BT reports a rise in full-year profits, a day after setting out its challenge to BSkyB’s dominance of the UK’s sports pay-TV market.
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BT reports a rise in full-year profits, a day after setting out its challenge to BSkyB’s dominance of the UK’s sports pay-TV market.
More here: BT reports rise in annual profits
The complex relationship between BT and BSkyB rests on gaining new customers for the former, rather than advertising
BT and BSkyB are at loggerheads. BSkyB is refusing to allow BT to advertise its new sports channels on Sky Sports, and BT has complained to Ofcom. Now leaving aside the fact that BT can (and does) advertise on any of BSkyB’s other channels, and that BSkyB and BT have both previously declined advertising from direct competitors – so there is plenty of precedent for BSkyB’s position – this dispute really is a storm in a teacup. What lies behind it, however, really couldn’t be more serious and the key questions are all for BT.
BT has spent upwards of £1bn on sports rights – mainly 38 Premier League games a year, top-flight rugby and WTA tennis. When you throw in production and other costs some analysts’ estimates put the total bill at nearly £450m annually. Sky has between five and six million sports subscribers and recent history with Setanta and latterly ESPN suggests that maybe a million of them will pay extra for the additional content BT will offer. Of course in addition to recruiting Sky customers BT will hope to attract new subscribers too, but even if it doubles that number to two million, simple arithmetic suggests it would have to charge them close to £30 per month just to cover costs.
Since no one seriously expects anyone to pay that much just for BT’s sports channels – which are still no real match and certainly no substitute for Sky’s – some analysts expect BT to lose in excess of £200m a year on them.
The only way of making sense of this from a BT investor’s point of view is to see it not as a loss but as an investment in improving the position of BT’s core business – broadband, and especially high-speed broadband. BT has been losing broadband market share to BSkyB – which from a standing start has gone to second in the market behind BT, the legacy operator, in just eight years.
The sharp end of that battle is the 2.5 million Sky TV customers who currently take their broadband from BT. Were BT to lose them, or even many of them – and on today’s trends that could happen – the loss of revenue (line rentals and broadband fees) could top £700m a year. Which is why BT really wants to package up its sports offering with its broadband services. In other words, for BT this is not about sport or even pay-TV, it is about broadband.
Which brings us back to the current spat over advertising. After Ofcom’s pay-TV review, BSkyB faced being compelled to wholesale its premium sports channels to BT at regulated prices. But with no obligation running the other way – on BT to wholesale to BSkyB – BT would then have been in the enviable position of promoting its YouView platform service as the only place to get all Premier League football. And that was the position last year when BT spent its £730m on football rights. But the Competition Appeals Tribunal decision to upend the Ofcom ruling means there is no obligation on BSkyB to wholesale its channels to BT at all.
BSkyB is now saying it will wholesale its premium sports channels to BT – allowing BT to sell them on to its customers – but only if BT will allow BSkyB the same arrangement with its sports channels. If such an arrangement was agreed, BSkyB would almost certainly drop its objection to BT running adverts on Sky Sports as the rivals would in effect be commercial partners.
But the problem for BT is that if BSkyB retails BT Sports as part of its offer to its customers, the telecoms company gets the money but not the customers – they belong to Sky. And no customer data means no capacity to try to sell them broadband packages. Which defeats the strategic point of spending £1bn on sports rights. Which could lead investors to wonder what else BT might have done with all that cash.
Video streaming firm uploads 13-episode series starring Kevin Spacey to more than 30 million subscribers across world
In just six years Netflix’s video streaming service has revolutionised the way people watch films. On Friday, the firm made a $100m bet it can do the same to the TV industry, launching its House of Cards remake starring Kevin Spacey online.
Netflix, seeking to make the biggest possible splash as it battles for a leading position in the fast developing video on demand (VOD) market, released the entire 13-episode first series of House of Cards – a star-studded, $100m (£64m) remake of the 1990s BBC drama adapted from Michael Dobbs’ political thriller, produced by The Social Network director David Fincher and featuring Spacey in his first TV lead role – to 30 million-plus subscribers in 40 countries simultaneously.
