Mat Yurow, the associate director, audience development, at The New York Times, wrote a great piece on Medium recently about the publishing industry’s “iTunes moment”. And it could be argued that TV is having an iTunes moment of its own as viewers are increasingly able to consume the shows (or, increasingly, the sports) they're interested in on their own terms, online, and without the need for a channel brand or an all-you-can-eat subscription. TVNZ is embracing that change with its soon-to-be-updated Ondemand platform. And we had a preview to see what's instore.
TVNZ was the first broadcaster in the region to launch an Ondemand site back in 2007. And since then it has regularly improved the access to its content through a series of apps on mobile, on PlayStation and, most recently, through Samsung Smart TVs. Now it is coming to the next phase of that journey with an ondemand service that requires viewers to log-in and offers a host of new functions seen on other streaming sites, like pick up and play, watchlists and recommendations.
The UI will be familiar to anyone who streams content through other SVOD services and it uses what general manager of TVNZ OnDemand, Jason Foden calls belts, horizontal strips that offer suggestions on what to watch or recently watched content.
The navigation has been improved and, as many streamers have come to expect, it offers the now-standard ways to find content, like A to Z, genre, most recent, or recommended. He says the main reason it is asking punters to log-in is to improve the viewer experience and to make the content more relevant to each individual, something Netflix is regularly applauded for (as this story on Gigaom shows, technology and content are inseparable on Netflix and it is thought to have used customer data to inform its decision to commission House of Cards).
It's also about giving viewers more relevant ads, he says, but that doesn't mean individuals will be targeted. It's only demographics. And that, in an ideal world, means they become more valuable targets for advertisers.
TVNZ still uses Brightcove/Akamai for streaming and Accedo provided the UI for the Samsung Smart TV app and desktop (it also provided the UI for Lightbox and 3 Now, although Foden says Lightbox is the off the shelf version and, as TVNZ uses Adobe for its CMS system, it spent quite a bit of time integrating it. Alphero was behind the mobile apps.
The new platform was initially planned to be released on Tuesday, but it's still in pre-registration mode (TVNZ isn't discussing pre-registration numbers but it's "super chuffed with the response so far"). And while it claims a New Zealand first with the pick-up and play feature, if Neon launches as expected today, it might not get to claim that title.
But no matter what tricks the platform can perform, Foden says success will always come down to TVNZ choosing the best content and, as it already has a working ondemand platform that people are happy with—and a new system that works—it's decided to ensure it works under the strain before launching.
He says it needed to give people a compelling reason to log-in (while it did look at the possibility of social log-ins, it decided against it). And free is a pretty compelling reason. So is recency. And one of the main gripes of content consumers is delays in screening, with geographic rights often meaning long delays. In a world where it's tough to avoid spoilers on social media, some believe that is driving consumers to illegitimate channels. And networks have been doing much better in this regard and fast-tracking shows from overseas. That will continue with ondemand: it's premiering a host of shows on the platform, including iZombie and American Crime, and ensuring other shows are screened express ondemand (it's also happening on linear TV, with Foden saying the latest series of Broadchurch has been fast-tracked, meaning that it started earlier in the year than usual).
It’s also produced eight Shortland St webisodes that will screen exclusively ondemand (the most streamed shows are Shortland St, Home & Away and Coronation St). And there are new seasons of old favourites and a bunch of new children's shows, something Foden says is a big driver of streams.
Given its focus on recency, he says there won’t be a lot of binge watching opportunities (as a point of contrast, the third season of House of Cards, which snuck online early, is being released all at once on Netflix). But where it has the rights and where it can link it into a new series that's showing on linear TV, as it did last year with Orange is the New Black, he says it might offer full seasons of some shows.
Of course, not all shows that screen on linear TV are available ondemand, Brooklyn 99 and Ellen among them. He says about 90 percent of primetime and 60-70 percent of off peak is available on the platform. But its output deals with Disney and Time-Warner give it free-to-air and ad-funded ondemand rights (episodes are generally available for two weeks) and after a certain period of time they can then sell the rights to SVOD players. He says this suits those who want to watch box-sets rather than the latest episodes. But with its South Pacific Pictures or NZ on Air-funded content, Foden says the rights are a lot longer.
Another benefit of ondemand is that shows that slip off primetime on linear TV often find a solid fanbase ondemand, with Foden putting Revenge in that category (on average, it gets 30,00 streams per episode).
