The initial fear-based reaction to the possibilities of on-line video – caused by the experience of the music industry – has now been superseded by a market with very diverse players eager to exploit this new business opportunity as quickly as possible
Though as they admit they are fumbling their way through, trying to find out which business models to pursue, plenty of initiatives are popping up all the time.
“We will feel our way into how content will be funded in the future, no one really knows.” This was one of the statements uttered at the closing panel discussion of Future TV Show 2006, which gathered a number of key players from the digital TV business (with a predominance of British representatives), broadcasters, telcos, mobile companies, software producers, service providers, advertising agencies and analysts. The spirit at the conference was dominated by an eagerness for all the possibilities the digital technology offers and a lust for experimenting with various ways of making business out of content on this market.
Different Platforms Working Together
The discussion of which platform will win over the other seems to have died out. Everybody agreed that old media will live together with new media, and that every player on the market needs to be present on all platforms – both traditional linear TV, Internet portals, video-on-demand (VoD) and mobile TV. And the advantage of using all those platforms is to get them to work together to support each other, so that one platform directs viewers over to another. The new mantra is to build up on-line audiences around the programmes by making extensions to TV programmes like behind-the-scene stuff and chat forums, stretching the on-line platform to create communities.
One example of how the different platforms are successfully used together is the very popular drama series “Lost”. On Channel 4’s website you can download a podcast about the show, you can download episodes as VoD (episodes from the last season, and new episodes a week after its premiere for 99 p each). There are behind-the-scene videos, chat forums and a blog. In addition, the US network ABC is launching an Internet game “The Lost Experience” which plays together with the series, and they are producing 2-minute episodes exclusively for mobile phones entitled “Lost Video Diaries”, introducing characters which do not appear visually in the TV series, but play together with the show. ABC has also put episodes of “Lost” on iTunes.
All these offers work together to build up a community around the series and, of course, to get more viewers: if your friends play “The Lost Experience” you want to play together with them, etc. The VoD service is effective for keeping viewers who would otherwise skip the whole series if they missed an episode; now, they can easily catch up. Although this strategy is suitable for series, the starting point is different for one-off documentaries, yet the strategy could be applied around strands. BBC’s doc-strand Storyville has a website offering background info, filmmaker interviews, viewer comments, reviews, but all based on written text (though with the possibility of watching preview clips). This could be developed in similar ways.
Some speakers at the conference were quite confident that there will always be the need for “live television”, for television that is scheduled and transmitted at a certain time, and that VoD will grow alongside with that. Some broadcasters do offer VoD services for a limited number of their programmes. BBC and C4 do it for series, and in France Arte, FR3, FR2 and Canal+ all have VoD services for some of their programmes, including documentaries. They are geographically protected so that only viewers in countries for which the channel has the VoD rights can watch them. The price varies; on ARTE, for example, you can download “Darwin’s Nightmare” for EUR 3.99. Furthermore National Geographic and Discovery have VoD channels and the Documentary Channel in Canada has a VoD service. All broadcasters will probably follow in the near future.
VoD is launched not only by broadcasters, but also by telcos or distributors, and it comes in different forms, either as pay-per-view or as subscription-based ‘VoD channels’, where you can get access to a package of a certain type of programme: music videos, kids programmes, entertainment. Programmed a bit like theme channels, except that the programmes are not linked to a certain time, but can be downloaded or streamed at any time. Some of the new players on the TV scene are the telcos that want to deliver content to sell their other services, as well as software producers like Microsoft, mobile operators and electricity companies. They mostly buy programmes from other distributors (like broadcasters or Hollywood studios), but some have started to commission programmes as well; for example, mobile operator O2 commissioned Endemol to create a mobile TV format, an interactive reality TV series/docusoap show about the pop group Sugarbabes.
Culturally-based initiatives are also bidding in on the market. The National Film Board of Canada is about to offer all Canadians VoD access to a good part of their library.
Movie distributors are also creating VoD services, typically as an extension of their home-entertainment business. Cinema and video distributors like Scandinavian SF-films has created SF-anytime offering VoD of their titles. Canal+ in France has created Canal+ Active, there is Filmflex in the UK, and Comcast, Movielink and Cinemanow in the US. And the hugely popular US-based Netflix Internet DVD rental shop is looking into the download business as well. These are mainly fiction films providers, but there are also some initiatives looking into documentary on-demand.
In France the filmmaker-owned documen.tv offers docs for pay-per-view download for USD 4.99.
Distributor Mercury Media in the UK is launching a subscription-based documentary broadband site in October: joiningthedots.tv. They are asking producers for non-exclusive rights, so the producer can license the film to other websites as well. They will run the site as a subscription-based members’ club: for a monthly fee you get access to all the films on the site. MD Tim Sparke explains that they won’t charge a pay-per-view as the transactions costs are far too big to make it feasible. They will start up with 100 titles, adding 10–20 each month. The subscription fee will probably be EUR 9–10 per month, with a differentiated pricing structure so that less wealthier countries will pay a lower fee. They will pay back the producer 30% of the net subscription revenue and calculated according how many downloads the single film gets. Tim Sparke doesn’t think that the site alone can create a healthy income for the producer, but as the site grows in popularity and with world-wide potential it should be possible to get a decent revenue. Tim Sparke points out that if the film gets many downloads and positive user ratings and comments it can also help the film to get a TV sale.
