Wednesday, 28 November 2007

Kangaroo on the loose (in the Marketplace)

Yesterday the UK market defining broadband 'player' Kangaroo was announced by the BBC, ITV and Channel 4 (but noticeably not five) and I posted about the service. There’s been talk what this might mean for the future of the BBC Licence Fee as the service is being launched by the Beeb's commercial subsidiary BBC Worldwide. The future of the licence fee is an area I touched upon last week and no doubt will do again, but today I want to look at a different side of the Kangaroo story.

This Kangaroo will be fairly dominant in ‘re-arranging’ the make-up of the UK ‘TV’ market, until/unless he’s joined by another big kangaroo along the lines of one called ‘Hulu’ (due to its Mommy and Daddy being News International & NBC Universal) or some creature as yet unborn..

So where does Kangaroo leave the other players in this new market:

  1. Social (Media) Networks
  2. The other Nu-TV Aggregators (Joost, Babelgum etc)
  3. IPTV Distributors (BT Vision, Orange, Sky Anytime)
  4. Other current TV Channels
  5. Future brands

Well, here are some headline future gazing thoughts based on the limited information released as of Tuesday evening.

  1. Social (Media) Networks

All the major mass market social networks (MySpace, Facebook, Bebo) are becoming more open to 3rd party content and are actively looking at having either their own content (Bebo & MySpace have both commissioned shows) or promote other media, be that TV shows, music, films or other entertainment.

I reckon the Social Nets will be one of the winners from Kangaroo. Content owners need marketing and ultimately eyeballs on their content, which Social Networks provide; your friends tend to like a lot of the shows you like so it’s the perfect marketing medium. Equally Social Networks need content to hold onto their audiences which provide eyeballs for advertisers. Who hasn’t regularly asked friends – did you see XX last night? It's a mutual back scratching situation. Think of it as a symbiotic relationship like that of the Radio Times with TV Channels.

  1. Other Nu-TV Aggregators

The most high profile new broadband TV aggregators are Joost, Babelgum, Sky Anytime and Hulu. Now Hulu I’ll take out of this equation as, no matter what their long term objectives are, it’s looking to be something akin to the Kangaroo of the US market.

Joost & Babelgum are in a more complex situation. Their first player advantage, in the UK at least, has pretty much gone up in smoke. Even if, via non-exclusive deals with content owners they get to have a decent library, the incumbents will just be too dominant to challenge.

If I was those guys, I’d be having sweaty palms right now, but they are young, nimble, well funded businesses and I’m sure they’ve predicted these changes and are adapting their business plans.

Firstly, these guys are international players: As with many international media brands, you can be a major player in one territory, ticking along elsewhere.

Secondly, get enough ‘tier 2’ content and you can still be an effective player. Sign up other major content players (MTV, Nickelodeon, Discovery, Virgin Media TV) and you can still have a reasonable profile and be an effective player. Kangaroo is essentially a ‘national’ player, international media companies may like to do pan-regional deals, especially if that is in conjunction with international advertisers.

Now I know this industry is so new, pretty much all the players are still on the Beta learning curve. However, my third point is, don’t try and be all things to all people. Work out what out which market niches you can exploit most effectively and become a more focused proposition. Babelgum might be more of the ‘South Bank’ or Indie cinema of the industry, Joost might be a more youthful proposition with Music, Extreme sports, ‘underground’ programming. As with MTV or Coke, you change the mix you present for each market.

Sky Anytime is a slightly different proposition as in essence it isn't a stand alone service, its free to those who already subscribe to a Sky package. It has great content, but in the medium term I think its about future proofing Sky's main business and decreasing churn by providing an appreciated value add -and it does that well.

  1. IPTV Networks

For the likes of Tiscali, BT Vision and Orange TV Kangaroo is, I would say a mixed blessing.

Kangaroo has said they’d like to deliver their content direct to TV’s, which infers they’re likely to work with the current crop of well funded IPTV Network pioneers.

