Chasing Ghosts: The SVOD Problem
Carat GM Alex Lawson warns NZ Media Agencies and advertisers, there's a dark cloud on the horizon...and the auld enemy, the channel that has dominated our our lives, channel selections and media budgets for so long, TV, is the one that we now have to work out how to help.
As I've said in previous articles, I love SVOD; as a consumer. The choice to watch what I want, when I want and however many episodes at any one time for me is the most liberating development in entertainment that I can remember. And no ads! Heaven right?
Well, as a media buyer intent on reaching the right audience, at the right time at a level of scale though, I hate SVOD! THERE ARE NO ADS! No way of us tapping into those 1.6M+ subscribers, building reach for our clients, telling stories and selling products or serviced, which is why we're here basically. They represent completely lost audiences at times that can produce incredibly efficient reach.
This isn't another article foretelling the downfall of TV, but it is a warning that we need to look ahead and defend the backyard.
Broadcast TV remains, currently, one of the best ways for us to achieve reach at speed. It still dominates the viewing / consumption behaviour of the national NZ audience with 92% of NZ'ers watching about 3 hours of linear TV a day. of course, no self respecting agency or marketing person will admit to watching anything on tv these days, but we're not the average NZ'er that we try to reach each day. Time and again when you compare side by side campaign performance TV vs no TV, you'll see awareness and action jump for broadcast campaigns.
But, there's a storm brewing. Despite it's current strength, recent figures out of Roy Morgan estimate the Netflix subscriber base at 1.066M (14+) and Lightbox at 630k. These figures represent increases YOY of 56% and 220% respectively. The figures for Kiwi's who now have two or more SVOD services in their homes has nearly tripled in that time. Putting that into perspective the latest number of Sky subscribers has just fallen to 816k (-5.2%) but 20% of NZ now has some form of SVOD in the home, with 10% having two or more. Like it or not, this figure is only going to keep going one way, up and it's biting from one area only - traditional TV viewership.
As a media agency strategist, planner or buyer, this is inherently worrying in the search for audiences at scale in measurable and reliable environments. SVOD has significantly changed our behaviour and viewing patterns. Usual peak ratings delivery stays relatively consistent from about 1730 through to 2030 during news and into the early evening entertainment schedule which is typically reality TV based and due to social media spoilers still watched reasonably live. Post 2030 however, where in past years we would have hoped to score serious ratings with drama and entertainment shows, the ratings drop away.
And PUT's (People Using Television) are at their lowest levels in 5 years. This is not coincidence.
(AP25-54 2012-2017 YTD)
It's a significant threat to us in the industry to finding those audiences. If old lady TV can't find some magic rejuvenation surgery, and fast, it'll be a case of too little, too late. And that's not good for us.
But we'll just buy everything in Digital Video!
Yes, we can do that. And we will buy video digitally, programatically on global platforms that deliver audience targeted views whenever we need.
But being forced to buy all video through one channel isn't good for anyone, apart maybe for Google and Facebook!
One of the core tenets of media planning and buying is that of variety and choice. Anyone who plans to a single channel is, as Prof Mark Ritson would say, 'a fucking idiot' (paraphrased a bit there but you get the picture). Weakening a previously strong reach building channel like TV is not in our best interests if it takes away that choice.
Then you have to factor in the brand safety and ad fraud factor that we've seen all too closely in recent months in digital video. As an industry we've made giant steps in adding layers of protection for clients when buying online video. Google's Walled Garden has opened it's gate and agency desks have been working for some time now to battle this new world problem. But it's not yet perfect. And whilst digital video will rightly be a staple of our many schedules, with the consumers ability to skip, ad-blocking technology and just the ability to jump out and go to another site if you're not that engaged, TV remains a channel that brings engaged viewers who still (91% of them according to the Nielsen Multi Screen Report of 2015) watch the ad breaks. And let's not even start talking about Global companies taking money going offshore and what that can ultimately lead to...
As an industry we just can't afford to let it wither away in the face of the new players that effectively freeze us out from reaching the audiences we need to reach. So, what can we do? Here are a few thought starters from me.
Invest in Local - more, more, more...
Not a new idea, but one that we still see a lot of hit and miss on. Local is the jewel in the crown. It's the content, that if made well, engages NZ'ers and keeps them watching broadcast TV outside of the SVOD platforms.
Outside of news, shows like 7Days, Westside, Nigel Latta, Shortland St and The Block, regardless of your opinion of their quality, keep the people watching.
If you can't beat em, join em.
In TVNZ OD and 3NOW the fightback has begun. But we, the industry, need to support them more. In a time when the brand safety issue has never been more pertinent we have brand safe environments waiting for us on platforms that are capable of delivering scale. TVNZ has 1M+ subscribers and 3NOW has dramatically upped it's game from technology and UX Pov. Finding ways to incorporate the local AVOD platforms into our TV buys helps support the local industry and therefore our diversity of choice.
However, there are still improvements to be made. The battle with the major studios over stackable content needs to be won as it is still the biggest advantage that the SVOD platforms have. I know that it's hard for NZ networks on their own to win that battle, but what if we thought regionally, APAC, Global? Team up with the Aussies, the region or the worlds content purchasing networks to fight the studios? Think big people!
Bottom line here though? If you want brand safe environments for video that have the potential for message delivery at scale then a strong AVOD strategy is far from the worst thing to consider.
Don't Hide Great Content Away
However, here's the flipside to my last statement. Yes, we all know that Millennials, or more accurately, what we continue to call an audience largely in their 20's and very early 30's, love watching online and it's great that the broadcasters are now making good shows, with decent production quality for online release. But don't hide them away! Let them run on AVOD first if you like, but why not let great content like Darryl, Blade or Terry Teo have their time in the sun on broadcast too? There are plenty of folk who don't take the time to delve into the AVOD world who would watch these if put on at a reasonable hour and promoted properly.
Bring Back Buck
Or protect him. The debate on whether live sport should be wrestled away from Sky and brought back to the people via FTA is one for another article. The bigger challenge I see for NZ broadcast is keeping sport on broadcast at all. The All Black's have already dipped their toes into YouTube, Amazon just paid $50M for the right to broadcast the NFL's Thursday Night Football simultaneously to the TV broadcast. What happens when Netflix, who think nothing of dropping $100M an episode on House of Cards,says "hey, let's buy international rugby...everywhere!"
Australia and the UK have certain sports or events protected from even being wrestled onto subscription TV, but not so NZ. It's highest bidder rules - so what does it matter if it's Netflix or Sky to the NZR?
Sport is still one of the last great strongholds of the live viewing experience. Yes, Sky has shown ability to adapt with the launch of Fanpass with a variety of pricing methods but the service is still problematic on a number of devices (see how long an AB's game lasts before crashing when watching through the Samsung TV app) and without the ability to select multiple content strands, start a game after kick off if you miss the start or even have the ability to watch on catch up, the door is open for a major player to swoop in and take away those audiences from us.
A healthy TV industry, along with radio, outdoor, cinema, print and yes, digital is crucial to keeping us,the communications planners & buyers, armed with the wide variety of options that we need to achieve reach at scale and efficiency. Retaining a well balanced mass media market, alongside the ability to target precisely when required is key to the ongoing health of our industry and our clients business success. Whilst this is primarily at the door of the networks, we as media agencies have a role to play in ensuring we have the most choice for channel and platform choice in front of us.