Digital Is Dead – Long Live TV and The Web!

Nigel Walley -  July 2009

I received a flyer in the post from the Institute of Direct Marketing (IDM) the other day, outlining the curriculum of their ‘Complete Digital Marketing Course’.  What was remarkable about this flyer and its grandiose claim, was just how incomplete the course was.  In a week when AudiTV launched an on-demand service on Virgin cable’s Showcase, and Honda’s webTV service moved to the front page of the BT Vision EPG, there was nothing about breakthrough digital TV marketing in it at all.  With Sky launching green button advertising on the satellite platforms, there was nothing about interactive television formats; and with both Sky and Virgin developing targeted broadcast and targeted on-demand mechanisms, there was nothing about converged marketing principles, bringing together internet techniques with broadcast content.  And it wasn’t just TV that was ignored.  At a time when DAB is firmly back on the radar screens thanks to Lord Carter, there was nothing about digital radio marketing, and in a week when I stood in Victoria station watching coverage of the Tehran rioters on the big newscreen, there was nothing about digital outdoor. The DMA was of course just a session on web marketing, with a bit of mobile thrown in for amusement. As you can see though, it wasn’t the pompousness of the word ‘complete’ that struck me.  It was the redundancy of the word ‘digital’ in a marketing context.
In Decipher, we have been saying for a long time that if you use the word ‘digital’ in a marketing context, it is because you are too stupid or too lazy to use a more accurate word.  Unfortunately, the trade press and the agency world are complicit in re-inforcing this ineptness. If you read the new media trade press, the word digital is used predominantly to refer to stuff that is simply web marketing.  On a good day, it refers to both web and mobile.  If you speak to any digital agency, you will find they are web marketing agencies who do a bit of mobile when required.  This is not intended to diminish their contribution. The world of web marketing has emerged as a complex, multi-faceted market with many, sophisticated formats, products, currencies, reporting systems and analysis techniques.  But it is still only web marketing. Most digital agencies don’t address all internet formats, let alone all digital formats.
There is an equally complex, multi-faceted market landscape growing up around Digital TV which is being ignored by the marketing community.  As Tess Alps said in NMA this week, ‘TV is part of the new media age as much as the internet’.  The truth is that if you take Google out of the equation most ‘digital’ marketing money is spent on TV.   The new media industry doesn’t seem to have spotted this.  In Marketing magazine last week, Fiona Ramsay talked about how red button had failed as a format, but I had just received an announcement saying that Sky was running their 40th red button campaign of the year, up on this time last year. The backdrop to this red button advertising is a continued growth in red button use around content. During Wimbledon this year, over half of all digital homes pressed red more than three times.  This is the same week that the BBC and ITV announced that they were creating TV widget for iPlayer and ITV.com that could be launched from broadcast on Yahoo Widget enabled TVs.  Sky also announced the Autumn launch of SkyPlayer for Xbox.  Now, who is meant to deal with the marketing implications of these new formats. The truth is that red button and other emerging TV formats don’t fit the nice ‘traditional vs digital’ structure the industry likes to work in.

The reason this matters is that it highlights the failure of the traditional side of media to deal with the emerging TV formats and systems.  Whilst these are predominantly TV formats, they are too hard for the traditional agencies to deal with, but too integrated with broadcast for web or DM agencies to do anything meaningful with. So the industry ignores them.  The red button stuff is just a symptom of this, but it is the part of the story that has never been written about red button.  Red button is essentially a TV medium that was given to the internet and DM agencies to deal with because the main agencies didn’t get it.  But the internet and DM industries couldn’t make the necessary content because the TV budget had always been spent by the main agencies and the other agencies weren’t able to plan for its use in the context of a TV campaign.  We heard this story over and over again over the last few years.  A newly emerging example of this inability to deal with emerging TV formats is online video advertising.  We are now hearing that  ‘traditional’ agencies don’t understand it but  ‘Digital’ agencies don’t have the capability of making the right content or planning it in the context of a TV deal.  We hear this two or three times a week at the moment and it all sounds very familiar.  ‘Digital’ agencies unable to deal with a digital format. The truth is that online video is predominantly a brand format that needs to be planned and created as part of a TV campaign and neither ‘traditional’ of ‘digital’ agencies are set up to do it.
The trouble is that they think they are.   John Owen of Dare said in last week’s Campaign that ‘digital is a state of mind, not a description of channels’.  Well it is a pretty blinkered state of mind.  Nobody with the word ‘digital’ in their job title ever seems to have an opinion on the cost of advertising on Sky Channels, ITV3 or MTV, even though they are digital-only channels, let alone knowing anything about TV interactivity, TV on demand or IPTV marketing formats.  The truth is that, at a time when we need broad minded integration of agencies,  the so called ‘digital’ industry has become as parochial and small minded as traditional media. No less a figure than Mike Nutley of New Media Age commented on this last year.
As if that wasn’t bad enough, marketing people have even started using the word ‘digital’ as a noun, as in ‘we are going to use ‘digital’. The minute that the word ‘digital’ shifts from adjective to noun, you know that it has had its day. It is a useless word for our market and deserves derision.  But then, we have been here before.
Back in the mid 80s, before all of this new media nonsense, I was working as an architect for a very trendy company in Soho designing bars and restaurants.  In those days we didn’t call them architectural practices, with the fusty connotation that brought.  We worked for ‘design’ practices.  These ‘designers’ were made up of architects, furniture designers, graphic designers and other assorted visionaries who we were slowly repackaging the world, in a festival of Philippe Starck inspired ‘design’ enthusiasm.  However, towards the end of the 80s, something very odd happened to the word ‘design’.  It started to be stuck in front of anything vaguely unusual, or contrived. It gradually even transmogrified into ‘designer’ which slowly became a term of derision, like ‘estate agent’. The word ‘design’ became redundant and architects started calling themselves architects again.
Even before the arrival of the DMA’s ridiculous flyer, I had been thinking about a similar demise of the word ‘digital’. This was mainly because of Stephen Carter. For the last few weeks he has been addressing an assorted rag bag of unrelated issues, under the title of Digital Britain.  This phrase has the same amount of credibility as Cool Britannia.  You initially think it sounds good, and then its overwhelming vacuousness creeps up on you.  You knew that BritPop was over as a phenomenon when Tony Blair and Alistair Campbell tried to harness it under the Cool Britannia initiative.  It’s the kind of embarrassing thing that your Dad dreams up when he is trying to get hip with the kids. I am hoping that Digital Britain has finally done the same for the word digital in popular parlance.  Somehow we need to address the problems it causes in creating damaging demarcations in the marketing industry.
This may happen in the same way as with the word ‘designer, where the realization of how vacuous the word was crept into mainstream consciousness.  In this morning’s Times, Libby Purves wrote: ‘the word ‘digital’ joins a long list of adjectives too exciting for their own good’. When even someone as ‘analogue’ as Libby Purves spots the ridiculousness of a technological word, then you know that it has had its day.  I work in media.

