Monday, March 30, 2015

The Television Of Politics

So, here we go, here we go, here we go...

The UK airwaves are relatively full of politicians. Milliband, the Labour leader, who looks and sounds dreadful on TV seems to be doing well, whilst the ultra smooth Cameron seems to be running scared from the cameras, and the plethora of minority parties are changing the face of the dual system which has largely ruled British politics for centuries.

Recent elections in Greece, Israel and France have shown a predilection for extremists, even in the US the Republicans seem to have managed a polemicism which is depressing in the face of the demographics they should be courting. We are in a world of alienation and national exceptionism, from Russia, to Egypt, to Israel and the US, we have spittled hatred and a lack of common morality. The media loves this, of course. Consensus makes for very bad television.

And then there are the cliches. If I hear the words 'hard working families' one more time I will throw away my remote. How about 'hard working immigrants' or 'lazy British spongers'?

Everyone hates politics and politicians, yet we put them in place and support them. Perhaps the ballot should carry an 'anything else' option. And perhaps the media should get more real about how to cover the disfynctionality of politics in a way that resonates wih voters and not Oxbridge presenters.

Friday, March 27, 2015

Major Changes Ahead For European Media

There are major changes coming to the European media industry thanks to a trio of new initiatives laid out by the European Commission.

They are going to push for better access to digital goods and services across borders by introducing harmonised consumer and contract rules, with more efficient and affordable parcel delivery, tackling geo-blocking, modernising copyright law and simplifying VAT arrangements. In other words the likes of Amazon and Netflix will be dealing with one country, not twenty eight. But they are likely to have to charge VAT and possibly even pay some corporate tax. For content owners this is bad news since they will be able to sell into one market not twenty eight. It will particularly impact on sports rights, which shows why companies like Sky and Liberty have been investing in building pan European networks.

Secondly, the EC is to tackle issues related to digital networks, reviewing  current telecoms and media rules to encourage investment in infrastructure, work towards a unified European approach to spectrum management and look at how to strengthen trust in online services through more transparency and the swift removal of illegal content. It also called for the quick adoption of new data protection rules. This means that the big networks will become even bigger monopolies and it will make it far more difficult for new entrants to enter the market since they will need to invest in pan European infrastructure.

Finally, the Commission is to promote a European digital economy by promoting interoperability of technologies, tackling issues related to unlocking the potential of big data, and promoting government e-services. The theory is that you can create European tech giants like Google, Facebook, Uber or Air BnB. The reality is that regulation is the barrier to these companies, and the example the UK is showing with driverless cars and drone deliveries is the approach that is needed, not more blanket red tape.

In recent years the EC has done good work in harmonising mobile roaming charges, but surely the first priority in achieving all of the above objectives is ensuring that all citizens have good, reliable broadband access ? The danger with the above is that it encourages massive multinationals and actually makes it much easier for US companies to take over the parts of the European media industry they don't already own.

May we live in interesting times, as the Chinese curse says...

Thursday, March 26, 2015

Fun and games with rights valuation

A well known and successful figure in the sports rights industry identified two approaches to valuing sports rights;

a) Bid the maximum amount you can afford without busting your business
b) Estimate the revenue generating potential of the rights and bid accordingly

In the case of top tier rights b) is very rarely effective. However the perception of value can be misleading.

BT Sport very much appeared to take the approach in a) with the Champions League and blew the armies of bean counters at ITV and SKY clean out of the water. Given the size of BT they could have bid more but will have taken a best guess on the top price coming from the competition.

Does this mean that the rights are worth what BT paid ? (£897 million).

From an accounting perspective there are three main methods of valuing IPR / intangible assetts

1)Cost method (pleasingly circular argument)
2)Income based method
3)Market based method

Clearly on a cost based method BT paid the right price (!), a market based method suggests too much was paid but how about the income based method ?

If we make a massive assumption that each BT quad play (now they have mobile too) customer is worth £30 per annum to either keep or acquire then how many customers need to be impacted by the Champions League to break even ?

