2015 in TV land: the year yield takes over - Part Two

James McGrath
By James McGrath | 22 December 2014
 

In part two of our look at the TV market in 2015, we delve into what TV networks in Australia are doing to address the issue of a stagnant, if not declining, pool of revenue. See here for part one.

The struggle is real, diversifying income streams is the key

It's hardly a new revelation, but 2015 will be the year that TV's push outside of the TV screen comes home to roost.

HbbTV

Seven West Media unveiled its push into hybrid TV at its last upfront presentation, unveiling a January push through its Australian Open coverage.

So far what's held up the march of HbbTV into the marketplace is lousy home penetration rates. The technology is in place, the networks are ready to feed content, now we're just waiting on people to buy the units.

That's why a recently-inked rash of free trade deals with Asian nations such as China, South Korea, and Japan could be one of the better things to have happened to the TV industry in Australia.

While the outlook for the Australian dollar is not great, the ability for electronics from Asia to reach Australian shelves sans tarriff could see price drops across the board.

Not great for local industry, but fantastic if you're a retailer wanting to sell a HbbTV unit.

Branded content plays

Meanwhile the branded content game isn't just for media agencies anymore.

Network Ten in particular was keen to show the capability of its branded content arm, Generate, which in partnership with Context Media got Modern Family's Ty Burrell into a Toyota.

For Ten, it was partially about demonstrating that while its revenue share didn't match its audience share, that it could diversify its revenue base so it wasn't so reliant on traditional markets.

Generate's national head, Melissa Fein, told AdNews the Modern Family spot had piqued the curiosity of buyers.

“It's definitely been very successful for us in terms of the Facebook talkability and other areas, and we've had a lot of enquiries from clients asking us how to get into that space,” she said.


“It goes back to leveraging talent to drive the content instead of just a straight ad. It's about using your talent as an asset. It's a very exciting area for us.”

If you can't beat 'em, join 'em

As with any industry facing competition from outside sources, one of the key strategies is to join your competitors in the disruption.

This has been most notable in the SVOD space, with traditional rivals Nine and Seven both heading to a new battleground.

Seven West teamed up with Foxtel to expand on the Presto service, while Nine has teamed up with Fairfax in a $100 million joint venture to come up with Stan.

Meanwhile, all networks have been piling into the online catch-up space after the ABC led the way with its iView offering, with all players keen to chase eyeballs onto tablets, desktop, and mobile.

While the ABC led the way, Ten has taken the mantle of the commercial players.

The exact revenue split isn't known, but the ability to serve pre-roll inventory has become another handy money spinner for networks.

Sweet twitterings, apropos of nothing yet

This year Network Ten said 'we're totes big on social media', and this year should be the year it explains why that's important.

All networks have been hard at work trying to explain to buyers exactly why social media is important, and what roll it has to play for advertisers, but so far buyers haven't exactly been too enamoured with their explanations.

“Networks are still grappling with the concept of social marketing and are yet to understand the true commercial opportunity. We see this only improving over time as networks focus greater energy into their own social strategies and for their programs,” IPG Mediabrand chief investment officer Victor Corones told AdNews earlier this year.

“It’s these strategies that will ultimately be the life blood of a show’s future success.  Getting that right then allows advertisers to be involved.”

However, things could get a whole lot more interesting in the first quarter next year when Nielsen releases brand rankings on Twitter. Cross-reference those with the Twitter TV ratings it has also been working on, then networks have something truly powerful on their hands.

Event TV and sport – TV's greatest hope

It's already blindingly obvious, but the power of free-to-air TV lies in scale.

It lies in being able to relay a message to more than a million eyeballs at once, and there are only a few things in this world that can do that.

More often that not though, these things fall under 'event TV'.

This could be competition reality shows, or just straight competition.

The ever-increasing value of sports rights has been a hot talking point this year, and with the AFL rights set to be settled next year, they'll be even more keenly talked about.

While networks have been keen to talk down the importance of gaining the rights to the AFL, every man and his dog could tell you the blindingly obvious -- sport brings Australians together like nothing else.

