MIPTV wrap up from Cannes

The future success of IPTV and subscription ( SVOD) television may be forged on the quality of its own in-house developed content. The success of Netflix and Amazon in the creation of their own unique content is viewed as a key differentiator in the battle for audiences according to leading industry executives as this year’s MipTV held in Cannes, France. 

Sky CEO Jeremy Darroch Sky, said that he  sees drama, produced in-house, as the future of Europe's number-one pay-TV group, which built its position largely on sports, news and HBO series.

“It could be a big portion of our business. Our intention is that those shows can sit alongside the programming we acquire, and will continue to acquire, from our partners,” Darroch said at his MipTV keynote.

Sky has started the foray into original drama commissioning, with the Arctic crime series Fortitude, which it aired simultaneously across all its territories in Europe. It is currently showing in Australia on the ABC.

Sky is already Europe's leading investor in television content, with a combined program budget of some US$7 billion.

Darroch also suggested that growth would come from expansion into new businesses. “The transactional business, for example, digital DVD rentals and sales, is one where we haven't been that active but I think we could make a major impact.”

On  the 4K front, global demand is rapidly growing with Japan having launched  two full-time 4K channels from SkyPerfecTV and other full-service transmissions from public broadcaster NHK are due to start shortly.

NHK’s Shinichi Nagano (deputy head/Programming) showed delegates an impressive show-reel of spectacular footage including 8K down-converted (to 4K) material from the Rio ‘Mardi Gras’ carnival parade.

Japan’s Cable & Telecommunications Association also showcased their 4K output.
Delegates were given the latest display sales numbers from analysts GfK, who confirmed that consumers were still buying 4K TV sets in considerable volumes.  Sales for the 12 months to January were 298,000 for the UK, 294,000 for Germany and 290,000 for France. Sales for February were on average down “because there was little inventory left, with retailers holding back on stock in readiness for new model deliveries announced at CES in January,” said GfK.

Nevertheless, this still suggested that each of the three major European markets were likely to see sales for 2015 around the 600,000-700,000 units, and perhaps much more.

GfK’s data showed that retail prices for the average 50” display rose slightly in January from £1031 to £1131.

As MIPTV 2015 drew to a close last week, it became clear that the gap pointed out by many media analysts between “traditional” TV and internet content isn’t as wide as they thought. The succession of panels and keynotes in the Cannes Palais showed quite the opposite – an increasing interconnection between all kinds of screens, content and stars. The thing is, in a TV/entertainment industry without borders, how can these – sometimes very new – media companies thrive?

Like last year, answers were given by the multi-channel networks (MCNs) present at MIP Digital Fronts, MIPTV’s international digital content marketplace. Invited to showcase their best talent and share their views of the content industry’s future, the CEOs and creative directors kept reminding the audience that millennials’ behaviour is the one reason the industry has to change, both in terms of formats and accessibility. Maker Studios’ international president René Rechtman quoted some figures to illustrate his point (watch the full session below). Did you know, for instance, that short-form online video is consumed by 62% of generation Y, whereas traditional long-form is only consumed by 38% of these young viewers? And there’s more: they watch three times more online video than non-Millennials!

o how do MCNs remain relevant? As Rechtman pointed out, “talent travels between platforms and works where the audience is.” So is becoming platform-agnostic the key? VICE’s global head of content Alex Miller - who also took to the stage at MIP Digital Fronts – couldn’t agree more: “The only thing that matters is storytelling. The only thing that matters is good content,” he repeated, pointing out the urging need to focus on quality rather than platforms.

As an example, he mentioned VICE’s recent focus on mobile content, facilitated by the company’s past experience: “We’re going to be taking everything we’ve learned from news moving from online to TV to mobile, and we’re going to be doing it for every single one of our channels.” To further prove that their ambition knows no limits, chief creative officer Eddy Moretti gave the audience a glimpse of things to come: VICE’s next target is the big screen, with two feature films planned per year for the next three years.

If there is a gap, it is between the viewers themselves: during AwesomenessTV’s showcase, CEO Brian Robbins boldly declared that “traditional TV viewing for teens and tweens is dead – not dying, dead.” He further warned the MIP Digital Fronts audience against focusing on generation Y only: “Generation Z (those born from the mid-90s) will be way more influential than millennials. Pay attention to generation Z. It’ll ensure that your company and brand will be setting the trends, not reacting to them.” More influential on their peers and more mobile than any generation before: these two characteristics will undoubtedly be key to target future media consumers.

