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Posts Tagged ‘television’

AlJazeera and ADM: Life after the Premier League Rights Saga

August 15, 2013 Leave a comment

The saga of the renewal of the Premier League television rights recently culminated with their award to Al Jazeera on an exclusive basis. As usual, the price paid has not been announced. Given the nature of the auction process and judging by its extended duration, it would probably be safe to assume the final amount is in the hundreds of millions of dollars.

If there is one thing that everyone agrees on, it is that the process took far too long. The result was announced roughly a month before the scheduled start of the 2013 season, leaving fans and subscribers confused as to how and where they will be able to watch the games. That the PL allowed the process to drag on for so long must imply that they reaped a financial benefit above and beyond what they would have gained by accepting the initial bids. Nevertheless, the proceedings did not help the reputation of the sports rights sales processes in MENA, which are in general quite ambiguous in nature.

Unless Al Jazeera has been quietly preparing for winning the PL rights, the short duration until the season’s kick-off leaves them with a considerable challenge. Undoubtedly, Al Jazeera will provide a high standard of coverage with a star line-up of pundits, presenters and commentators. If, as has been speculated, the PL has mandated that cards be paired with decoders, Al Jazeera has a limited amount of time to make sufficient decoders available in the market. Ironically, ADM’s decoders are compatible with Al Jazeera cards, but pairing will require the cooperation of ADM, which may be difficult to secure. There is a marketing challenge in defining and communicating pricing, availability and technical requirements to potential subscribers. Finally, there is a customer service challenge in signing up a significant number of new subscribers within a short period of time. The coming weeks will confirm whether Al Jazeera is able to meet these various challenges.

The exclusivity of the PL rights as awarded to Al Jazeera firmly answered the question of cooperation among MENA rights holders. Many speculated that ADM and Al Jazeera had drawn a line in the sand in the face of ever escalating rights costs. Indeed, had this scenario played out, it would have set the tone for a reduction in future sports rights values in the region. As it stands, future rights costs may rise sharply if ADM attempts to replace the PL rights with Spanish, Italian or UEFA rights as they come up for renewal in the coming years.

As many have commented, the costs of sports rights in the region are not commercially viable. Although I do agree, neither Al Jazeera nor ADM are naïve enough to think that they are purchasing assets to generate a financial return over a three-year period. Each has his own strategy and perspective and, in both cases, my guess is their reasoning extends beyond the commercial constraints of regional pay-tv.

Some have been critical of the rights owners for embarking on strategies that promote price hikes. I would agree that constant shifting between platforms is not conducive to long-term subscriber growth, but in the end sports rights are worth whatever someone is willing to pay for them. Incidentally, rapidly escalating costs for sports rights are not unique to the MENA region. The primary difference is that in most other markets, the bidders are driven by a commercial objective and operate within a market with sufficient scale to justify the costs.

For ADM, it must now of course determine the fate of its platform, which has hundreds of thousands of subscribers and represents a significant multi-million dollar investment. Most subscriptions will likely be expiring between August and December and ADM needs to offer its existing subscribers a viable alternative. It can of course shut down the platform and cut its losses, thus leaving Al Jazeera as the only viable buyer of international football rights in the region. Alternatively, ADM may elect to expand its HD entertainment offering to retain subscribers and gain new ones. Another possible scenario is for ADM to wait until major football and sports rights come up for renewal and attempt to acquire them. Each of these scenarios will have a significant impact on the pay-tv market in the region.

What next for Al Jazeera? Typically, pay-tv operators use sports rights to attract subscribers to a larger bouquet of entertainment channels with the aim of maximising revenues. So far for Al Jazeera, sports rights have been an end in and of themselves. After securing the rights for every major football tournament, will they focus on local football league rights? Or will they cast a wider net and seek to expand into entertainment? It would be an opportunity to create a compelling and complete pay-tv portfolio to entice a larger number of consumers at a lower subscription price point that Al Jazeera is clearly comfortable with. In comparison to the costs of sports rights, movie and entertainment channel rights in the region are a “bargain”!

(This post appeared in BroadcastPro Middle East.)

