TVNZ-NZ Marketing Awards 2016: Mercury Energy powers to success
The electricity market is highly competitive, with deals around price often being the only differentiator between brands. So Mercury Energy decided to try something different. ...
It took over two and half years and cost around $60 million, but TVNZ has finally moved into its new office space. We chat to TVNZ chief executive Kevin Kenrick about moving back home.
It took over two and half years and cost around $60 million, but TVNZ has finally moved into its new office space.
The refurbished building was opened by prime minister John Key on 2 September, during an official event that included a blessing of the premises.
During a short speech, Key spoke of the important role the renovations will play in future-proofing the business.
In typical Key fashion, he also took the opportunity to make a few jokes, comparing TVNZ’s profits to Air New Zealand’s and saying that he would like to see the broadcaster deliver a casual billion dollars in the upcoming financial year.
While made in jest, the reference to financial results came only a week after TVNZ reported an annual profit of $12.7 million, down from the $28.1 million delivered in 2015.
This drop in profit coincided with a decline in revenue, caused by lower demands for television advertising.
What this means is that TVNZ, like all legacy media companies, has to diversify its revenue sources if it is to stay relevant—and, more importantly, profitable—in the future.
Last week, as he walked me through the building, TVNZ chief executive Kevin Kenrick pointed out that all design decisions were made with a view toward creating a modern media business capable of surviving the continued onslaught of digital disruption.
This is not to say that TVNZ is jettisoning its heritage. As you enter the building, you are left with little doubt as to where you are. Large digital screens flank the entrance, and an even bigger screen hangs over the atrium. TVNZ shows are being broadcast constantly, giving a nod to the continued and future importance of video to the media company.
Something that’s particularly noticeable about the ground floor is the vast expanse of open space in the centre—something, which Kenrick says, was purposely done to allow for greater collaboration between staff members.
“It just means you’re more likely to have people bump into each other and have conversations, rather than send emails,” Kenrick says.
Throughout the ground floor there are a series of breakout meeting rooms, which staff members can pop into at a whim.
The decision to incorporate a high number of informal meeting rooms was informed by advice from ASB chief executive Barbara Chapman, who told Kenrick that staff tended to use the breakout rooms more often at the bank.
“At first everyone thought, ‘Oh my God, if we’re open plan and we don’t have our own offices, we’re going to need more meeting rooms’, but now everyone is gravitating to these more informal meeting spaces.”
At the end of the ground floor, TVNZ has also included a marae, which is an important symbolic shift, given the previous marae was located at a separate building.
“The marae was down at one of the buildings that we sold, and it was a bit out of the way. But the big thing about a marae is that it’s a meeting space, and a place where people can come together, and having that central really just makes a lot of sense.”
New digs, new tech
On the next floor, Kenrick points out the post-production area, which is kitted out with state-of-the-art equipment. He explains that the upgrade of the tech in this space was one of the clearest examples of how much the world had changed.
“The interesting thing is that when you fit out a new edit suite, there’s nothing to see, because the technology has just become more and more compact. It previously took up a lot of space.”
This floor also features a new recording studio, which, despite being in very close proximity to the hustle outside, is completely soundproof and almost feels like a floating room.
While some of the equipment has been replaced with newer versions, Kenrick says items that hadn’t become dated were simply refurbished and reinstalled in the building.
The upgrade of its technology allows TVNZ to take full advantage of the speed offered by digital. In the past physical tapes would often be carried from one department to the next, but increasingly content is distributed to the desired platform in digital format. In this sense, the movement into the new building is a case of TVNZ clipping its legacy wings and fully embracing the digital age.
As we walk up the stairs to the next floor, Kenrick points out that all the stairwells also have breakout points, which allow staff members to have an impromptu chat as they’re going up or down.
It’s a small touch, but one which again reiterates the importance of collaboration between the various parts of the business.
The snake desk
The ongoing theme of collaboration—a word Kenrick doesn’t shy away from—is also evident as we head into the TVNZ Blacksand department.
Creatives, designers and a range of other contributors sit around what is called ‘the snake desk’, which can be easily rearranged, depending on who needs to needs to work on a project.
As Blacksand executive creative director Jens Hertzum explains: “The idea of the snake desk was so that all our creatives could sit along the spine of the space.”
Kenrick adds that this setup is more in tune with the evolution of internal creative departments.
It wasn’t long ago that creative teams at TV companies were predominantly required to splice together snippets for show promos. But what regularly comes out of Blacksand these days appears more akin to the kind of work produced by agencies.
“Anyone can edit a few scenes, cut it together and throw a bit of music behind it, but what [Jens] has been encouraging teams to do is look for a creative idea that can be brought to life.”
Like all businesses, TVNZ faces a major challenge in reaching audiences across the fragmented media space and this has necessitated a very different approach to developing promos.
