Broadcasting by Lyonsdown

Distributed within the Sunday Telegraph, produced and published by Lyonsdown which takes sole responsibility for the contents

February 2014 | business-reporter.co.uk

TV wars: Let battle commence

BROADCASTING

Business Reporter · February 2014

an independent report from lyonsdown, distributed with the sunday telegraph

Broadcasting

Opening shots René Carayol

s Sky prepares to mark its 25th anniversary perhaps it may not be the celebration that it had hoped for. After years of dominance, mauling the likes of Setanta and ESPN, and showing a clean pair of heels to the terrestrial players such as ITV, it is at long last facing its first real competitive threat in BT. BT entered the pay TV marketplace, initially to protect the growing threat to its broadband business from the likes of Sky. It is now beginning to look like a serious broadcaster and fearsome long-term competitor that will not be deterred. With the rapid convergence of the media and telecoms sectors, other large players are starting to sniff around the lucrative spoils to be had from the broadcasting shake-up here in the UK. Vodafone made £84billion from the sale of its stake in Verizon Wireless, and there are strong rumours that the cash-rich company could partner with either Sky or BT – or more explosively, it could acquire either of them. Its 25th year will be a crucial one for Sky, as an assertive BT is the first broadcaster with pockets as deep as its and a CEO, in Gavin Patterson, who appears to be just as aggressive and risk-embracing. Patterson and Jeremy Darroch, CEO of Sky, are not

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traditional broadcasters or telecoms men. They know each other well, having worked together at Procter & Gamble. They will not respect precedence or any traditional rules of engagement and will back themselves to the hilt. They are locked in a Herculean struggle for the valuable “triple play” – customers who buy phone, broadband and TV products together. They are using expensive top-flight football as bait, in what may well be a defining broadcasting confrontation. BT’s £897million bid for Champions League rights blew both Sky and ITV out of the water. Everyone expected competition but not many foresaw BT’s buccaneering approach, bidding more than double the previous fee. BT took the market by storm, becoming the first single UK broadcaster to own all live rights to the f lagship European Champions League; they are in play now and cannot afford to back down. BT has already acquired two million TV subscribers for its new sports channel. Despite its formidable adversary, Sky is very much alive and kicking with revenues of £6billion a year and 10.5 million TV subscribers in the UK. The broadcaster has a lot to play for and with £300million earmarked for the failed Champions League bid in the coffers, watch this space. The Premier League smells blood in the pay TV battle. BT and Sky paid a staggering £3billion between them for the rights to broadcast live Premier League matches; this was an incredible 70 per cent increase on the 2009 auction. Consequently, the canny Premier League may well bring

This looks like a fight to the death between the all-conquering Sky and a newly belligerent BT forward the next auction to this year, instead of 2015, enabling it to capitalise upon the expected feeding frenzy. This all kicked off because BT, keeping a mindful and covetous eye on its seven million broadband customers, was provoked by Sky becoming the second-biggest UK broadband provider with around five million customers, despite only entering the fray in 2006. This looks like a fight to the death between the previously all-conquering Sky and a newly belligerent BT, which now has former Sky CEO Tony Ball as a nonexecutive director. Who would have thought the nimble and aggressive Sky would be outmanoeuvred by the ex-public sector telecoms giant, once

seen as far too slow and inward-looking? These are exciting t i me s, w it h Sk y unner ved and starting to act like a rather complacent telecoms house, and BT like a fast-moving broadcasting start-up. High spending will be inevitable, but at what cost? Who will blink first? The only guaranteed winner when there is such whitehot competition is the consumer.

Vision

IN MOTION.

Verizon Digital Media Services delivers content to consumers reliably and securely. It’s how great content moves.

VERIZON DIGITAL MEDIA SERVICES

Business Reporter · February 2014

an independent report from lyonsdown, distributed with the sunday telegraph

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Netflix subscriptions rocket amid ISP row FILM-streaming service Netflix continues to look strong after adding more than two million American subscriptions in the fourth quarter of 2013. A total of 2.33 million new households joined the Netflix TV and film-streaming service domestically. Internationally, it added 1.74 million households. The company ended the year with more than 44 million members and enjoyed net profits of $48million for the final quarter, compared to just $8million for the same period in 2012. The broadcast industry is still debating the merits of linear viewing, where people turn to scheduled channels in the traditional

same way, and not charge differently by content, platform or user, for example. The proposals were recently defeated, following a court challenge by technology giant Verizon. A Netflix statement reads: “In principle, a domestic ISP now can legally impede the video streams that members request from Netflix, degrading the experience we jointly provide. “The motivation could be to get Netflix to pay fees to stop this degradation. Were this draconian scenario to unfold with some ISP, we would vigorously protest and encourage our members to demand the open internet they are paying their ISP to deliver.”

manner, and the increasingly popular non-linear model, which involves users choosing what shows to watch, at their convenience. While many have argued that linear will continue to dominate the industry, Netflix is showing the popularity of non-linear. The company, which turned heads last year by offering some original content, most notably the popular TV drama House Of Cards, stressed that it would continue to focus on offering its own content. Netflix also revealed its position on a row over US proposals to enforce “net neutrality”, the principal that Internet Service Providers (ISPs) should treat all internet traffic in the

Commercial radio stations complain of micro-regulation By Dave Baxter

Traditional radio broadcasters are being hampered by outmoded classification criteria, claims an industry expert

An advocate for Britain’s commercial radio stations says the industry is being held back by “micro-regulation” as it tries to fight off digital competitors. Linda Smith, the interim CEO at RadioCentre, a group representing UK commercial radio, warns that certain Ofcom regulations could be hampering stations as they attempt to take on new rivals online. Commercial radio stations c u r r e nt l y f a l l u n de r a classification known as a radio format, which sets the genre and service a station is expected to deliver to listeners. A station classified as “adult contemporary”, for example, would be expected to mainly play “modern” music from recent years, rather than old hits. Smith is concerned that these formats limit what stations can offer as they attempt to compete with new rivals such as iTunes Radio and Spotify Radio, which

she claims are less stringently controlled. “There are four genres [radio formats] but these are becoming more and more blurred, and it’s more and more difficult to break one out from another,” she says. “Our concern is that if we are totally regulated under these rules, that makes us have to compete in an area far more stringent than [new competitors] are having to operate under, because they are not subject to the same jurisdiction. “From our perspective, if we are in the world of Spotify or Last.fm, they can do whatever they like without requiring any regulator’s permission. “No other media is subject to this degree of microregulation. The radio formats stem from the Broadcasting Act in 1990 and the Communications Act in 2003. Just think of what’s happened in the last 10 years.” The radio formats focus on the “character of service” a station is expected to deliver to

With thanks to... Publisher Bradley Scheffer...............................info@lyonsdown.co.uk Editor Daniel Evans.............................................dan@lyonsdown.co.uk Production Editor Dan Geary .................d.geary@lyonsdown.co.uk Reporters...........................................Dave Baxter and Joanne Frearson Production Assistant Alexis Trinh.............alexis@lyonsdown.co.uk Project Manager Justin Payne..................j.payne@lyonsdown.co.uk

its listeners, and are designed to ensure this is maintained. A n O f c om do c u me nt explaining the formats and their purpose reads: “While the requirements were binding on licensees, they are only ever subsidiary to the headline essential character of service a station had to deliver: a means of making sure it was delivered.”

As consumers become better connected through smartphones and other devices, a number of brands are fighting for listeners on internet radio, from Spotify to Pandora and iTunes Radio. A number of different apps have been launched for iOS and Android as the competition begins to intensify. As it does, traditional radio stations will not want to fall behind.

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22/01/2014 10:04

Business Reporter · February 2014

Broadcasting

ExpertInsight

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Cry freedom at last! technology. They’re always based on your business strategy and the outcomes you want.

INDUSTRY VIEW

oving content around the world by tape and disk as it’s being post produced for distribution no longer makes sense. Established processes that have been around since the year dot increase the time from creation to consumption. So it takes longer to recoup your investment. Those same processes also prevent you and your creative suppliers from working together as efficiently and as effectively as you need to, where you need to, precisely as and when you need to.

