (Actually, it found that there was some overlap between working and watching TV, but that’s a different point entirely.) 
So what? TV is so important that some chose to prioritise it over all other activities. TV continues to take the lion share of leisure attention and therefore spend.

Show Dumping: This is a relatively new phenomenon, identified by Tivo in 2016 where viewers disengage from a show because it becomes too difficult to watch. This might be because it moves from one streaming service to another, especially if it goes from free (iPlayer) to subscription (Netflix). Or if it goes from a subscription you already have to one that you don’t. 
So what? It seems that content isn’t king, but economics is.

Path to Pay: As we’ve seen, the only growth area in Pay TV is in low-spending households. These are the ones who normally enjoy Freeview or iPlayer or shows recorded on their hard drive. All broadcasters are looking for a way to encourage these free viewers to become pay viewers. 
So what? The innovation in the UK market over the last year has been in this low ARPU end of the market, and focus will continue to be here. Existing products like Now TV, Amazon Fire TV, Netflix, Freeview Play will get better. But as a direct consequence, products like Sky Q and Virgin Media VIP will become more expensive and irrelevant. This is all good news for the viewer.

Skinny Bundles: Presumably due to the restrictive rights negotiated by Google, YouTube TV is launching with a mere 42 channels. This looks waifishly skinny when compared with the “over 260 channels” as boasted by the likes of Comcast
So what? These 42 channels are the ones that viewers actually want to watch. In other words, 85% of Comcast’s channel line-up is of no interest to a viewer. It should be acknowledged that there are significant issues with the rights that Google negotiated, particularly the reluctance of broadcasters to relinquish control over which ads to show to Google. Nevertheless, to misquote Andrew Neil's keynote, I hope we’ll look back on 2017 as the last time we got away with forcing viewers to buy 85% more stuff than they actually wanted.

Net Neutrality by Necessity: The growth of online video continues to be explosive. ISPs are struggling to maintain the infrastructure investment to keep up. But just as it’s ludicrous to expect to pay different electricity bills for usage by a laptop versus usage by a microwave, it’s equally illogical to have anything other than net neutrality.
So what? Viewers are moving away from delivery of TV through aerials on the roof, to delivery of TV through home Wi-Fi. The industry is having to welcome a new entrant to the TV value chain: the Internet Service Provider. The ISP has a key role in providing the broadband connectivity into the home, and usually the Wi-Fi router that flings the Internet around the home. As they did with the owners of the DTT transmitter network or satellite fleets, it’s in the broadcaster’s interest to strike a commercial relationship with ISPs. However, it’s not in the ISP’s interest to strike individual commercial relationships, not least in Europe due to legal obligations not to discriminate service based on content. ISPs will realise this once they accept that they’re nothing more or less than a fundamental utility. Which will leave broadcasters floundering to find their place in the new value chain. 

Prop-Up Programming: Even in this age of multi-channel multi-format multi-delivery fragmented viewing, some programmes still get over 10M viewers. These hugely popular programmes prop up the channel, the brand, the technology platform, and the broadcaster as a whole. However, these programmes are becoming fewer. 
So what?  If ITV didn’t have to serve 10.4M viewers with Britain’s Got Talent simultaneously, they could abandon the expensive DTT and DSAT carriage agreements, and deliver directly over the Internet. However, if ITV didn’t have any programming that reached 10.4M viewers simultaneously, it wouldn’t command the same ad revenue, and wouldn’t be able to afford to deliver its services. A neat little circle that props up the status quo, but looks more fragile as the number of prop-up programmes decrease.

(Full disclosure – I made the last two up myself and added them to the list, hoping that they’ll gain credibility by association.)

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