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Industry Contributor 2 Mar 2020 - 3 min read

TV: Stop trying to pivot a legacy model and redesign for the future

By Sarah Wyse, Head of AFL Media Network

The Future of TV Advertising Sydney event last week carried on the conversation and consistent themes discussed at its London equivalent in December.  In our local market we are seeing more collaboration between the TV networks culminating in a new measurement tool in VOZ (connecting audience across broadcast TV and BVOD) which aims to power a walled garden, data-driven, automated trading platform offering advertisers efficiency and ease.

While the room was positive and discussions took a more productive turn than in previous years, the industry must ensure that as it builds the future TV model, it is centred around the audience and how they want to consume content- rather than trying to pivot a legacy model that will no doubt be improved, but will it be future-proofed?

Key points:

  • Each TV market around the globe is different however what is consistent is the YOY audience decline over a long period of time.
  • SVOD increase goes hand in hand with traditional TV decline and interestingly the only thing keeping SVOD from cannibalising traditional TV is sport.
  • Cross screen measurement, data and addressability is still seen as holding back the TV industry as a whole globally (Australia making strides with VOZ and Seven CAP).
  • Industry agreement that TV has to become a walled garden to achieve a consistent addressable framework for measurement and trading
  • SVOD services who simply just aggregate will be at threat in the future as they will have no point of difference. Investment into original content is what sets SVOD services apart, ie: Netflix originals, Amazon Prime Video, HBO.

The TV industry seems to have some idea of what it needs to do. But you cannot fix a model that has fundamentally changed. What would we build if we were starting from scratch?

There is plenty of evidence that TV is taking steps to adjust to the new world:

  • Broadcast TV becoming more targetable, measurable and tradable is a huge leap forward from where we were just two years ago.
  • SVOD services focussing on production of original content, e.g. Netflix/ Amazon Originals, will set them apart from their competitors in the future.
  • Big entertainment brands such as Disney carving out their own direct-to-consumer SVOD offering, disrupting their own traditional models, they hope, will ensure their long-term future in Disney+
  • STV launching hybrid SVOD/AVOD offerings with a narrower content focus, e.g. Kayo for sport, will determine if consumers will make switch to a paid service dedicated to one genre of content - at scale.
  • Big tech platforms making investments into content rights and continuing to focus on video will continue to pose a threat to the traditional model as the scale and distribution of traditional players simply cannot compete with those of the Amazons and Googles of the world.

The question is, are we on the right path? Are the leading industry players thinking enough about how consumers and viewing audiences want to and will be consuming content in the future - ahead of working out their business model? After all, it starts with the audience.

Viacom CBS revealed research into audience sentiment around 'Todays TV' stating 57% of viewers define TV as shows and movies – not the platform or device. With consumers finding it increasingly frustrating to search and find content, there was agreement that simplification and ease for consumers will be a big theme of 2020/21. Interestingly, the research revealed an obvious need for aggregation in a “catch-all service”. Sound familiar, Foxtel?

If we can learn something about big tech, it is their ability to change consumer behaviour, creating a frictionless experience for users. Youtube, Uber, Amazon, AirBnB – all good examples of disrupting their competition and creating a new normal. It is this expectation from consumers that makes it difficult for businesses to know what their customers expect next from a frictionless experience, with new technologies popping up daily.

As global media, entertainment and technology trends suggest, for a consumer: the notion of having multiple subscription video services; an untailored product offering; a set of siloed video channels (where nobody can quite remember exactly where they started watching “that show” they now can’t find); and a “free” (ad-funded) broadcast content offering whose financial model is under too much pressure to deliver the quality of programming required to reach big audiences – is not sustainable. Even if you can make the maths work in the short term.

TV and agency stalwart Barry O’Brien contributed a piece to Mi3 a few weeks ago recommending that perhaps it’s time for the big players to share in the cost of studio production and “sleep with the enemy”.   The continuing pressures that “content being king” presents further cemented by Kim Portrate's comments in the same article, potentially opens up opportunities to delineate services and products between:  content (who is making the content) and distribution (the channel a consumer interfaces with).

The high cost of quality content in a model that is funded by subscription or advertising, will see financial returns if a) you have large, probably global scale and/or b) media is just one arm of your business often driving a broader agenda. With continuing audience decline on traditional channels, perhaps a focus on either content OR distribution might be the way forward.  A recent announcement of how a TV network may “sleep with its enemy” is Amazon commissioning Seven Studios to revive much loved Aussie favourite, Packed to the Rafters.  

If a “catch all” platform is how users want to consume their favourite content, then TV Networks leveraging their content IP in a co-production model may very well be the way in which TV networks should be thinking about content creation in the future - collaborating with partners such as Amazon or a new Foxtel (which recently agreed to distribute Netflix to its subscribers) – as a way to build a sustainable business model. Not forgetting SVOD services also rely on customer referral from aggregators to attain high reach too. For example, the majority of Netflix subscribers in the UK come from platforms such as Virgin TV. 

If we were to start from zero today, what would we build? Rather than trying to pivot or transition a legacy model, what would we launch? If we start with what the audience wants/will want in the future and work back, we will be in a better position longer term, rather than trying to fix a model that has fundamentally changed.

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Sarah Wyse, Head of AFL Media Network

AFL

Sarah is the Head of the AFL Media Network, the largest digital sports media business in the country. Previously Sarah spent 10 years in Sydney in various senior leadership roles across digital video and adtech, including Managing Director at Videology ANZ and Chief Revenue Officer at Allure Media.

Passionate about digital, technology and diversity & inclusion, Sarah is also the founder of Wyse Women, a network promoting gender quality by increasing the participation of senior women in the workforce through flexible working. 

Sarah holds a Batchelor of Science in Mass Communications and Cultural Studies degree from the Metropolitan university in London. In 2016 and 2017 Sarah was shortlisted in the B&T Women in Awards in the Mentor and Technology category. 

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