Making it happen We understand the importance of having a flexible supply chain, especially in your business. If you want to film content in Los Angeles, have it post-produced in London and arrive at a distributor in Singapore, we’ll make that happen. If you’re a global brand and want to work with a small creative outfit anywhere in the world, we’ll make that happen. If that small creative outfit needs to work with one or more of their peers anywhere in the world, we’ll make that happen. And you want to distribute your channels in another country, we’ll make that happen, too. You don’t have to worry about the technology. We can manage all that for you. However, if you want the hardware on your premises to comply with local law (such as the Patriot Act in the US), we’ll even make that happen!

Your concerns With the opportunity of change also comes challenge. How do you go from the shackles of time-consuming physical handovers to the only sensible alternative – a digital working environment? How do you manage the transformation? Will it be cost-effective? And, in an industry where the pace of change is unprecedented, how can you be as certain as you can be that the investment you make will be fit for purpose today and tomorrow?

Dedicated to you BT Media & Broadcast can provide the specialist solutions and the peace of mind you’re looking for. It’s all we do. BT Media and Broadcast is part of British Telecommunications Plc, which has developed a market-leading global network. We’ve leveraged that heritage, the massive investment and expertise that goes into continuously upgrading and managing the core network. We’ve gone on to

ExpertInsight

Exciting times ahead augment the core with a dedicated global media transmission network. It’s purpose-designed to carry live TV pictures and the very large files required by the movie industry and postproduction houses. And, because it’s shared platform, it’s not going to cost you an arm and a leg. Just as importantly, it’s secure and built on the best-of-breed technologies and devices. That said, the solutions we provide over our dedicated global media network are never driven by

When you’re freed from the constraints imposed on you by established working practices, you’ll be able to use our services to launch more channels, open up new markets and create even more exciting content. Here at BT Media & Broadcast, we don’t just serve the media industry. We’re part of it. With us, you really can cry freedom at last! Mark Wilson-Dunn is global VP of BT Media and Broadcast 0800 671045 clientreception@bt.com

Vital to create a winning formula Verizon committed to staying on the leading edge INDUSTRY VIEW

uccessful formulas are about knowing which components are needed for the desired outcome. With the recent acquisitions of upLynk assets and EdgeCast, Verizon Digital Media Services has created its own unique formula for successfully delivering a quality video experience. The assets of upLynk and EdgeCast, together with Verizon’s global network, are the key ingredients to revolutionising the way digital content is delivered. This winning combination also simplifies how studios, broadcasters, content retailers and video programming distributors deliver a quality video experience across devices. “Verizon is bringing best-of-breed solutions to the marketplace – from contentacquisition to delivery, including analytics, content management and monitoring,” says Bob Toohey, president of Verizon Digital Media Services. “We are positioned to deliver on the promise of all we have to offer.”

EdgeCast and upLynk With more than 6,000 accounts and serving

some of the world’s leading web brands for global media delivery and acceleration services, EdgeCast brings to Verizon a rich intellectual property portfolio, and hundreds of talented professionals who are laser-focused on web acceleration and content performance. James Segil, co-founder of EdgeCast and chief marketing officer for Verizon Digital Media Services, adds: “EdgeCast has always focused on quality and performance. With Verizon’s global backbone and the relationships it has with carriers around the world, we can push scale and quality even further.” With its patent-pending technology, upLynk has developed one of the most innovative ways to adaptively stream HD linear and on-demand adaptive video to major platforms and devices. upLynk streamlines the processes of encoding, storage, playback, ad insertion and analytics – eliminating complexity and allowing for intelligent and more agile video workflows. upLynk’s high-quality video suite is uniquely suited for both broadcasters already involved in massive deployment and those deploying IP video for the first time. Ralf Jacob, former upLynk chief executive officer and chief revenue officer for Verizon Digital Media Services, explains it this way: “We remove the heavy lifting when it comes to the issues that content owners face. By using a single adaptive video format for the

process of uploading and encoding digital media for live, linear and video-ondemand content, we simplify and enable more agile video workflows.”

Committed to Quality Recently, Verizon Digital Media Services announced Verizon Live Events, the latest addition to its product portfolio. Live Events can acquire event feeds from any source – including satellite, terrestrial, fibre and internet – then transcode and deliver the content to broadcasters and other commercial customers. The service also includes

proactive monitoring and robust redundancy over Verizon’s global network. “We know end-users expect excellence and that’s why we’re committed to staying on the leading edge,” says Segil. “Our goal is to raise the bar for the industry by serving as the standard for quality. We have the network and the know-how to deliver a quality experience.” Built on one of the world’s most advanced networks with a video-optimised platform, Verizon Digital Media Services delivers a vast range of content-management and delivery services with carrier-grade quality, reliability, security and scale. www.verizondigitalmedia.com

Business Reporter · February 2014

an independent report from lyonsdown, distributed with the sunday telegraph

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The media delivery revolution has ushered in an unlikely resurgence in local broadcasting in the UK. Dave Baxter reports…

By Dave Baxter

ven though it has flourished in America, people argue whether it has a future in Britain. Either way, local TV is setting up shop in the UK. From reporters live at the scene of a fire to the familiar faces of anchors and other area-specific programming, the US model of local TV has managed to grab, and keep, the attention of swathes of viewers. With Ofcom licensing 21 services to run from British cities including Liverpool, Brighton and Glasgow, this is something the UK wants to emulate. The government, which came up with the scheme, believes local services could create jobs and improve local TV content. As culture secretary Maria Miller has said: “It is the news most local to us that is often most valued. People want to know about events in their street, their neighbourhood, their borough.” Others have been supportive of the concept. Greg Dyke, former director general of the BBC, has previously made the case for broadcasting from individual towns and cities, claiming that there is sufficient demand for local news and information. But the scheme has attracted its critics. Former culture secretary Ben Bradshaw once dismissed local TV as a “flop”. Others worry about the commercial viability of the plans, the quality of stations’ output and their effect on the regional

Broadcasting

Clockwise from below: Estuary TV has had a “fantastic” response; Lia Nici, Estuary TV executive producer; Notts TV is due to begin broadcasting this spring

“People are asking for more programmes. They’ve been quite surprised because they thought local TV would be wobbly-camera TV” – Lia Nici, Estuary TV

press. Despite this, a number of stations are expected to start broadcasting this year, and the experiment began late last year in the north Lincolnshire port of Grimsby. Estuary TV, which provides news, sport and entertainment from the area, focuses on northern Lincolnshire and East Yorkshire, broadcasting on a Freeview channel. It claims to broadcast to around 270,000 homes. There are no figures available to show how many viewers the channel is attracting. But Lia Nici, Estuary TV’s executive producer, says the initial response has been strong. “The response from the audience has been fantastic,” she says. “We are inundated with emails and phone calls and messages on social media. “People are really happy to see there are local issues and local interest on TV. Up until now you could only see something local if it was based in your area or on the news. There are no audience research mechanisms like BARB [Broadcasting Audience Research Board] for local TV, because it’s not set up for that. It might take another 12 months for the whole network to get up and running.” Estuary TV has eight full-time staff but also engages a number of freelancers, with Nici saying around 20 people will be working on it at any one time. And while she acknowledges that local TV lacks the scale of its national counterparts, Nici believes the new channels can still offer quality programmes. “The biggest problem is we are not a national broadcaster, so we have got a very specific audience we are working to,” she says. “We are not broadcasting to millions, but to hundreds of thousands of homes. “People are phoning up and asking for more programmes. They’ve been quite surprised because they thought local TV would be wobbly-camera TV. “People talk about how awful it is to not be in a city. We have to smile, because that’s the city attitude, that if you don’t work in London, you must be rubbish.” While London, too, is getting its own local TV channel, Nici believes that the new broadcasters will help to nurture media talent elsewhere in the UK. The channel is owned by the Grimsby Institute Group, which offers further and higher education. Because of that, the channel has a focus on local education and employment. Nici says: “Our whole ethos is to grow the creative and media industries in our area. We bring in producers and freelancers. We are broadcasting but also training people. I think that the channel can be a strong enough hub to support the employment and development of a lot of people. “Working with us, people can be more flexible, which works for young people and also for women, particularly women with families, which has been a big issue in TV in the last few years.”