It’s also worth noting that Blacksand is increasingly working directly with clients, which in turn is providing a revenue source for the broadcaster. The better and more respected TVNZ is among clients, the greater the potential for earning additional revenue from the ideas developed by the team.
Beyond the 6pm bulletin
Another area of the business that has been directly affected by this fragmentation is the news department.
Kenrick explains that the news department has been set up centrally within the business, so that anything produced can be distributed instantly.
“There are things that you want to publish immediately online, there are some things that might go into a news bulletin, there are some things that might go into a current affairs show,” he says. “So, it’s really a central zone where everything comes in as fast it can, and then you determine how and where you publish that.”
According to Kenrick, this is a major departure from what existed in the past.
“Previously, this whole area was locked off in the basement. There wasn’t much natural light and it was sort of hidden away. And news is a big part of what we are, so we really want to showcase that.”
As the tour winds to close and we head to Kenrick’s office for a sit-down chat, I’m left in little doubt that this is as impressive a corporate edifice as I’ve seen. But there is perhaps a slight bit of irony in the fact that this giant structure with all its people is facing arguably its strongest challenge from new media companies like Facebook, which occupy little more than a tiny office space in The Generator. Which raises the question: how do you fight an enemy that’s barely visible?
Here’s thefull transcript of the interview with Kenrick:
Damien Venuto: Hi Kevin. It must be really rewarding to have finally opened up the new building and to walk into the space that so much thinking has gone into. What does it mean to you to finally have TVNZ inside of this new office space?
Kevin Kenrick: We're thrilled to have everyone back in one place. The design that the architects came up with has absolutely been delivered. There was a dream and we all got excited about that dream. Part way through we thought, ‘Oh my god. There's all this work and is all this disruption is it really worth it?’ But we've come out the other end and we're really thrilled with the outcome.
You mentioned that you spoke to some other businesses who gave you some advice in terms of design decisions and so forth. Do you maybe want to touch on your conversations with Barbara Chapman and how she influenced some of the decision making that went into the new space?
Yeah, Barbara was kind enough to show me through her building just before we started. They'd done a recent development and they had some great insights about using informal breakout areas rather than formalised meeting rooms.
One thing that was a big question for us was whether we weren't would hot-desk or whether each person would have their own dedicated space. We chose to go with dedicated space because we just feel that people want some level of familiarity and even with hot-desking people end up going to the same spaces as well so we didn't think there was a lot to be gained by that.
We've embraced this open-plan approach. We've got a lot of informal breakout areas and the formal meeting space you need to have that but probably a lot less than we previously thought might be required.
I suppose also having breakout rooms rather than having formal meeting rooms makes it a bit easier for people just to have a little chat rather than the formal process of booking a room and making sure it isn't occupied. If the space is available you can just sit down and have a quick conversation.
Yeah and I think that from time to time people want a bit of private space for a personal phone call. They need to know there's somewhere they can walk to that's readily available and they can do that or they just want to catch up with two or three colleagues and have a bit of a chat. We just a think a more dynamic environment that supports that is better for people. It's also great to get people up and moving rather than sitting at a desk all day long.
Walking through the new building, one thing that I noticed was that you guys had marae on the premises. Do you maybe want to touch on the thinking and why it's so important to have that within the building?
We've been fortunate enough to have marae in the building previously, albeit it was in a separate building which was off to the side. A big part of marae is about being a meeting place and a communal space for people to come together. For us it's really critical that we could put that right smack in the centre of the building and in the communal area, making it more accessible and more fit for purpose.
What has the response been like of the staff? Obviously it's like moving into a new home in some regards because you spend more time at work sometimes then what you would even at home.
People are really positive about it. I think a big part of is it's been a long time coming. I think people are really thrilled to be back together with their colleagues rather than split across multiple different buildings. I think the fact that we are showcasing our newsroom and putting that right at the heart of the building is something which we take real pride in.
In general, I think people are just proud of the environment and keen to host clients and business partners here rather than feeling that we got to somewhere else because we're in the middle of a building job.
At the opening you spoke quite a lot about future-proofing the business and the importance of having this investment in order to have a business that was sustainable and something that would give quality entertainment and news in the future. What does future-proofing mean to you and how do you feel that's reflected in the new business?
The thing that's really obvious to people is the physical nature of the building. What's least visible is all the work that's gone into the core IT systems that run the business. We've upgraded both of them in parallel. We've moved from a world where we had a whole combination of content coming in and file versus tape formats. We had a broadcast world versus a digital online world. What we're trying to do is bring those all together as one and to future proof those so that we've now got a really slick work flow in terms of bringing content into the business and being able to publish and send that out to viewers as fast as possible across multiple different programs and outputs. Much as the focus is on the building itself, the thing that drives the efficiency and future process is the ability to create content, to generate that, bring that in, and to distribute it, make it available on the screens that people want to see.
It also feels that everyone within the building is operating within a closer proximity to their neighbors who might not even be in the same department. Do you find that it's a slightly more collaborative space than what you've had in the past?