On the upside, these pioneers don’t need to scramble around doing deals with every company that owns 20 hours of content – you do one deal with Kangaroo and I assume get the bulk of interesting top of the range TV content, all pre-cleared.

On the downside, these competing platforms, and other platforms in the market place will all have the bulk of the same content and differentiators within their offerings become harder to achieve; differentiators which are effective marketing tools will be even harder to find.

  1. Other TV Channels

The one question that hasn’t been answered just yet is just how open, or closed the Kangaroo platform will be. My guess a ‘bloated’ proposition will be harder to navigate and won’t be in the best interest of the founder partners, so I think they’ll definitely be a limit to which channels are invited, or allowed to join. So, UKTV and Viacom may get a yes, but Chart Shows’s Bliss or True Movies channels may find it harder. The only certainty I have is that the ‘shake-out’ of smaller TV players (which I discussed back in June) will continue as the crowded multi-platform marketplace makes it harder for small players to achieve and keep a commercially viable mass. I do expect Channel 5 to be part of the Kangaroo deal eventually, unless their parent RTL has something up its sleeve.

  1. Future Brands

So how easy will it be for new media brands to break through, or will the major players, now that they generally have their act together, be just too dominant to be challenged. I think people will always find ways to break through, and if its not through Kangaroo, the Social (Media) Networks and Google’s Open Social networks will be the new route to market.

Tuesday, 27 November 2007

ALERT! Kangaroo on the Rampage

So a while back I was moaning, sorry, commenting about how in this wondrous age of Video on Demand I had to download so many program’s to watch my regular UK TV shows (iPlayer, 4oD, Joost, Babelgum). I commented how it’s like having to have a different set top box for each channel, which was unsustainable.

Now we are about to see disruptive Digital, disrupted, oddly enough by the old skool ‘traditional media’ with the official announcement of project ‘Kangaroo’. Nice summary here from the Guardian, but essentially it’s the BBC and Channel 4 dumping (sorry, building on the success of) their current (Kontiki based) players, and joined by ITV who had been using an ‘in-browser’ player.

Now this is massive, it’s an ‘iPod’ moment for TV in the UK market. Kangaroo is already being compared to Freeview in its capability to cut through to a being a fairly instant mass market proposition. It will have all your favourite shows and soap operas – it will have such a massive position in the marketplace other (mass market) rights holders from US Studios, through to indie production companies, to ‘new’ players in the market (such as newspaper’s who make video content) will all want to be represented on this platform.

I have 0% doubt in the success of Kangaroo as it will have the content... and not just in a ‘name the 3 hit shows we have’ and expect people to use our service way, it will have the vast bulk of hit UK TV shows/brands and I expect a lot of the international ones. I wonder whether Hulu will snowball like Kangaroo to dominate the US market as much.

The service will no doubt hit some bumps, but ultimately the nature of the content will mean it will prevail.

Some bumps that immediately come to mind include:

- The ISP’s moaning about the P2P networking clogging up their systems (and I expect it will be P2P)

- The BBC Trust wrestling with the restrictions they’ve imposed on the iPlayer, probably after public confusion when ITV allow series stacking of shows like Emmerdale, but the BBC won’t allow you to stack (series record) Eastenders. (The BBC Trust put some fairly random restrictions it to supposedly stop the BBC stifling the commercial market)

- TV Broadcasters and Rights Holders having to bring their Rights issues more into line across the market place

- Working out ‘comparable’ price points and attitude to how to include advertising

- Ofcom reaching out to regulate ‘NuTV’ after the next ‘phone-in’ type scandal

Some other questions raised straight away are what about Five, Sky, what about Endemol and Fremantle and their respective strategies. What about then for that matter, Nickelodeon, what about Information TV and movies 24??

Will Kangaroo be an open access system, or a way of the incumbents and big players protecting their dominant position from news smaller players?

Kangaroo is no doubt fantastic news for the average viewer who just wants their favourite shows.