In this increasingly fast-moving and dangerous “TV” world, innovation isn’t just a way to attract younger audience: it must be at the core of any digital video strategy – and this is where MCNs have a big role to play in the industry as a whole, according to Michael Shamberg. The producer behind Pulp Fiction and Erin Brockovich now helps BuzzFeed create traditional story-based or character-based content, and he sees the internet company as “a big R&D lab.” At the other of the spectrum, “the studios don’t have the capacity  to innovate at all, because the amount of capital is so large, and they move so slowly,” he explained, in his keynote session with Buzzfeed Motion Pictures’ Ze Frank (watch in full here).

In other words, in today’s media landscape, it’s all about being agile and addressing your audience with original and customised content – not to mention the necessity to get that audience’s feedback and exchange with these viewers. Rooster Teeth’s creative director Burnie Burns insisted on his MCN’s experience in this field: their productions wouldn’t be nearly as successful without such a passionate fan base.

Flexibility, authenticity, spontaneity: the mandatory skills to survive in TV nowadays? They can at least help you stand out in what Yannick Bolloré calls the “wall of infinity:” “10 years ago it was possible to see everything… We have shifted to a wall of infinity. It is impossible today to have this erudition about the content… And it is clearly a fascinating disruption.” The best illustration of this overabundance of content was probably given by Vsauce’s Michael Stevens, who talked about YouTube’s current scale: “Every single minute, there are 10 more days to watch. You couldn’t watch all of it in a lifetime,” he said.

Surviving infinity can be a exciting challenge, though. Sky’s CEO Jeremy Darroch goes een further: “There’s never been a better time to be in the industry that we’re in,” he said. “The demand from customers for great content seems to be insatiable… They want to have access to that, as we know, on their terms. They want the whole experience of watching television to be better.”
If surviving the infinity of content means making better television, then the TV industry still has a bright future ahead!

Last year, Sky became one of Europe’s leading investors in original content through the acquisition of Sky Italia and Sky Deutschland, with a combined programme spend of £4.6bn/€6.4bn. Jeremy Darroch emerged from that consolidation as group CEO of Sky, with his MIPTV keynote today the first time he’s spoken at an international event since the acquisitions. He was interviewed on-stage by former BBC1 controller Lorraine Heggessey, who is now chair of the Grierson Trust.
“All my career’s been in consumer-facing businesses, where customers and consumer insight has been at the heart of what we’ve done,” he said. “Sky is no different… our role is to develop very deep insights into what our customers want… and then to think about how we start to construct a service.” The direct customer relationship continues to fascinate him, he added. So what does the customer want?

“More great content,” he said. “There’s never been a better time to be in the industry that we’re in. The demand from customers for great content seems to be insatiable… They want to have access to that, as we know, on their terms. They want the whole experience of watching television to be better.” But on their own terms in terms of how and when they watch it.

Is Sky as much a technology company as a broadcaster? “Innovation in the viewing experience has always been at the heart of what we’ve done as a business,” he said, right back to when it launched its first satellite service. “We can think of innovations like Sky+, high-definition, 3D, Sky on the Go. All of these things have been synonymous with Sky as a business… It’s a core part really of what we think our brand stands for and a core part of what our customers expect from Sky.”

Darroch added that Sky has been “built on change” in its industry and the markets in which it operates in. “This whole idea that we constantly seek to renew ourselves,” he said. “You get a very dynamic culture: a culture that’s restless really, and constantly wants to move on and try new things.”

He talked consolidation with the recent acquisitions of the Italian and German Sky broadcasters. “By bringing the Skys together we could really in each of the markets step-change again in what we do. At the heart of that would be doing a better job for customers,” he said. “We’d be able to do things at a great pace and often to raise our level of investment right across our customer service… We’re in 21m homes today, but something like 60m homes in the territories we’re in aren’t yet paying for TV.”

How will it change the way Darroch runs the business? “I’m working much more across the businesses. Much more working on the business, and less in the business,” he said. “What that’s created is the opportunity for others to step up and move into some of those old roles. We’ve got a load of very talented people around the Skys… We’re just really getting into and learning about that process of change. This is not about spinning on a sixpence or throwing all the cards in the air. It’s about starting to move through that at the right pace.”

He talked about the explosion in technology and new distribution platforms, which is allowing Sky to get to customers it couldn’t reach before. “It’s a very exciting time for everybody here, and it’s a very exciting time if you’re in Sky.” He also talked about Sky’s UK business: “If anything, it’s accelerating,” said Darroch. “The UK business was in good shape. At the heart of that has really been a journey we’ve been on in the last few years to broaden out our business.”