Asked if local TV may help to rebalance what is traditionally a “London-centric” industry, she replies: “I hope so. If we could do this from somewhere that isn’t next to a huge city like London or Manchester or Birmingham, that would make a difference. “Often people feel their only career choice is to go away from home. Not everybody wants to do that. I think this will open up a world of opportunities. “It will stop the control of the larger cities and introduce new people who perhaps can’t afford to move to London. “In the past we have had people talk about living in caravans to get their foot in the door. That’s fine but it’s not ideal.” Estuary TV will soon be joined by other channels of differing sizes across the country. Nottinghamshire’s Notts TV hopes to launch on Freeview in March or April. In Norfolk, the Mustard TV channel, owned by media group Archant, plans to begin broadcasting in March. London Live, which will be backed by the London Evening Standard, plans to launch at the end of March. With channels scattered across the country and run by different organisations, the results of local TV projects could be varied. Any success on the level of the American equivalent will take time. But local broadcasters will be hoping they can at least avoid a “flop”.

Business Reporter · February 2014

an independent report from lyonsdown, distributed with the sunday telegraph

Broadcasting

Find us online: business-reporter.co.uk

Desmond set for huge windfall as Channel 5 up for £700m sale By Dave Baxter

ExpertInsight

Richard Desmond is considering the sale of Channel 5 just three years after buying it, according to reports. Desmond, who also owns the Express and Star newspapers, has reportedly asked advisers at Barclays to look at a potential sale of the channel, with the target of £700million. A sale on Desmond’s terms would yield a huge profit. The founder and owner of the Northern and Shell media group bought the channel from German network RTL in 2010 for £103.5million, and though the channel was showing signs of recovery, UK advertising revenues had slumped during the financial crisis, hitting Channel 5 hard. Since then, the broadcaster has recovered from its losses, even reporting an $8million operating profit in the first quarter of 2013. This took some big manouevres. Desmond embarked on an aggressive series of cuts, dramatically reducing the organisation’s headcount. Efforts were also made to renegotiate rates with the company’s suppliers, and to focus on cheaper programming.

The channel also did well in securing popular reality TV show Big Brother, and moves were made to ensure its advertising sales operations became more effective. At the same time, Channel 5 received useful help from the other parts of Desmond’s Northern and Shell empire. Desmond’s newspapers have advertised Channel 5 shows, giving it exposure which will have helped to bring in viewers. With the channel looking healthier, speculation has now begun over who would be interested in taking it on. Some have pointed to ITV as a prospective buyer. But as a large, advertising-funded broadcaster, ITV is likely to run into competition issues if it attempts to purchase the channel. Rupert Murdoch, another media magnate, has previously ruled out the prospect of his company, BSkyB, buying the channel. This means that Channel 5 may be looking abroad, possibly in America’s direction, for a buyer. But a potential bidder may be interested, as both Channel 5 and the broadcasting sector look much stronger than just a few years ago. ITV has managed to significantly improve its profits in recent years, while Channel 4 has impressed viewers with a new array of creative,

Richard Desmond is set to part company with Channel 5 after only three years

edgy content. Financially, the industry has benefited from an influx of cash since 2010, and a bout of spending and acquisitions just last year. Early in 2013, American media company Liberty Global made headlines when it paid £15billion to take over Virgin Media. And BT has recently injected a sense of competition into the market by spending huge sums purchasing football rights, a strategy that has put it head-to-head with Sky. Although Channel 5 is in many ways an attractive target, those looking to buy will have to contend with certain issues. The free promotion from newspapers such as The Daily Express, worth a large amount, will no longer be available, meaning reduced exposure or a need to spend more on promoting its shows.

At the same time, the channel is entirely reliant on advertising. This makes it more vulnerable to market forces than, for example, ITV, which, along with the BBC, makes significant revenues from selling the rights to programmes around the world. Apart from Big Brother and Celebrity Big Brother, the channel’s shows include CSI, The Wright Stuff, Neighbours and World’s Most Dangerous Animals. It also runs a range of children’s shows under its Milkshake brand, including Fireman Sam, Peppa Pig and Thomas And Friends. Channel 5’s operating profits are expected to reach around £70million for the financial year of 2013/14. But anyone taking over the channel will have challenges, and rivals, to face up to.

Word of the Year 2014: Cloudification How Deluxe has taken cloud philosophy into broadcast delivery INDUSTRY VIEW

f the word of the year for 2013 was “selfie”, it looks like 2014’s addition to the dictionary will be “cloudification” – the trend for any hardware-based product to be put in the cloud. But what things can be cloudified? In a word: television. The cloudification of broadcasting is certainly under way. Driven from a technology foundation of non-proprietary IT hardware married with an entirely software-centric approach to design, the traditional philosophies of broadcasting are being eroded. Gone are the high-cost barriers to entry that the traditional hardware-centric, highly proprietary broadcast platforms, which are still very much de rigueur today, dictate. A more agile and scalable offering is in place, one that frees the broadcaster and content owner from the shackles of their inflexible, hardwired, difficult-to-scale hardware platform. Since the inception of television, broadcasting has relied significantly on traditional hardware manufacturers to drive the functionality and innovation required to support the changing appetites of consumers. Unfortunately, this rate of

change has often been too slow and has meant that the broadcast function has been, in many ways, superseded in terms of technology and process innovation by online and non-linear strategies. If we take the example of a car, it is difficult to adapt a sports car into a saloon. The same can be said for broadcasters. They invest in a platform that will deliver four channels, then marketing and sales require this to extend to six. The problem is that the underlying design was never intended to extend to six channels. To support this change something has to give, either resilience whereby some of the other channels lose their backup, or there is a need for a complete redesign to support the new video servers, subtitle inserters, graphics engines and the like. Deluxe LeapCloud has taken the cloud philosophy into broadcast playout and content delivery. Delivering services from hosted data centres that enable the business to offer its services as fully managed – much of the broadcast operations are outsourced to Deluxe, or under a platform as a service agreement – whereby only the technology is outsourced to Deluxe while the operations are still managed by the broadcaster. There

are certain characteristics which are essential for a system to be considered a cloud-platform: • On-demand available 24/7/365, billable as pay-as-you-go. • Elastic achieved through virtualisation of software-oriented platforms delivering rapid scaling up and down. • Resilient multiple data centres that are connected through dual and diverse network links. • Geographically agnostic services can be run securely from anywhere in the world that can provision good connectivity for the function being carried out. At Deluxe we have looked to

revolutionise the way in which broadcast television is delivered. By providing broadcasters with greater visibility and access to assets and managing the workflow for making an asset broadcast ready we are eliminating the errors that often cause on-air outages. We can therefore take an approach of monitoring by exception to our broadcast playout offering. So, you heard it here first! Coming to a screen near you, the 2014 word of the year: cloudification. Stephen Stewart is director of business development at Deluxe stephen.stewart@bydeluxe.com www.deluxeleapcloud.com

Business Reporter · February 2014

an independent report from lyonsdown, distributed with the sunday telegraph

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Broadcasting

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Gauging the shift to online video advertising By Matt Smith “Every day there are requests for new technology all over my desk,” says Greg Cristal, director of global accounts at DG MediaMind. The company delivers more than 100 billion online ad impressions every month, and Cristal says video is on the rise. “Video is growing at a tremendous pace online, and while TV ads run in a linear fashion, online ads can be personalised and interactive,” he says.

