Looking Forward to Television

By David Turner (Head of Investment – Media)

Future of TV v2

I recently attended a short conference entitled the Future TV Advertising Forum (ANZ). It was an extremely insightful and thought provoking day, and it made clear that the Australian market has many more challenges to overcome than we do. The Australian networks have been competing against each other so intensely that they have detrimentally affected the medium. They’ve finally realised the need to collaborate in order to market the medium as a whole. Meanwhile, it is promising to note that New Zealand’s top three networks have been working together for some time, with their collaboration most recently leading to the launch of Think TV.

There were a number of key themes from the conference which are crucial to consider in the New Zealand market:

  1. Reinvention and expansion of the television measurement system
    We need to further investigate cross-platform measurement, and also how we compare video. For example, viewability metrics on digital are extremely different to TV. One impact on TV involves 100% pixels and 100% screen coverage, whereas one digital video impact is 50% of pixels for 2 seconds.
  2. Create a better viewer experience
    The viewer is vital and offering poor experiences is not an option. There were a variety of suggestions about how a better viewing experience might be achieved, such as less commercial airtime (although this will increase the cost of TV), better technology (SKY TV will be releasing a new OTT box this year), and content which is accessible across all devices, giving viewers greater playback flexibility.
  3. Continue to invest in compelling content
    We need to invest in quality, trustworthy content and continue to offer viewers an experience that YouTube or Facebook cannot.
  4. TV advertising is a lever for growth
    Research undertaken by the Centre for Amplified Intelligence compared TV, Facebook and Google against two key attributes: attention (cut-through) and building memory structures (product choice). Their study concluded that higher screen coverage and average pixels delivered better results. Unsurprisingly, TV came out on top, significantly ahead of YouTube and Facebook. The full findings can be found here.
  5. SVOD players have changed the game
    However, I was surprised to learn how Netflix operate, and I’m now questioning if this will be a sustainable model. Netflix are currently spending almost double what CBS do on content, and an astounding five times more than the BBC or ITV! They’re currently spending almost 80% of their revenue on content, versus 15% back in 2011. These figures are staggering, and although this expenditure is definitely the key behind their growth, it does beg the question of whether this is sustainable. If their subscription base stops growing (an issue Facebook is currently facing), they will most definitely run into funding issues.
  6. Mindsets of content creators and distributors are changing
    Disney are currently in the process of trying to acquire Fox, a very significant move that will have a number of ramifications across the world. Bob Iger (Chairman and CEO of The Walt Disney Company) recently announced that direct-to-consumer offerings are Disney’s highest priority. This position represents a serious attempt to dismantle today’s value chain and the market as we know it. Local networks who hold content distribution deals for Disney and Fox will be nervously watching the outcome, however the size of this deal and the added complication of a 39% shareholding in SKY UK has the potential to hold up proceedings.

 

TV will not die anytime soon, although it does need to evolve and adapt considerably faster than it has in the past. Advertisers and media owners must be extremely careful about which decisions are made, as we are all ultimately responsible for the future of the television market. As Mark Ritson says, “If TV ever does die, its assassins will struggle to find ways to promote their offerings once it’s gone.”

Date: May 02, 2018
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