While the mobile apps have proven popular, he says the feedback it gets is that people want to watch content on the biggest screen they have (he says Chromecast is not officially supported, but it, and a number of other devices that aren't supported, still work). So while it took the PlayStation app down recently, it will be loading the new app back onto PlayStation 3 and 4. TVNZ also continues to partner closely with Samsung and he says it is "doing a good job for us" (the manufacturer is the market leader in the smart TV segment in New Zealand, in part due to sewing up exclusive partnership deals with broadcasters like TVNZ, MediaWorks and Lightbox, although it has also recently come under fire for what some felt were dubious data collection processes— something it strenuously denies—and advertising creep).
The law of diminishing returns means it doesn’t make sense for TVNZ to develop apps for different brands, so it needs to pick the winners. But Foden says the impending arrival of HBBTV, a mix of online and linear content on the same EPG, might fix that (Freeview's Sam Irvine discussed this recently and Foden says it is expected to land in New Zealand later this year).
TVNZ's online revenue increased from $10 million in FY2013 to $13 million in FY2014. In comparison, TVNZ's linear ad revenue dropped from $312 million in 2013 to $306 million over the same period, so it's not enough to make up the shortfall, but, not surprisingly, TVNZ sees ondemand as a big part of the equation for future growth.
“It’s growing at over 50 percent a year in terms of revenue,” said head of sales and marketing Jeremy O’Brien last last year. “And we think that’s growing ahead of market. And that’s matching the growth in our video streams. So as we grow the streams, we’re growing inventory and selling it.”
The ads cost more than linear TV (some of its inventory can be bought programmatically through Total Media), but there are fewer of them and, as per the previous iteration, there will be a maximum of two ads per segment (up to a minute long) and one pre-roll. This means a show that takes 30 minutes to watch on linear will take around 23 minutes to watch ondemand.
And, as O’Brien said, that’s the premium model it would prefer.
“It’s a totally different environment, first and foremost. And the reality is, if we were to reinvent the business model around broadcast again, we’d probably have fewer ads and charge more for them. Online opens up the opportunity to create a more premium advertising environment.”
While there’s no launch sponsor for the new OnDemand service, Foden says it’s had a lot of support from Foodstuffs and a number of other partners who see the potential in it.
As for ad blocking, which is on the rise among the young, tech-savy audience Ondemand tends to attract, Foden doesn’t see this as a huge issue as most understand the value exchange of free content (on a related note, some companies are paying Ad Block Plus a ransom to show their ads). And while some companies, including Google, are experimenting with charging consumers to remove ads, Foden says it wouldn’t consider doing this, as it would then be competing with SVOD players.
Foden says there has been a five fold increase in streams since 2007, peaking last year with 6.3 million streams in the month of October. And December 2014 also saw streams up 52 percent from December 2013. But the team responsible for maintaining and developing the site has remained the same size at around 10-12, not including the marketing or sales teams.
However, this shift to a logged-in state has changed the orientation of other parts of the business, says O'Brien, with its data and insights team doubling in terms of staff numbers in the last 12 months.
“We hired Jono Symons to run that. He’s got a very strong background in data and direct marketing. And he’s looking at a number of things. Firstly, it’s how we’re going to provide a better experience for our viewers, whether it’s recommendations, collections, or pause and play across devices. I think that’s really important. We’re not going to do anything with the advertisers until we get those things right first because ultimately our viewers are the reason we can talk to advertisers.”
So, given there is no real channel branding in TVNZ's Ondemand offering, could there come a time when channels One and Two don't exist?
- Check out the story on TVNZ's plans to grow Ondemand here.
"I think the power of the brand is important," says O'Brien. "How many brands you need is up for debate. I think there will be a role for a trusted aggregator, but whether that’s an individual channel brand, or a more monolithic aggregator is yet to be seen. If you look at distribution, HBBTV is going to play a big role where the packaging of content can be by channel or by genre, and so ultimately the brands that are going to do really well are the ones that become known for a distinctive attribute, be that drama, comedy or sci fi."
He says channels One and Two came from the fact that there is a destination on a remote that you wanted to get people to push. And that’s a legacy of a TV market that began 50 years ago.
"Whether or not a destination brand is important depends how much equity you believe you have in that. If you look at our reach to New Zealanders with those channels, there's still a lot of value. So it’s how you transfer that to a multi-platform world."
Blacksand was behind the new OnDemand branding, with assistance from DAN and Origami. And TVNZ has been promoting pre-registration with a campaign involving a range of its talent.