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TVNZ & The Gang Of 31

15 February 2006

TVNZ & The Gang Of 31

We thought that the silly season was over, but the lead story in this morning's Herald - wherein 31 prominent New Zealanders are calling for TVNZ to become a fully public-funded broadcaster - suggests otherwise. The group say that television "used to be better" and believe that the way to turn back time is to remove the ads.

Displaying commendable restraint, we won't stoop to commenting on the characterisation of advertisers as "hijackers and abusers" - even though, as anyone with more than 30 seconds experience in the industry knows, advertisers are at the mercy of broadcasters, not the other way round.

Instead, let's ponder the potential after-effects if a TVNZ channel were to be decommercialised. For some reason, most worthy citizens seem to want Television One to be the ad-free channel -- even though the bulk of audiences under a certain age opt for TV2 as their TVNZ channel of choice. Television that "reflects life in New Zealand" is not necessarily what younger New Zealanders want to see. Ah well - we'll go with the flow.

So - zap the ads on One. If we do some back-of-the-envelope calculations based on TVNZ's last Annual Report, that probably means an annual shortfall of some $190-$200 million (i.e. roughly half TVNZ's current yearly operating expenses).

Would our 31 dignitaries prefer that money to be diverted from health, education, roading or welfare? A tax increase, perhaps? Or reintroducing the broadcasting fee? Shouldn't take more than $50 a household (factoring in the cost of fee administration and compliance) to subsidise "the channel that time forgot". Or should that money be extorted from those abusive advertisers disparaged earlier?

Actually, a large chunk of change would come out of advertiser pockets anyway. Remove Television One from the advertising inventory and you immediately create $200 million or so worth of unsatisfied demand. The remaining commercial broadcasters would immediately implement sensationalist rate increases to "satisfy" that demand.

Unfortunately, most of that "new money" would NOT go towards subsidising One - "the demands of the many (shareholders) outweigh the needs of the few (31)" - so our public service channel would still end up busking on street corners, while the crassly commercial channels enjoy a substantial windfall. Advertisers would end up paying at least a third more to hijack the same old consumers - except for those fleeing the tyranny of commercial abuse to the sanity and serenity of television as it used to be.

Perhaps someone might mention to the commercially-challenged 31 that in these enlightened times it is perfectly possible to replicate the once and future experience that was NZBC Television. Your options include:

DVDs of classic TV shows and documentaries, available at your local video shop and gloriously commercial-free;

Sky's new MySky Personal Video Recorder will allow you to capture the entire Television One schedule and then zip through the adbreaks at thirty times normal speed;

Get yourself a broadband connection and download quality content from the ABC, BBC and CBC. It's available now (from sources of dubious legality) - or wait five minutes because broadcasters all over the world are falling over themselves to turn this into a new revenue stream;

* Sign up to Sky Digital and enjoy the lightly-commercial blasts from the past on UKTV, the History Channel, the Arts Channel et al.

Unfortunately, the avowed aims of the 31 Back To The Future retro-advocates are completely at odds with informed industry perspectives such as those described in the newly-released IBM white paper "The End Of Television As We Know It". According to this well-researched view of television circa 2012:

* "Audiences are becoming increasingly fragmented, splicing their time among myriad media choices, channels and platforms. For the last few decades, consumers have migrated to more specialized, niche content via cable and multichannel offerings. Now, with the growing availability of on demand, self-programming and search features, some experiencers are moving beyond niche to individualized viewing. With increasing competition from convergence players in TV, telecommunications and the Internet, the industry is confronting unparalleled levels of complexity, dynamic change and pressure to innovate."

For the years between now and 2012, according to IBM, the television industry will be faced with two distinctly different consumer types: "While one consumer segment remains largely passive in the living room, the other will force radical change in business models in a search for anytime, anywhere content through multiple channels. The techandfashion-forward consumer segment will lead us to a world of platform-agnostic content, fluid mobility of media experiences, individualized pricing schemes and an end to the traditional concept of release windows."

Preparing for such a future will require broadcasters to:

* Segment: Invest in divergent strategies and supply chains for the different consumer types.

* Innovate: Innovate business models, pricing, windows, distribution and packaging by creating - not resisting - wider consumer choice.

* Experiment: Develop, trial, refine, roll-out. Repeat.

* Mobilize: Create seamless content mobility for users who require on-the-go experiences.

* Open: Drive open and standards-based content delivery platforms to optimize content and revenue exploitation, and to create high business flexibility and network cost-efficiency.

* Reorganise: Reassess their business composition against future requirements and identify core competencies needed for future competitive advantage.

If you'd like an electronic copy of the IBM white paper on the global future of television, drop us an email at newsletter@mediacom.co.nz .

If you'd prefer to see the future of NZ television as espoused by 31 of our finest citizens, on the other hand, head on over to http://www.nztvarchive.co.nz .

