TVNZ announced its new season line-up tonight. So we sat down for a chat with head of sales Jeremy O'Brien to talk about the broadcaster's changing content strategies, the growth of production partnerships, the MediaWorks situation and what the future holds for TV.
On Purina's Pound Pups to Dog Stars: "That’s been in progress for a good six to eight months with Purina and Screentime. Basically, there was a loose opportunity around the proposal. They hadn’t specifically briefed us to say 'we want to make a show'. They said 'we want to bring the values of the brand to life and we want to do it in an unique way'. So we suggested trying to make a show and it went from here. The thing that made it seamless and easy was that there was a great fit between the brand and its focus on animal welfare, well-being and nutrition and the show itself, which shows the helpless states these animals get into and the fact that it can be turned around. We think this will be something New Zealanders are going to fall in love with and we have confidence in what Mark [Vette] will be able to do. He was involved with Driving Dogs and he has a strong reputation as a trainer and a pet wrangler, so you say 'actually, that journey’s going to be pretty inspirational'. We want to put it on a peak time slot and it will be quite an important lead in for our 8.30pm shows."
On programme partnerships: "It’s very competitive out there, so this is just part of how, over time, our media proposition has evolved. They tend to be at a different end of the market than commoditised trading, which is around bulk. This is about high value but also high resource. The return the client gets is different, the amount of time you put in is different, but the value of what you charge is also different. You can’t do this on a commoditised model because it doesn’t make any sense. It’s a good margin, although you do want to do enough of it to make sense for your business. The fact that the Media Solutions team is spread across sponsorship, production funding and programme funding gives us enough volume to dedicate that resource to it. If we were doing three programmes a year, then it wouldn’t work. You need to have some sort of economies of scale."
On production partnerships: "We have about a dozen different forms of branded content, with Maybelline, The Mix, Made to Match, Easy As, Tech in a Sec etc etc. There’s a whole heap of stuff in that space and that’s a growth area we certainly see a lot of potential in. We're probably sitting at various stages on half a dozen projects that haven’t been signed off yet but are in development with clients. Production partnerships are growing the fastest and have the biggest opportunity because it has a much broader range of options than trying to get a programme that’s going to work for an advertiser and audience in a peak time slot. That's not saying it can’t be done, and there are a couple of good examples. But you can only do a couple of those and they are really resource intensive."
On sticking with output deals: "International is all about volume. You need a hell of a lot of content to programme two full-service 24/7 channels and so we believe that output deals, supplementary to the $100 million we’re spending on local content [TVNZ wouldn't comment on how much it spends on these international deals], provide the certainty of volume. We also want to grow the volume of video that’s being viewed across our ondemand platform, so it’s providing more of an avenue for us to put some of that other content that might not be massively broadcast and might be more narrow cast but that gives us an opportunity to get good revenue in the Ondemand video space. As those numbers continue to grow that will become a more feasible distribution model that maybe doesn’t go on air first."
On multi-night broadcast: "We’ve had a real look at our overall content strategy, so one area where we looked to rework the schedule is expanding multi-night local content format. We’ve seen some real success in the market from multi-night, local content. New Zealanders have got right in behind it. It started off with some of the things we’ve brought in like My Kitchen Rules and that’s followed on with other formats so that’s definitely something where we’ve looked to refresh our content over the next few years. MasterChef and the Australia/New Zealand Amazing Race will both go multi-night and there are couple of other things that are in early development and that will take a bit longer to bring to market."
On the continuing power of the networks: "If you look at our video, across all of our platforms and the amount of minutes viewed per day across TVNZ it’s 36 times more than the minutes viewed per day on YouTube. And YouTube's big, but that’s the difference quality content makes. That’s the debate that continues to go on. It’s not pretending they’re not there; it’s acknowledging that as we future proof the business, a key part of that is the rights around quality content and we believe the output deals give us greater security. There’s a trade off, but we believe it’s the right approach. You’re making a much greater commitment and that comes with greater benefits than if you pick it off show by show. Ultimately thedistributors will say 'who can monetise it in this market?' And the reality is, because of the reach and scale, we’re able to get out of it on-air that gives us some degree of coming to the table and talking about the online bit and building it so it becomes a no-brainer. And if we're already reaching a million New Zealanders then why would they bother coming in and setting up their own distribution network. That’s where we’re coming to it from."
On online: "Online revenue is about five percent of our total revenue. We’re growing at about between 20-30 percent per annum on revenues. Viewership is growing slightly faster than that [Kiwis now watch more than a million streams on TVNZ Ondemand each week] so there’s a little bit of a lag but it’s certainly double-digit growth and that's been the case for the last couple of years. We do know that it tends to skew female and higher income. And the big opportunity there is to push it further and make it more accessible."
On whether MediaWorks' instability has been good for TVNZ: "Home and Away has been really valuable to secure for us in terms of the audience it brings and the ability that gives us to enhance or stabilise reach. But I think it’s a mixture. Always beware the wounded bull. I think everyone would agree that it’s good to have competition in the market so it would be good to have a strong TVNZ and a strong MediaWorks for the long-term sustainability of the market. Has it been good for us? When you’ve got your backs to the wall, you’re at your most dangerous so we absolutely need to be on our game and are really wanting to grow and improve our offering. I’m certainly not sitting there rubbing my hands with glee. They’re very bullish. And what else would you be? They have chosen not to do output deals and they’ve got some cash they’re looking to do something else with. So, time will tell."
On the market: "In general, the market from an investment point of view has certainly showed signs of recovery. It’s been a tough five years across the economy and so we’re seeing more confidence from our clients. We absolutely want to grow the opportunities around dual screens. One, because the engagement and interactivity with content keeps viewers sticky. And the other thing is over time – whether that’s three, five or ten years – fewer people are going to differentiate between how their content is delivered to whatever device they’ve got. It’s going to be about the content. We need to move with the consumer and we saw that with the America’s Cup. In the past, those were the events that truly stopped the nation. No-one drove and they were around their TV screens. But this time people watched on TV, they streamed it on their iPhone on the way to work, they watched it on their desktops at work, so it's a totally different experience to ten years ago. And to me that’s a really exciting part for the industry and certainly something we want to be part of."
On the future: "I think we can learn a lot from the past and what’s happening in other industries. We’re always looking for what will be that watershed moment for on-air and online viewership. In the past businesses took what I’d call their traditional business model and they transferred that over to the new distribution platforms. The challenge for TVNZ, and everyone in this space, is as those audiences migrate [online] it might not be the sole domain of an ad-funded video model. It could be a one off fee, a monthly subscription, or people could be happy enough about the trade off with ads. And what you’ve got to work out is what the consumer benefit is in each of those. People are learning that not everything's free. And they also understand that being delivered quality content means there's some sort of a trade off or value in that."