Damien Venuto: TVNZ v Netflix - does the local player have any hope?

COMMENT:

Through the 1960s and 70s, cult leader Jim Jones whispered into the ears of his followers, convincing them the world was going to end and ultimately leading them to willingly drink cyanide. Most of what he said was, of course, blatantly untrue, but his gift of the swindler's tongue made him irresistibly persuasive.

Something similar has happened in media. For the better part of the past decade, the tech giants, themselves led by charismatic leaders, have done a great job of convincing the public, and more importantly, advertising agencies, that television faced impending death in the face of shifting consumption habits.

A lawsuit filed in California by advertisers against Facebook alleges the social media company knowingly overstated the digital metrics attached to video ads, thereby convincing advertisers to invest in the product.

While Facebook has previously admitted to inadvertently overstating its metrics by 60 to 80 per cent, the lawsuit alleges that Facebook's method of not counting video views lasting under three seconds enabled it to inflate average viewing times by as much as 900 per cent.

Facebook has denied the allegations and is seeking to get the lawsuit dismissed. Regardless of the result, the litigation has already had the effect of coating any claims made by Facebook with a veneer of doubt.

Speaking to the Herald last week, TVNZ chief executive Kevin Kenrick said he had noticed a shift in sentiment towards the big social media companies.

"The global players have done a really good job of promoting and polishing a shiny new thing and what we're now seeing is a bit more critical appraisal and how effective it truly is," he said.

The promise that tablets and mobile devices would snuff out the glow of the television set has also been grossly over-estimated.

Research from NZ On Air's 2018 report shows online video (mostly Facebook and YouTube) drops off during peak television times, 6pm to 10.30pm. The only other forms of content to spike during this time are subscription video on-demand (SVOD), featuring the likes of Netflix and Lightbox, and free on-demand content.

The point here is that the future of the television industry isn't in the fight against mobile phones or tablets, but is rather in the battle to control the connected television. The rectangle in the living room will always glow, but it's just a question of what consumers will watch on it.

Kenrick is well aware of where his competition lies, last week announcing at the TVNZ Showcase event the objective to double his on-demand audience from its current base of 300,000 weekly users.

TVNZ took its first step towards that target only a few days later by launching an advertising campaign, dubbed 'It's Yours', to trumpet the value of TVNZ OnDemand as a customisable experience, offering something different for every viewer.

This narrative, of course, also applies to Netflix – a company that casually announced last month that it would be raising a further us$2 billion to invest in content (this is likely to push overall debt to US$10b).

Kenrick doesn't have any delusions of grandeur about competing against a cash-rich tech giant, which has the ability to spend millions on a series of strange Adam Sandler films on a whim.

"We're a small company in a small country, so we're not going to win by spending more than others," he says.

It means making the right picks, but that is easier said than done. Betting on shows in the over-supplied international market is akin to playing roulette, in that you're more likely to get it wrong than land on hit.

"There are a handful of shows that are the shows and there a whole lot of others where people go, 'oh yeah, it's okay,'" says Kenrick.

Similarly, going local doesn't offer any guarantees. Shows like Filthy Rich and Survivor looked great on paper, but haven't necessarily delivered the hype the broadcaster would have hoped for.

"Our industry is all about creating something new and with that is risk and opportunity," says Kenrick, reflecting on some of TVNZ's more disappointing shows.

"As an industry, we understand that we're not going to hit it out of the park every time. But I think the worst thing that could happen is if you stop trying. Bland, safe content is not compelling and it's not going to attract viewers. So we need to create an environment that continues to inspire innovation, creativity and taking some bold swings."

Kenrick points to Wellington Paranormal as an example of getting it right, saying the show was made with a minuscule budget by international standards, but still managed to resonate with local audiences.

"The key thing for us is to get more right than we get wrong and to learn every time."

With Kenrick also confirming plans to earn money from the platform in the future, there's a lot riding on the state broadcaster's ability to turn the TVNZ OnDemand app icon into something that users are as willing to click on as they do with Netflix.

Strong, well-watched local on-demand players will also help to subdue some of the growing debate over whether public funding should go towards shows hosted on international platforms, such as Netflix or YouTube.

If 3Now and TVNZ OnDemand can consistently pull in strong audiences, then there'd be little merit in giving the big international players more than they already have.

Because God knows, the big tech companies have already taken enough from local media.