“People want the flexibility of being able to watch what they want, when they want on their choice of device,” says Joris Evers of Netflix. “It is a defining moment in the development of internet TV.”
The move has left US cable TV channels including HBO and AMC – which have all but owned the audience for high-end programming in recent years with shows such as The Sopranos, The Wire, Mad Men and The Walking Dead – wondering if they have been left behind in the race to adapt to the rapidly developing digital viewing tastes of modern audiences. “Our goal is to become HBO faster than HBO can become us,” said Evers.
Netflix started out as a DVD-by-post business in the US in the late 1990s before switching its focus to VOD. More than 80% of its customer base is in US. The firm offers low-cost, no-contract £5.99 a month online video deal.
At such a low price, building a greater volume of international subscribers is critical for Netflix and a year after launching in the UK – where it faces a considerable range of VOD competitors including BSkyB, Amazon’s LoveFilm, Tesco’s Blinkbox and Apple – it is estimated to have attracted 1.4 million subscribers.
But some media industry analysts are unconvinced Netflix has the financial muscle to support its original production binge without raising prices, as users can pay for just one month and watch all the episodes of House of Cards.
“Netflix is showing it is in sync with viewers who are increasingly consuming drama [in a swift period] in DVD box sets or via ‘all you can eat’ on-demand services,” said Anna Stuart, analyst at Screen Digest. “But it is hard to see how this policy would work if Netflix’s original programming slate becomes more prolific.”
The firm has five more original shows in train as part of a reported $300m original content budget over the next three years. These are almost all associated with Hollywood names, remakes or revivals including acclaimed US comedy Arrested Development.
It is a theme also in evidence at Amazon’s VOD service in the US, with a string of original productions announced from the co-stars of The Big Bang Theory, a director from 30 Rock, and Doonesbury cartoon strip creator Garry Trudeau.
The problem for Netflix, and a number of its internet-based rivals, is that most of the rights it has are for older TV and film content. Films can be more than a year old before reaching Netflix’s subscription service, leading to a potentially thin library that will not be attractive enough to attract and keep consumers.
Jeff Henry, a former ITV executive who runs rival digital service FilmFlex, said he believed the original productions work online as an advertising ploy to lure in new subscribers. “It is not surprising that in most cases these original productions come with existing brands, most of these TV projects are about marketing, not about large amounts of viewing,” he said.
BSkyB, arguably Netflix’s fiercest rival in the UK, has been manning the digital barricades to protect its long established and hugely profitable subscription TV business.
Last year Sky launched Now TV, an internet service allowing consumers to gain access to content such as Sky Movies for the first time without a TV subscription, although it has attracted just 25,000 users to date. But this week it announced it would makes its six Sky Sports channels – including live Premier League football action – available via Now TV for a £9.99 “day pass”, which should attract more users.
The satellite broadcaster has also blocked internet rivals such as Netflix from getting almost any of the biggest Hollywood films soon after they are released, tieing down deals with the big six US studios, including Warner Bros and Universal.
BSkyB’s deep pockets also give it impressive programming firepower, spending £2.3bn annually on content, the lion’s share on sport and film rights.
Sky does not reveal what it spends on film and entertainment programming, but by 2014 it is aiming put £600m a year into original UK productions alone.
The average revenue Sky gets from each customer – a key indicator of the success of a subscription-based business – is £568 a year, compared with Netflix’s £5.99 a month.
However, Evers remains unphased by what Netflix views as attempts by TV companies and internet rivals to muscle in. “Netflix pioneered this, others are following our lead,” he said. “We believe we are the best at it and it is our challenge to continue to lead.”
• Service £5.99 a month for streaming
• Subscription exclusives Hunger Games, Drive, The Hobbit
• Original programming Arrested Development, Hemlock Grove, Orange
BSkyB is awarded the broadcast rights for Premier League games that are not shown live, while News International signs a deal to show clips on the internet.
Go here to see the original: Sky wins Premier League rights
Leveson report suggests only minor changes for future mergers such as Murdoch empire’s BSkyB takeover bid
Lord Justice Leveson is highly cautious, even timorous, on what will be the key question for many of his readers, of how overweening power exercised by some media proprietors might be curbed.
