For many broadcasters, advertisers and even media agencies in Australia, the concept that television programs can be viewed, free of charge and in high quality, on anything other than the familiar dusty cube in the corner of the front room can prove a puzzling one.
Domestically, questions abound about how to properly monetise TV shows streamed online, either as ‘sneak peeks’ or entire episodes, known as catch-up TV.
Throw in conundrums such as rights issues and the sluggish, metered broadband prevalent in Australia and it’s perhaps understandable, if not forgivable, that huge strides have yet to be made in online TV.
A quick glance abroad puts such caution into perspective. The BBC’s iPlayer, launched in the United Kingdom on Christmas Day 2007, offers free program downloads via a futuristic, flashy online console. So far, more than 387 million streams and downloads have been notched up by users. In the United States, Hulu, a joint venture between Fox, NBC and Disney, achieved 373 million downloads in April 2009 alone, accordingto Nielsen.
Although Australia has a fraction of the population of these markets, illegal download rates here are among the highest in the world. Nielsen Online figures show that 22% of advertsisers’ dream demographic – 16 to 29-year-olds – say they watch TV online “all the time.” So what are broadcasters doing to cash in on this undeniable thirst for content?
At first glance, aside from the ABC’s iView, there appears to be little to compare to overseas innovations like the iPlayer.
“Personally I don’t think the networks are supporting online TV as much as they should be for fear of cannibalising their current commercial TV offering,” says Kerry Field, innovation partner at media agency Mindshare. “This is one of the reasons why the BBC and ABC are leading the charge when it comes to releasing their shows online – they have no need for this concern.
“Evidence from overseas shows that online and mobile TV viewing is having an impact on normal TV. Networks should be concentrating less on the device we use to watch TV shows and more on how they push their content to more people across multiple devices. Australia desperately needs an injection of content, other than highlights and recaps, and much greater promotion by the big networks. I think all of the commercial TV networks could be doing a much better job than they currently are in this space.”
The main challenge is, of course, garnering income for the technology and marketing of catch-up programming. Although advertisers are now routinely sold packages that include online ads – of which online TV is a small portion – they aren’t ploughing much extra money into the area due to low-level uptake. For example, Seven put the first episode of leading import Heroes online, with 50,000 streams the result. The first eight online episodes of Desperate Housewives attracted a small but dedicated group of fans, resulting in 19,000 streams. These numbers aren’t insignificant, but when compared to the vast free-to-air TV audiences, you can see why a solely online ad-funded model hasn’t yet formed.
For pay TV, the situation is slightly different. Foxtel is set to roll out 400 hours of full-length TV episodes in October. Subscribers will be given the service for free, with pay-per-view movies also available.
Patrick Delany, executive director of sales at Foxtel, explains: “It costs us nothing to attract someone via the internet – our main expense is putting in set top boxes. There will be no ads in the catch-up shows. There may be sponsorship and we may open the pay-per-view movies to non-subscribers, but we’ll see how it goes. TV still outweighs this in terms of eyeballs, but it’s about filling a niche, which is what we do. I can understand why the FTAs have been a little slow on this as we have different business models.
“But it is tough to offer this on the basis of advertising. If you look at how Rupert Murdoch is bringing back payment models for newspapers, it shows that it’s hard to do it (via just ads). The content can’t be free forever.”
On the plus side, additional viewers can be lured via online programming, if overseas examples are to be believed. In the US, HBO show Tell Me You Love Me was deemed a failure when it pulled in just 680,000 viewers for its debut. But, counting on-demand and online viewing, this figure shot up to over three million.
Rob Leach, head of pay TV sales arm MCN Connect, is enthusiastic about this opportunity, saying: “I spoke to the BBC about The Office. They said that people only viewed the whole series if they got into the first four episodes. If they had catch-up TV when it first aired, the audience would’ve been much higher because viewers would be able to pick it up from the start. It can add 30% to your TV audience, if you get it right."
But measurement is key, Leach adds. “We can track every viewer, but the FTAs will struggle with measurement as they won’t be sure if they are adding new viewers or just the same ones that are watching TV. The FTAs need to have the balls to invest in online TV as it’s not cheap. But I really worry about them, and Freeview in particular. The FTAs have no history of collaboration and the technology providers are already arguing.”
Freeview, the alliance of FTA operators, has announced that it will offer the “most extensive online TV service in Australia” within 12 months but refused to be drawn on details.