Very much so. The building has been designed to insure that we do bump into each other more than maybe what we would have before. We think that's a good thing. Having some shared communal spaces that everyone gathers around we think is a great way for people to bump into each other and have those informal conversations as opposed to sending an email. We've even reconfigured the stairs so that the landing pads between the stairs are areas that people might congregate and talk or that they might use the stairs rather than just go up and down the lifts and not necessarily see each other.
At the opening ceremony, John Key, he was quite charismatic and he made quite a few jokes and one of the things that he said was that he was hoping for TVNZ to deliver a billion dollars in the upcoming financial year. Are you guys on track to deliver that billion?
We think that the number's probably about right we just think that he's got the decimal point in the wrong place.
Jokes aside. Profits have been declining in the TV industry, across the world really, over the last few years. When we talk about future-proofing the business, obviously it is also important to grow profits and so forth. Do you feel like TVNZ is in a much better position now in order to grow revenue and profits in the future?
I think the critical thing with any business is about having positive cash flow. You need there to be able to invest in the future of your business. We're in a situation where there's some absolute challenges and opportunities but within that we're really confident that we've got sufficient cash flow to keep running the business and keep investing in the future capability that we need.
We do think that the market is evolving quickly. There's changes in the structure of the market in terms of proposed mergers with different players. There's ongoing shifts in consumer behavior. There's a raft of different sources and types of content that are available. We think we're in good position to take advantage of those opportunities. No one's got the answer of just quite what that's going to look like but I think you've got to be in the game and you've got to be in a fit enough state to be able to play the game well.
I suppose with some of your channels, Duke could be an example, you're really trying a few different things, you're experimenting a little bit. You're trying to see what works, what doesn't. It's a case of not standing still I suppose.
Yeah, Duke's a great example of an initiative that actually helps us learn. Absolutely we knew that there was demand for people to be able to reach younger male audiences that were harder to get. Duke was a really efficient way of delivering that audience but more importantly for us was the opportunity to pilot live between online and on air. To look at a blended audience that we were selling to advertisers. To basically just keep on piloting different ways of how we might present content as Ed [Kindred] talked about the other day.
For us, we've got to keep trying. We've got to keep learning. We've got to be prepared to make mistakes and when we've got something that works brilliantly on Duke then we then extend that across the rest of the business.
One thing that some analysts or some economists have said was that 2011 was a particularly bad year for the newspaper industry. It was the start of a downwards spiral, essentially. There have been mentions that television could be on a similar trajectory at the moment. What do you think separates television 2016 from newspapers 2011? What's the difference between the two?
I think the big driver of change for newsprint was audience moving from the print version into the digital version. In most cases there wasn't a lot of distinction between the content that was available in each of those spaces. Arguably you could say that digital gave the reader more benefits in terms of how they could access the content. I think that that trend, that behaviour, is continuing because it meets the needs of the reader. I think when you look at TV, video content was what made TV successful. Video is now available across a whole lot more devices and therefore people are going to take advantage of that.
What we are seeing is that people want choice, they want control, and basically they want to look at the content on the best screen that's available where they are. When I walk into a retail store today, the TV screens aren't getting any smaller. The new TVs, they're really big, they're really high definition and it creates for a great viewing experience. We think TV will continue to play a role. At the same time, we want to be able to see on content on multiple different screens but I don't think that all of a sudden all the viewing's going to move to a smartphone because there's some things that look a whole lot better on a big screen.
Also, I think that people sometimes underestimate the laziness of human beings because there’s real value in being able to sit down and not having to choose something on a catalogue of three million options. Sometimes you just want to relax and watch something without making too many decisions.
To me it's a bit like when you go to a restaurant and sometimes the menu is so exhaustive and comprehensive by the time you go to the end of it you're struggling to make a decision. You're pretty much ask whoever the staff, ‘Can you just give me a recommendation? Can you make this decision for me because I'm overwhelmed.’ I think there's so much content that's available that there is a role for linear schedule for some people for some of the time. There's also a role for on-demand where you can choose what you want and where you watch it. There's a role for short-form for long-form. We're part of the mix and I think we'll continue to be part of the mix.
I suppose with your new season launch happening on Thursday night, we are going to see a lot more content coming from you guys. Are you looking forward to that as well?
Yeah, the new season roll-out is always a high point of the year for us. It's the time that we remind ourselves why we do what we do. It's about compelling content. It's about engaging with viewers. It's always an exciting time to bring all that together and say, "Well here's what we got for the year ahead." To share that with our partners.
It's always one of my favourite times of the year so I might look forward to it. I'll see you on Thursday then.
Yeah, I look forward to it.
Brilliant, thank you so much for your time, Kevin.
The electricity market is highly competitive, with deals around price often being the only differentiator between brands. So Mercury Energy decided to try something different. ...
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