Content is still king in TV's fuzzy future

Sky Television is in 47 per cent of New Zealand homes and adds two or three new digital channels every year. Photo / Paul Estcourt

When television arrived in New Zealand 50 years ago a consumer's main decision was whether to buy a console TV or one that had legs.

Nowadays shopping for a new TV can lead to a bewildering array of TV-meets-online media options.

Two years ago High Definition TV was the next big thing - now its 3D.

Things are no less complex for broadcasters who are facing the accelerated fragmentation of their audience against the backdrop of an economic slump that has hit ad revenues hard.

At TVNZ the state broadcaster has laid off more staff and beaten off low expectations to limp home to a modest profit for the year to June 30.

At the other end of town MediaWorks is emerging from dark days as private equity owner Ironbridge has restructured to cope with its debt load.

Broadcasting bosses are struggling to predict the state of their industry in 10 years' time - let alone the next 50.

But signs are that the old maxim of the entertainment business will ring true - content remains king.

New Zealand On Air pumped $91 million into indirect subsidies for television in the year to June 30, 2009. The taxpayer has become a crutch of the local TV business in troubled times.

Against that backdrop TV3's Campbell Live presenter John Campbell is typically optimistic about the future of Kiwi television. Upheavals in TV land are not marvellous, but ... "It's wonderfully uncertain" - says the current affairs host.

"It bodes well that audience levels have never been higher. But how do you get the audience to pick you and stay," he said.

"And how do you get them to watch you in a way that also delivers to advertisers at the same time."

But having fought for the survival of his show, Campbell will know that the challenges for television go beyond this ancient task. It's far more ominous than that.

As well as the ever-expanding number of niche digital channels, many viewers have been going online for their entertainment - and some have been taking advertisers with them.

TVNZ even launched a pay channel, Heartland, on Sky this week. Media platforms just keep on morphing.

The trend that saw traditional media losing advertisers to websites has moved on with media websites trying to reduce the impact from the phenomenal success of social media sites like Facebook, Bebo and MySpace.

A timid investor might throw their hands up in surrender. Some taxpayers will be wondering why we did not sell up in the late 90s when there was still a market for TV stations.

But as the Economist magazine noted recently, television - for all that it is swimming in dangerous waters - is at least faring better than other traditional media.

Part of that local success is credited to taxpayers' New Zealand On Air funding - which reduced the networks' contribution to shows during the advertising slump.

But network bosses also praise independent programme makers who have kept margins remarkably tight during the slump,

South Pacific Pictures (SPP) managing director John Barnett has arguably been the biggest business success in the 21 years since deregulation created NZ on Air and the indie scene.

SPP now has a name in the international television markets for selling Shortland Street and format rights to hit shows like Go Girls and Outrageous Fortune.

To Barnett the future for New Zealand television rests on the hoary old line that programme makers love to quote.

"Content is king - there is no question about that," he said.

"People are going online all right," he said, "but often when they are there they are talking about is what is on TV and the content."

TVNZ's approach has been to focus on distribution rather than content - developing tvnz.co.nz, tvnzondemand, and taking a one-third stake in Australasian rights to the advanced personal video recorder TiVo.

The reality, he says, is that television has been taking a diminishing share of ad spend and the industry growth has become totally dependent on broader GDP growth.

"The traditional view is that online has meant eyeballs being lost to TV. But what was missed was that on-demand viewers online were 13 per cent more likely to return."

TVNZ chief executive Rick Ellis agrees that the other entrenched piece of new television technology - PVRs - will lead to people fast forwarding through advertising.

This five-year stint as chief executive is Ellis' second. He was effectively pushed out by Helen Clark's Labour government for being too commercial, after implementing moves in the late 1990s that would have seen TVNZ competing with Sky in a joint venture for a pay TV service.

This time around - with global media brands like Google TV moving into the television space - he says TVNZ's approach is to build its scale in the local market.

Jason Paris was head of marketing at TVNZ but defected to MediaWorks and took over as head of TV3 and C4 this week.

His defection raised eyebrows. He was Ellis' right-hand man responsible for implementing the digital strategy, which has been implemented efficiently.

The question is whether the broadcasting industry has taken its eye off the ball in its traditional role as a programme maker and broadcaster to achieve that.

But TVNZ made a big commitment to new distribution channels - arguably moving resources away from traditional television content.

It's not clear the same model will work for TV3 and Ironbridge Capital.

Speaking to the Weekend Herald this week, Paris played down his credentials as an evangelist for belief that the future of media is online.

A former executive with Nokia, Paris downplays the claim that mobile phones will become a dominant media device. Some people use it for text, but would never think of using it for media, he said.

"I do not think that the market has changed in the past 10 years as much as we think and people are behaving pretty much the same way they were 10 years ago," he said.

For a TV channel the important thing to remember was that fragmentation of audiences had not killed off the value of a media brand.

"People can have 50, 100, 200 TV channels but they will watch 12 of them and do most of their viewing on five," he said.

But there was still a Luddite faction within media, he said.

In his new role Paris saw more partnership for back end costs, saying it was crazy for Sky, TVNZ and MediaWorks to all be investing in their own technology infrastructure.

"We need to get over that and if we are going to compete it should be on brand and on content," he said.

The challenge will be for TVNZ and TV3 to explain that to staff who have developed competition over the past two decades.

Sky Television is in 47 per cent of New Zealand homes and adds two or three new digital channels every year. Photo / Paul Estcourt

MIXED SIGNALS ON THE TUBE

* Spending on advertising is falling as a proportion of GDP and TV is losing market share to online media.
* Sky TV is in 47 per cent of New Zealand homes.
* Politicians ignore Sky's dominance in New Zealand's radically unregulated television sector.
* TVNZ and TV3 fear Sky ownership of Prime TV will lead to their being shut out of programming deals with Hollywood studios.
* 2009 television advertising spend was down 11.9 per cent to $570 million - dropping back to 1997-98 levels.
* New channels are mushrooming on Sky and Freeview. Sky is starting two or three new digital channels each year.
* Internet TV is taking off. Global internet giants like Apple, Google TV and YouTube are moving in on the market.
* Sky TV is planning on relaunching its IPTV online download service at the end of the year.
* Personal video recorders like MySky, TiVo and My Freeview are in about 12 per cent of homes. PVRs allow people to fast forward through advertising, reducing their effectiveness for broadcasters.
* Viewers want New Zealand broadcasters to invest in expensive new technologies such as HDTV and now 3D.
* The good news is that New Zealanders - and people around the world - are watching more television.
* Broadcasters say people are going online as well as still watching traditional TV.