‘Advertisers want to do more than 30-second spots and digital allows that’
With digital the power in television has come back to the consumer, BRIAN SULLIVAN tells Vanita Kohli-Khandekar
What is the thinking behind Fox Now (Fox’s own online streaming service launched earlier this year)?
The old model (of delivering television) is not sustainable for the consumer and the news model is not sustainable for the business. The old model had consumers paying $100 or more a month for bundles of TV channels and the new one has them paying $10. The missing $90 is not going to Netflix, Amazon or Hulu or the others. It is going to the consumer. In the old model (dominated by linear TV) a lot of channels and bouquets were created at a point in time for a reason, that doesn’t exist any more. So there are seven Discovery channels or seven MTVs. A $10 ecosystem cannot support the creation of content that consumers are used to. However with TV Everywhere services and streaming services what was happening was all the content that was disaggregated in the US was getting aggregated. Over the last six-seven years we have had to take our 17 networks and boiled them down to five — Fox, Fx, National Geographic, Fox Sports and Fox News. And consumers had to go to all sorts of place to get them — on TV Everywhere services, Google, Amazon, Netflix. It was a nightmare if you wanted to watch a Fox show. Also 90 million people in the US have cable, we can’t give up on them. So we give them an aggregate on Fox Now. It is meant as a positioning for the future. What we are trying to do (with Fox Now) is marry the power of apps with the power of television experience and offer all content from all networks in one place. The service has a full screen video navigation. This is built to service current and library shows. Plus we program a lot of live shows — in sports and news. Fox Now started rolling out in April this year and finishes in December this year. One of the reasons Netflix worked in the US was the price arbitrage — cable was way over $80 a month when Netflix came at $12. What happens in markets (such as India) where there is no arbitrage? The EU has a fair price of $40-60, in the US it went up to $100-120 and had everything thrown in. It is a market where big helpings sell. If you stop at the 7/11 to get a soda and snack, you bought a big soda of six ounces (177 ml). So the first phase of SVoD (subscription video on demand) had people taking streaming services along with cable. Then they starting cutting cable or don’t come to cable. They take fiveseven services and pay more. What kind of pressures does this new ecosystem put on the business for someone like Fox? Five years ago it used to cost $1-2 million to make one episode of programming (drama). Now it is $6-10 million. So many more people are involved. Therefore inflation has shot through the system. Earlier we would do 22 episodes, now we do eight-10 episodes a season. That makes it that much harder for new or standalone guys to succeed. The vast majority of shows created fail. Also the big new players from Silicon Valley want everything to be scientific. Silicon Valley uses only data. But they need to get better at the softer, creative side too.
Why is data such a huge issue with video streaming? There isn’t a single consolidated list of the top video apps or streaming services… Nobody shares data. If they don’t control who is watching what on their site, they are just a pipe.
What we are trying to do (with Fox Now) is marry the power of apps with the power of TV experience and offer all content from all networks in one place. The service has a full screen video navigation
Are ad rates moving in line with the rising cost of content? In traditional industry they are increasing by one-two per cent. In digital the audience increases and so does the CPM (cost per mille or thousand). But you need differentiation in the ad experience and the consumer is not involved in that experience. Advertisers want to do more than 30-second spots and digital allows that.