“All this, plus the added benefit of reaching audiences on a greater number of devices, makes it one of the most sought-after mediums.” The best digital marketing platforms also offer advertisers a complete picture of their campaigns through comprehensive analytics, but broadcast advertisers are still hesitant to splash their cash in the unfamiliar online world. “In the TV world, if you had a certain Gross Rating Point (GRP) you would know you’d sell that many products in the supermarket,” Cristal says. “When

TV came to the online world they said, ‘Take some money and tell me how many GRPs we had,’ and we would say, ‘It doesn’t work like that!’” According to Cristal, the key is to show broadcast advertisers what online video advertising can achieve: “Fortunately, it’s easy to dip your toes in the water. Just 5 to 10 per cent of an advertiser’s budget is sufficient to see results.” “The dollars are going to come from TV,” he says. “80 per cent of the money is still there. But when audiences are increasingly living in a multiscreen world,

Amazon ventures further into broadcast territory Amazon, the global online retail company, has included broadcasting in its plans for expansion. The firm has been competing with other global companies such as Google and moving into areas such as cloud provision. Amazon is now offering some entertainment services. It recently reached a deal to stream the entire run of Veronica Mars, a detective series, more than a month before its broadcast release. This content comes as part of the company’s Amazon Prime package, which offers other perks. Speculation has been rife about Amazon’s ambitions around the broadcasting industry. It has already acquired DVD rental and video-ondemand provider Lovefilm, and there have been reports, for example, that the company is working on a set-top box. It has also been rumoured that the company has been in talks with broadcasters and media firms about the idea of providing its own internetstreamed TV service. Whether any of this will materialise is unclear. Amazon has stressed that while it has worked on creating shows, it has no plans to either license TV channels or offer its own pay-TV service. The Amazon settop box rumours have been neither con f i r me d nor denied. A s t he retailer continues to branch out into content, whether it intends to develop a fully fledged TV presence is unclear.

TV alone isn’t going to cut it.” Cristal believes that a focus on audiences and quality content will make the web more attractive to advertisers. “If online is going to be the new home of TV – which it will be – we need to make it comfortable for TV to move into. The building needs to happen around the audience and content, not the numbers.” Find out how your business can work with digital content more effectively at The Digital Content Summit 2014. www.digitalcontentsummit.co.uk

Sky’s new AdSmart service is designed to bring targeted advertising to broadcast

The Future of TV is Online Mobile and tablet viewing grew 133% last year.* Download Ooyala’s latest Video Index to learn how viewers are watching TV today and how data can help make you more money from video.

Targeted advertising aims to rejuvenate TV revenue By Dave Baxter The broadcasting industry has come a step closer to embracing targeted advertising, after more than 40 companies backed a service operated by Sky. The company’s AdSmart service uses a customer’s postcode and publicly available personal information from third-party providers to tailor what adverts show on a television. AdSmart sends a library of adverts to a set-top box, which can then select adverts according to what best matches a customer’s profile, and slot them into a live advertising break. This could involve, for example, advertising a people carrier to a family with young children but offering a more stylish vehicle to a house of young adults. Companies running advertising campaigns could also choose to tailor them, for example, to a particular region. Apart from location, details factored

into the advertising choices include age and income. AdSmart is now being rolled out after a six-month trial, with the broadcaster hoping to entice local businesses as well as companies which may have deserted TV advertising. With this ambition, it plans to expand the size of the TV advertising market. Major brands including Tesco, RBS, Audi and Littlewoods have taken up the service. Andrew Griffiths, Sky’s managing director for commercial businesses and chief financial officer, said: “We want to make TV advertising work better for viewers and advertisers. “By enabling advertisers to better segment the TV audience, Sky AdSmart has the potential to open up TV advertising to many more brands and businesses. “This helps both the brands that previously thought TV too broad a medium, as well as local advertisers who felt that TV wasn’t previously accessible to them.”

With increasing concerns about the commercial use of personal data, Sky has been keen to stress its communication with customers about the scheme. Sky has been in contact with customers about the implications of the service, which will run across its wholly-owned channels, over the last three years, giving them the chance to opt out if they wish. The broadcaster appears keen to expand the service already, having created regional sales teams for the service in London, the South West, the Midlands, the North and in Scotland. Targeted advertising could become an increasingly important source of revenue for the industry, as companies look to be less wasteful with their campaigns. Late last year, Twitter launched a similar service in America, allowing brands to target users with “promoted” tweets if they use the network to discuss certain shows.

go.ooyala.com/ Telegraph2014

*Ooyala Video Index Q312

Business Reporter · February 2014

Broadcasting

an independent report from lyonsdown, distributed with the sunday telegraph

Find us online: business-reporter.co.uk

Battle

stations They may claim it isn’t anything of the sort, but now that BT has thrown down the gauntlet to Sky for premium sports event contracts, a broadcasting cold war – and fierce competition for consumers – could result… By Dave Baxter

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hen I first enter BT’s headquarters in London, it’s hard not to stare at Robin van Persie. The Manchester United striker is suspended in mid-air, frozen in the moment as he makes a shot on goal. This image is printed onto a huge banner which hangs from the upper reaches of BT Centre, an imposing multi-storey complex near St Paul’s Cathedral. It proves difficult to ignore. Behind the reception desk, Manchester City goalkeeper Joe Hart makes a diving save. And from a cardboard cut-out, sports pundits Jake Humphrey, Clare Balding and Lawrence Dallaglio appear to be watching the lobby. If anything it’s a statement of intent. While some telecoms firms would prefer not to flood their headquarters with sports paraphernalia, BT has become a different beast since it started aggressively scooping up sports rights. As part of plans involving around £1.5bn of investment so far, the company has been bidding hard and making some powerful acquisitions. In football, a sport awash with money, the landscape has already changed. BT has secured TV rights for the FA

Cup, the Champions League and even a share of Premier League coverage. On top of this, it also made deals to cover the rugby union Aviva Premiership, women’s tennis and MotoGP. In August it launched two of its own sports channels, to great fanfare. The strategy is designed to entice and retain customers for the company’s broadband and communications packages. But in entering the world of match broadcasting, BT has made an enemy of the incumbent, Sky. The two have been engaged in some high-stakes bidding wars. When BT won the Champions League and Europa League rights, BSkyB’s share prices dropped sharply. But Sky, which has dominated the market for 20 years and seen off a number of challengers, is unlikely to back off. It looks like a classic corporate showdown. But when I meet John Petter, the head of BT’s consumer division, he argues the company targets those who have already chosen to go without pay TV. “We saw the potential of people who couldn’t afford a pay channel,” he says. “We saw that confirmed at the time of the Olympics. For the first time in several years, everyone I know was talking about sport. It wasn’t just the hardcore football fans. It was ordinary people. ” Petter doesn’t see Sky and BT as direct competitors in this market. The revelation may amuse journalists who have relished the prospect of covering an important commercial bust-up. “I think lots of journalists have written this up i nto te r m s we don’ t

Below left: Major competitions such as the Aviva Premiership, Champions League and Europa Leage were a BT coup; below: John Petter, head of BT’s consumer division; right: Manchester United striker Robin van Persie (left) is one of BT’s poster boys; main image: BT’s new Sunday football studio

particularly recognise,” he begins. “It’s fun to write this up as a battle between two corporate giants going head-to-head. We think it’s really different. The test for us is the growth of our own businesses and getting customers online. For us, we want to build up the whole business and a key part of that is broadcasting. We are not about taking £50 off customers just for pay sports. We are not doing the same thing as Sky.” Petter’s argument is intriguing, and likely to contradict scores of newspaper headlines. But he also concedes that Sky and BT Sport may experience some “overlap”. “If you are a hardcore football fan, you will want to have Sky and BT channels. There’s lots of overlap,” he says. “We will reach people who aren’t prepared to pay 50 or 60 quid for sports channels because they haven’t got the money, but want to follow their team and want to watch the big games.” With its deep pockets, BT has been able to spend enormous amounts getting its hands on some of sport’s top events. In November it announced a three-year deal to broadcast all UEFA Champions League and Europa League matches from 2015. This deal alone is worth an eye-watering £897m. Such largesse has led to concerns that auctions

Business Reporter · February 2014

an independent report from lyonsdown, distributed with the sunday telegraph

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could spiral out of control, putting undue financial strain on broadcasters or even their consumers. But when I ask Petter if he fears the bidding war could escalate, he sounds rather stoic. “If we are going into any kind of auction, we have to go into it