The fact that six out of the top 10 most-watched programs of 2014 were sporting events speaks volumes about the importance of snapping up the rights.

It's a seller's market out there.

Programmatic buying

So far, only Foxtel and MCN have have announced programmatic trading of linear TV inventory, in a partnership with AOL-owned Adap.tv.

The full details of the partnership and how it will all work has yet to be shaken out, but there's little doubt there is at least a curiosity about the partnership in the marketplace.

“Everyone continues to talk about the growth juggernaut of online video and MCN is fundamentally hitching its ride to that growth curve,” MCN group sales director Mark Frain told AdNews earlier this year.


“The reality is no-one is trading linear TV and IP-delivered video together. They’re trading IPTV and online video together, but not linear television – where the majority of audience viewing remains and the majority of revenue is still traded.

What you’re still lacking in this market is an abundance of premium online video. By MCN taking the decision to put our inventory in this private marketplace it gives the digital traders more options to buy and start to use TV,”

It remains to be seen whether the free-to-air networks will jump into the game as well, but making inventory easier to buy is always a good way to get buyers through the door.

What's to come from the networks?

Seven and Nine

The big two of the free-to-air space will continue their dance, with both having legitimate claims to being the biggest TV network in the country.

For Seven, it's about maintaining the rage after winning prime time this year, the eighth consecutive year it has done so.

However, Nine will have something to say about that, with an unrivalled launch platform to hit in February.

Nine traditionally uses its cricket coverage as launch events for its programming, hoping to build early momentum for the rest of the year.

This year, it has a Cricket World Cup being played on home soil.

As far as launch events for programming go, they don't get much bigger. Nine will undoubtedly have a great start to the year, and the challenge for Seven is to use the rest of the year to overtake and surpass Nine.

Network Ten

It remains to be seen who exactly will own Network Ten in 2015, but whoever ends up with control of the network will have control of a station which is betting big on Q1.

While Network Ten was keen to tell buyers all about its stable programming slate next year, the reality is that a lot comes down to the start it gets.

It will have the Big Bash League cricket to get it off to a good start, and it will be hoping I'm a Celebrity, Get Me Out of Here will help maintain the rage.

It's no secret that Ten's start to this year wasn't the best.

ABC and SBS

For the government-funded broadcasters, it's all about measuring the impact of the coalition's cut/efficiency dividend.

Already programming has been partially trimmed back, and there could be more to come.

ABC staff have been placed in “shark pool” redundancy queue, as the market waits to see what effect a declining roster of journalistic talent will have on its programming.

Meanwhile for SBS, the cuts could have another effect altogether.

While it's yet to be legislated, the government will allow the broadcaster to double the amount of primetime ads it can run. This, to put it midly, angered the commercial players.

The Federal Government and SBS floated figures of an extra $28.5 million over five years from advertising as a result of the switch, but peak body Free TV Australia, leveraging analysis done by MediaCom, said this figure would more than likely be roughly $200 million.

It remains to be seen where it will all land of course, but if it's in the upper range of estimates a shrinking pool of advertising could get even tighter.

Foxtel

2015 will be the year when Foxtel figures out whether a new well-publicised pricing structure manages to re-kindle the pay TV operator.

While the free-to-air may still be able to promote the fact that it's free and available in all homes, Foxtel can't do that.

Sources have suggested Foxtel is most vulnerable to the SVOD wars about to heat up in Australia, as users look at what they can get for about $10 per month against a minimum of $25 per month.

The fact Foxtel has moved to beef up its own offering by bringing Seven West on as a 50:50 joint venture partner speaks volumes about how seriously its taking its own SVOD play.

Meanwhile, the market will start to figure out MCN's new trading platform, which is intriguing the market.

It also has a potential new triple-play offering up its sleeve, which could help bring new customers to the platform.

For more opinion:

2015 in TV land: the year yield takes over - Part One

TV negotiations reach "tipping point"

TubeMogul to “nail” Australian programmatic TV

Have something to say on this? Share your views in the comments section below. Or if you have a news story or tip-off, drop us a line at jamesmcgrath@yaffa.com.au

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