FTA TV's ad-supported model is dead: EY

James McGrath
By James McGrath | 21 April 2015

TV networks will need to experiment with distribution models this year if they are to get the most from their digital content, according to a new EY (Ernst & Young) paper.

Issuing the paper today, EY said media and entertainment companies needed to further consider subscription models as a way to protect against fragmenting advertising dollars.

“After years of offering content for ‘free’ under paid advertising models, traditional media companies will need to continue to adapt their back-office for subscription models as well as devise additional strategies to better monetise their growing digital audiences,” the report said.

“This all needs to be done while protecting their share of advertising dollars or premium subscription services via traditional platforms. Regular revenue from subscriptions can provide a buffer against fluctuating consumer consumption.

“Flexible pricing and usage models will also help protect revenue streams given the likelihood that people will use more than one service.”

Currently, Nine and Seven West have skin in the subscription-video-on-demand game through shares in Stan and Presto respectively.

All free-to-air networks, however, host catch-up services online which are currently totally ad-supported.

EY also said there was an opportunity for FTA players to “get mobile right” by creating “micro-content”.

“Consumers already demand anytime, anywhere content. Next, they will also demand ‘any form’ content -- small pieces of customised media and entertainment suited to the way people live and work,” it said.

It said the opportunity was in mobile, as using a smartphone for entertainment purposes was still a niche offering, ranked behind using a phone for banking and bill payments.

“However, this will likely change rapidly. Media content needs to be more easily available for a mobile experience, faster as well as more simple to use,” it said.

“One of the sector’s greatest challenges in getting mobile right is in security and digital rights management. Device and operating system fragmentation means companies have no universal method to secure content, increasing the cost to deploy across devices.”

EY also said that this year was shaping as a “watershed” for the industry in the way it went about trying to collect consumer data, and how it would use that data to create more compelling propositions.

“Local media and entertainment companies will need to continue to actively embrace new technology – especially analytics – and develop new business and distribution models to satisfy the demands of and foster more meaningful relationships with Australia’s voracious and increasingly outspoken consumers,” the report said.

The need for free-to-air players to collect better data on their consumers has been a point raised by media buyers in recent times, when discussing whether the FTA TV model would “break” this year.

Maxus' local CEO Jon Chadwick told AdNews yesterday that the measurement piece was not yet where the industry needed it to be to shift more dollars into it.

“The dollars will invariably flow to where we as agencies can best demonstrate ROI for our clients,” Chadwick said.

“Having that uncertainty around the numbers at a time when TV networks are under pressure from fragmentation is really not helpful”.

Industry data player OzTAM is currently collating data on TV networks' online catch-up services, with numbers from the intative to be made public during the second half of the year.

Meanwhile, it is also thought to be sounding out several measurement players around the world on how better to collate a holistic view of TV and online data, but it's thought no one player has nailed the complete equation yet.

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