New Zealand’s leading national television broadcaster and digital media company TVNZ has a more unusual model of being owned 100% by the government, but is also 100% commercially funded.
Despite a strong linear TV backbone with the three core channels of TVNZ 1, TVNZ 2 and male skewed TVNZ Duke, reaching 2.5 million Kiwis weekly on-air alone, it’s has also been laser-focused on its TVNZ OnDemand offering - with more than 1.5 million verified accounts.
The broadcaster made the brave move of introducing mandatory user sign-ins years ago - well ahead of the likes of Seven and Ten in Australia.
While TVNZ’s main local rival is MediaWorks New Zealand (owned by US hedge fund Oaktree), TVNZ CEO Kevin Kenrick, who is also ex-national marketing director at Lion, said the business has bigger fish to fry with the likes of global video players.
Known for having a strong news offering, focus on local content and running one of the nation’s most popular soaps, Shortland Street, Kenrick says for TVNZ, it’s about being less hung up about what platform and what devices people are watching on, so long as they are viewing its content in some shape or form.
We caught up with Kenrick to find out more about the business, market challenges and how it plans to take its burgeoning streaming offering further.
How is TVNZ OnDemand tracking?
In the last 12 months we've really started to get some traction and momentum behind TVNZ OnDemand. We've hit that moment where we've moved from it being catch–up linear TV to actually becoming a content destination in its own right. It’s really starting to benefit from that change in perception. For the 12 months ending July this year, we clicked over 100 million video streams for the first time. When we’re in a market of about 4.8 million people, so that represents a big chunk. It's number we're really proud of.
Why make the move to compulsory sign–up for viewing?
We moved to a mandatory sign–in probably about three or four years ago. At the time, we knew sign–in registration could offer personalisation, but we did not want to be caught in a horrible halfway house, where we had one group of viewers who signed-in and another who didn't. So, we made the call to require it as a mandatory part of registration. It didn't actually slow the uptake of registrations at all. In hindsight, we think it was absolutely the right thing to do.
The cast of Shortland Street
It is not commonplace for all networks to make sign-in compulsory. Do you think that's a mistake?
We formed the view that if you're in the online streaming game and you're not using data, then you're just building someone else's business and someone's else’s platform. So, we looked at it and felt that, while we had a number of viewers, if we didn't know who they were we couldn't actually use that data to enrich experience and offer more to advertisers.
What’s the current strategy for TVNZ OnDemand?
Our focus is on how we accelerate growth. So, while we are bigger than what we were and we're bigger than the other video–on–demand offerings locally, it's that area between us and the international players; our focus is how do we build scale to compete with those global–scale giants.
What's the advertiser response to TVNZ OnDemand?
We've had a combination of responses. OnDemand for us was born out of the concept of catch–up TV and subsequently, we had advertisers who saw it as being a bolt–on to TV advertising. But, in recent years, it has progressed in leaps and bounds, and we've got a content line–up that is unique to the online space. This content may not be part of our linear offering, or we may showcase and preview it as OnDemand before giving it a linear broadcast. OnDemand is now seen as an online destination in its own right.
What’s the biggest business challenge for TVNZ as a business?
When I think about our challenges, the first is undoubtedly competing with global–scale players. We're a big fish in a small pond and we are now going head-to-head with players who dwarf our scale in terms of resourcing, and that's a challenge. What this led us to do is play to our own strengths, which enlists the power of locally-differentiated content.
The other challenge is how we juggle the transition between a linear world and an online streaming world. It's actually a whole lot simpler just to do one or the other, but juggling the two of them creates real contestability in terms of resource, how you allocate that, and obtaining the right focus and the right balance.
It’s about looking at how much of the resource should go into online streaming and building that future versus optimising the performance of the linear TV business, where we are already performing so very well.
In light of the NZME/Fairfax merger failure, do you expect more similar market moves?
We are mindful of changes in terms of market structure. So, in the same way that you've got the significant changes that have recently been announced in the Australian marketplace, we expect there would be structural changes which surface in the New Zealand marketplace as well.
What would changes like that mean to you?
I think that change is a given. I don't think that the current market structure is sustainable and I think that you're either someone who believes that change creates opportunities and therefore you're excited by it, or you live in fear of it, which doesn't actually help anyone. So, we're certainly in the excited camp; very much.
What’s the local market competition?
If I talk from a broader perspective, our competitor is anyone that draws the attention of a potential viewer. We are competing for viewer's attention, so any and all distractions or use of time in that context could be viewed as competition.
If you look more specifically at some of our traditional competitors, there’s MediaWorks and Sky TV and more recently there are developments with the telcos, with Spark’s sports rights. I think that Sky is facing the challenges that Foxtel is. MediaWorks is facing the same challenges that we are, but it's got radio assets as well so it's a little bit different in that respect, but in the TV space it's facing the same challenges as us.
How fierce is the rivalry between networks?
I think this industry attracts really passionate people who are big backers of their own content offering and it's an emotional game, so I think that people bring a lot of that to the way they participate. I think you could characterise the competition as being really robust, but we're a small market and everybody knows everybody. It's a constructive, robust level of competition — that would be the way I describe it.
Yet at the same time, I think the risk is we don't want to become unduly distracted by competing with local competitors when the players that represent the biggest threat to us are the global–scale players.
Does New Zealand stage big, glitzy TV upfronts that the networks roll out in Australia?