He says politicians should be the ones to carry on deciding whether to intervene when they consider media plurality is threatened, rather than autonomous regulators: “It is in the nature of large media organisations that every one of us is exposed to their output on a regular basis and we all have views (and, in some cases, perhaps prejudices) that might affect such a decision if allowed to do so …
“It seems to me that those who argue that a public interest decision is rightly for a democratically-elected decision-maker are right. It is that person who is accountable to parliament and the electorate: that is the nature of our constitutional arrangements.”
All he recommends, for future media mergers, such as the Murdoch empire’s attempt to take total control of BSKyB, is a set of relatively minor improvements to transparency during the process: “The secretary of state should consult relevant parties as to the arguments for and against a referral, and should be required to make public his reasons for reaching a decision one way or the other.”
Leveson concedes that this might not appear to make much change, but he says this would make it easier to challenge poor decisions in court by judicial review: “It will ensure both the highest standards of probity and that a very rigorous test is applied to the reasoning behind the eventual position.”
He says it is “unarguable” that there needs to be more scope for the media regulator Ofcom to look regularly at plurality problems, and not merely when a merger or a takeover is occurring, but adds ” the precise mechanism for doing so is essentially a technical issue on which the inquiry is not best placed to reach a definitive conclusion”.
Anyone who thought Leveson would take a hatchet to the former culture secretary Jeremy Hunt for his behaviour over the Sky bid has had their hopes dashed.
Although he describes the Sky bid events as “an illuminating case study” that would cause a perception of bias, Leveson analyses the manoeuvrings over the ultimately withdrawn bid to take over 100% control of BSKyB in a way that broadly supports the already-presented government version of events.
He does not back the claim that there was a secret deal in which Murdoch’s papers would support the Conservatives in return for explicit commercial concession.
He largely exonerates Hunt from actually biased behaviour, and merely accuses him of a lack of supervision of his special adviser, and an “unwise” failure to spell out how closely he had been communicating with James Murdoch before being given the job of deciding on the Sky bid.
Leveson accepts the official line that Hunt’s junior special adviser, Adam Smith, who subsequently resigned, merely went too far out of inexperience and allowed himself to be ensnared into “inappropriate” email and text correspondence with the lobbyist, Frederic Michel, who was carrying out a “charm offensive” on behalf of News Corp.
This left Smith exchanging messages that appeared to accept “Mr Michel’s use of the language of common cause and conspiracy”.
“When faced with the intimacy, charm, volume and persistence of Mr Michel’s approaches, Mr Smith was put in an extremely difficult position.”
He got “way to close” to the lobbyist, “ultimately, as I have concluded, probably passing on confidential information about Government thinking which should never have been imparted to News Corp.”
But Leveson accepted: “There is much to say by way of mitigation for Mr Smith. He was inexperienced, had been involved in government for a matter of months and had never before been involved in (even if he had ever heard about) a quasi-judicial process. He did not receive what was to be, for him, sufficiently clear or detailed guidance”.
Leveson contents himself with a dry hint that the official version of events may not, in all eyes, be wholly credible: “I must admit to finding it surprising that Mr Smith, who had worked for Mr Hunt so closely and for so long should have kept him unsighted on the way in which he was performing what he saw to be his duty; that, as I understood it, was the role of a special adviser – to be the ‘eyes and ears’ of his principal. Both men, however, make it clear that Mr Hunt was unaware of the nature, and extent of his contact with Mr Michel.”
Pay TV group BSkyB says that more customers took on additional services such as broadband and phonelines in the last quarter, boosting its revenue.
Visit link: BSkyB boosted by customer loyalty
Former Barclays boss finds new heights of unpopularity Stateside
They say that what begins in America eventually arrives in the UK. But, very occasionally, us Brits can send something back too.
The baiting of Bob Diamond – the former Barclays boss who’s made such a heroic stab at becoming the world’s most hated banker – is one cutting-edge innovation of which Albion can be proud. And now our simple invention seems to be catching on in the US.
Protests aimed at ousting Diamond as chairman of the board of trustees at Colby College in Maine – where he’s donated millions – have been expanding, the local Portland Phoenix reports, as the students get more and more irate about Barclays’ role in the Libor-rigging scandal.
