There’s been plenty of discussion about the rise of subscription video ondemand services recently, with Spark’s Lightbox getting set to launch, Sky announcing it is planning a new Netflix-type service and Slingshot offering a controversial workaround allowing Kiwis to access overseas providers. But sitting relatively quietly in the background is Freeview, which is now being used in 67 percent of the country’s 1.6 million homes and is hoping to launch an ondemand service later in the year that will cater to the increasing number of New Zealanders with connected TVs. General manager Sam Irvine says it will offer “the seamless integration of linear broadcast TV and TV over the internet”, so what does this mean for the gogglebox scene?
Freeview, which is a joint venture between the major free-to-air broadcasters, has done all the hard work in the lead up to the Digital Switchover late last year and Irvine says it did better than expected, with 82 percent of the analog audience (or 160,000 households) left at the end of that period choosing its platform. Since then, households using Freeview have gone up 2.45 percent, or 40,900. And, with data caps and download speeds on the rise, increasing sales of connected TVs and improved ‘middleware’ that enhances reliability and usability, he believes the planets are in alignment for “Freeview 2.0” to hit the screens (Freeview Plus is set to launch in Australia with HBBTV technology in September).
“The big bit of the job is done, but it’s an iterative process,” he says. “… We’re not really in a position to say anything because we haven’t got very far down the track, apart from saying this is happening everywhere else in the world so it seems like a good idea and it does take advantage of the fact that majority of mid to high-end TVs and a lot of the lower-end ones are all connectable and it improves the user experience and the user interface.”
In New Zealand, he says very few TVs are connected in comparison to other markets (in the UK, smart TVs have a 45 percent market share) because “there is a very under-developed market for over the top offerings”. But of the 400,000 TVs sold each year, at least half of those will be connectable next year (in what could be seen as either a depressing indication of rampant consumerism or a positive tale of technology adoption, Kiwis are now swapping out their TV every seven years, down from ten years a few years ago and that number is moving towards five).
“Officially we don’t have Netflix, Hulu or Lovefilm. So our rate of connection is quite low compared to the global average. And that’s because you need a reason to connect.”
Those reasons are starting to arrive, the English Premier League games on Premier League Pass, or the other soon-to-launch options. But there’s “absolutely a space for Freeview”, he says.
Irvine says the issue with most smart TV apps like MediaWorks, TVNZ or Quickflix (it has announced plans to launch on Freeview, but that has been severely delayed and Irvine isn’t sure if it will happen) is that you’ve got to go pretty deep into the menu to access the content and the experience is completely different across devices. Also, with the likes of Apple TV and Premier League Pass, there are often problems with connectivity when users need to get content from a mobile device to their main TV screen. And that’s why he says the idea of an easy-to-use catch-up hub on the main TV that offers search functionality across all content and a backwards electronic programme guide is pretty compelling for “broadcasters, manufacturers, viewers and retailers”.
“You think about where the broadcasters are. A brand new competitor in Telecom and the threat of other over the top players coming. But they have built a very successful platform in Freeview. So you’d want to be thinking about how you can make it a lot easier for viewers to access that content … What we’ve done well with our current offering is make it simple and accessible to every New Zealander. And the great thing about the model is that as we use open standards all devices from many manufacturers all use a common interface to access content.”
So will the availability of an ondemand service through Freeview make recording technology obsolete? He says Sky have done a pretty good job in that regard, with MySky achieving the seemingly impossible and creating technology that dads around the nation could understand and use. But the market is quite immature in terms of digital recording.
“What may happen is a step change as we move to access through the connected TV and you don’t need to record it [not all shows that screen on free-to-air are available ondemand, however, as it depends on the rights the broadcasters have purchased]. But I don’t think we’ll see the end of recording anytime soon. It’s just the ease and simplicity of it. There are no contention issues. And it always works.”
So with more viewing options now available, has Irvine noticed more people deciding to cut the cord with Sky, perhaps using Freeview as the main viewing option and a streaming service with other content to top it up?
He says it has just done a round of research and found that people have been considering their entertainment options more than they were before and that’s “probably because there are now more ondemand options”. That’s particularly noticeable with the under 35 market, many of whom don’t see a reason to pay for Sky as they’re accessing content through other means, either legally or illegally (according to Stuff, around 30,000 New Zealanders have found workarounds to use Netflix)
“I think that’s an interesting development for Freeview. They have to take account of the fact that free is very powerful word. It’s a really interesting time for TV.”
Sky’s churn rates have come down significantly over the years and while it continues to rake in the profit and increase its average revenue per user, Irvine says it is finding growth hard to come by.
“We’re free and they’re pay, so we don’t compete, but you do in terms of a value proposition. Do I want to pay $100 a month for that little bit of content that I can’t get on FTA, or am I happy paying nothing and missing out? I guess that’s what people with over the top offers are relying on as well. They’re offering a significantly lower entry price to that content, but not giving as much content. So the choice has to be good for the consumer.”
Sport is one area where Sky still has it over everyone (it recently re-signed a broadcast deal with NZ Cricket in a six year deal, which Irvine feels is a long time given all the changes in technology). But it has realised its all-you-can-eat buffet model doesn’t suit everybody, so, in addition to Igloo, it’s stated publicly it will launch a new, cheaper over the top service by the end of the year (it is also planning on launching an ondemand service through its MySky box later this year). So could Sky potentially come on to the Freeview platform and offer a paid option?
“In the UK, where it’s a very competitive market, Sky have developed an over the top offering called SkyGo that fits quite well with the established free-to-air platform, and you can buy it by the day. You don’t need to be a subscriber. But not in New Zealand. They don’t need to … We don’t have any regulation here. And they’d like it to stay that way. So they just get bigger and bigger. What you need in any market is competition for consumers—and particularly to drive innovation. We were one of the first countries in the world to do Freeview HD, but in some other areas we’re a long way behind. We lack competition.”
Spark is the latest to offer it. So what does Irvine think of the Lightbox offer, which includes Homeland, House of Cards, The Blacklist, Breaking Bad, Orange Is the New Black, Masters of Sex, Mad Men, Louie, Modern Family, Arrested Development and Alpha House.
“We’ve seen it before. It’s always about the value proposition. What am I paying money for? Is the content worth the monthly [$15] sub and the hassle factor of me having to do something else to get it onto the big screen? Over the top players mean you have to go somewhere else. So bringing those together [like it’s hoping to with its Freeview catch-up technology]and it’s the best of both worlds.”