Broadcasting

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knowing what it’s worth to us. We are extremely rigorous in how we do our business costs,” he says. “The biggest risk in that period was launching a channel in the first place. In 2012 we were doing it all around my kitchen table in Battersea. “The thing that’s really remarkable is the sports channel feels like a relatively mature business. We didn’t confirm the studio in Stratford until early 2013.The first show was in August. “But I think people watching it wouldn’t think that. I think it looks pretty professional.” It has been a learning curve in other ways. When I ask about the technical teething problems BT experienced after launching its sports channels, Petter tells me: “We have had a busy year. “We have signed up more than two million households to BT Sport. We have had a frantic summertime. We are now operating on a more even keel.” When I decide to pry a little and ask if BT has a wish list of rights it still covets, Petter

is careful not to give anything away. Instead, he praises some of the company’s recent victories. “Because of the competitive market of rights business, we never would signal to the marketplace what we are going to do,” he warns. “I would say we are very happy about what we have already bought.” While he singles out BT’s coup in getting hold of Champions League and Europa League rights as a big tick on his wish list, Petter also gets enthusiastic about digging out the “stories” behind less mainstream sports. “We probably attach more importance to rugby than Sky have done,” he says. “Historically the rights have been between Sky and ESPN. But in this situation it’s hard to tell the stories. “We don’t want to sound too pleased with ourselves, but our depiction of rugby has enabled those stories to come out. We are increasing the reach of rugby. I think it helps having all the rights in one place. I think it’s about focus.” Petter is also

excited about BT’s coverage of MotoGP, insisting the sport will be put “front and centre”. Beyond BT’s intervention in the rights market, broadcasting has been dramatically altered by the explosion of both social media and data, which allows companies to better track consumer behaviour. Petter admits that BT is not unaffected by this. “If we do anything that interferes with a broadcast, fans don’t like it,” he tells me. “They want to look at the action really clearly. I think this will give us an advantage in some respects.” This ranges from gauging fan sentiment in real time on social media to assessing what events can lead to people abandoning a match. Petter says: “I think the key thing for broadcasters is to listen to their listeners and viewers. It’s about knowing what people want, even if they don’t tell you directly. “And something we have to study is social media, as well as data. “I remember during one of our first Premier League games [Crystal Palace played Manchester United], one of the sides had a player [Kagisho Dikgacoi] sent off after about 40 minutes. “It was a player from the underdogs. We saw that lots of people gave up on the game at that point and went to make a cup of tea. So you can see how people are enjoying or reacting to a game. “If anyone has a player sent off against Manchester United, even with the season they are having, they will give up.” More generally, Petter believes broadcasting is an industry in flux. He spots two trends he admits “run in different directions”. One is the rise and rise of video-on-demand, with viewers piling into services like Netflix. To illustrate the point, he notes that the service had 2.5 billion streams in the first half of 2013 – an increase of half a billion on the six months preceding that. The second trend, he says, is an undiminished appetite for live TV in certain situations. “There are still occasions where live TV is incredibly important. Some events happen in real time,” he says. “Sport has to be live, and the UK offers a really interesting market for sports. “In the US, one in two households subscribes to a pay sports channel. In the UK that number is one in five.” Being more focused on BT’s telecoms rivals, Petter may not see Sky as a direct competitor in broadcasting. But the competition may think differently.

Content assets drive business value Clients need to protect and exploit their content assets to remain relevant INDUSTRY VIEW

don’t like the word “content”. It is too technical. It doesn’t reflect the desire audiences have for our product or the hours of creativity that went into its production. However, content is our primary asset; whether it be a story, historic breaking news or a sporting triumph. At Ericsson, we deliver managed services that connect the world’s content to audiences everywhere. At the core of our business is a belief that the true value of content is realised through re-use, reformatting and redistribution, in order to enable a

‘create once, use many’ business model for producers and broadcasters.

Creating and preserving heritage For many years the industry has struggled with what to keep and what to throw away – more than 130 years of content creation with which to rediscover, prioritise, restore and predict future audiences. The recent experience of lost Doctor Who episodes demonstrates the real value of content, compared with the cost savings of not preserving national treasures. With the decreasing cost of storage, Ericsson is able to simplify archiving decisions for content producers and broadcasters. Together with our clients, we deliver solutions that create and preserve a heritage of content that is ready for monetisation when required. Today an asset may be distributed in tens or hundreds of locations in its lifetime in multiple formats. New platforms are coming onboard quickly from new market entrants in both device manufacturing and IP-video distribution and the desire for content continues

unabated. For those who still hold firm the adage that content is king, maybe the phrase “The king is dead, long live the king” is best replaced with “The king is dead – but he may be back.” Ian Brotherston (left) is Head of Broadcast Services, Ericsson in UK broadcast.services.communications @ericsson.com

Business Reporter · February 2014

Broadcasting

ExpertInsight

an independent report from lyonsdown, distributed with the sunday telegraph

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Media management in a fragmented world INDUSTRY VIEW

colleague of mine is a keen cyclist, powering up and down mountains, meeting with likeminded people for cycling holidays. They are very communal experiences. Last year, after a long day in the saddle, the cyclists gathered post-ride before dinner. All 10 of them promptly had some kind of connected device in their hands – laptop, smartphone, tablet – and were uploading ride data or looking at new bike paraphernalia online. Meanwhile the TV played in the corner (something generic and uninteresting to cyclists was on) eyes darted up and down, but the TV was fighting a losing battle. It was blurting out content without audience interaction; something all the other devices in the room enjoyed. We live in an increasingly connected world with ever more connected devices learning our habits and desires, with more content than ever before and more ways to consume it; sometimes it can feel as if the good old TV has been left behind. Many will have heard of the term “convergence” and in terms of the ability to receive multiple services over a single device or network, it makes sense in terms of user experience. But actually, behind the scenes there’s massive divergence and fragmentation in what content providers need to do to exploit their content. Audiences consume via all kinds of devices: some watch live, many catch up later or binge-watch on demand. This produces both opportunity and challenge for broadcasters. On one hand, there’s the opportunity to reach a wider audience and gain a more intimate audience relationship; on the other hand, there’s the growing complexity of content distribution. To put it slightly differently, instead of one big, congruous audience all watching the same programme at the same time via the same technology, we end up with lots of smaller audience pockets split between different devices watching at different times. Whereas broadcasters have traditionally delivered content in the form of a linear channel to a single – or perhaps a small multiple – of handover points for onwards distribution to consumers, this may now be hundreds of handover points and a mixture of linear feeds and non-linear packages for catch-up and on demand. While the resulting complexity in delivery has grown immensely, audience growth may have been more modest. In fact, offering content via new platforms and devices may be more for audience retention than acquisition. This means controlling the cost of delivery becomes increasingly important. As each audience fragment may be small it may be that even large broadcasters don’t have the critical mass for each delivery type in order to commission, build and support

their own infrastructure and for this to be commercially viable. They need to benefit from the economies and flexibility of managed services. According to Nielsen, “viewing numbers continue to favour traditional TV by a large margin (in the US). Overall, Americans aged two and up watched 31¼ hours of TV per week during Q2 (2013), or more than four-and-half-hours per day. By contrast, Americans watched exactly one hour of video online or on a mobile phone per week during the same period.” Our heritage is as a broadcast service provider delivering linear channels, supporting major sporting events and breaking news. Of course those channels are still a major part of our business, but our sector is no longer confined to supporting them with playout and delivery services; we are now far more involved in the logistics of getting content from wherever it’s coming from to wherever it’s going to. That includes all steps before it can be broadcast or streamed in some way; the management of that media through often complex, multi-party workflows, enabling the collaboration of internal and external specialists in often disparate locations, in preparing and packaging the content for delivery to various consumer platforms. Let’s take the example of a broadcaster launching two new channels to target specific regions it has identified as growth markets. These will be carried on numerous local affiliate platforms but they also want to deliver their content via the video-on-demand (VOD) platforms of these affiliates as well as the likes of Netflix and even a small subset of content to YouTube to act as teasers. All that content is coming from different providers; production companies who have acquired broadcast rights, in-house productions and so on. The challenge is to take that content in its raw form and work with it to create versions for the intended markets. This might include editing to comply with local regulations, tastes and culture, liaison with partners to create language variants or identification of suitable junctures for commercial insertion while preserving editorial integrity and preserving brand identity. Indeed, everything that is needed to get that content from its raw state into versions that are appropriate for each and every distribution channel and target market. Additionally, storage, playout and transport of the linear channels all needs to be supervised culminating in the managed handover of these channels to the local affiliates. Delivering the content to the affiliates’ VOD