Simultaneously, there are those in the UK unable to forget other slight blots on Diamond’s time at the bank too, not least former customer Guardian Care Homes, which will kick off the first claim for damages over alleged mis-selling of interest rate swaps in the high court tomorrow.
Barclays rejects the claim, but the legal battle is being billed as a “landmark case”, likely to have major implications for all UK banks and how they settle future claims, which must be of tremendous solace to Bob. Even if Colby removes the tasteful golden letters adorning the Diamond Building, his place in history looks assured.
Bob Dudley has been the boss of BP for two years – but this week might just be the first time he’s actually looked forward to facing the City.
The oil group is only reporting third-quarter numbers on Tuesday, but after spending the past few years significantly underperforming the market and rival Royal Dutch Shell, the company has finally found something that can be spun as a coup.
Last week, BP extracted itself from its TNK-BP joint venture with a group of Russian oligarchs – a relationship notable for large profits and even bigger spats. So comfortable was Dudley with his TNK-BP pals that he even felt compelled to flee Russia four years ago when running the show.
His new deal will see the British oil group exchange its 50% stake in the business for £7.5bn in cash and an 18.5% stake in the Kremlin-controlled oil giant Rosneft – causing much muttering about frying pans and fires.
Sceptics also mention Dudley’s tendency to announce moves that don’t happen, but with shareholders clinging to hopes of higher dividends and share buybacks, it’s doubtful they’ll be churlish enough to raise these concerns and ruin the American’s day.
Before we knew him as the man who (metaphorically) slept as News International’s phone-hacking crisis escalated, James Murdoch already had a reputation for succumbing to weariness.
As a 15-year-old intern at the Sydney Daily Mirror – the paper where father Rupert learnt the trade – he kindly provided amusing headlines for the rival Sydney Morning Herald by dropping off on a sofa at a press conference.
The task of remaining conscious has occasionally returned to challenge Murdoch fils since, and this week will present another one of those little tests. James will once again be asked to wrestle the narcolepsy and endure one of those tedious shareholder assaults: campaign group FairPensions is urging BSkyB’s shareholders to vote against his re-election at the satellite broadcaster’s annual meeting, where he now sits as a mere non-exec after resigning from the chairmanship. Shareholder group Pirc reckons he should leave his new lesser role too.
All of which must seem particularly tiresome to young James, who has been forced to weather a few of these incursions of late. The result may also appear that way to the scorers. News Corporation, which the Murdoch family controls, owns 39% of BSkyB.
Ofcom rules that BSkyB can retain its broadcasting licences, but criticises former chairman James Murdoch’s handling of the phone-hacking scandal
BSkyB remains a fit and proper owner of broadcast licences, media regulator Ofcom has concluded.
But the regulator is highly critical of the company’s former chairman, James Murdoch, over his handling of the phone-hacking scandal.
The judgment comes as News Corp is reportedly considering handing oversight of Fox Networks to James Murdoch. According to The Financial Times, Murdoch could soon be in charge of the media firm’s flagship Fox network, one of its most lucrative assets, and cable channels such as FX and National Geographic. Fox Networks does not include News Corp’s Fox News Channel.
Ofcom criticised Murdoch, the News Corporation deputy chief operating officer and former Sky and News International chairman, for his “lack of action” over the News of the World phone-hacking affair.
The regulator found that Murdoch’s conduct in relation to News Group Newspapers “repeatedly fell short of the conduct to be expected of as a chief executive and chairman” and that his lack of action in relation to phone hacking was “difficult to comprehend and ill-judged”.
NGN was the News International subsidiary that published the News of the World, which was closed in July 2011 after the most damaging phone-hacking revelations emerged.
Ofcom, which launched its “fit and proper” review of BSkyB’s broadcast licences on 6 July 2011, the day before News International announced it was closing the News of the World, concluded that there was no evidence to suggest that the pay-TV company was involved in phone hacking.
The ruling found: “There is no evidence that Sky was directly or indirectly involved in any of the wrongdoing either admitted or alleged to have taken place at [the News of the World] or the Sun.