Filed under: Future Advertising , BT Vision, Future TV, futureadvertising, IPTV, Nigel Walley, On-Demand, TV, Virgin

Why do I still watch broadcast TV?

Adrian Stroud – June 2009

I recently challenged myself to work-out why I still watch so much ‘live’ TV. I don’t mean news or sport because I can rationalise those genres quite easily. I mean bread and butter programming.
The challenge came about because I was debating just how much more damage all the VOD services and PVRs will do to live TV viewing figures in the long-run. This is important because it is those live viewing figures that contribute the vast bulk of advertising impacts. VOD currently delivers far, fewer impacts per hour of viewing than live TV, so the ‘end game’ for advertising funded TV programming is defined by this question. My guess was that live TV won’t drop more than perhaps 25%, no matter how many VOD and time shifting gadgets like Sky+ launch, but I could not say why. I suspect I’m making the mistake of confusing the technology with the benefits.
VOD and the PVR are the rational way to consume all but the livest of live TV events. So, when VOD has all the content you want and it is available on every screen in the house, why would you want to watch ordinary old broadcast TV at all?
Live TV has one strong thing going for it – ‘missability’. When you turn your TV on, the rational thing to do is to check a few favourite channels to see if something is sneaking past you that you might like. If I find something valuable in this initial foray into live TV I’ll add it to my Sky+ planner. But here is an odd thing, having committed to recording a newly discovered programme and all subsequent episodes; I’ll probably continue browsing likely sources of live entertainment. When I’m in this mode I’m not actually looking to make a commitment to something I really enjoy. I’m probably expecting to be interrupted or be forced to change channel to meet someone else’s taste. The stuff I really like is salted away for some future, quiet, uninterrupted hour that never comes. So missability is a factor for me at the moment but what if just about every TV programme you could think of was available on demand? How can you miss something then?
Misability is not always what drives me to the broadcast channels first. The conditions under which it seems appropriate to commit to a piece of VOD material are quite specific. The kids must be in bed (a deadline that slips further and further into the evening) and a joint decision must be made with Mrs Stroud as to the duration available for shared viewing and of course there is then a debate about exactly what to watch.
By habitually recording things I like and then delaying their consumption to some future ideal moment that never arrives, I could easily end-up watching less programming that I really enjoy than I did when I had to strike while the iron was hot.
Here is another odd thing. Watching one of my ‘favourite’ programmes sometimes just does not appeal as much as watching short bursts of fairly random content. When left alone with the remote control and hour to waste, I’m likely to channel hop. I might leave a programme in a dull bit and give it another chance a few minutes later knowing that it will have moved-on.
The use of Sky+ to time-shift seems to have levelled off at about 15%. This is an average drawn from a very wide spectrum of behaviour so don’t worry if you are not typical. It is not an average like the average shoe size for men is 10, it is more like the average score for a blindfolded darts player will be 10.
Maybe 15% has always been the average amount of consciously planned TV viewing, and VOD and PVRs have simply revealed this underlying truth? Maybe 85% of viewing was always low-commitment and ‘a bit random’ and we were unconsciously quite happy with this. Let’s face it, how could TV have become such a world-wide hit, occupying many hours a day for most people in most countries if ‘fairly random, low commitment viewing’ was not fun?
So the reason I watch live TV is rational but it is not about being live, it is about serendipity and the way it can be randomly sampled – it is a about browsability. When I channel-hop into a programme half way through, I know that is what I have done and that is exactly what I wanted to do. I don’t want to navigate a hierarchical menu system, highlight a title, see the channel indents, pre roll and then sample ten minutes of scene-setting before a drama gets going. I want a random few seconds somewhere in the middle. I don’t even want a ‘sampler’ of best bits edited together. If I go back to the same programme five minutes later I want it to have moved-on by five minutes. If I’m channel hopping while the children are still around I want to know that I’m not going to stumble across something violent, rude or frightening. Of course, when they are safely in bed these become positive selection criteria.
I have yet to see a VOD system that has the browsability of live TV and that encourages the same happy-go-lucky lack of commitment to viewing a whole programme. But surely a VOD system could mimic these attractive features of broadcast TV and offer added benefits? I suspect that the current generation of VOD systems are assuming that our TV consumption is more planned and sensible than it really is.
Rather than thinking about what the end-game is for live broadcast versus on demand, the real question might be how much TV viewing will remain low-commitment, fairly random sampling? It would be surprising if on-demand systems did not eventually meet the need for browsability better than the current broadcast channels. But if they do, will they be able to deliver about fifteen, spots an hour like live TV does? If you have some cash for research I’d love to see what can be done.