platforms and services such as Netflix and YouTube provides a different set of challenges, with each platform specifying different technical formats and supporting information for the content. This means a specific package needs to be prepared and delivered for each of these platforms. One might ask: what is the definition of a broadcaster now, so long the dominant content provider? Again, it would be remiss of us to suggest that the traditional broadcast model is dead; it absolutely is not. If we look at some global figures published for the first quarter of 2013 by Nielsen then “television remained the dominant media type in terms of advertising investments, with 59 per cent media share and 3.5 per cent global growth”. Broadcasters have always been the experts at funding, commissioning and curating content, understanding, cultivating and building a relationship with the audience and monetising this by selling to advertisers, or via subscriptions. This role really doesn’t change that much. In fact with ever more content and ever more ways to consume it, arguably this role becomes yet more important and more valuable. But the concept of a broadcaster with a TV or satellite transmitter, delivering a linear channel and managing the associated technology is no longer relevant or accurate. Managing the end-to-end content flow from a technical and logistical point of view is not where broadcasters bring the most value. More content and more ways to consume it arguably makes the role of curation and recommendation even more important – the core competences of the broadcaster. After all, who has spent what feels like more time scrolling through pages of content trying to decide what to watch than actually watching it? As an industry we have to work together to provide the best possible viewer experience from content acquisition through to quality of delivery, managing technical complexity to remain competitive. Above all, we have to fight for the time and attention of our audience in a world where there is so much fighting for these precious resources. Back in the bar with my cyclist friends, how might that scenario have played out if the TV had known it had an audience of avid cyclists, and how much more valuable would this have been to advertisers? +44 20 7753 3600 info@globecast.com

Business Reporter · February 2014

an independent report from lyonsdown, distributed with the sunday telegraph

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Broadcasting

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Inspector Dogberry From retail to the world of payments, the emergence of smartphones has been shaking up the way industries work. For broadcasters, who have to contend with viewers intent on using their laptops, tablets and phones to watch the latest shows, the situation is no different.

But it seems some are fed up with the sector’s zeal for mobile, and what this could mean. Digital UK, a company that supports the nation’s terrestrial TV service, has issued a report arguing that Freeview is worth nearly £80 billion to the economy and provides better value than mobile. The organisation worries that demand for mobile services will mean it loses out in a competition for limited frequencies on the radio spectrum, and is urging the government not to become preoccupied by mobile.

Anyone who takes a regular dip into Dogberry’s columns will know all about his passion for gaming, and the distraction this can be. Fortunately, this promising industry often finds ways to creep into his work. So it was a source of some glee for the Inspector to learn that Hollywood director Steven Spielberg (right, modelling combat suit) is reported to be working on a TV show based around wargame classic Halo. The show will be produced in conjunction with Halo developer 343 Industries, and is part of attempts to turn games consoles, such as the Xbox One, into a hub for entertainment. Microsoft, which makes the consoles, has announced other entertainment deals, including a partnership with the NFL to combine viewers’ Fantasy Football statistics with live game broadcasts.

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Twitter: @dogberryTweets

By Matt Smith, web editor

u Editor’s pick The Media Blog

Digital UK’s chief executive Jonathan Thompson said: “With increasing demand for spectrum, it is critical that digital terrestrial television remains a strong proposition with the same coverage and range of channels viewers enjoy today.” While it is important to note that Digital UK is heavily involved with work on Freeview and expected to favour it, the argument does raise questions. As mobile grows in popularity, how can it be accommodated? And will it actually threaten other formats?

http://themediablog.typepad. com/the-media-blog/broadcast Head over to the Broadcast section of The Media Blog for humorously packaged analysis of the latest goings-on in TV and radio. Latest posts at the time of writing include looks at how we tweet, along with different types of programmes and the ways in which newspapers report on television programmes.

David Lloyd’s Radio Moments

Bringing it all back Holmes Steven Moffat is not happy. The creator of Sherlock, which has kept much of the population glued to their seats in recent weeks, has spoken out against shows being broadcast in countries months after airing elsewhere. He cites costume drama Downton Abbey, aired in America months after showing here in the UK. He believes that, apart from being frustrating for die-hard fans, this also leaves them vulnerable to devastating “spoilers” online. Moffat also claims the delays could lead to increases in piracy, as viewers are forced to take desperate measures.Dogberry is sympathetic to upset fans. But after a two-year wait between the

second and third series of Sherlock, he wonders if Moffat is the man to lead this particular charge…

The F1 Broadcasting Blog

http://davidlloyd-radio.blogspot. co.uk

http://f1broadcasting.wordpress.com

Broadcaster David Lloyd gives his expert views from inside the radio business on his blog. Expect to discover a mixture of his thoughts on various programmes, anecdotes from his career behind the microphone, and plentiful insights on the radio industry as a whole.

An interesting look inside broadcasting the fastest sport on Earth, this offers information on both the BBC and Sky’s coverage of F1 in the United Kingdom, including ratings, analysis of social media reception, and the latest news and developments within the media companies covering the glamorous sport.

Digital Radio FM Europe www.gearlive.com

TuneIn Radio (Free – Android)

Ustream (Free – iOS/Android)

If you want to scour the airwaves for upcoming stations or just have very specific tastes, TuneIn Radio has thousands of web channels.

What if you could broadcast video from anywhere? Ustream lets users stream and watch live broadcasts from their devices.

All the latest news about digital radio in Europe, along with resources providing information about the different types of bands available to broadcasters – as well as the option of broadcasting a radio station over the internet. Well worth a browse if you’re interested in the technology behind the industry.

Simplifying content distribution INDUSTRY VIEW

Babcock provides a managed service approach

e are operating at one of the most exciting points in the broadcast industry’s history. There are now four key ways in which TV content can be delivered to audiences: terrestrial, satellite, cable and the internet. Each method can deliver HD-quality video content to viewers and each comes with a commercially viable, potentially global reach. Furthermore, all platforms now offer video on demand, as well as live services, giving viewers more choice than ever before. The multi-platform approach, which most

of the leading broadcasters adopt today, has resulted in a significant increase in the number of content distribution suppliers, contracts and varying service-level agreements (SLAs) that need to be managed, compared to a decade ago. Most organisations are now finding this is a major headache and, as we are hearing increasingly from many broadcasters, a distraction from producing and monetising great content. As part of the UK’s leading engineering support services organisation, Babcock International Group’s Media Services business provides its clients with a managed service approach, sub-contracting or partnering with the technology companies that meet client requirements, zipped up into one contract. This gives broadcasters assurance and long-term certainty in dealing with a financially robust FTSE100 company, committed to adhering to strong SLAs.

Managed, monitored, supported and maintained from its network operations centre in London and leveraging an extensive fibre and satellite network, Babcock saves its clients time and money, freeing them up to focus on their core business. Over the last year, Babcock has been developing key partnerships with leading satellite operators, including SES, Eutelsat, Asiasat and Intelsat, and video-overinternet technology companies including Cisco and Brightcove, building end-to-end solutions that help minimise the complexity of content management and delivery for the 2014 broadcaster. Richard Jacobs is business development director, Media Services, Babcock richard.jacobs@babcockinternational. com

Business Reporter · February 2014

an independent report from lyonsdown, distributed with the sunday telegraph

Broadcasting

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Business World Russia

A major broadcaster has decided not to broadcast the 2014 Winter Olympics Olympic Ceremony live. American broadcaster NBC will not stream the ceremony, in Sochi, live on its website. Instead, the spectacle will be broadcast eight-and-a-half hours later. NBC, which will be showing all the athletic events live, has told journalists it wants to have time to give the ceremony “the full pageantry it deserves”.

Space

A live broadcast from the International Space Station (ISS) is set to air later this year. The show will involve live footage from the ISS, as well as Houston’s Mission Control, as the space station completes an entire orbit of Earth. The broadcast is part of a Live from Space season, which will also look at the lives of astronauts in space and airs on Channel 4 in March.

Radio Revolution

United Kingdom

United States

ExpertInsight

Some of America’s biggest TV names are going to the Supreme Court in a case that could reshape the future of broadcasting. The court has agreed to hear the case of a group of broadcasters, including ABC, Fox and NBC, against media start-up Aereo. The case follows a number of legal victories by Aereo, and will look at whether the firm is violating copyright by retransmitting broadcasters’ signals online.

