Network Insight Institute

Dr. William Atkins

Dr. William Atkins, malcolm long associates

We are looking today at the question of what needs to change in terms of private strategies and public policies. For debating purposes, one short answer could be 'industry culture'. Examination of Australian television industry culture is relevant both in terms of the culture of strategic commercial development for the companies involved, as well as the regulatory approaches.

We have seen in Australia recently, in the pay TV and digital TV policy processes, a legacy of platform-specific, network-specific, content-specific, genre-specific and owner-specific regulatory settings. The government has attempted to mediate outcomes by allocating or fencing off certain industry routes and opportunities. While these have supported powerful incumbency positions for network players, it's time to face change.

At this seminar, there has already been a discussion about National Service Standards for distribution of television. These concepts can no longer really apply, although perhaps there will be minimum standards that will be something like analogue-plus. But television viewers and users will have different levels of service, because they will choose to pay more for some levels and they will experiment more.

So there isn't the same level of universality in the digital media environment. The monolithic analogue structure will be eroded as well, as viewers and users are reached, and communicated with interactively, via different routes. We have seen a taste of that in Australia through the pay TV industry, although head-to-head competition remains elusive.

So the 20th century analogue approach is increasingly clumsy, as the characteristics of the digital media begin to be felt in ever-widening circles. Some key principles, though, remain valid as they have always been. For instance, quality branded content is vital on the industry side. It is the 'good stuff' on TV that people want to watch, and added to this now are interactive components.. And from a regulatory side, public interest and the need for diversity of voice remain. It is the way that these principles are affected and organised in the digital age, that presents the challenge of change.

As this is a TV-centric gathering, we will examine some of the shifts in strategic settings in the television industry globally. The television industry is increasingly about customers, both through pay TV relationships and through interactive relationships. This is giving rise to the vertical model of media ownership and partnering. It's an end-game being pursued vigorously by a number of transnational media corporations such as AOL, Time-Warner, News Corporation (where it can) and Vivendi Universal.

Having had an historic structure of platform-specific media operations, media companies are being driven by the digital condition into niche operations in various consumer categories. Key examples are sport, education (a tremendously important one that is still quite underdeveloped), games such as PlayJam, movies and music. The media companies, using a mixture of platforms and positions on those platforms, will from their mass market windows (newspapers, magazines, radio and free-to-air television) drive viewers and users into other products and other experi-ences in terms of service and content. While their activities on a channel may be shrinking, their overall audience aggregation is growing by adopting a vertical approach.

The benefit is that you have a wide mass market audience to whom you promote your value-added services down the chain of users and viewers, who then undertake transactions. Now, sitting in that very important space, where promotion, distribution and transactions crossover in a single space, are the navigational aspects of free-to-air television, and the subsets of television such as pay TV, pay-per-view and datacasting. Whilst it may be a future scenario in Australia, in more advanced digital markets it is happening now.

In terms of the power of the electronic programme guides (EPGs) and navigation: if one looks at Western Europe, the figures speak for themselves. In Sky Digital 90 per cent of the subscribers use their EPG at least every week. So you have 90 per cent of seven million people looking at one particular screen every week. With Canal Satellite, the French operator, 77 per cent of subscribers use the EPG. Mosaique is a more innovative offering that is like an EPG except that you see a video wall of the channels on your screen. It gets 82 per cent of subscribers using it each week. So with an up-grading of the functionality, the useability, and the viewability of an EPG, one gets a 10 per cent increase in usage. That usage will grow. One of our colleagues, I think it was Duane Varan, men-tioned earlier how the spike in interactive usage in the UK in the last few months arose from better content and better functionality.

Revenue is relatively elusive in the navigational EPG. It largely accrues to the platform operation through spot and interactive advertising. EPGs confer placement, and when there are 200 channels that is going to be a valuable lock on customer relations and activity. And it is acutely powerful in the hands of a platform operator because they are mediating the navigation.

Click here to view William Atkins' powerpoint presentation.

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