Filed under: Ad Formats & Cases, Commercial Models, Distribution & Devices, Future Advertising, IPTV, Interfaces & Functionality, PVR / DTR / DVR , 4OD, BBC, BT Vision, CH4, CH5, ch5 on demand, demand five, iPlayer, IPTV, ITV, ITVplayer, Joost, Sky, Sky Anytime, SkyPlayer, Tiscali, topupTV, VOD

Creative Britain By Govt. Diktat?

June 2009 – Nigel Walley

I have always found the idea that you shouldn’t kick a man when he is down, to be rather odd.  If you are going to kick someone, ‘when he is down’ seems like a great time to do it. For a start, he is near your feet.  So, in that vein, lets have a go at Gordon Brown.

I got a call a few months ago from  a consultant working for the DCMS.  They wanted me to take part in something called their ‘Creative Britain’ programme.  Now, this  ‘aims to move the creative industries from the margins to the mainstream of the UK economy’.  This annoyed me immediately,   I didn’t realize up to that point that the government viewed me as being at the margins of the economy.  They made me feel better when I read on their site that the programme views  ‘talent, innovation, business growth and intellectual property as key drivers of success in the creative industries’.   However, for anyone running an agency this really is stating the bleeding obvious and all very big government.
But it made me wonder what tools or devices does a government have to help an industry like ours.  In simple terms, there are only two areas where they can play: regulation and fiscal policy ( tax and spend to you and I ). This is where it all got a bit odd.  They went on to say that they are committing ‘£70 million to support the strategy…and successfully deliver a range of commitments’. 
Now, initially you think £70M sounds significant.  But when you consider the UK has 250 advertising agencies that make more than that a year, around 50 digital agencies that make more, and that’s before we get into radio, TV, music, movies, design, architecture, publishing  and the other  20 odd industries that are covered by the programme.  In terms of sharing it around it doesn’t seem so much.
However, when you discover how it is being spent you quick become grateful that its such a pokey amount of money. It is to be spent on breakthrough initiatives such as helping councils invest in’ mixed media centres,’ launching ‘a World Creative Business conference’, creating 5000 apprenticeships in creative companies by 2012 and, intriguingly, a £3M research programme ‘to improve the capacity of growth oriented,  small and medium creative enterprises  to innovate’. 
Now  the thing to remember that this is our money they are spending on this nonsense, and that fiscal policy has two parts. Before a government can spend, it has to tax and this is the rub for creative industries. During the lifetime of this government it has enacted three elements of fiscal policy which work directly against the interests of the creative industries, and whose impact dwarfs the (so far unmeasurable) outcomes or the Creative Britain programme. It has raised the corporation tax threshold for small businesses , it has reduced the capital gains allowances for business owners who sell their agencies or production houses and most recently, they have raised the personal tax rate for top band employees.  This is classic ‘take with one hand, and pretend to give with another’ and undoes any good that their token initiatives may deliver.
The cumulative impact of these changes is to dramatically disincentivise the kind of entrepreneur who turns their initial creative impulses into job creating, small and medium size businesses.  The only place that Cool Britannia will exist , if this goes on any longer, will be in the Macclesfield Council ‘Mixed Media Centre’ where I will be selling  the popcorn.