The BBC is planning to broadcast 1,400 accounts of World War One from across the UK to mark the centenary of the conflict. UK regions will each broadcast a series of reports, focusing on how they contributed towards the war effort, according to the BBC’s in-house magazine Ariel. The project will focus on the domestic impact of the war and how it affected everyday life.

Radio may be the grand old dame of the media industry but, as other traditional outlets fall by the wayside, it’s going from strength to strength. By Dave Baxter he digital revolution has wreaked havoc on newspapers and record companies, but it shows no signs of slowing. As consumers armed with smart devices take control of what they buy, watch and read, few trades remain unscathed. For the radio industry, this means a number of things. The sector is in many ways in good shape, with listeners continuing to tune in while they’re driving, working or carrying out tasks

around the house. But as technology improves and consumer behaviour evolves with this, radio needs to keep up. Michael Hill, MD at UK Radioplayer, a not-for-profit company which allows users to browse British radio on its website, says: “Any conversation about radio has to start with the realisation that it’s in very rude health. “We are not in an ‘Oh God, what are we going to do?’ scenario, but that’s more dangerous

From right: Radioplayer’s app works on many platforms; UK Radioplayer’s Michael Hill; Ford’s SYNC system will soon be compatible

Unlocking the power to create in a pressing economic climate We must keep producing the ‘wow factor’ INDUSTRY VIEW

he European, and indeed global, economy is only just starting to recover from a banking crisis that created widespread credit constraints. It has been tough, but businesses with strong foundations have gained rather than lost ground during this time. Our broadcast and media industry has proved if not immune to the effects of a tough economy, then at least adept at recognising and responding to the need for change. Underpinning the positive health of the industry is an apparently unstoppable demand for content. Audiences are demanding more, on more devices and available anywhere, anytime and the capacity of younger generations to multi-task and multi-view is a behavioural change that is fuelling growth. The opportunity presented for new services on new platforms and devices poses a number of business and technology challenges, but also with great opportunities for those innovative enough to take advantage of the change. At Sony we are focused on understanding this context and working with content producers to help them unlock new value. At the premium end of the content spectrum it’s encouraging to see strong

consumer demand for quality drama and live sports content driving demand for ever greater visual experiences. Linked to this, the maturing of 4K capture and workflow tools was a major question on the industry’s lips in 2013, and two things have become clear: viewers that experience 4K are blown away by the enhanced viewing experience, and the technology is in place to deliver full 4K, even in a live production context. While still in its infancy, 4K production is a reality today – as Sony’s trials with FIFA last June at the Confederations Cup proved – and will be further evidenced this summer as Sony captures the action in Brazil for the FIFA World Cup in 4K as well. On the consumer side, the demand for everimproved image quality shows no signs of abating, in turn driving the investment priorities of broadcasters and producers. Networked file-based production workflow also remains high on the industry agenda. The search for more efficient approaches to producing, distributing and storing the huge amount of data required for video content continues to exercise both technologists and financial planners. Cost, capacity and future-proofing are all considerations that our customers are constantly looking to define and achieve in this area. Added to this, the development of IT-based approaches to broadcast requirements continues,

particularly in the area of live production, where reliability of service is mission-critical. A prime example of kit that’s making this progression possible is Sony’s NXL-IP55, a live production unit that enables multiple video data streams to be transmitted over an IP Local Area Network (LAN). Our goal as an industry must be to keep a clear sight of what adds value for our audiences. Nothing is more important than liberating the creatives in our industry to continue to produce great programming, whatever the genre or device. If we as an industry can continue to deliver the “wow factor” for our audiences, then we should be confident for our future. www.pro.sony.eu

Business Reporter · February 2014

an independent report from lyonsdown, distributed with the sunday telegraph

Like us: facebook.com/business-reporter because it could make us more complacent. Nowadays people are using brilliant phones, brilliant cars and brilliant satnavs. Everything’s getting better in their digital lives and I want radio to get better in their digital lives.” Hill says that with many motorists continuing to use the radio in their cars, it needs to fit in as vehicles become more sophisticated. “In the next year or so, we are focusing on what’s happening in cars,” he says. “Radio has been very strong in cars. We have a captive audience and people have time on their hands. “As car companies build connected cars, should we be following the model that car radios have looked like that’s quite simple, or is there more you can do?”

Broadcasting

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He says that work on in-car radio also involves integrating people’s iTunes libraries as well as other accounts and apps into the system, and looking at ways of improving the user experience. As part of this, UK Radioplayer has been working on an in-car radio system with Ford. “It’s about integrating the radio applications, using voice control, so you can speak to your car and you can find radio stations to listen to,” Hill explains. “It’s experimental work we have been doing with Ford, but it’s going into production.” Similarly, Hill thinks work can be done with connected mobile devices to make radio easier to use. He says: “Particularly with tablets, I think this is more of an opportunity than a challenge. Young people are using tablets for browsing and doing whatever they do. “The tablets tend to be in areas of the house where there isn’t an easily usable radio, usually with a Wi-Fi connection and often with a decent set of speakers.” He also believes new methods can be used to help listeners discover content they like. “ People a re u sed to switching on the radio and listening to what there is, but if you have an app that entices people to things they like, then listening duration will go up,” he says. “You can look at what we listen to on iTunes or what we like on Facebook,” he says. “Let’s say you like your rock. Maybe you know about Planet Rock but maybe you don’t

know about Kerrang! or Radio Six Music.” As it attempts to move with the times, another big question exists around if and when the industry should switch to digital. Patrick Hannon, the president of WorldDMB, a forum looking at the implementation of broadcast digital radio around the world, argues that going digital would cost money but could also bring benefits to the industry. “Is it [a digital switchover] worth doing? One reason is the sound quality,” he says. “Also, when you are driving around, digital radio comes into its own. If you have got FM, it’s fine, but if you have got AM, it’s not. Digital radio is far more reliable. “The second benefit is the extra choice. As a

rule of thumb, you would get twice as many services on digital as on FM. “You have also got additional features like scrolling text giving you the song name. And it allows the UK to use this as a platform for attacking other markets.” But Hannon adds that if radio does decide to take the plunge and go fully digital, it would make sense to shut down analogue equipment to cut unnecessary costs. “Why not just carry on having analogue and digital? The basic problem with that is the costs, because for a broadcaster you are having to broadcast twice, and the fees are not insignificant. “Cutting those costs would be good for the listeners, because that’s part of the licence fee.”

8,000+ ATTENDEES 200+ EXHIBITORS 18th - 20th March 2014

Grand Hall, Olympia, London

OPERATOR PARTNER:

DRIVING FUTURE INNOVATIONS IN MULTIPLATFORM ENGAGEMENT

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OVER 260 INDUSTRY LEADING SPEAKERS INCLUDING:

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DISCUSS AND DEBATE THE MOST PRESSING TOPICS, SUCH AS:

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• Assessing Cloud TV’s Impact on Broadcasters

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Business Reporter · January 2014

Broadcasting – Industry view

Business Zone

an independent report from lyonsdown, distributed with the sunday telegraph

Find us online: business-reporter.co.uk

The future Online options

Facing up to a dizzying array of challenges

here is now little doubt that online video is a key part of the future of TV. Ooyala, a leading provider of video solutions, publishes a quarterly Global Video Index, chronicling shifting digital video consumption patterns. In the third quarter of 2013, the inexorable growth of multiscreen video was clearly visible, with share of viewing on mobile and tablet devices growing 133 per cent year-over-year. Broadcasters face a dizzying array of challenges: legacy IT systems geared to linear channel operations; staff resistant to, or unprepared for, change; and massive complexities in content rights management. But the fact remains that consumer demands are changing. Thankfully, broadcasters can now

access insight tools to understand these demands and launch or improve online video products that drive significant revenue growth and cost savings. Editors and commissioners must make data-driven decisions in order to build, retain and engage audiences. Analytics, content discovery and social tools can drive these changes. For example, some companies may find they need to shorten clips for mobile viewers or cut opening and end credits for binge viewers. Effective use of analytics can drastically improve hit-rate and viewer engagement, reducing waste in the content commissioning process. The revenue side of the business must also be ready to adopt new analytics tools and ad formats. Advertisers want a 360-degree view of the consumer: which device they are using, at what time of day, in which geography. Insights such as these enable broadcasters to price effectively, charging appropriately higher rates for premium inventory. Analytics also

empower more transparent business models in an environment increasingly dominated by programmatic buying. And business model adaptation extends beyond advertising. With a deeper understanding of individual viewer behaviour, broadcasters can minimise subscriber churn and maximise pay-per-view revenues. Behind-the-scenes operations also need to adapt to new realities: device proliferation, the growing number of video formats, and a complex new content rights management ecosystem. Decisions must be made about how much to outsource and which new partners can meet these needs. Operations must be future-proofed, as online video viewing continues to grow. For more statistics on changing online video consumption trends, please find Ooyala’s latest Video Index at go.ooyala.com/telegraph2014. +44 (0)20 7494 6200 www.ooyala.com

