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Magnus Brooke Director of Policy and Regulatory Affairs IIC Brussels Telecommunications & Media Conference 12 th March 2014.

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Presentation on theme: "Magnus Brooke Director of Policy and Regulatory Affairs IIC Brussels Telecommunications & Media Conference 12 th March 2014."— Presentation transcript:

1 Magnus Brooke Director of Policy and Regulatory Affairs IIC Brussels Telecommunications & Media Conference 12 th March 2014

2  ITV’s changing business  Will EU citizens be able to find and access EU content in future?  Short-term:  Risk that historic channel / platform balance becomes unsustainable and EU content disappears from view  Medium-term:  Risk that regulatory framework around commercial communications undermines delivery of key EU policy objectives CONTENTS 1

3 ITV plc is the UKs largest commercial broadcaster and largest commercial producer  ITV plc is one of the UK’s largest creative businesses. We are a FTSE 100 company with a broad international shareholder base and offices around the world. Now one of the top 5 independent producers in the US with production businesses across the EU.  ITV is by far the largest commercial TV channel in the UK by audience share and share of TV advertising revenues  ITV invests well over €1 billion in original EU programmes per annum. Nearly all programmes on ITV’s main channel are premieres  Main competitor to the BBC in all key programme genres  Spend of €120m pa on news (national, international and regional)  Extensive online presence with VOD content across 19 internet-connected platforms 2

4 Four years into ITV’s transformation plan, we are growing and investing with consistently strong performance since %+42% Group External RevenuesNon-NAR Revenues Adjusted profit before tax +438% * * Restated following adoption of IAS19 +£776m Net Cash/(Debt) * * Including distributions to shareholders, cash has increased by around £1.1 billion between 2009 to

5 What this pays for… Regional, national & international news Very high levels of EU origination Access services Economic development across UK Stimulating independent sector 4

6 Three key themes: Parasitic exploitation of content Copyright exceptions, old and new National regulation of channel/platform relationship – e.g. override of broadcaster copyright to benefit platforms Risk of EU content ‘disappearing’ from prominent positions on content access interfaces But emerging risk that historic channel/platform balance becomes unsustainable and EU content disappears from view Short term 5

7 Audiences increasingly want content on their terms: wherever and whenever it suits them, but still overwhelmingly in the living room Timeshifting as a % of total viewing Hours of viewing per day Timeshifting as a % of viewing Short term 6

8 Digital technology means we can adopt a multi-window multi-platform approach, extending the lifecycle of ITV’s content  Monthly video views on ITV Player have risen from 10m in 2009 to over 577m in 2013: growth driven by mobile and tablets  The ITV Player app has been downloaded 11.7m times on to smartphones and tablets  We are trialing pay opportunities e.g. ITV Essentials (portable access to subscribers in 12 EU countries), and ITV Premium offers ad-free subscription access Short term 7

9 TV VODHD PVR Although VOD is widely available, consumers overwhelmingly prefer to time- shift broadcast content via their PVR Around 90-95% of all TV time-shifted viewing is via PVR (TV VOD measured by BARB is about 5% of TV timeshifting) Short term 8

10 PVR capacity extends far beyond what could ever have been possible with VCRs and physical VHS tapes Sky 2TB Sky+ HD box 1180 Hours of SD TV This PVR has the equivalent capacity of VHS tapes that would stack to the height of… Short term 9

11 Sky 2TB Sky+ HD box 1180 Hours of SD TV In other words… Capable of recording the entire ITV peak-time schedule for 11 months of the year! Represents >90% of ITV’s commissioning spend! Short term 10

12 Our research shows that the most popular and high-value genres are significantly more timeshifted than average Timeshifting by genre, ITV and Total TV, 2012 Average – all TV Drama is our most timeshifted genre, but also our most expensive The ‘shelf life’ of the content is relatively long compared with sport or big entertainment events The immediacy of sport, i.e. watching partly to learn the result, means that timeshifting accounts for a relatively low proportion of viewing Genres which drive a large proportion of our viewing are most timeshifted Short term 11

13 For instance, Downton Abbey is extensively time-shifted by PVR especially in pay-TV homes Source: BARB \ AdvantEdge. Individuals Series Average 2013 Short term 12