The site will be set up like a club where members can communicate with each other. Each film will get a forum and they will implement Amazon-like systems for user ratings and user recommendations. Initially, films will only be available in English, but there are plans to add more languages in the future.
Mercury Media has chosen to stream films from their own site rather than put them out on platforms like Homechoice. They want to control the site content, though in the future they might cooperate with other platforms.
To market the site and the films they will engage in grass-roots marketing, spreading information about films to relevant communities and getting their links on relevant websites. They are also in negotiation with the digital channel ITV4 about creating a ‘joiningthedots.tv’ strand to use that platform for attracting viewers to the site. And that could be expanded to other TV channels around the world.
Positive Aspects for the Future?
It might be easier and more feasible for alternative players to set up specialised documentary channels. In Scandinavia filmmakers and producers have joined forces to launch a cable channel named Scandinavia, to offer a channel with high-quality films and docs. They link up with IPTV-platforms offering Scandinavia as part of their TV channel packages. It has become easier to create a channel and get it out.
With VoD services it will be more attractive to subscribe to a documentary channel and hopefully in the future viewers won’t have to buy packages of channels (of which they only watch a small percentage, but have to pay for all the others as well). For the same monthly fee they can get fewer channels but only those they want, and a larger amount can go to the individual channel, enabling those channels to invest in productions.
Targeted marketing is becoming easier and cheaper because of the prevalence of user-recommendation systems, viewer-reviews and ratings, and the sending of links to films. If films are more available, they will be seen more. Secondly there is the ‘long tail’ effect: web shops like Amazon, Netflix and iTunes have proved that older titles are very much in demand when they become available. And with very little costs of having a huge catalogue shelved, there is also big potential for earning money on older doc titles.
Another interesting aspect is the increased possibility of integrating and connecting different types of programmes. For example when something is shown in the news, it would be possible to look for background information about that subject (e.g. the Iraq war), by watching a documentary. It would be easy to create links and navigate to find that specific doc and download it, either via pay-per-view or by having the broadcaster pay extra for having that service available.
The more pessimistic aspects are that the commercial players like telcos are gaining an overly dominant market position. Even now, pubcasters are dependent on them for getting their channels out using their distribution nets and selling their programmes to their IPTV services, and since it is unlikely that telcos will invest in quality doc films, it is dangerous if their position becomes too dominant.
It is still hard to imagine, though, that the pubcasters wouldn’t play a significant role in funding docs, so a lot depends on their development. Will they become even more commercial or will they finally realize that they have to compete on quality? Several conference participants from the pubcasting world pointed out that “quality is a competition factor” and that the strength of the pubcasters is their possibility of investing in expensive drama (or documentary) productions. There was talk of making fewer, but better programmes. There were also predictions, however, that the high-end and low-end programmes would survive, but the middle ground would go. And that could be bad for the documentary.
Those who represented public service TV at the conference were not the controllers but the new media departments. They yelled for quick action from their institutions. They pointed out that it is important to learn from the music industry which suffered great losses due to piracy of illegally downloaded music on the Internet. What the TV/movie industry can learn from that is to ‘turn on the tap’ – making as many programmes as possible available as quickly as possible at a reasonable price. Stuff from pubcasters is already available for illegal download on the net, so it is crucial to get it out there, offer it legally.
Then, of course, it would be very important for filmmakers and producers to negotiate some good deals for their rights, it would crucial for them to ensure that they are going to profit from the new media distribution options. Dealing with digital rights is a very complicated issue, and there is still great uncertainty about how to handle this.
In France a national inter-professional agreement protocol was signed in December 2005 by content providers and on-line service providers to list some guidelines regarding rights and revenues. It secures rights-holders a revenue, and the VoD-platforms must also pay a percentage of their turnover to invest in new productions.
In the UK a deal was just made in June with PACT and BBC, C4 and ITV respectively. The three agreements are a little different, but an important point is the recognition that a new-media right represents a value and is singled out as an independent negotiable right, that it will secure additional income for the producer and that the right will go back to the producers after a relatively short term.
The European Commissioner for Information, Society and Media, Viviane Reding, presented a “European charter for the development and the take-up of film on-line” at Cannes this year, in recognition of the urgency of getting this to happen in Europe. The US is way ahead in the on-line film area. One of the aims of the charter is also to get the rights issues resolved.
Everybody is eager to get the on-line business up and running, and the development makes room for new stakeholders to enter the broadcast business. It creates opportunities, but it is crucial to ensure that quality programmes will be made and that the public service organisations understand that their role is still to serve as the backbone of culturally and politically important programmes like documentaries.