I don’t see this being a problem for the social networks per say as their nascent media services and shows would be complementary – and I’m sure deals would be done to encourage the average Bebo or FaceBook user to go to Kangaroo and download the latest episode of the Mighty Boosh or Entourage.

I don’t think the situation is so clear for the likes of Joost or Babelgum who, in the UK at least are seeing their first mover advantage slip away.

More on this tomorrow.

Wednesday, 21 November 2007

Paying for the BBC, Channel 4

Today I'm asking a question rather than making a comment.

There has been some conversation recently in the UK, about how Channel 4 - a commercial business that is re-finding it's 'mandated by law' function of being a Public Service Broadcaster.- will fund itself in the coming years. The business has been harping on about at it will have a funding deficit in the mid-term and has made a bid for a £300 million found 'top-spliced' from the BBC's Licence Fee funded budget.

Articles like this one suggest some of the ways forward for Channel 4, but to me there is a massive flaw in the arguments put forward so far in the press, and that is the matter of market context. More specifically, I mean the BBC.

Now the Beeb not long ago got it's funding formula (Royal Charter) renewed, but just for another 6 short years until 2012/13. However, I think it's fairly likely that this is the last time the BBC will get a budget set in its current way; revenue form the TV Licence, a tax paid by every TV household in the UK.

I don't think you need to be too much of a futurologist to guess that defining a 'TV household' in 7-10 years might well be a toughie. Granny may still have a TV in the corner of the room hooked up to a Freeview digibox but for large swathes of the population today's trends of having 'TV' screens hooked up to computers and home networks will have continued. Mobile phones, laptops and other 'screens' will more commonly be used to watch 'shows' and shows themselves will increasingly delivered by downloaded and streaming over the web by the likes of Joost, Bebo and the like, many of which will be non UK 'broadcasters'.

In this world, the current TV licence just doesn't make sense and will be harder to collect. I think the BBC is well aware of that, which is why it's commercial arm BBC Worldwide has become quite so aggressive is buying and setting up new businesses as part of its strategy of creating and growing new revenue streams internationally. They've set up new stations, launched production businesses, added advertising to international sites and become much more astute in exploiting their brands commercially.

So, back to my original point. How can we have a constructive conversation about the future funding of a PSB (Public Service Broadcaster) Channel 4, without having some realistic idea - or at least opened a wide discussion -about how one of the world's biggest media organisations, the (Public Service Broadcaster) BBC will be funded too.

Many of the suggestions put forward for Channel 4, like say giving ownership to a not-for-profit trust (as the The Scott Trust owns The Guardian) might actually be what we want for the much larger BBC. Do we want 2 such Trusts? What would happen if we made both organisations all ad or subscription funded? Do we privatise one or both and how might that affect the purely commercial Networks?

I'm not making suggestions today about the right funding formula - I'm just saying we can't effectively discuss Channel 4, until we have a better knowledge how the market place is likely to look in a few years - and the BBC is just too rich and too dominant in terms of budget and in terms of audience reach to ignore.

Tuesday, 13 November 2007

Hyper local globalisation: In the Starting Blocks

Today’s post is prompted by my recent romp around NBC, Universal, and Fox ‘professional’ web video content site, Hulu. From what I could tell it looks lovely, but after 5 minutes of clicking around I realised whilst the site let me join, it won’t let me actually use the service and watch a show.

I have a deep appreciation of international rights issues, and no matter what your future business plan might be (and I admit this is a beta site), how hard can it be to have a disclaimer at the front saying that this is a US only site and content can’t be viewed outside the country. Showtime for years won’t even let you take a good look round their website if your non-US based.

This, in fairness, seems to be a common problem with sites that show ‘real’ TV shows. Pretty much all the sites will let you access their library catalogue, but only let you watch what is cleared for your territory (which quite often is not a lot if you are non-US). That’s outstandingly sloppy and short sited – it just makes me think they don’t understand how to respect their audience.