Filed under: Uncategorized

Let Me Count The Ways of VOD

May 2009 – Adrian Stroud

I’ve got a thing about redundancy, not the type that starts with your boss coming into your office and closing the door behind them, the type that comes from having more of something than you need.
The sort of redundancy I’m thinking of first came to my notice with CD players.  For people of a certain age, the conversion from vinyl to CD was a significant leap of faith. It was a conscious decision that was carefully considered and expensively executed.  I recently counted all the bits of equipment in my house capable of playing an Audio CD – there are at least 18.  Some of these devices, I can bet have never played an Audio CD in their life.  Many are gathering dust at the back of a drawer somewhere because, although redundant, they are serviceable and my pre CD brain can’t cope with disposing of something with such valuable functionality.  
I’ll bet that within a few years the same thing will happen with VOD and any bit of kit associated with a screen.  Of course, to some degree I’m predicting the past here – the whole point of this piece is that I’m going to count the multitude of ways that my suburban home is already equipped to deliver a VOD experience, despite me never having made a conscious effort to achieve VOD readiness.
I delight in being resourceful (green and mean) by resuscitating old PCs for the children to use.  I have three children, each with an elderly but functional PC in their room. I have a laptop for work, and so does my wife and we have a more up-to-date ‘family’ PC downstairs. That’s six PC’s between five of us.  I didn’t count the Media Center under my TV because I don’t use it as a PC. I got the Media Center for music and photos.  In my mind it is Av equipment, as is my Sky HD and PS3.  The PS3 was my Christmas present from the family.  At 48 I must have been quite a demographic anomaly in terms of the target group for the PS3. When asking for advice, the young sales person in GAME asked my wife what sort of games her son enjoyed.  I think it is a fantastic piece of kit and it serves as our lounge Blue-Ray/DVD /CD player as well as my shoot-em-up game machine.  I have a PSP that I rarely used and a couple of years ago we got a Wii for the children.  My phone is 3G but I must admit I’m unsure about my wife’s phone or my daughters – so let’s leave phones out of it.
 We are a bit unusual in that we also have a Sky+ that feeds another room. This extra Sky+ is a luxury legacy of having been a Sky employee.  Remember, I’m only counting equipment that is broadband enabled and capable of supporting VOD.  I have a surround sound amp and projector too so the wiring hanging out of the back of my TV console looks like medusas’ head.  
OK, excluding phones, I recon our household currently contains 12 pieces of equipment capable of delivering an IP based VOD service.  Other than making me an obvious target for a burglary, what does this tell us?  Did some of those devices surprise you? The Wii for example?  The Wii has no hard drive so it is not an obvious candidate but a limited VOD service has been announced for this year in Japan.   The PSP?  It also has no hard drive but when within reach of my wireless network it will happily stream Video from the PS3 to its lovely little screen.  The PS3 is a very capable piece of equipment.  It has the best picture quality of any device in my house and is a perfect VOD platform. It has plenty of computing power to operate a beautiful and responsive interface. No wonder Sony have big plans in this area with a service launching this summer.   Despite claiming that the PS3 is ‘mine’, the girls and their friends all have a log-on and they love it.  When Sony launches their PPV film service we will be early adopters.  If it offers up-to-date content (see No Long Tail Please – I’m human) my dependence on Sky and my trips to Blockbuster will reduce significantly. 
Sky’s VOD service to the STB is probably twelve months or more away.  If they limit that service to Sky broadband customers it will be an irrelevance to me.  I’m a happy AOL broadband customer and the lure of another VOD service might not move me to Sky Broadband.
At Decipher we have just equipped one of the studios  with the latest Samsung TVs that has an Ethernet connection and supports ‘widgets’ that let you run useful little internet applications like Twitter,  Flicker and Yahoo News feeds but we also understand the menu will shortly include BBC iPlayer.  So, if I had one of these, I could already have four devices associated with my main TV that could be independently VOD enabled.  I can’t be very unusual in this regard.
When gazing into the future it is tempting to look for simple scenarios and stories.   In the mid 1990’s when I was involved in BT’s ground breaking VOD trials it was such a monumental  task setting up the video servers, high-end STBs and network capacity that it looked certain to be a business only a few big players could ever be involved in.  Now, companies like IPVISION will build you a white label IPTV service, including content acquisition. All you need is the marketing clout to shift a lot of STBs and business plan that recoups that outlay. Now the future looks messy and complicated with overlapping platforms in most households.
My guess is that the end-game for all this is that in the next five or ten years the average home will have many devices (in addition to PCs) potentially capable of accessing free and premium VOD content. Most will be redundant because VOD capability will be a secondary function of a piece of equipment that is really excellent at doing something else.  Some will be gathering dust in a cupboard like my CD ‘walkman’ – not because of any distinct lack of functionality but because they are not aesthetically pleasing or are not quite as easy to use as the latest generation of device.
 If I was a content owner I’d be thinking about standard deals that get my content onto every platform and in front of as many people as I can.  I’d be very hesitant about giving exclusivity to a particular service – I’d just want a bug slug of the revenue from whoever succeeded in getting my content in front of a paying customer.
And here is my main point – When you are in a situation of significant redundancy and there is are many VOD services offering largely the same content under similar terms, the differences in usability only have to be trivial for a device or service to drop out of use altogether and be relegated to the dusty cupboard.   Aesthetics, usability and the importance of personalisation are subjective and it would be surprising if the tastes of one generation were the same as another.  Every member of the household will have more than one way of accessing VOD and they will be able to choose the service and device that suits their whim.

Filed under: Uncategorized

Whose Shares Wins? ITV vs Google

See Decipher discuss the Susan Boyle case on Channel 4 news here

Much was made in the press about ITV not earning any revenue from all the people watching the clip of Susan Boyle on Britain’s Got Talent on YouTube.  This has been described by various commentators as a missed revenue opportunity, and a commercial failure for ITV.  This completely misses the point.  Over 50 million people tuned into watch the Susan Boyle clip on YouTube.  It was the best two minute ad for a TV programme that has ever been distributed and ITV didn’t pay a penny for the privilege.  You have to ask how many posters a TV company would have to buy to get an equivalent, media impact.  The only statistic of interest should have been the uplift in audience, from the episode before to the episode after the YouTube explosion of Miss Boyles version of Les Miserables. There was a 2 million uplift.

There has been a bizarre implication in all the media coverage over the last two weeks, that because of this example, YouTube is somehow a 21st century business and that ITV is an old fashioned business that doesn’t get it.  ITV maybe sitting in the middle of firestorm of reduced ad spend, but at least advertisers are spending with it.  They are barely spending with YouTube, which costs Google the best part of a billion dollars a year to run, but makes it only 200 million dollars in return.  It is one of the last of the dot.com absurdities – a great functionality in search of a business model. 