14 Parasitic exploitation of content (often within the law) on a commercial scale without a return to the content investor is a growing problem European Commission needs to be vigilant in ensuring that MSs properly implement EU IP obligations – cf override of UK broadcaster copyright for “cable” retransmission Override used by TVCatchUp (online) and by Virgin (cable) to retransmit the most popular UK television channels without requiring consent. 4 year litigation around TVCatchUp still not complete Weakening the IP framework (e.g. broadening exceptions) will make current problems worse by allowing intermediaries to extract more value from consumers without making any return to the European producers and creative industries Broadcasters need additional signal protection to ensure pay-TV platforms and other third parties cannot exploit content without payment to the rights holders and therefore ultimately to the underlying talent Short term 13

15 Will we still be able to easily find EU content in future? Paid-for prominence can be found in numerous emerging areas of the user experience, often far away from the old world of linear channel EPGs – TV homescreen – TV manufacturers offer global OTT SVOD providers key positions on their Smart TV hubs – Recommendations – Global manufacturer or Operating System providers recommend content based on commercial arrangements, paid-for prominence or previous viewer behaviour. One Smart TV manufacturer currently provides its own alternative TV guide to highlight linear TV shows, in breach (we believe) of even existing UK EPG rules – Search results – Search provides one of the easiest methods of finding content: partners can pay for their results to surfaced ahead of competitors Short term 14

16 Maintaining easy access to EU content and sustaining the virtuous circle of content reinvestment requires a modernisation of prominence regulation “We need to look again at how the prominence of PSBs can be maintained as viewers move away from standard definition formats, viewing at the time of broadcast and traditional numerical channel lists, to a world of high-definition, catch up TV with more dynamic and tailored menus.” UK Government Communications Review, July 2013 Prominence regulation must move beyond the traditional TV guide and existing TV platforms to capture the new ways in which people “find” and access TV content from “connected platforms” Regulation should be considered where platforms are curating TV content offers from a number of providers to consumers. Most major platforms are likely to operate within the EU. Nationally based solutions to prominence may be a useful starting point but the global nature of TV platform and device design and development may necessitate minimum standards/guidance across the EU Short term 15

17 Clearly there are major changes afoot potentially affecting EU audiovisual markets Emergence of global digital display advertising platforms (YouTube, Facebook) Global clients (FMCG, car manufacturers, soft drinks, etc) Global media buyers (WPP, Publicis Omnicom) Global TV and device manufacturing The current regulatory regime for media assumes a stable display advertising market which will inevitably continue to fund TV-like EU audiovisual content We need to start market scenario analysis in thinking about the regulation of audiovisual communication whilst the sun is shining If we are too slow to prepare to change, there is a medium-term risk to future investment in EU content including news Might we need to think radically about AVMS to sustain EU content investment in the medium term? Medium term 16

18 TV advertising is clearly being targeted by digital online display advertising platforms “As broadcast and internet delivered content converge, the distinctions between content and advertising will become harder to maintain and the existing frameworks will struggle to accommodate the prolific innovation in advertising formats, the highly fragmented nature of their implementation, and the scale of their cumulative impact on consumers” Industry Perspectives on the Future of Commercial Communications on TV and TV-like services, independent report commissioned by Ofcom Medium term 17

19 Digital media platforms let brands innovate and reach consumers in a compelling way, bypassing traditional regulated routes to mass audiences Medium term 18

20 There are numerous examples of where the pressure points will come Editorial rules are likely to continue to command widespread support but issues in the medium term around: Highly restrictive regime around sponsorship and product placement Undue prominence rules Minutage restrictions which result in absurd limits on self-promotion by EU audiovisual operators Pay-TV operators have €billions for marketing (BSkyB €1bn spend p.a.) Google’s entire environment is about cross-selling/promotion ITV’s on air promotion of its own VOD service or its connected TV joint venture YouView is severely constrained by UK and EU rules Medium term 19

21 If advertisers have more and more unregulated display advertising options, will heavy regulation of TV be sustainable? How much do we value the societal benefits that TV advertising funds such as European content, news, etc? How radical are we prepared to be to preserve these things if we can? The Commission needs to start thinking radically now about the future framework for TV regulation even if change is still years away TV advertising will remain strong until beyond 2020, but technology and consumer driven change is certain and marketers are already exploiting a myriad of new ways of engaging consumers with their brands. So while there is no need for urgent wholesale change, there are some tactical adjustments required, and a pressing need for longer term thinking. Industry Perspectives on the Future of Commercial Communications on TV and TV-like services, independent report commissioned by Ofcom, 2013 Medium term 20


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