“In the circumstances, and notwithstanding our views in relation to James Murdoch’s conduct, we do not consider, having taken into account all the relevant factors, that on the evidence available to date Sky is no longer fit and proper to hold broadcast licences.
“Whilst we consider that James Murdoch’s conduct in various instances fell short of the standard to be expected of the chief executive officer and chairman, we do not find that James Murdoch’s retention as a non-executive director of Sky means that Sky is not fit and proper to hold broadcast licences.
“We recognise that whether it is appropriate for James Murdoch to be a director in light of the events is a matter for the board and shareholders of Sky.”
Sky welcomed the long-awaited ruling as its share price rose slightly in early trading on Thursday, up 5p – nearly 1% – to 733p at 9am.
News Corp said it was pleased with Ofcom’s ruling regarding Sky, but disagreed with the regulator’s conclusions about Murdoch, saying they were “not at all substantiated by evidence”.
BSkyB said in a statement: “Ofcom is right to conclude that Sky is a fit and proper broadcaster. As a company, we are committed to high standards of governance and we take our regulatory obligations extremely seriously. As Ofcom acknowledges, our track record of compliance in broadcasting is good.”
“We are proud of our contribution as a broadcaster, the investments we make to increase choice for UK audiences and the wider benefits we create for the economy.”
News Corp said: “We are pleased that Ofcom recognises BSkyB as a fit and proper holder of a broadcast licence and remain proud of both News Corporation’s and James Murdoch’s distinguished record in facilitating the transformation of Sky into Britain’s leading pay television and home communications provider.
“We disagree, however, with certain of the report’s statements about James Murdoch’s prior actions as an executive and director, which are not at all substantiated by evidence. As Ofcom itself acknowledged, James deserves credit for his role as chief executive, then chairman and now non-executive director, in leading Sky to an outstanding record as a broadcaster, including its excellent compliance record.”
The Ofcom review was aimed at establishing whether the pay-TV broadcaster remained eligible to broadcast in the UK, given that News International owner News Corp is its largest shareholder, with a 39.1% stake.
At the point Ofcom launched its review, on 6 July 2011, News Corp was still bidding to take full control of Sky. It abandoned the bid the following week in the face of mounting public and political outrage over News of the World phone hacking.
After reviewing evidence subsequently submitted to the Commons culture, media and sport select committee and the Leveson inquiry, Ofcom concluded that Murdoch had no knowledge of an alleged News International cover-up of what has been branded the “industrial scale” of phone hacking at the News of the World.
“The evidence available to date does not provide a reasonable basis to find that James Murdoch knew of widespread wrongdoing or criminality at [the News of the World] or that, by allowing litigation to be settled and by allowing NGN and News International executives to make the representations they did, he was complicit in a cover-up,” the regulator said.
However, Ofcom was critical of Murdoch’s reaction to the payout to Professional Footballers Association chief executive Gordon Taylor in 2008.
The regulator said it was clear at that point in 2008 that Murdoch was aware of the existence of new evidence that News of the World phone hacking may have gone beyond one rogue reporter – as News International was claiming at the time – in light of internal documents in relation to the Taylor settlement. But he did not follow up by asking to see the opinion of the senior counsel hired by the company or finding out for himself what the evidence on which the settlement was based was.
“James Murdoch’s exercise of responsibility was less than we would expect to see exhibited by a competent chief executive officer,” the regulator concluded of this episode.
Ofcom also criticised Murdoch for not taking seriously a Guardian article in July 2009 headlined “Murdoch papers paid £1m to gag phone hacking victims”, which first revealed the Taylor settlement and that the practice went beyond a single rogue reporter at the News of the World.
The regulator noted from Murdoch’s own evidence to the culture select committee that he entrusted the handling of the response to the Guardian article to News International subordinates, rather than launch an investigation into whether phone hacking involved the three individuals referred to in internal communications. This information subsequently emerged during a culture select committee inquiry.
“We consider that James Murdoch’s failure to apprise himself of this information, given the information which he accepts he knew, fell short of the exercise of responsibility to be expected of the chief executive officer and the chairman,” Ofcom said.
Murdoch was also criticised for failing to respond meaningfully to a highly critical report by the culture select committee on phone hacking in 2010.