The press commentators declared that ITV’s shareholders were funding content that YouTube were exploiting to build a business and that they should be up in arms about it.  But this perspective was not based on a sensible analysis of commercial outcomes.  If you look at the issue from a revenue gained point of view, the only shareholders who should be up in arms are Google’s.  Their expensive acquisition, YouTube,  distributed an amazing two minute advert for Britain’s Got Talent from ITV for free on their platform.  For Google or YouTube to get the equivalent value out of ITV you would have to pay them millions pounds.

YouTube is the best thing that has happened to the TV industry in the last 20 years.  The idea that people are tuning into the UGC site, rather than watching TV is preposterous.  There is just no evidence that it is happening.  Consumers get the idea of relative value between them. YouTube is a clip sampling destination, not a TV destination. 

More importantly brands understand the relative value. T-Mobile the brand behind another recent YouTube hit  – the Liverpool Street Station dance scene -  quite clearly understand the comparative value exchange at work here.  When they wanted to launch their follow on campaign to the dance scene, they chose not to launch on YouTube, but paid serious money to good old ITV to put their ad into the centre break of…….you guessed it…Britain’s Got Talent. You can bet that the perceived price and value of the spots they used had increased dramatically because of YouTube’s free support and the extra 2 million pairs of eyeballs it delivered.   If I were a TV exec I would be gagging to get promo footage of my shows onto YouTube.

The only cause for complaint among ITV shareholders must be that Google let YouTube provide ITV with a global promotional base for BGT, but ITV don’t own the global rights to exploit the programme asset. But that is a different moan.

See Decipher discussing the media coverage on Channel 4 News here.

Filed under: Commercial Models, Future Content , Future Programming, Future TV, ITV, Nigel Walley, On-Demand, YouTube

Acronym A Go-Go

Nigel Walley - March 2009

I received an email this week from a contact who works in the TV industry in Australia asking my opinion on something to do with what he called ‘PDRs’?   Now I had to stop and think what on earth he was talking about. Eventually I went back to him to check my assumption that PDR meant ‘personal digital recorders’.   These are, of course, what we would call a personal video recorder (PVR) or, if you believe Sky, a digital video recorder (DVR) or, if you follow Tess Alp’s of Thinkbox’s mantra, a ‘digital television recorder’ (DTR) or, if you are the Dixon’s web site, a little bit of all of them, without explaining the difference.

Now when this acronym fiasco started we were only really dealing with two options – PVR and DVR.  Decipher made the assumption that a personal video recorder – a PVR – was something that behaved like Tivo in the US, learning about your likes and dislikes and recommending programmes to make a truly ‘personal’ service.  A digital video recorder – a DVR - was a more simple device which just did exactly what you told it to do.   I know  that Thinkbox were concerned that neither of these acronyms contained the word television.  As the main cheerleaders for the UK broadcast ad sales market, Thinkbox’s Tess Alps wanted to make sure that telly was central to the idea, and began to promote DTR.  In fact she has been banging heads around the industry to make us all use the same DTR acronym.  Strangely, among some consumers, the name of the original box in the market, Sky+, is becoming a bit of a generic term for the device. It is not uncommon to hear people say ‘I Sky Plussed it’ when they have recorded something. We have even heard people with a Freeview PVR say the same thing.  On Decipher’s behalf I can say that we really don’t care which acronym is used, as long as all providers in the industry coalesce around it.

The confusion about what to call this device is typical of the TV industry shooting itself in the foot over new technology introductions.  Compared to the internet, the TV industry always struggles to get quick, mass acceptance of new technology introductions, particularly within the creative communities.  Their inability to agree to industry wide naming conventions goes a long way to explain this.   A great example is the advent of catch-up TV on-demand.  Half the platforms called it catch-up TV, while BT Vision and Tiscali / Homechoice decided to call it ReplayTV.  Nonsensical.  Thankfully, Tiscali has now changed sides, and called it catch-up. However, BT Vision currently is still sticking to the Replay idea. 

This just highlights how the TV industry has a crying need for shared terms, descriptions, icons and signage around its new functionality. However getting the different platforms (Sky, Virgin, BT Vision, Freeview and FreeSat) to agree about something, is liking herding really belligerant cats. What tends to happen is that the platform that gets to market with a new feature first, gets to establish names and presentational conventions. Hopefully, the rest then adopt these, however the catch-up example shows that this isn’t always the case.

The area crying out for co-ordination at the moment is future advertising formats. As on-demand and PVR capability roll out onto every platform, the potential for new ad formats to be delivered is multiplying. Red buttons, green buttons and yellow buttons are being called into play by different platforms, each of who are emphasising a different set of formats in their development plans.  For agencies and brand clients trying to work through this, it will be a nightmare, unless some group can broker a more co-ordinated approach.  As we saw with early red button campaigns, unless agencies are given standard formats and terminology across all platforms, they just don’t come on board and its impossible to drive volume.  This might be the time for a bit more of Tess’ head banging.