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Technology and the Rebirth of Creativity in Advertising

May 14, 2012 Leave a comment

The headline in the LA Times on Dish Network providing its customers the option to skip commercials (something possible on Youtube most of the time), further emphasizes the speed at which technology is advancing is faster than the speed at which advertising agencies are able to react. Consumers are increasingly getting the tools to choose whether they believe an ad is worth their time. If every consumer was able to skip any advertisement which they deemed irrelevant, boring, or pointless, the measure of the success of a particular advertisement becomes very binary: watched or not watched, relevant or not relevant. Obviously, this type of measurement is most suitable for web, mobile, or internet-connected TV sets. However, measurement is increasingly possible in the offline world: how many people scanned a QR code on a print ad? How many consumers typed in a coupon code on a newspaper ad? How many users visited a Url on a billboard? How many Groupon customers came back a second time after their first discounted visit?

As technology becomes intertwined with consumer behavior, Lord Leverhulme’s well known saying “Half the money I spend on advertising is wasted and the trouble is I don’t know which half.” will cease to be relevant. Every passing day increases our ability to measure advertising and decreases the uncertainty associated with it. This will be painful for some whose campaigns will be demolished by a lack of user response or engagement, but it will herald a golden age of creativity. It will challenge creative directors to not only create beautiful imagery, but to also understand the context, behavior, interests and reactions of consumers.

Technology is changing the nature and format of advertising. It will also change how advertising is judged and evaluated. The creatives who understand the impact of their work on the behavior and actions of the consumer stand to gain the most.

What will the Television watching experience be like in 5 years?

April 28, 2012 Leave a comment

I posted an answer on Quora.com recently in response to the following question:

Q. What will the Television watching experience be like in 5 years?
I sit on my couch with my phone in my hand and remote in the other, but still watch tv in the same way I did 15 years ago. With smart TV’s and users on the couch having smart phones, I imagine there is a lot of disruption and changes that will take place in this market.

A. “The passive lean-back experience at the heart of television watching has resisted many attempts to change it. It will remain at the core of watching and will not be replaced by viewers selecting the next video file every five minutes in the next five years. Even as digital video rises in advanced markets, television viewing is rising alongside it. The most evident support for this is that web players like Youtube and Yahoo are changing themselves to organize content into “channels” (sounds familiar?).

These days five years is too far out in tech terms to predict! However, there are trends that are influencing the mainstream television watching.

1) TV will continue to extend to multiple platforms: Tablets, consoles, web and mobile. This will make TV a more personal and portable experience since it will increase individual viewing rather than family-unit viewing. In Western markets this is already the norm, but in developing markets this will be a stronger influence.

2) Rise of the second screen and social communities: Consumers continue to multi-task while watching TV, but increasingly they will be looking at additional info to support their TV viewing. This will build communities around content in a new way that extends beyond broadcaster borders. TV has always been social and the subject of conversation. However, technology now means that the scale and reach of the conversation changes (from a few friends/colleagues to global discussions) and the speed of the discussion accelerates (from next-day to immediate).

3) Time-shifted viewing will dominate and begin to influence the broadcaster scheduling model and advertising formats. DVRs/ Network playback/ catch-up viewing online will encourage advertisers to focus on integration of brands within content rather than relying only on spots (but those will still be there in five years time).

4) New younger talent: New talent (actors/ writers) will reach the TV screen through discovery on the web (e.g. Youtube etc). Barriers to entry into the TV business for individuals will be lower. Some programs will be “hits” at a TV scale before they reach the TV screen.

The barriers to massive change in television watching are not technological but commercial and social. The technologies to change our tv viewing experience are already available but the entrenched advertising and subscription business models in markets like the US will continue to be a large hurdle against revolutionary change. On the social level, viewers still want to have a predominantly passive viewing experience rather than on-demand viewing. This may change as younger generations grow up without the habit of watching broadcast channels but five years is too soon for it to become mainstream.

TV watching will drastically change when someone figures out the perfect recommendation engine to line up programs selected from sources all over the web and at the same time untangles the complicated rights and window-release systems currently in place to free-up content while still able to finance its creation. But that’s a separate discussion altogether!

In summary, the TV watching experience will be more social, more suited to the viewer’s time, more integrated with advertising, more personal, more portable and will feature more on-screen talent.”

In Search of A Sustainable Business Model

April 12, 2012 3 comments

(This is a copy of an article written for BroadcastPro)

On the surface, the free-to-air television sector in the Middle East is thriving. Viewing time is one of the highest in the world. Even in the turbulent political environment of 2011, research indicates that the advertising market has continued to grow. Hundreds of channels exist yet satellite operators can’t keep up with demand and continue to launch new satellites. International players such as Newscorp and Turner have made investments in Middle East media. The region’s population is growing rapidly and is very young by global standards, thus making it attractive for advertisers. The large number of broadcasters supports an eco-system of profitable entities ranging from international and regional production houses to infrastructure providers and media professionals.