In focus: Working together worldwide Gordon Smith, former US senator

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Broadcasting’s best days lie ahead as both an engine of local economies and as an integral part of tomorrow’s technological world

he NAB Show Collaborative supports the advancement of a global industry through collaborating with leading regional events well versed in the nuances of their market to build a global network of learning, innovation, and collaboration across regions. We support global innovation by uncovering the best ideas, leaders, and technologies, and provide a forum that better serves the broadcast, media, and entertainment communities. NAB Show Collaborative partners currently include: Mobile World Congress, Barcelona, Spain Owned and produced by the

GSMA, Mobile World Congress is recognised as the leading global event for the mobile industry. NAB Show is partnering with MWC to produce a two-day symposium on the convergence of mobile and broadcast on February 25-26. MWC will join 2014 NAB Show in Las Vegas, Nevada and present “Disruptors in Mobile” – sessions discussing the next big disruption in mobile content within the Disruptive Media Conference, April 9 – 10, 2014. CABSAT 2014, Dubai, United Arab Emirates Owned and produced by the Dubai World Trade Center, CABSAT is celebrating its 20th anniversary and continues to service the Middle East, Africa,

and parts of Southern Asia. NAB Show has partnered with CABSAT to offer some of its world-class education presented at the annual NAB Show in Las Vegas. SET Expo, São Paulo, Brazil Owned and produced by the Society of Television Engineering (SET), this is the

largest and most significant event for broadcast and digital media professionals in South America. NAB Shows has partnered with SET Expo to strengthen the association and encourage new business opportunities within the Americas. www.nabshow.com

What does UHD TV really do? Just when high definition (HD) appeared to set the bar for broadcast quality, Ultra High Definition (UHD) displays began to hit the market. Marketed as “4K” because of its almost 4,000-pixel-wide image, UHD offers much higher resolution than HD. The format is making rapid inroads, but what does the emergence of UHD really mean for the consumer? As the camera and smartphone market have proved, consumers are hungry for better image quality. UHD responds to this demand by offering eight megapixels to HD’s two. For this higher resolution to shine, though, higher contrast and a wider range of colour (known as gamut) are necessary. UHD standards in development address these factors, as well as the use of higher frame rates, the latest immersive audio formats, and 3D. The media industry faces enormous challenges in supplying UHD content to consumers. While a similar 4K format is already available for cinema, groups such as the Society of Motion Picture and Television Engineers (SMPTE) are working overtime to identify the infrastructure and standards needed to bring this technology to the consumer at home. A recent SMPTE report (www.smpte. org/uhd) defines the work required to deliver UHD experience in a way that takes full advantage of the technology. Next-generation broadcast technologies such as UHD require rapid evolution of infrastructure and a shift towards IT architectures. SMPTE offers education designed to advance the industry in managing issues such as the shift to IP-based handling of media. The SMPTE Regional Seminar on this comes to London on February 11 and to Salford on Feburary 12. Complete details are at www. smpte.org/seminars. Richard Welsh is SMPTE international governor and CEO at Sundog Media Toolkit 00 1 914 205 2381 info@sundogtools.com

Business Reporter · January 2014

an independent report from lyonsdown, distributed with the sunday telegraph

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Find us online: business-reporter.co.uk

Broadcasting – Industry view

The debate: What is the most disruptive technology affecting broadcasting?

Suranga Chandratillake Chief strategy officer Blinkx

Neil Berry VP, EMEA Ooyala

Henrik Eklund CEO Rivinet AB

Alla Salehian Founder and CEO TIMA Ltd

John Ive Director of business development & technology, IABM

The era where traditional TV is the unilateral king is fast coming to the end, primarily due to the exponential growth of online video. While the technology is not new, online video is by far the most disruptive technology affecting broadcasting today. It has impacted the way viewers consume content – not only how, but where and when they watch shows or videos. Due to the proliferation of devices, viewers can access content at any time, at any location, on the device of their choosing, so eyeballs are rarely giving their full attention to traditional platforms like TV. With traffic to sites such as blinkx, YouTube and Facebook growing every day, and video shared more than any other medium by consumers, it’s clear to see who’s stealing the limelight. What’s more, online video provides consumers with more choice and more flexibility. The web hosts a variety of content that traditional broadcasters could never compete with, be it snackable three-minute videos on the bus ride home or exclusive, online shows streamed straight to your iPad.

IPTV, VOD, live streaming and other forms of online video are growing at an astonishing rate and have totally changed the way viewers consume TV. For media companies and brand owners the most disruptive aspect of online video is analytics. The days of the schedule driving viewing habits are already long gone. The growth of online video will see television companies use big data analytics to tailor programming to each individual viewer, based on the device used, the time of day, and many other factors. Better analytics will mean more efficient revenue models that optimise ad load, ensure viewers only see relevant ads, enable greater tailoring of subscription bundles, and drive alternative rights windowing strategies. Ooyala customers are already experiencing the impressive ROI delivered by online video analytics and the personalisation it enables (for more information, see the recent IDC study showing nearly 500 per cent average ROI). 2014 will see many more leading TV companies adopt these tactics. +44 (0)20 7494 6200 emeacontact@ooyala.com

The days of cost-cutting are over, but sadly not in the sense of “happy days are here again”. The broadcast industry has been in a transitional phase for quite some time now. While this does not necessarily mean that 2014 will be the year of collapse for broadcasting as was 2001 for the music industry and 2008 for newspapers, the inevitable decline is drawing nearer. I wouldn’t be surprised if we see more private, as well as public service broadcasters across Europe, shutting down. It will be an eye-opener and the industry as a whole will need to fully understand that cost-cutting is not enough and realise that re-engineering and innovation is the only way forward. Innovative ways of charging for content and associating brands with audiences via content and distribution will be the key challenges. Perhaps 2014 will bring something that truly disrupts the traditional model.

New technology has given rise to the citizen journalist but the real impact on traditional broadcasting has been the ability of the public to access real-time news information and distribute content they, and their social network, want to consume and feel is relevant to them. Broadcasters have been slow to realise that this is the beginning of the end of traditional news production, where the editor of the day sets the agenda. They have, on the whole, stopped providing depth and analysis to a story or event in favour of headline and breaking news reporting which is fast becoming the domain of Twitter and Facebook. The challenge facing broadcasters is how to refocus on the quality and relevance of their content and how to change their workflows with a view to targeting smaller but more engaged segments of the audience through the new and emerging distribution channels.

Broadcasting has many traditions to be proud of, with many deriving from the differences between other technology applications. A case in point is how challenging it is for broadcast engineers to produce and manage TV programming. They have responded by developing unique, expensive technical equipment for a small industry compared with IT and telecoms. That is set to change as IT technology, based upon networking and Internet Protocol (IP), rises to the challenge and provides solutions using commodity-priced components and systems. Not only does this provide a more flexible software-based environment with expanded creative opportunities, but video production and consumption become available to a wider market. This is of particular importance – with video usage set to grow dramatically, production is becoming more accessible with smaller budgets and for consumers, video is now available on a multitude of devices. It’s a big culture shock for the industry, but IT and IP technologies hold tremendous future potential.

020 3551 4710 blinkx.com

henrik@rivinet.com

asalehian@tima.com www.tima.com

marketing@theiabm.org www.theiabm.org

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