Fantastically engaging, wide-ranging, and thorough chat with Antonio Gioia, Project Manager, Service and Content Innovation, Mediaset…
IP&TV News: What are the main threats that broadcasters perceive in the TV Everywhere model?
I think the answer depends on your business model, that is whether you’re selling ads or subscriptions. Being Mediaset, involved in both FTA and pay-TV market, I see myself wearing two hats and can actually try to tackle the question from two different points of view.
In the new multiscreen TV experience, ad-funded broadcasters are typically wrestling with increased audience fragmentation and the challenge of making their content stick amidst the myriad choices available to users. There’s way more fragmentation, way more distraction and it’s way more difficult for advertisers to hold on to eyeballs and for broadcasters to find reliable multiplatform measurement tools.
As for pay-TV providers, they are actually struggling to keep up with video experiences enabled by OTT services: pay operators are typically still hindered by a slow-moving business model as well as serving less technically savvy consumers. The situation is exacerbated by pay-TV players still wondering how they can derive some additional business benefit from TVE, whether it comes from more PPV purchases, additional fees for second-generation multiscreen features, or even from dynamic targeted advertising.
As if it were not enough, a lack of willingness to pay due to the expectation that online video should be free, the widespread availability of pirated content, and difficulty securing rights – especially for live streaming – present additional challenges to broadcasters in markets such as Italy. The good news? We don’t need to keep ourselves from getting bored…
Are these fears well founded? If not why?
Only partly. First of all, it is incontestable that FTA broadcasters have not been completely able yet to create engaging online ADV format; moreover, they are still figuring out how to monetize the online in-stream ads separately from the ones over the air, add more value to consumers and advertisers alike, and increase overall revenue. To further complicate matters, they are currently resisting the march of programmatic buying and its sub-set, Real-Time Bidding (RTB), as a mechanism for selling their online inventory. While in some cases they may be right to fear it, I think we all should understand that this is the way that most digital inventory is going to be sold, so we should try to get ahead of the curve and at least start experimenting with non premium inventory.
That said, I do believe that TV Everywhere as a reality is exciting and seductive and game changing. I see TVE as an opportunity rather than something that can jeopardize our business.
Let’s go back to our “audience fragmentation issue”. My point is that broadcasters who rely on the ad-supported model can effectively exploit TVE to make regular TV ads better targeted, while pay-TV providers have several other advantages that they can leverage to make multiscreen service successful. With strong relationships with content owners, pay-TV players (such as Mediaset Premium) have access to the most current, popular content available, and also the capability to produce original series and entertainment shows. Not less important, TVE could have also the added benefit of providing a disincentive to content piracy. Often, when consumers cannot find desired content on a particular device from a legitimate source, they will turn to unlicensed sources in order to address their needs. By offering a legitimate option for subscribers, operators not only grow usage and loyalty among their customers, but they also help minimize content piracy.
Last but not least, I would agree with those who argue that the arrival of OTT and free content online is not taking market share from Pay TV operators; yet it does bring the risk that overall market ARPU will be depressed considerably. To support that ARPU we need added value and the second screen is the way to do that. As our Premium Play app demonstrated, TVE does help reduce churn, grow customer loyalty and inflate the perceived value of pay-TV to subscribers. Multiscreen services also give us provider a tool to drive subscription growth, be more competitive and, ultimately, create new revenues.
And what strategies could lead to actual effective monetisation of the model?
I think that asking how much a pay-TV provider can charge as a discrete fee for multiscreen is the wrong question. It is not about the incremental price tag but overall customer value. There are several OTT players and a lot of free (and illegal) content out there and pay-TV customers paying EUR 20 or EUR 40 a month, so we need to give value for the overall monthly subscription. Mediaset for instance has seen customer engagement and loyalty increase thanks to its Premium Play multiscreen service, which launched three years ago. So let me say that any additional revenue earned through multiscreen is actually “jam on top”. I know that – in several markets – this approach has eventually proved to be problematic: the TV Everywhere service is a concrete provider cost, but reducing consumer churn is sometimes a difficult result to quantify. I therefore understand those who decided to re-focus their strategies and used TV Everywhere services to drive consumers to higher tiers of service and produce incremental revenues. Anyway, I would suggest them not to drop their guard, as such a strategy may eventually backfire.
How do you see the dynamic between OTT and pay-TV resolving itself in the coming years?