“We consider this lack of action by the chairman of News International in response to a widely publicised highly critical select committee report to be both difficult to comprehend and ill-judged,” Ofcom said.
It also expresses bafflement over Murdoch’s inaction when the phone-hacking scandal began to escalate with the publication of fresh evidence in the New York Times in September 2010 and with the launch of legal action by Sienna Miller, which became public in December 2010.
Ofcom noted that Murdoch gave evidence to the Leveson inquiry earlier this year that he immediately moved to get his house in order with three specific courses of action: an internal investigation; action against any employees involved in wrongdoing; and seeking fresh legal advice to get to the bottom of what was really going on.
“Having reviewed the relevant evidence relating to this period as a whole, we note that only one of these steps was taken in 2010,” Ofcom concluded.
“In light of the events which occurred in 2009 and 2010, in particular the publication of the [culture select committee] report, the growing civil litigation and the New York Times article, we find it difficult to comprehend James Murdoch’s lack of action, given his responsibility as chairman.”
His father Rupert Murdoch, News Corp’s chairman and chief executive, escapes censure by Ofcom. The regulator said it did not find the evidence provided a basis to conclude Rupert Murdoch had acted in a way that was inappropriate in relation to phone hacking, concealment or corruption by employees.
Ofcom also found that BSkyB was not involved. “To date there is no evidence that Sky was directly or indirectly involved in any of the wrongdoing either admitted or alleged to have taken place at the News of the World.”
News Corp said: “We are also pleased that Ofcom determined that the evidence related to phone hacking, concealment and corruption does not provide any basis to conclude that News Corporation and Rupert Murdoch acted in a way that was inappropriate, and that there is similarly no evidence that James Murdoch deliberately engaged in any wrongdoing.”
If the regulator had decided that either James Murdoch – who stood down as chairman of News International in March 2012 and as chairman of BSkyB in April, but remains on the board of the broadcaster as a non-executive director – or the company itself were not fit and proper owners, the regulator could have revoked its licences.
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UK media regulator Ofcom says BSkyB is “fit and proper” to hold a broadcasting licence but criticises ex-chairman James Murdoch for “ill-judged” conduct.
Read the rest here: Sky ‘fit and proper’, rules Ofcom
Television firms debate why viewers want to ‘chat, play and buy’ while watching their favourite shows
There is plenty of creative and commercial potential for second-screen apps and websites designed to be used by TV viewers while watching their favourite shows, but challenges include budgets and rights issues.
These were the main conclusions from the Second Screen Experiences: Your New Companion? debate, held by the Royal Television Society in London, focusing on how people are using smartphones, tablets and laptops while watching TV.
“81% of people sit routinely in front of the TV with their tablet or smartphone,” said Anthony Rose, chief technology officer of Zeebox, by way of introduction.
He outlined the four key drivers for second-screening. First: people want to find something to watch. Second: they want to get information about the show they’re watching. Third: they want to chat to friends. And fourth, they may want to buy things that they see on-screen.
Rose highlighted the latter as increasingly important for the future. “Although it doesn’t sound very sexy, for advertisers that’s the next big thing,” he said. “Advertising I think ultimately will fuel this whole business.”
Zeebox took investment from BSkyB in 2011, which will soon be bearing fruit. “The new Sky+ app will shortly have Zeebox enhancements,” said Rose, who also showed a “sneak preview” of a new version of the standalone Zeebox app, which will launch in the US and UK next week.
It includes a “What’s Hot” page showing shows that are currently trending, or coming up later that day, but a separate tab provides a more traditional-looking channel guide.
A third tab is Activity, providing a stream of what friends and other Zeebox users are watching and “booking” (planning to watch). However, Rose noted that social features are just a part of what Zeebox does, and do not appeal to every user.
“People get very obsessed with social TV,” said Rose. “What we realised very quickly is that many people have very basic aims: ‘help me find something to watch tonight, and never mind the social’… They may not want to login.”
Rose was asked how many people are using Zeebox, and said that its app has been downloaded around 1.5m times in the UK. How many of those users are active, though?
“I don’t have the latest figures, but it’s three or four hundred thousand monthly uniques,” he said.
