Sky: Content investment faces challenges

There are challenges ahead in sustaining content investment across the UK broadcast industry, according to Mike Darcey, Chief Operating Officer, BSkyB, who expressed fears that there are no guarantees that there will always be the same level of incentive to invest.

Darcey’s comments at the Future of Broadcasting conference came after the broadcaster revealed plans to increase its investment in UK content to £600 million (€670m) by 2014, an increase of more than 50 per cent.

He outlined three areas of concern, all of which he said were relevant globally, but which he felt were particularly acute in the UK.

First, said Darcey, was the strategic imperative of online – and the question of how to make sure it was positive, not a negative, for business. “As we’ve seen from the US, many content providers rushed towards online aggregators such as Hulu, but some networks are now having second thoughts about the modesty of new revenues, and the cannibalisation of old revenues,” he noted.

He also queried whether it was right for commercial terrestrial broadcasters necessarily to put their content online, as the BBC goes. “I guess that depends on whether they want to make online pay its way – you will have to ask them whether that is really working out,” advised. “For pay-TV broadcasters, online offers an opportunity to add value for subscribers and to extend the subscription model to new platforms and devices.”

He didn’t underestimate the strategic challenge that online poses to all content creators, suggesting it was “a nut that needs to be cracked – with a bit more sobriety and thought and a bit less wide-eyed naivety than has been shown in recent years.”

He also cautioned content owners to beware of distributors who may turn out to be false friends. “For content owners, it’s imperative that new distribution options support re-investment in content creation, rather than simply suck value from one part of the chain to another,” he said.

The third challenge for content providers was the future policy framework under which UK broadcasters operate. “All of us need politicians to recognise the role we play and the value we create – not just for viewers, but for UK plc too,” he declared.

With the UK Government beginning its review of communications policy, he suggested a number of ways in which it could safeguard the commercial incentives for content investment:

– By retaining a strong copyright regime so that content creators can receive a fair reward for their work

– By maintaining a strong resolve to take action against digital theft

– By ensuring that distributors pay a fair price for the privilege of carrying valuable content across their shiny new networks

– By applying a light touch to the regulation of emerging IP-based platforms, and

– By recognising that regulation of existing broadcast platforms may need to be

reviewed as and when we see changes in consumer behaviour and expectations.

Above all, let’s make sure that we don’t take content investment for granted, he warned. “The creation of high-quality content needs to remain economically attractive if we want the audiences of tomorrow to have access to the same rich mix of fresh programming that we enjoy today.”

For Darcey, the common thread that linked many of these challenges was the need for a sensible balance to be struck between promoting investment in infrastructure and investment in content. “If the investment climate remains attractive, we will play our part in delivering great content and in supporting the UK creative industries for many years to come,” he concluded.

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