Filed under: Distribution & Devices, PVR / DTR / DVR , DTR, DVR, Future Advertising, Future Programming, PVR, Sky, Virgin

No Long Tail Please – I’m Human

Adrian Stroud

Commercial TV funded by advertising is an astonishingly scalable business. You can look at the richest territories in the world such as the USA and note that when it is fuelled by $70bn in TV advertising, the TV industry can produce a service that occupies 34 hours a week of leisure time for the average adult. Then look at Serbia, with a TV ad spend that is about 1% of the USA and, you guessed it, they keep the average Serbian adult busy 34 hours a week. I know this ignores other revenue like subscription but you get the point. With a business model that scalable you’d have thought the UK TV industry could absorb a reduction in advertising revenue of a few percent without all the talk of the sky falling-in. 

So why all the gloom? Here is how I imagine it works – If you are a TV company emerging in a primeval TV market, the first thing to worry about is what I’ll call the ‘cultural fit’ of your programming. Cultural fit is how well your programming represents the hopes, fears, morality, culture and aspirations of your host nation. A cheap programme with a good fit will easily beat an expensive one with a poor fit. Eventually, all the surviving broadcasters have achieved a high level of cultural fit and they are driven to try to out-spend each-other because once the cultural fits are all balanced, the biggest spender will win the most ratings. The TV production business will absorb all the money available to it – There is no point at which it will ever have ‘enough’ money. Hence TV (and film) production costs rise to excruciating levels and stay there. There is a ratio to be worked out here if you had the time, but I’d guess it is something like every £1 you spend on ‘fit’ is worth £10 on other production costs. That is why the best writers, directors and producers are so well remunerated – they can spot a poor fit and hopefully correct it before your blow your production budget on a turkey.

So in a mature market you’d expect a handful of broadcasters to have almost exactly the same degree of cultural fit in their programming and for them to be at the very limit of what they can afford on production and acquisition.  What happens to our terrestrial commercial stations in a recession then? In theory, they could all just reduce their spending a few percent and have perfectly healthy profit-margins.  We know this is true because lots of TV markets spend a heck of a lot less than we do and have just as much overall viewing.  But what if your major competitors include BBC and Sky – both of whom have an income that looks pretty recession proof?  Well, the outcome of dropping your production costs is likely to be a disproportional loss of viewers followed by further drop in revenue and you face the spectre of ‘spiralling down’ to some much lower level.  If my mental picture of ‘cultural fit’ being of paramount importance by something like 10:1 over production costs is correct, we can expect them to fight back with programming that is cheaper but that reflects the hopes, fears, morality, culture and aspirations of the average Brit even more closely than they managed before. Is that possible?  I assume the whole purpose of the public service remit has always been to prevent that very thing from happening. So yes, it is possible but not with the current burden of public service. If the public service leach is loosened you can expect more paranormal, studio-based, live, confrontational, reality game-shows than before.

This way of thinking can help to understand what happens in the international programme market. The cultural fit of American TV programming in the UK is not perfect but the production cost of the best stuff is so high that it can win decent ratings against UK originated programming. The same is true of US programming in almost every market.

The ‘cultural fit’ 10:1 model would predict that we should import almost no programming from territories that spend the same or less than we do on programming – and sure enough, we don’t.  It would also predict that we should have great difficulty selling our programming to the main US networks where they spend much more per hour on domestic programming than we do but we might succeed better with major channels in territories like Australia that have a similar culture and spend less per hour on their own content – both true.

Hollywood films have such massive budgets that they can bludgeon their way past the cultural fit problem.  Every now and again a low budget film is the first to spot that the cultural fit has changed and that the mainstream studios have failed to notice. They can exploit this observation and beat more expensive productions hands-down, Easy Rider is the most obvious case I can think of. Punk rock would be the music business equivalent.

What about older UK programming? Here is a surprise. The cultural fit of domestic programming declines steeply over time even in its home territory so programming from the past becomes rather like material imported from another country. This is because the very best programming matches the current profile of cultural fit so well that even a year or two later it has lost it’s edge and it’s appeal is fading compared to newer productions. As production costs rise, older programming also does not have the benefit of what were considered high production values at the time, so it gets a ‘double whammy’ in terms of damaged commercial value.

Even worse news for older programmes – humans seem to be programmed to seek out the ‘new’ so anything perceived as ‘old’ has a disadvantage for irrational reasons. That is a triple whammy so far and a fourth ‘whammy’ is on the way.  The combined effort of the worldwide TV production and film businesses is producing good new content faster than you can watch it. If your Sky+ is like mine, it is like a magic beer glass that re-fills faster than you can drink it. With what feels like an oversupply of good new stuff there is no point giving something a second chance some years later. Your Sky+ hard drive is effectively a personalised VOD service that benefits from the combined programme budget of every broadcaster on the platform. For a new TV series to get my attention it would have to be better than, LOST, Desperate Housewives, Heroes, Scrubs, Battlestar Galactica, Ross Kemp in Afghanistan, Country House Rescue, Grand Designs, Russia A Journey..… I could go on.  All these fantastic programmes are backing-up on my Sky+ faster than I can watch them.

The closer to origin date that you consume material the more value you attribute to it. Even with new material on my Sky+ the chances of me ever watching it must half every week I postpone viewing it.  This seems to be an unconscious and unavoidable human trait. You cannot prevent yourself from feeling privileged when attending a premier. The TV and film industries structure themselves to move the moment of consumption ever closer to the point of production. As a producer, the speed with which you can get your content in front of all its potential viewers influences the value you can extract from it. The faster the value is realised, the more of it there will be.