The answer on the figures above is 10 million customers per year. Since BT consumer has about 18 million customers now this seems plausible.

If we continue on this flight of fancy the next question is why didn't BT take such an aggressive approach with the Premier League rights ?

Potentially the EPL has been overvalued and the Champions League undervalued - but a good buy by BT perhaps and an error from Sky. Forgetting the piracy issue of course......

Wednesday, March 25, 2015

The limits of exclusivity

"Proprietary lock-in" is a term sometimes used to describe the perceived aspect of a product or service that is unique and drives value.

In some cases that might be brand, patent or expertise and in the content area which drives Pay TV it is partly the perception of exclusivity.

It may be worth taking a quick look at the legal limits of that exclusivity and how technology has impacted.

Copyright is traditionally presented as the protection for content owners in order that original works can be protected and the authors of those works can benefit from their creations. A balance has always been struck however such that knowledge and information is shared freely. For example education has always benefitted from exceptions to copyright and fair dealing allows the sharing of content for news purposes.

Therefore websites and networks such as YouTube, Facebook, Vine etc can distribute clips (with a credit to the author) in a news context without breaking copyright. The rules are by no means crystal clear but this seems a reasonable conclusion as long as the clips are fairly short (perhaps about 1 minute).

The above exception has always been loosely referred to as news access and while carrying restrictions seems to be generally accepted. Broadcasters in the UK have mutually agreed to the use of 1 minute of sports clips for news purposes.

Much more complicated and possibly significant is the concept of linking to content that is freely available to the public already.

A couple of recent European cases namely Svensson and Bestwater seem to suggest that no breach of copyright occurs when there is merely linking to 3rd party content which is already available to the public. The legal argument is that no communication to a "new public" has occurred.

The UK Newzbin cases go the other way really and suggest that where an element of indexing takes place then a breach of copyright may be committed.

Feedback from law enforcement officers in the UK suggests that in general they seek to use other areas of legislation to protect copyright as they are not convinced that if content is linked only that there is breach of copyright.

Overall this seems to suggest that aggregating links already generally available under a subject heading (much as Google and the other search engines do) without direct permission from the copyright holder is not a breach of copyright.

Given the global nature of the internet this presents quite a problem as if the sources or initial "leaks" of content are not addressed effectively then all the subsequent linking is lawful - probably.

Monday, March 23, 2015

Google Pushes TV Advertising

Customised TV ads has been a pipe dream for as long as commercial telly has been around. Companies like Visible World were tackling this opportunity over a decade ago, but by and large attempts have got nowhere fast.

The problem is not the technology, this has long existed, but rather the existing infrastructure. Getting that picture onto your flat screen demands a considerable amount of technology. This is further complicated by the fact that there are four mainstream means of distribution: digital terrestrial, cable, satellite and IP.

On top of this you have TV regions or affiliates with opt in and opt outs.

Now, if it was all IP based the problem wouldn't exist: twelve years ago my former company developed a platform that enabled targeted delivery of TV ads on a one by one basis. But all that sunk investment in MUXing technology and PlayOut systems based on carts means that we are still a long way from this.

So, it's interesting to hear that Google's Doubleclick division, who run the main systems for booking ads on the Internet, is trying to span out into TV in Kansas, where Google has invested heavily in infrastructure.

This is ironic. One of the main reasons targeted advertising doesn't work is Google, which puts a heavy premium on behavioural advertising over targeted advertising.

Let me explain the difference. The former doesn't care on what website the ads appear, it follows the individual and keeps on playing the same ads at them irrespective of the hosting site. The latter targets the user based on the theme of the website. I am no fan of behavioural targeting - I usually see ads for things I've already bought and I'd much rather see ads that were contextual to my interests.

The dilemma this causes for publishers or broadcasters is that this devalues their advertising inventory. Because you deliver an audience of billionaires does not mean that you will be paid more for your ads.