***********

Done Deal We thought we'd just close the loop and note that Sky has indeed been cleared to acquire Prime - obviously as a result of the point of view we expressed in an earlier edition of this newsletter. Sky are now starting to implement their plans for Prime; and although details are still sketchy, here's what we know so far:

* The dots in the Prime logo are on their way out. Why? Because they're actually celebrity dots, borrowed from the Nine Network logo. Now that Nine is outta here, so are the dots.

* The 5.30 News is here to stay, at least for now, but Suzy may be out. Alison Mau is tipped to front the show, creating an interesting situation (given that hubby Simon is fronting One News at Six). Who'll scoop who?

* Prime's content for the next six to twelve months was pre-bought before the takeover became reality, so don't expect much radical change in 2006 - or that's what we've been told. We suspect that there might be a few surprises in-store, even earlier than currently predicted.

* Prime will join its pay-tv brethren in the pages of SkyWatch, so now we'll have the privilege of finding out what's scheduled on Prime up to a month in advance. Be nice if the other Free To Air (FTA) broadcasters would do likewise.

Moves are afoot to broaden Prime's coverage, through a special low cost installation deal tapping into Sky's network of installers throughout New Zealand:

* If you live where Prime's UHF signal is available (over 90% of NZ), installation of a UHF aerial and tune-in will cost $145.

* If you live where Prime's UHF signal is NOT available, you can now install a SKY Digital dish and decoder, with the Prime Television service only, also at a cost of $145 (and no decoder rental fee).

* Or you can install SKY Digital with the free-to-air broadcast package (all national free-to-air television and radio channels) for $99 including GST with a minimum 12-month decoder rental agreement at $18.29 including GST per month.

These digital installation offers are particularly interesting and give a little hint of Sky's strategic direction once the FTA broadcasters drag themselves kicking and screaming into the provision of FTA digital services. As in the UK, Sky NZ is likely to offer multi-channel package deals with a single upfront cost and no rental fee.

With the US now committed to a 2009 switch-off of analogue television - and Australia contemplating a 2010 shutdown of oldstyle television - now just might be a good time for making moves to digital. Otherwise we'll find ourselves in the same situation in TV as we are in broadband - way, way behind the rest of the world. The knowledge economy turned no-legs economy ....

Newspapers: In For A Shakeup It's official: the sleeping newsprint giants are waking up and getting ready for an extreme makeover!

The American Press Institute last week announced a groundbreaking programme to help selected newspapers take new business ideas from sketchbook to marketplace. It's called Newspaper Next and it's a year-long, $2.25 million project to discover future business models for the newspaper industry.

Newspapers who want to be selected for this new initiative are asked to submit a "disruptive" idea for a new product or service to be considered for the programme. A "disruptive" idea, would-be participants are informed, offers new benefits to the consumer, such as simplicity, convenience, ease of use or low price. Classic examples of disruptive innovations include the personal computer, discount airlines and Intuit's Turbo Tax software.

The Newspaper Next Disruptive Innovation Advisory Programme will provide innovation guidance to three to five U.S. newspaper companies. The selected newspapers will receive advice and consultation from the N2 project team over a four-month period, including two daylong sessions with the N2 project team and weekly conference calls to review progress.

The chosen projects also will serve as practical demonstrations of the innovation tools and processes under development in the yearlong Newspaper Next project. The cases will be included in the N2's final report and recommendations when they're released.

Newspapers participating in the programme will work with:

* Stephen Gray, N2 managing director and former managing publisher of The Christian Science Monitor

* Scott Anthony, a managing director at innovation consulting firm Innosight and co-author of Seeing What's Next: Using the Theories of Innovation to Predict Industry Change.

For more information about the Newspaper Next disruptive innovation programme and to download an application, visit www.newspapernext.org . The deadline for applying is March 1.

Don't You Ever Let A Chance Go By

They're called ShelfAds - and they're tiny digital video players that detect movement and start playing a 10-second video ad on shelf as a consumer walks by.

ShelfAds, developed by POP Broadcasting and currently being tested in the US, are the latest attempt to bring video in-store and in-your-face at point of purchase.

According to its developers, the ShelfAds system has also been built to integrate RFID technologies and could one day dispense aromas as well (scary though that thought might be).

Traditional in-store TV networks face the challenge of finding appropriate locations within crowded supermarkets; and they're often silent, either by design or because store employees have turned down the volume. The ShelfAds, calling out to you as you wander through the aisles, will either be perceived as highly relevant and timely - or as the ambush of a thousand tiny voices. Guess that's why it's good to test first!

If you're interested, point your browser to http://www.popbroadcasting.com and check out ShelfAds for yourshelf.

ABOUT MEDIACOM MEDIACOM, with offices in 80 countries, is one of the world's largest and most respected independent media planning and buying organisations. We create media solutions that build business for a wide range of local, regional and worldwide clients.

With $13 billion in global billings, a commitment to strategic insight, total communications planning, tactical media brilliance and tough but creative media negotiating, MEDIACOM provides unsurpassed value in today's chaotic media marketplace.

ENDS


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