Where does this leave an ‘on demand’ TV services with a ‘long tail’ of archive material? It should have surprised nobody that ‘on demand’ would end-up meaning ‘catch-up’.  The winning services will always be the ones that offer the fastest access and easiest way to watch the newest, most expensive, best fit material. The engineers might not have known that but surely the TV executives did?

What is clear is that even in the most ardent TV homes, viewers only have so many hours in the day to watch television. If consumers are increasingly able to use new systems to find their favourite big shiny shows, they will have less time and inclination to drift down the channel line-up in search of something to view.

TV companies used to be able to schedule the ‘least worst’ programming at any point in time and be guaranteed a decent share. In homes that have all these systems available, the middle order of multi-channel broadcasters, particularly those that are merely deliverers of archive programming, could (and should) be decimated. The quality of past TV programming is seen through the distorting lens of memory until you actually try watching some of it. The few gems you remember distort your recollection of the whole. In reality 9/10ths of it is not as good as current TV and you have no need to ever re-visit it.

In this world, we could easily lose 200 TV channels, and the consumers would still be better off. Because of the new functionality, viewing is going to re-aggregate around the output of a smaller number of bigger, better, functionality rich channels, because they are the ones that make the high profile, new content that drives the TV market.  Decipher calls this ‘multi-function TV’ and once again, for media planners it will bring both questions and opportunities.

Filed under: Distribution & Devices, IPTV , BBC, cultural fit, Future Content, IPTV, ITV, Long Tail, On-Demand, Programme Library, programme sales, Public Service, Sky, TV Advertising, VOD

TV iPlayer Looks Like A Duck But Quacks Like A Cuckoo

Nigel Walley – March 2009

 There is a rule in life that if something walks like a duck and talks like a duck it must be a duck.  It is a good rule, but we have been struggling this week with a slight variation to it.  How about if someone really big and important repeatedly tells you something is a duck, and has gone to the trouble of painting the thing to look like a duck, but every time you look at it,  it still doesn’t walk or talk like a duck?

The duck in question is the TV version of iPlayer that is available on Virgin cable.  The BBC and Virgin have made a great fuss over the fact that ‘iPlayer is now available on Virgin’.  But however much we have tried, we can’t make it quack or waddle.

What is actually available on Virgin is an alternative menu structure to the main Virgin on-demand menus, painted to look like a duck, sorry, like iPlayer. These menus have been created using the red button software already present in the Virgin set top box.  Apart from the fact that these menu screens have been coloured black and pink, it doesn’t look or behave anything like iPlayer.

First off, it must be pointed out that, despite the inference from the BBC PR at the time,  BBC catch up programming has been on the Virgin system since it launched, and is still available through the main Virgin menu system. Admittedly the amount went up from 50  to 400 hours when the new screens launched, but all this new content was also made available through the Virgin menus.  The new iPlayer menu screens therefore don’t offer the only route to the BBC catch up content in the Virgin TV VOD system.  If you want to see yesterday’s Cash in the Attic, you can go to the main Virgin A-Z menu and select A-C, and you will find the programme you were after. 

Secondly, the TV iPlayer is not connected to the internet or to the main iPlayer servers or content network.  The iPlayer branded menus merely point back at the same episode of Cash in the Attic on the Virgin servers that the Virgin branded  screens do.  Once you start playing the video, the Virgin VOD controls take over. This means that none of the presentation twists or web functionality that we have come to expect from the web iPlayer exist on the Virgin service.

Thirdly, there is the strange absence of TV channels (and radio channels for that matter).  On PC iPlayer you have a choice of looking for content via ‘Channel’ branded menus, via ‘Category’ or genre clusters, via editorialised clusters such as ‘Most Popular’ or ‘TV Highlights’, or via a very slick search functionality.  On the TV version almost all of these options have been removed.  Radio does not appear at all and all TV channel references have been removed. You are left with a genre based menu, and a very temperamental search function.

The one interesting innovation that ‘TV iPlayer’ has delivered is the ability to jump into BBC catch up content whilst watching a BBC channel.  This functionality is not currently available to any other broadcast channel who offer catch up content on the Virgin system. However, it raises an interesting question about whether this feature should be built by the broadcaster (as in this instance) or should be provided as standard across all broadcasters by the platform (as on Tiscali/Homechoice and a number of European cable platforms).  We would favour the later, as it creates a uniform menu approach for the poor customer.  

Now none of this would really matter if wasn’t for two things.  The fact that the BBC keeps telling us that the thing that has appeared on Virgin is iPlayer, when it clearly isn’t, and more importantly that the BBC keep telling us that people are using it, when they clearly aren’t.

When announcing performance statistics, the BBC have taken to calling any use of a BBC catch up show on Virgin, as ‘TV iPlayer use’, irrespective of the route that users chose to find the show.   However, we surveyed 750 Virgin homes to ask how they access BBC catch-up shows, and over 80% claimed to be rejecting the black and pink painted menus and to be still using the Virgin A-Z menus.   The BBC PR department claims these people as ‘TV iPlayer users’, when it is clearly aren’t.  They are merely Virgin on-demand users who have chosen a BBC show.