In reality, a minuscule number of broadcasters are profitable. Ad figures are inflated by rate card monitoring that does not take into account regular heavy discounting. On a net basis, ad spend per capita is lower than global benchmarks. In the absence of a single regulatory body with authority over the many countries in the region, the advertising and broadcasting sectors are practically unregulated. In advertising, this has led to aggressive but not always transparent sales practices. In broadcasting, the lack of regulation has led to large discrepancies in the quality of content. Audience measurement is either non-existent or relies on antiquated methodologies.

The rapid development of satellite Direct-to-Home distribution, while a necessity in the past to avoid strict government control of the television sector, has come at a cost. Broadcasters and advertisers cannot target individual markets and therefore larger countries tend to get the lion’s share of television spend while local TV advertising budgets are diverted to newspapers.
Despite the lack of profits, new channels continue to launch, at times as misguided commercial ventures but mostly in pursuit of non-commercial goals. This is fine in a normal free market scenario, but with the lack of audience measurement and no regulation of the claims channels can make or how their advertising inventory is sold, the market becomes distorted. Its overall value is diminished as too many players are left chasing an undervalued advertising spend.

There is no short term solution or quick fix for the various issues afflicting the TV sector in the Middle East. Many are regulatory and related to the multi-country footprint of the sector and therefore cannot be easily resolved. Ultimately, the current key players in the Middle East’s television industry including broadcasters, advertisers, media buyers and sales representatives, are best positioned to improve its prospects by taking pragmatic steps to increase revenues, reduce costs, and support transparency.

Key actions include:

All parties should support the introduction of audience measurement tools. The UAE is the only major Middle East market that is close to launching people meters.

Broadcasters can increase their revenues if they work closely with advertisers. The evolved advertisers need to expand their arsenal beyond the 30-second spot to cut through the clutter. Yet currently the content development process at broadcasters barely involves their ultimate clients. If more budgets are to be allocated to TV, broadcasters must reach out to advertisers and seek to develop content that entertains audiences while integrating brands in a seamless non-intrusive manner.

Broadcasters should begin to shift their mindset to that of content owners and capitalise on new platforms to increase revenues: IPTV platforms are emerging in Saudi and other countries. OTT is a nascent but promising sector. Satellite operators are considering spot beams. YouTube viewing on mobile is one of the highest in the world. Broadband penetration is growing rapidly in key markets. All these platforms provide opportunities for content owners to create more relevant localised content, extend television brands onto the web and mobile, generate syndication and licensing revenues, or explore new advertising mechanisms.

Broadcasters can reduce content costs by sharing productions across markets or acquiring rights for smaller geographic territories. The pan-Arab channel is a convenient myth and very few channels can be both popular with audiences across all countries and be able to generate revenues from those countries.

Advertisers too must play a role in rewarding broadcasters that create premium content with verified audiences. In too many instances, the short term focus on reducing spot rates has led to a negative ripple effect across the advertising value chain.
The TV sector in the Middle East must repair its business model if it wants to sustain itself in the long term and attract investment on a commercially viable basis. Eventually, internal voluntary reform, if not exercised, will be replaced by externally imposed regulatory reform.

The Premier League and the Joy of Statistics

August 2, 2010 2 comments

A strange thing is happening at ADTV. For the first time, we are able to actually count the number of our customers. We recently launched our Premier League pay-tv offering and can now, in real time, all sorts of data: the number of subscribers, their location, the number of decoders in each market, the number of calls to the call centre, the average call answer times etc. We can react instantly and alter allocations of resources and manpower as the situation changes on the ground. This is so refreshing.

To most people in developed markets, remarking about this may seem trivial. As broadcasters, we have been numbed by years of late viewership data (6 weeks late, at times), incompatible research methodologies and limited market information. We routinely make assumptions that drive million dollar investments and set sales targets based on a loose mix of statistics and black magic. The internet changes that a little, but until broadband penetration reaches saturation levels, the internet will not provide the answer.

I can see why it would frighten some people. Waking up every day to a precise sheet of data that lets you know if your programming or media allocation decisions from the night before were right would be a scary thing. But it would be challenging and it would most certainly lead to a better product and a better marketing plan.