The debate zeroed in on the creative potential for second-screen apps and content, with Jody Smith, Channel 4′s multiplatform commissioning editor, entertainment and comedy, saying that the broadcaster is keen to go beyond the “play-along” games that have been successful for gameshows like Million Pound Drop.
“From my point of view as a broadcaster, our doors are open to producers to come and pitch second-screen formats,” he said.
“A lot of indies, they probably look at what we’re doing already and pitch the same, so we do get a lot of play-along formats pitched. Which is great, but unless you can move the story along… why do we just want to repeat it?”
Producer Shed Media’s group head of digital Juliette Otterburn-Hall talked about her company’s work on second-screen formats, including The Voice, and a partnership with Zeebox for a new show on Sky Living that includes animated GIFs and polls within Zeebox’s app.
“In general we’re very keen to enhance the multi-platform offerings at Shed… Any idea, before it goes out the door, we’re thinking about what platform it should be on,” she said, while admitting that not every show needs whizzy second-screen content.
“The key thing is deciding what your IP is, what the relevance is creatively, and trying to give a seamless experience wherever your audience are,” she said, before adding that whether the broadcaster is commercial or non-commercial (i.e. the BBC) also has a big impact on Shed’s second-screen strategy.
Neil Mortensen, research and planning director at Thinkbox, talked about his company’s research into second-screen behaviour, and what he claimed was the most exciting discovery: “It all revolves around extensions of their current behaviour,” he said. “We try to frame it for our advertisers simply: chat, play and buy.”
Gareth Capon, emerging products director at BSkyB, was also bullish about the commercial potential for second-screen apps and content, although he stressed that “the creative piece is the most important” element. “If we don’t have any audience, there’s nothing to commercialise.”
Sky worked on its Got To Dance series with Zeebox, helping viewers buy the music that featured in the show on iTunes, and also running a separate second-screen show during the downtime in the main broadcast, where previous winners gave their views on the current contestants.
The business model for broadcasters in second-screen can be as simple as more people watching their shows at the time of the original broadcast because of the social chatter around them. Not just good shows, either. “Second-screen definitely makes bad television watchable,” quipped Rose.
One thorny question: how to pay for all these second-screen apps and content without taking budget away from the core TV show? Smith said that Channel 4 has specific budget for this, which Otterburn-Hall welcomed.
“It’s tricky to know how we pay for this. We’ve got great ideas for this content,” she said. “Production companies are really keen because it is very exciting… but obviously there’s got to be revenue there.”
She cited data ownership and rights as another grey area: who “owns” the second-screen app or site. “We’re used to making programmes that you sell,” she said. “This adds a whole myriad of complexity.”
Capon agreed that rights and funding are the two key challenges facing broadcasters, producers and second-screen technology startups, but warned that it’s too early to start setting models in stone either creatively or commercially.
“We don’t yet know exactly what’s going to work. We have to try out different types of experiences,” he said.
Two looming elephants in the second-screen room are Facebook and Twitter, and the question of if and when they will try to have more of the playing and buying (as well as the chatting) happening within their own smartphone and tablet apps, rather than those of companies like Zeebox.
Twitter in particular seems very keen at the moment to bring its users back to its own apps, shown by the restrictions it’s placing on third-party Twitter clients. Both social networks are forging relationships with broadcasters, too. Won’t they try to muscle the likes of Zeebox out at some stage?
“Facebook are making all the right noises that they want to be a platform. Twitter, on the other hand, perhaps went platform-wide a bit too early in their life, and now it seems to me they’re trying to pull back,” said Rose.
He maintained that Zeebox’s “deep knowledge” of the TV schedule and related content that viewers are looking for will continue to set it apart from the big social networks.
Fear of the 900lb social gorillas disrupting his business? “Of all my problems in a given day, that doesn’t rise to the top ones,” said Rose. Channel 4′s Smith agreed: “That doesn’t feel like it’s their core business model at the moment.”
Which, of course, doesn’t rule out it becoming so in the future. The point which came across throughout the debate is that it’s still too early for second-screen experiences to draw many hard conclusions about how they may evolve.
Or as Rose put it: “Today what we’re seeing is just beginning to scratch the surface of what’s possible.”