Mike Darcey, Chief Operating Officer, BSkyB, has suggested that the real challenge facing the broadcasting industry isn’t finding the technical ‘nous’ to develop the products and systems such as those showcased at IBC, but rather how to pay for it all.
Participating in a keynote panel on ‘New Routes to Funding Original Content’, Darcey told delegates that “making great TV, showing it off to its highest quality, and delivering it with the highest levels of convenience and flexibility, costs serious money. Another inconvenient fact is that, today, there is more pressure on financial resources and business models than ever before.”
He argued that where pay-TV operators such as Sky see potential to deploy new technology to attract new customers – and better serve those they already have – free TV just sees disruption and unwelcome additional costs. “Understandably, they worry that these new technologies do nothing to expand their revenues – and so they long for a return to the analogue age and the stability and predictability it offered.”
Furthermore, whereas Sky loves giving viewers the chance to watch their favourite shows online or on their mobile devices and the chance to watch those programmes when they want, with innovations such as video on demand or Sky+, Darcey contended that free-to-air broadcasters begrudge such development, fretting over the up-front financial implications, audience fragmentation, and the cannibalistic effect on TV advertising revenues.
“Pay-TV broadcasters and platforms tend to lead the deployment of new technology innovation. The same is increasingly true with investment in original content,” he said . “So again we will find more and more, that pay TV takes the lead here – particularly in those areas where the business case in the free-to-air world looks increasingly challenged.”
He said that by constantly serving up more and more of what people want, more and more of them would be happy to pay for it. “We, in turn, will be a successful and profitable company able to invest more in the future. What allows this approach is the basic durability of the subscription model.”
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“The financial trend in television is set,” he asserted. “The amount of revenue generated by the free-to-air business model is in decline, while it is growing strongly for the pay model. For those reliant solely on advertising and public largesse, the future is uncertain – squeezed between falling revenues and rising costs. This makes the ability of the free model to invest – in technology and content – increasingly tough – and that gap is an opportunity. An opportunity which subscription broadcasters can exploit.”