This is the direct opposite of how traditional magazine advertising has worked, for example.

Television advertising is more complex. The old adage that 'I know 50% of my advertising works, I just don't know which 50%' is more true of television than any medium.

Television use to be a great brand builder, but these days you rarely see brand ads, apart from the odd beer or beauty commercials. Adverts have become more direct and often more annoying as a result. 

The danger of fully targeted advertising is that it will become more like the web, where the same ads follow you whereer you go.

Google has built a massive global monopoly based on this, but I really hope they don't succeed in doing that same in TV advertising.

Friday, March 20, 2015

The Death Of Software

I'm sitting writing this overlooking a building site in the South East of England where blocks of new housing are going up to serve those of us who have been pushed out of London by the ridiculous property market there.

Underneath the steel and concrete lies the remnants of one of Kodak's last film processing plants, built just as digital photography was taking hold, when the managers of the veritable company hadn't even dreamt that, in under a decade, everyone would use their phones (yes, their phones!) for taking photographs.

There's a great article in the NY Times today about the company, which in its day offered the kind of media technology that those of us striving to invent the tools for the future of TV are grappling with today.

The Kodak story is a salutary lesson in the need to constantly ask what business you are in and in the need to constantly reinvent yourself. 

In the media industry we have gone from hardware to software to cloud in the space of a generation, with software driving most of the innovations and developments in the industry over the past two decades. I've been in at the deep end of this with Web Channels, Narrowtsep and now TVE Everywhere.

But I hope that I am no fool, and as more and more tools become available that undermine the building blocks that I have spent decades and millions investing in, it's never too early to look at the next disruptor.

Software development is now often unnecessary (thanks to cloud based services), free (thanks to investors in search of the next Google) or cheap to develop using readily accessible developers all over the world.

(Now don't think that I'm talking down my company's products and services: when I predicted that TV would eventually be delivered over the Internet it took nearly twenty years for this to become true.)

But the reality now is that I come across companies the whole time who have great technology, and it's all worthless, despite having cost hundreds of thousands or even millions to develop.

What is important is what you DO with that sunk cost. And that means translating your technology investment into a return based on the building of a marketplace or ecosystem.

Most investors have cottoned onto this and see technology as intrinsically having little value, but content and audiences do.

The result is that it makes a lot more sense to hire in the technology you need in the same way that you hire your office or hotdesk and to focus on the other drivers that will make your business unique.

Of course, the media industry lives side by side with the media facilities industry, so is very used to this model, which is why it is surprising that so many UK media companies try to develop their own homebrewed tech: they wouldn't after all dream of developing their own cameras or vision mixers, any more than they had their own film development facilities in the past.

Thursday, March 19, 2015

Spoilt for choice

The recent announcement by Apple that they plan to "go big" in the delivery of content to the consumer adds them to an impressive list of entrants into the once limited arena of broadcasting.

The scarcity of broadcasters due to very high infrastructure costs led to high concentrations of audience across a limited number of distribution platforms.

Today we see organisations as diverse as Tesco, BT and Amazon in the space rubbing shoulders with the pirates in competition for eyeballs.

While Google do not at first glance look to be a broadcaster the combination of the search capability distribution through YouTube and monetisation via adsense and adwords make them a very powerful player indeed.

Given the crowded nature of the space what are the driving forces behind the decisions to invest capital ?

One possibility, quite remote admittedly, is corporate boredom. Media seems sexy and maybe getting involved in the sector gives the opportunity to "hang out" with some hot actresses or actors and after all - how hard can it be ? So get the bean counters to massage the ROI, hoodwink the board. and happy days. Just make sure you are gone before the budget to actual revenue recon takes place.

More plausible is that in a converged world there are very few differentiators and exclusive content that really engages the audience is one of them. Once the audience is "hooked" other services can be bundled - or so the story goes.

Perhaps the winners will simply be those who can afford to lose money for the longest - a bit like the airline industry. One that basis this is a perfect move for Apple and its $178 billion cash pile.