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Deep Dive 24 Aug 2021 - 5 min read

Optus' Clive Dickens hunts big tech's lunch, says football bigger than Aussie sports but Optus wouldn't 'overpay' for lost Champions League; backs BVOD but warns publishers clinging to display ad models are already dead

By Paul McIntyre & Brendan Coyne

Clive Dickens: "We've got to go from being a telco to tech-co. Every media company has got to go from being a media company to a tech-co. So we're all trying to achieve the same thing."

Optus VP of Product Development for TV and Content, Clive Dickens, says there are three ways to make a living from content – and display advertising isn't one of them. But subscriptions are the future, and Optus is aiming to take a slice of the tech giants' lunch with an aggregation play. He thinks telcos and media companies are facing the same disruption, but sees light at the end of the tunnel for TV - and points out Singtel, Optus' parent, has 10 per cent of the world's population on its books, with more paying customers than Facebook or Google. So it should be able to weather the storm.

What you need to know:

  • Optus aiming to take a cut of streaming and broader revenues while boosting customer acquisition and retention with subscription aggregation play, Sub Hub.
  • Clive Dickens says football also delivering in spades, but Optus unwilling to "overpay" for Champions League. Stan's Nine pinched it instead.
  • The former Seven and SCA digital supremo thinks paid content and subscriptions are the future of media, but display is in a death spiral. 
  • But he thinks BVOD will save TV from linear declines – maybe faster than some think.

Display advertising... or shape-based advertising, is not a sustainable business. Shapes, however pretty, however animated, however interactive... the CPMs on those will just continue to hit the floor.

Clive Dickens, VP of Product Development for TV and Content, Optus

Clive Dickens has always been at the bleeding edge, often rhetorically.  So now he's at a telco, able to move less quickly than media due to more onerous governance and regulatory scrutiny, his timing should be perfect.

Two years after exiting media to head up TV and content product development at Optus, the former Seven and SCA digital supremo is backing media subscription revenue to drive top line growth by taking a cut from the likes of Netflix and Paramount+.

The telco is willing to take a hit to get the ball rolling, offering subscribers to SubHub, its subscription aggregation play, an $84 sweetener in the form of a year’s membership of Amazon Prime.

If nothing else, that should help Amazon get some scale in the Australian market, so far proving relatively resistant to its e-commerce heft.

But Dickens thinks the venture, some 18 months in the making, will also pay off for Optus – giving customers another reason to choose the telco over Telstra or the mobile virtual network operators such as stablemate Amaysim, or rivals such as Belong and Aldi.

“In telco, customers typically have three things to think about when deciding to join: coverage, service and value. Does the telco have coverage where I live, work and play? In the event that something goes wrong, can I speak to a friendly person to fix it? And is it good value? Those are the three things that every telco in the world competes on. At Optus, we compete very well on all three… Now we also have SubHub that allows you to bundle and save on your subscription services,” says Dickens.

He says any quality content subscription is welcome to join the party.

“We won't be aggregating the Dollar Shave Club. It's about delivering digital content [not physical products]. Australia’s [content subscription] economy today is worth over $2 billion a year. It's rising to $4 billion and we want to take a share of that.”

Dickens says more brands have agreed to join the platform in a bid to tap Optus' 10m Australian customer-base, but do not want to be announced until they have completed “technical integration”. He says SubHub will be looking more fulsome by the end of the summer, and subscribers will likely use the discounts on aggregated subscriptions to pay for another, thereby “funding more content”.

Football: expensive, but mostly worth it

By end of Antipodean summer, the English Premier League (EPL) season will be getting to the business end of the season, as will the Uefa Champions League. Despite losing the latter to Nine-owned Stan, Dickens remains a staunch backer of “the beautiful world game of football” – i.e. not the Australian version – to drive customer acquisition and retention.

We would have loved to hold on to the Champions League, but we weren't willing to overpay for it,” says Dickens.

In fairness, rivals said Optus had paid over the odds when it reportedly dropped $180m on three EPL seasons, far more than incumbent Foxtel was prepared to offer.

Given the amount of football “federated” across networks including ESPN, Kayo, Stan, and soon Paramount+, Dickens suggests the apparent price inflation shows Australia has woken up to its value, and that Optus was right all along.

“What it actually shows you is that six years ago when some said that maybe Optus had overpaid for the Premier League, that wasn't the case at all. The rest of the Australian market and underestimated the rise of the beautiful world game. The beautiful world game has been the winner here.”

Dickens suggests football has potentially greater upside than Australia’s own variant.

“I love Australian sports like the next Australian, but then none of them are beautiful world games, and that's really what we're all investing in.”

Nine shareholders will hope he’s half right. Either way, the Premier League continues to pay dividends for Optus, suggests Dickens.