He added that Sky’s businesses in Germany and Italy are performing well and putting out good shows, and broadening their distribution base as the UK has. He admitted that Germany is a nascent business, but that it is driving subscribers well by investing in content. “They’re growing well, a small team in Germany but they’re doing a good job,” he said. The businesses are learning from one another too: there are more ideas coming through. “The interesting thing about the big ideas: people often think they flow from the UK to Italy and Germany, but in many cases it’s the other way,” he said. “These’ll form much of the drivers of our growth over the course of the next few years.”

Sky has been synonymous with Rupert Murdoch, but how involved is he in the business now? “Fox are obviously our biggest shareholder, and incredibly supportive of us as a business, and continue to be so,” he said. “But they let us get on, as you’d expect, with the job… It’s our job to communicate and engage with all of our shareholders. One of the great things we’ve seen over the last year is we’ve had very strong support for the journey we’re on. Pretty much all our shareholder base have bought into it… Fox were a very important part of that.”

Will there be more acquisitions in the future? “I don’t see any reason why not [but] we’ve got plenty on our plate for now and we’re focused on that,” Darroch said. But if that’s successful, it will explore where else it can expand. “We have an appetite in our business to invest… There’s lots of good ideas that will come up, and we’ll get after them.”

Darroch added that Sky is working hard on building its entertainment business, including through acquisitions and commissioning, including original productions. “Very much so, that’s our intention. And that will sit alongside continuing to acquire a huge amount of content from whatever in the world. Our own commissions give us a little bit more flexibility around what we do,” he said.
Is it crucial to have this to differentiate the company, wondered Heggessey. “I don’t think it’s the only way, but it’s certainly one way, and it can sit alongside lots of other things that we do,” he said. “It can complement either what we do with others or what we do elsewhere in terms of the customer experience.”

Darroch delivered a message to the creative community. “We want to particularly with our own commissions take a bold step… We’re very willing to take risks. We’ve always been a business that’s willing to take risks within the framework that we’re trying to achieve,” he said. “It seems to me that if you work with the very best people, you want to give them a lot of freedom to do their best work… We’re very much open for ideas.”

Will that include central commissioning across all three markets, or still have commissioning in each of them? “A bit of both,” said Darroch. “We’ll still have them led by individual markets… but we signed off last week seven or eight new commissions that we think will go across all the territories.”

He also talked about sport: how will Sky’s increasing investment in English Premier League rights square with wanting to spend more on original content, for example? “It’s not an either/or,” he said. “You don’t start building a broader content business by losing sight of your heartland… That week we renewed the Premier League, we brought the British Open golf tournament to Sky Sports as well.” So Sky is not letting more expensive football rights prevent it from looking for new opportunities elsewhere too.

How does Sky decide whether its investment in original content is paying off? It looks at consumption, obviously, and at what customers are telling it about its shows – including resonance with new customers versus existing customers. “And of course we look at reaction from the creative community,” he said. “We try to take quite a broad view of how we assess content… we’re not particularly driven by any one metric.”

Other broadcasters are buying up production companies, so will Sky be joining that trend more enthusiastically than it has done so far? “I don’t think it’s imperative, not particularly. We will make a few more investments, largely driven by Sky Vision, our distribution arm,” he said. “It’s something I’m open-minded to… we want to be very flexible and agile and work across the industry.”

Can Sky still be a disrupter, when it faces the likes of BT, Netflix and Amazon competing with it for sports rights and content. “It’s very much about getting broader,” he said. “How do we get to as many customers as possible?” Whether that comes through its own satellite service, through wholesale deals with others and through selling its content.

“We’ll always be a business that will be single-mindedly driven by customers,” he added. “And culturally by constantly renewing yourself. People often say ‘you’re the incumbent now’. I reject that… We don’t really worry too much about those kind of guys, we just stay focused on what we’re doing.”

So what’s the next big innovation for Sky? “I think you’ll see lots of innovations in terms of the home entertainment experience and the viewing experience,” he said. “The core of our business still today is families going home and having a brilliant experience… I think you should expect to see news that will come through with that.”

But also trying new things: “We’ve got lots of plans to innovate over-the-top in our new services like Sky Now and Sky Mobile. The future is less about any one single idea than about our ability to do multiple things to really span the whole of the markets in which we compete and operate.”