As a consumer, this stuff doesn’t matter.  As a commentator, it does rather feel like an iPlayer agenda being pursued.  Or more specifically, an inter-departmental land grab, as the iPlayer team attempt to grab and control the TV VOD world from under the nose of the channels part of the BBC, Vision.  I can understand why Virgin would allow themselves to be complicit in this in the short term, because it meant that the full power of the BBC’s marketing department was shouting about a functionlity on the Virgin platform that wasn’t available on Sky. For many Virgin customers who had yet to experiment with on-demand functionality, this may have broken down some of their reservations and encouraged trial.  But as the months go on, it must feel to Virgin that this fake iPlayer is becoming more like a cuckoo in the nest.

I like to think that the organisation that brought us Life on Earth would be able to spot the difference between a duck and a cuckoo.

Note: A truncated version of this opinion piece was published in NMA’s Comment Section this week.

Filed under: Interfaces & Functionality , BBC, Future Content, iPlayer, On-Demand, PC VOD, TV VOD, Virgin

Overhead Projectors, Broadcast Channels and Other Redundant Technologies

Nigel Walley – Feb 2009

 

I used an overhead projector for a presentation at a conference the other day.  It was great.  You get to write on a sheet of acetate, like your teachers used to, and it shines up on the wall.  Joking aside, there was something immediate and human about presenting ideas with an overhead that is completely lost with Powerpoint.  I know that I sound like a music nut comparing vinyl to the CD, but in the rush to move into the digital age, we can sometimes throw the baby out with the bath water.   Before we got rid of overheads, someone should have stopped and questioned whether there was anything great about them that needed preserving.  In fact I think they may make a comeback

 

On that not, let’s pursue the point about music formats.  It is likely that we will have a similar situation with LPs.  There will be many people who will end up owning a vinyl collection, and an iTunes collection of music, but will forgo their CDs all together.  CDs may go the way of the VHS tape and the VideoDisc.  I find it difficult to imagine someone saying what I just said about overheads, about CDs.   I did hear a very persuasive defence of the audio cassette the other day, particularly its role in the creation of compilations, as a gesture of love amongst teenagers, but I think the days of the audio cassette are gone.  Vinyl will be the great survivor because there is something about LPs that is great and human, and that people don’t want to let go of.

 

CDs will become what the Americans call a ‘buggy whip’ product.  Apparently at the turn of the 19^th century in America, making hand held whips, for drivers of horse drawn buggies was big business.  Then, all of a sudden, it wasn’t. ‘Buggy Whip’ has come to be used to mean a product or industry that just disappears as a market is redefined rather than revised.  

 

The distribution format debate has now begun to rage in the TV world around broadcast channels.  It only used to be the most fundamentalist wing of our new media brethren who would speak about the death of broadcasting channels. Now everyone is at it.  I have heard the most sensible people talking about not needing broadcast channels, and how they are now 100% on-demand. Now there is a very sensible technical argument against the death of broadcast.  If you want 11 million people to watch Coronation Street at 7.30 every night, then sticking it up in the air, rather than through an expensive network, makes the best economic sense. However, two counter arguments are appearing. The first is a neat technical rebuff.  Once we get fibre everywhere, like the cable industry, there will be sufficient capacity to not worry and that we should just make it available on-demand from 7.30.  The second argument says that making everyone watch Corrie at 7.30 at night is an old fashioned construct.

 

Now this is where the human in me starts to revolt again.  Millions of people around the country build the social routines of their household – dinner, bathtimes -  around channel schedules. Do they do this because there is no alternative and with on-demand then broadcasts are the next buggy whip.  I am not yet convinced, and the argument fails around live football.  However, I can remember when Prince Charles used to talk about organic food and saving the planet and everyone thought he was a nutter?

Filed under: Distribution & Devices, IPTV , Broadcast, CDs, channels, Future TV, multichannel, Nigel Walley, PVR, TV

The BBC Is A Pay TV Operation

Nigel Walley – February 2009

I opened my bank statement the other day to see how much I paid Sky.  What I found interesting wasn’t the Sky number, but the line underneath. By some quirk, the direct debit that I pay to TV licencing was listed underneath. I pay just over £11 a month to the BBC for TV and radio.  Now, as a middle class middle Englander, I understand how much value I squeeze out of the BBC for that money.  I probably use way over the average amount of BBC output, and don’t begrudge it.  What I find odd is that the industry still lumps the BBC together with ITV, C4 and Five in our discussions about free to air television.

The BBC is quite clearly not a free to air broadcaster.  I pay a subscription every month to access the content and it is quite clearly a Pay-TV operator in terms of the way it is financed.  The only differences between the BBC and the other Pay-TV operators are that it is a compulsory subscription and that they have a variety of public service obligations in return. 

While this may seem like semantics, the question of whether they are a Pay-TV operator or not becomes quite pertinent when you consider a different question:  ‘does free-to-air have a future?’  This normally would have been an absurd question to ask but if you look at the revenues this year so far for ITV, C4 and Five it is clear that it may no longer be quite so stupid.  The cash crisis affecting the PSBs operating in the FTA sector (apologies  – couldn’t resist the acronym clash) mean that we may be seeing the beginnings of a vicious circle where programming budgets on the non-BBC channels decline to the point where their content is demonstratably of inferior to the BBCs, so they lose share to the BBC, they then earn less from advertising and therefore have less to spend on programming. Whether a circle is vicious or virtuous often depends on the direction from which you are looking.

Filed under: Future Content , BBC, FreeToAir, Nigel Walley, PayTV, Sky