My simple request would be - if you have the technology to track IP addresses and work out where in the world I am, and therefore not play me an episode of Bionic Woman – why don’t you just use that technology to dynamically only serve me the content I can access. If you think about the functionality when you start building a website it’s a fairly easy thing to do.

This really opens up the discussions about brands and regionalisation (not just in terms of countries and regions, but also cities and towns). It’s something TV, and especially multi-channel brands have been dealing with since the early 90s and now that the web is video heavy finding a fine line between sites localised to maximise footfall, featuring cost efficient quality ‘networked’ programming, but dealing with rights issues as that networked content is also sold to 3rd parties for the numbers to stack up.

That’s a big question, and I’ll be exploring the area in future posts.

Wednesday, 7 November 2007

Why are we so in love with (linear) TV Channels?

Recently Sky announced that it was now was calling a halt to new channel launches on its platform as older digiboxes wouldn’t be able to handle the extra EPG info.

What really surprised me was just quite how many channels were on the ‘stack’ to launch – 2 a week for as far ahead as the eye could see.

My first reaction was who are all these people launching channels – and how do they expect to make any money?

Having been involved in many a channel launch in the UK and in multiple other countries I’m well aware of the cost bases, and the kind of money one can expect to make. Now I’ve touched on this subject several months ago when I questioned whether the ‘Great Channel Shake-out’ was coming. It seems that shake out time is coming.

So my point today is, why do so many new players try and launch channels on Sky with the aim of making money (as opposed to be a marketing cost of a wider business)– and my answer is these are often ill thought out vanity products with no chance of cutting through and little chance of even breaking even. The old maxim was ‘the best marketing for your channel is the EPG’, but that just doesn’t cut it why an EPG, which with radio stations, has about a thousand channels names on it. Many of these players are ‘squatters’ hoping not to lose too much money before they sell their one escalating asset – the EPG slot.

Only the big boys and legacy channels can seriously expect to make any money from ‘subs’ (money the platforms pay the channels to have quality content on their platform, that they then can charge customers for a ‘package’). There is still money to be made from advertising, but that’s getting increasingly hard even if you do make a blip on the frankly Dickensian rating’s system that is BARB. Personalised advertising from the likes of Google will shake up the market no doubt, but I don’t see it bringing masses of new money into the general marketplace. The other money is direct revenues via phone lines, shopping and premium services.

Niche business owners need to work out what they want to achieve with their business, work out who they want to reach, how to market to them, how to build a market presence and then work out if being on the Sky platform is worth it – or if even being a linear channel is worth it. My view is concept, revenue streams and brand first- then work out if you’re a linear channel (either now, later, or ever) and what markets you can and should work in; new ‘TV ’businesses will flourish, but what constitutes a TV business has changed. There’s a multiple of platforms out there – but the real crux of the matter isn’t the platform, it’s how you go about gaining and keeping an audience which you can monetise. The platform of choice should flow from that question first. That's why wiser players like Simply Media, and others like London TV have moved off the platform and onto the web -it's right for their business.

Sky obviously think (and I agree) that there is too much ‘junk’ cluttering up the finite EPG resources as they up the amount of original content needed to maintain an EPG slot, dissuading those who block up the EPG with channels existing on a few hours of looped lo-res content shot in a suburban living room.

I do believe a TV platform like Sky and linear channels have a future in the medium to long term. I’m intrigued to see how FreeSat (Freeview equivalent on satellite) will affect the market. However, what I’m most intrigued about are new forms of EPG which are more than channel guides, but include programme search facilities, especially ones based on tagged content.

What I’d really like to see are ‘open source’ digiboxes where I could chose to download new, perhaps even personalised forms of EPGs, together with widgets and robots that turn my TV into a more connected experience - and that allow (linear) channels to exist in harmony with limited content niche brands.

If the platforms don’t do it, someone else will as TV’s move towards being another monitor on a household network as people decide they want to combine their Sky with their Joost , Babelgum and/or (video) iTunes