We follow a similar pattern in that we bring major advertisers and agencies together and focus on our content showcase, talk about what our strategy is, how we're going about things, and how that will impact the trade.
It's actually a fantastic occasion for us each year because we prize our content, and there is of course a fair bit of glamour. There is an automatic air of entertainment about the occasion. It's probably what makes this industry more exciting than many others.
Are you focused on securing large TV inventory deals?
Our focus is less about individual advertising deals because I think our market operates a little bit differently to the Australian market, in that we have deals with individual advertisers, as well relationships with different media agencies.
I think the Australian marketplace is more dominated by the agency deals than it is by individual advertisers, so we've got a combination of the two in the New Zealand market.
Are agencies cut out by some advertisers?
I don't think it's a case of cutting out agencies. I think it's a combination of advertisers saying, "I want an agency that is going to look across all the media options and give me advice and critique the various options, but I also want to have a direct relationship with the major media owners because that will actually give me the opportunity to advance my brand into participating in opportunities they might otherwise not hear about".
Which TV shows are ratings winners?
The big show that drives TVNZ 1 is 1 News, which is basically the staple of news and current affairs. TVNZ 2 holds the anchor show; for that it's local soap, Shortland Street. That's our version of Home and Away and has been running for 25 years. It is really quite a foundational building block of the TVNZ 2 channel.
We're also doing more and more local formats on international shows, where we can bring in a local flavour. The other piece that we are focusing on is what we're doing in the online streaming space for younger audiences, and one of the things that we launched a year ago was a social–driven alternative news offering called Re. It’s basically short–form video content that covers news and current affairs.
We launched that from scratch 12 months ago and it delivered 30 million video streams in its first year. It has had huge uptake among younger viewers and is really giving us some great insights into how we ensure that our mainstream news offering is maintaining its relevance and is still contemporary.
How would you describe your journey as CEO over the last 6.5 years?
I'm loving it. I think it's an industry that everybody knows is going through massive change and I think with that, it brings massive opportunities. I think there's no shortage of things that you can sink your teeth into and really test your thinking.
But, it's also an industry that I believe delivers something which really matters to New Zealanders. So, we inform people, we entertain people. We reach more New Zealanders per day than most businesses in this country would reach per week or per month. So, what we do matters and it makes a difference.
I think it's a really pivotal time for local media. I think for the future and sustainability of local news, we're at a really pivotal stage, and it's a really exciting time to be a part of it.
What are you doing in the programmatic and data realms of TV?
You've got this fragmentation of audiences that in truth is making life far more challenging for marketers.
What we think makes a whole lot of sense is unification of audience measurement, bringing that together and delivering an audience to advertisers irrespective of the device and the platform that it's actually available on.
At the moment, you've got different currencies, different metrics and it makes it quite challenging to compare and contrast, or to build a campaign that is across multiple different platforms.
So for us, programmatic has been a significant development. There's been a number of technical developments, but I don't think we've yet found anything that has delivered this simplification that would make it easier for marketers to achieve their outcomes.
What's the dream scenario with measurement? And whose job is it to make this happen?
I think we tend to look towards Nielsen in terms of the role it plays around the audience measurement and I think there is progress that's been made, but I think the market is moving faster than the measurement. So, there's definitely catch–up that's required, but at the same time what we have seen is there's been a number of digital initiatives where people have gone out and engaged digital as though that's the answer that is going to solve all problems for advertisers, whereas really what it does is it just add yet another option.
If you look at it through the eyes of an advertiser, their concern is how we make it easy to attract and engage audiences to their brand and sales proposition? We think the future is video. So, we're really confident that doubling down on video as the format is the right thing to do, but video right now is actually harder to measure across all the different options than it used to be. It's the most effective way to engage an audience, to build brand preference, and I think that's the opportunity for us as an industry to get right.
What are the differences you see between the TV market in Australia compared to New Zealand?
There are many similarities. But, one of the things that is different is, in a smaller scale market like New Zealand, you've actually got a little bit less head room in order to buffer yourself against market volatility and change, and therefore I think you have to be responsive and move a whole lot faster.
We are prepared to try and pilot things, but at the same time, when I talk to colleagues in Australia, I think there's a number of great things that they're doing that we can learn from, and vice versa.
So are Kiwis less risk–averse?
When you're an incumbent player and you've got a strong position, the risk is that you can become a bit risk–averse and that you're fearful of cannibalisation.
We've taken the view that you've got to keep the cannibals in the family and, from that perspective, we really don't have the fear of having to defend the linear TV audiences versus online streaming. We just want to make sure that people are watching our content and if they happen to do that on their phone, on a tablet, on a desktop or TV, that's their choice. That's not for us to say.
What we've got to do is make sure that we show up the best version of ourselves in all of those places and let the viewer decide.
You’re a founding partner of ThinkTV New Zealand that launched in March this year. How has it been going?
Kim Portrate (ThinkTV Australia CEO) and the team are doing some great work and we're facing exactly the same challenges. The industry has been remiss in terms of promoting the power and the value of TV and, for a period of time, we were out–shouted by the global digital players. ThinkTV is bringing a bit more balance to that conversation with advertisers by being really clear about what the unique benefits of TV are; something that’s long overdue.
Marketers have got past this whole thing about digital being the answer to everything. Also with TV, it’s important to understand that just because something has been around for a while, it doesn't mean to say that it's 'old school'. The reason it's been around for a while is because it works and it's bloody effective and I think we're getting a whole lot better at telling that story.
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