I think that pay-TV operators and broadcasters, rather than dedicated online services, have a great opportunity to dominate the online subscription TV market in the coming years, as long as they will be able to leverage existing content rights and broadcaster relationships. On one hand, pay-TV service providers are finally recognising the strong benefit of developing online TV services as a defensive business model, by offering live streaming of channels or by using their early access to VOD content to supply customers with content that is unavailable from OTT services. At the same time, standalone online subscription service can effectively address cord-shavers as well as the holdouts who will not be swayed by traditional premium TV offerings by promising massive libraries of content that include an abundance of long-tail titles, shorter commitment periods, a lower cost of entry and much simpler installation and hardware requirements than traditional, ‘full fat’ pay-TV services. Furthermore, a distinct and well-balanced offer can help operators minimize any internal cannibalization concern.
Tell us about Infinity – what has the service introduced to the Italian market, and how has it been received?
Hopefully with my previous answer I have already explained one of the reasons behind Infinity (www.infinitytv.it): the need to be ready to “pivot”. This is one of the strong incentives for broadcasters to create their own standalone online presence. Yet not the only one indeed…
Infinity is the first “all-you-can eat” catalogue available – anywhere and anytime – to all Italian consumers, not just our pay-TV subscribers, effectively expanding Mediaset’s reach to new potential customers. One strong attraction for Infinity is the widespread availability of the service on almost every connected CE device that the consumer owns. Infinity’s near ubiquity on connected devices provides consumers with the confidence that if they pay for the service, it will be available on the devices that they most want to use—wherever and whenever they want to use them. Closing any existing device “availability gap” was undoubtedly one of the most important imperatives we have been having since the rollout of the service.
In terms of service proposition, Infinity provides unlimited access to +5000 contents (movies, TV series, entertainment, cartoons) – mostly in HD – for just 9,99€/month. There is no contract and customers have the freedom to stop/cancel their subscription anytime, which is likely a Copernican revolution for the Italian market. To entice subscriptions, we are offering a 15-day trial of our entire SVOD library. Among the several features offered, it is worth highlighting the opportunity for the users – on iPad and Android devices – to download their preferred contents and watch them later offline. Not less important, the service provides a user-friendly UI and a powerful recommendation engine that incorporates past viewing behaviours as well as other useful metadata to push tailored content to our customers.
Based on the data we gathered during the first week of operations (11-18 december), it can be safely said that users’ reaction exceeded our expectations: we had 100K registered accounts, 550K unique users (only on web site), 6MM pageviews, with each user streaming on average 4 content per week.
As we move forward, Infinity will surely get even bigger and better, with more contents, more devices and more platforms in the coming months.
Looking ahead, what do you think the buzzwords will be in connected entertainment in the coming couple of years?
When we launched Infinity, we made a decision to be more focused on the UX. We did know that if we wanted to increase end-user viewing time we had to integrate the whole experience on all screens and do that in a consistent and simple way. I think that in the next future we are going to spend much of our time debating how to simplify the user experience and help viewers consume what we offer them so they see added value in the service. Another real challenge for service providers will likely be deciding what needs to be controlled in-house vs. outsourced. Many players today are looking at hybrid models, as they struggle to keep up with the proliferation of devices while maintaining control of the core feature set. So we need to define what is core and how to manage our platforms in the most effective and balanced way. Likewise critical will be the renegotiation of digital rights with content owners: not surprisingly, I see at digital rights and windowing as the new battle ground. The problem now is that neither pay-TV providers nor OTTV want to share those rights, while content owners are simply looking to make as much money as possible shopping content around to many sources. Broadcasters need to build critical mass in order to reacquire a certain amount of bargaining power.
Not less important, I can easily predict that (big) data will play an increasingly important role: TVE services will be more data-driven, which will allow better, more personalized programming and targeted ads that capture the viewers’ attention.
Finally, I see the emergence of two “bad words” in Europe as well: data cap and net neutrality. What are (if any) the consequences of the Netflix-Comcast “affair” (Netflix has agreed to pay a fee for more direct access to the Comcast network). In the complex and politically charged world of high-speed internet access, this really seems a landmark agreement: will dumb pipes (network operators) negatively affect the alleged fairness in OTT market and regain centrality in content distribution? And who will pay for the development/improvement of ultra-speed broadband networks?
You’ll be at TV Connect next month. Are there any areas you’re especially looking forward to investigating while you’re there?
With the growing adoption of multiscreen services, many people have been considering Social TV a hot topic over the past few years: lots of hype, several exciting formats and inspiring best practices, yet no money so far. Thus I’m really eager to figure out whether someone has finally come with a reasonable and realistic monetization model…
Furthermore, since TVE has been criticized for being confusing and somehow misleading, it would be really instructive to discuss what operators can do to make consumers more aware of, and more familiar with, the services. Lastly, I would be quite curious to know if there is any room for collaboration between pay-TV providers and pure OTT players.
Anyway, those are just examples. If I look at the agenda, I do have an embarrassing wealth of options…
Antonio Gioia will be appearing at TV Connect 2014, 18-20th March. For booking and more info go here.