However, the FTA broadcasters are keen to talk up the potential of their individual online programming offerings. Joe Pollard, chief executive at Ninemsn, is ebullient about the benefits of hosting Nine’s programming, pointing out that online streams have soared from one million in 2006 to 12 million in February this year. “We already place enormous value, resources and time behind the development and delivery of our content at Ninemsn and are constantly working on bringing this premium content experience to our valued audience in new and innovative ways,” she insists. “Advertisers follow audience numbers and audiences follow premium content and a premium delivery experience. It is the premium content that drives growth of audiences and the appeal to advertisers wishing to align with premium brands and large numbers of eyeballs.
“Underbelly: A Tale of Two Cities is a great example of this, quickly selling out its online advertising to three major sponsors for the entire season.” Pollard adds that Ninemsn will move forward with two different commercial models – ad-funded content and pay-per-downloads.
Over at Yahoo!7, the free/paid-for hybrid is also on the cards for Seven’s shows, although Seven sales director James Warburton admits that details will only need to be thrashed out when online-viewer numbers rise. “We are moving in the right direction, but in overall terms the (online) numbers are very small,” he says. “Right now, people don’t want to watch full episodes, but they like sneak peeks. If we lose a viewer between episodes one and four, for example, we can get them back online and lead them back through the front door.
“If you’ve got 50,000 viewers online, there’s not a lot of money there (from advertisers). We’ve got to be smart – it’s not at full throttle at the moment, but we can monetise it as part of an overall package. We are called FTA dinosaurs and we have to re-invent ourselves. But no one is sneezing at the investment, it’s just about the timing. The techies are all downloading at home, but the core 14 million viewers out there may have computers, but they are not all there yet.
“I think we’re in pretty good shape. Freeview is now here, the FTA industry is strong and hopefully there will be a pick-up in the ad market in the next six months.”
Free from commercial constraints, it is the ABC that has led the way in Australia when it comes to catch-up TV. Its iView player is considered the most advanced in the country, hosting around 65 hours of ABC1 and ABC2 content each week to an audience of 40,000. “We are in the privileged position that we’re not doing it on a commercial basis,” says Kim Dalton, head of TV at ABC. “In that context, we want as much content up as possible. We don’t see it as a threat to our TV audience, I don’t think there will be a complete breakdown of TV viewers. The challenge is to become truly multi-platform and I think there are opportunities for revenue. The name of the game is to build breadth and depth to a platform so it becomes a destination for viewers.”
Dalton states that an ABC target is to get 100% of its content online by 2010. While most commercial broadcasters would baulk at this figure, SBS has similar ambitions.
“The ABC and SBS are clear leaders in this field,” claims Marshall Heald, head of online at SBS, which handles more than two million online streams a month. “We are haemorrhaging cash due to the parlous state of bandwidth costs in Australia, so we are a victim of our own success. But we have a public-service agenda to doing this.
“Display ads account for 95% of online spend, video is about 5%. But paid subscription isn’t a viable business model as the content will be available somewhere for free. Our big challenge is to grow our audience. Like any area, the underdogs innovate and push things forward. We want to put our content online for people to view rather than forcing them to choose between TV channels as we only have a 6.2% share.” SBS has requested an extra $20m a year from the Federal Government to fund its online ambitions, but the broadcaster currently operates on 2.5% of the BBC’s online budget, so hopes that the iPlayer will be knocked off its perch by an Australian public service operator are a little premature.
Another often-cited obstacle to greater penetration is the broadband infrasctructure in Australia. Currently, online video can only be fully utilised with a 1.5MB, or more, internet speed. The arrival of the national broadband network (NBN) is seen as a panacea by all, pay and FTA operators alike. “The issue in Australia won’t be driven by Foxtel or the FTAs, but by structural issues,” says Foxtel’s Delany. “Considering the problems we’ve had in Australia, we’ve done well. The BBC’s iPlayer is no way a fair benchmark.”
While slow, capped broadband usage is a problem at the consumer end of the bargain, the rights issue is firmly in the broadcasters’ court. The thriving piracy market – where content is ripped off screens and placed onto sites such as YouTube – may provide the push needed for rights holders to release content to broadcasters’ websites. “It’s not an issue long term, but it is in the short term,” says Leach. “The distributors have to accept the content is going to get out there somehow and that they are best to do deals for TV and online up front.
“Distributors won’t get double the money for putting the content online, because it’s not worth that yet. But it’s better to have a share in something than all of nothing.”
Australia may be playing catch-up due to these problems, but there is no lack of faith that broadcasters will eventually get there.
Sales executives dreamily talk of a future dominated by Internet Protocol Television (IPTV), where viewers plug into programming online in different rooms of the house. Although, as it’s a question of when rather than if such progress is made, broadcasters have much to do to settle on a commercial model that is proven to work.