“We're into our sixth year of exclusive English Premier League rights and we now have just under 900,000 active subscribers to Optus Sport. The vast majority of us come to us to buy a mobile phone plan and home plan and then they get their beloved Man City or Brentford … And that's been a hugely successful customer acquisition and differentiation play for us…. And we've added Woman's Super League, we’ve got the Women’s Euros next year and the Women's World Cup as well.”

Dickens says Optus’ “singular focus around taking something that was under-appreciated, under-loved and under-marketed” also means the telco “over indexes” in customer acquisition of “new Australians” – immigrants from Europe, Asia and Oceania – and who will now be steered toward SubHub, creating a “win-win-win” for the telco, its customers and third party subscription providers.

When we said it was going to launch 7plus on the Home and Away 13th December season finale, a lot of people told me it wasn't possible, including some of my own staff … who obviously left.

Clive Dickens, VP of Product Development for TV and Content, Optus

18 months in the making and why BVOD will overtake linear revenues

While it took 18 months to get SubHub from concept to launch, Dickens says telcos have much greater risk factors to consider than media networks, particularly around customer data, making the SubHub programme a relative sprint.

In that regard, he has form, helping to build Seven’s development of BVOD platform 7plus in nine months.

“When we said it was going to launch on the Home and Away 13th December season finale, a lot of people told me it wasn't possible, including some of my own staff … who obviously left,” says Dickens. “It was possible, but it involved a lot of weekends and nights – and so has this one.”

But he thinks Seven’s success with the Olympics has underlined the value of a strong BVOD platform, and he thinks BVOD will ultimately eclipse linear TV ad revenues, perhaps sooner than some think.

While moving at different speeds, Dickens says that transition is where telco and legacy media share the same challenges.

“Our big dependency has been on network hardware, and broadcast media’s dependency has been on transmission, or printing presses or publication. Everyone's had to move to a software-based future. We've got to go from being a telco to tech-co. Every media company has got to go from being a media company to a tech-co, so we're all trying to achieve the same thing, with all different levels of success," he says.

“But we all have disruption. We have to redefine all of our businesses from the ground up. And I think that involves understanding software and IP better, and not relying on some of the 'hard metal'. Hard metal for a telco is that network build; hard metal for a media company has been that transmission.”

Dickens thinks BVOD represents that shift – and gives network legitimate hope to emerge from disruption not only intact but more profitable.

“We now have a large and fast-growing BVOD market … and I am proud to have played a small but important role in the co-creation of that market,” says Dickens.

He points to PwC’s latest figures, which forecast a $900m BVOD ad market by 2025, “which means that we will get to a point where the BVOD market will actually be larger than [linear],” says Dickens, “because linear will decline and BVOD will increase.”

Seven’s FY 2021 results and FY 2022 forecasts suggest that from a profit perspective, that tipping point is fast approaching, adds Dickens, with Seven predicting digital Ebitda will double to $120m next year (though that includes some padding via revenue deals with Google and Facebook).

Display advertising facing extinction, but don’t blame big tech

Dickens is as bearish on display advertising as he is bullish on BVOD, and thinks advertisers still reliant on display will face plenty more pain than those that do the hard yards of shifting models.

“Display advertising... or shape-based advertising, is not a sustainable business. Audio into your ears, video into your eyes with all of that wonderful targeting and subscription, paywalled news or paywalled content – they are the three sustainable parts of media,” he says. “Shapes, however pretty, however animated, however interactive... the CPMs on those will just continue to hit the floor.”

Publishers have long pointed the finger at Google and Facebook for their demise, but Dickens says big tech is not the problem.

“My view has always been that it can't be a binary discussion about being ‘good’ or ‘bad’. Everybody adds something to the economy, whether through employment, superannuation, corporation tax, income tax, whether it's through freedom of information, or whether it's all of the tools that enjoy for free,” says Dickens. “But in saying that, I was really personally pleased to see those companies step up and make a contribution to journalism through the news media bargaining code.

“Would they have done it with that stick? Probably not. But … now we [can] continue to have an adult conversation around how these big companies continue to commit to a sustainable Australian economy, stable, sustainable digital economy.

“But remember, the same technology that allowed them to come over and create shareholder value out of Australia is the same technology that's created an amazing shareholder of value for businesses like AfterPay and Canva, Airtasker and loads of others. So we are actually becoming a more sophisticated digital economy ourselves with our own bunch of unicorns," he says.

“One of the reasons why we felt so challenged by the hyper-scalers is because we didn't have any of our own, and we genuinely now have a pipeline of unicorns.”

And now, with SubHub, Optus aims to take at least a small slice of big tech and some of those hyper-scalers' lunch. As Dickens might say, win-win-win.

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