Home Analysis What The Future Of Online Commercial Broadcasting Looks Like

What The Future Of Online Commercial Broadcasting Looks Like

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Channel 4 is demonstrating what the future of online commercial ‘broadcasting’ looks like. The UK broadcaster closed its digital shop – the 4oD catch-up service – and instead built a digital shopping mall called All 4, which launched in March 2015. There you can find linear channels, catch-up TV, short-form content and online originals. And the icing on the cake is ‘Walter Presents’, the ambitious sub-brand that pulls together great foreign drama into a curated collection of box-sets for online viewing.

Distributing channels (whether on traditional TV or via online simulcasts) is only one part of the job now. Channel 4 is delivering a service that in some ways rivals a TV Everywhere offering from a Pay TV operator, or an SVOD service like Netflix or a virtual platform operator like Magine TV. There is less variety than you find at these online alternatives, which include other broadcast groups and pay channels. But All 4 has more in common with these kinds of services than with a standalone television channel. It is a broadcaster platform.

With All 4 you see the full potential for broadcasters online – and the huge opportunity that ‘digital’ viewing hands to them. They are no longer constrained by terrestrial or satellite spectrum. They can create and commission more content – if the audiences are there to pay for them. This is underpinned by Channel 4’s greatest achievement of all: the company is now monetizing online viewers as fully as it can monetize a broadcast viewer, thanks to a successful advanced advertising and data strategy.

If you can monetize digital viewers the same way you can monetize analogue viewers, then it no longer matters if you draw people to your online hub and away from your broadcast linear channels. That helps explain why a commercial broadcaster is using its broadcast linear channels to heavily promote overseas drama that it wants you to view online, as Channel 4 does with ‘Walter Presents’.

Two weeks ago at the DTG Summit in London, Keith Underwood, Director of Strategy and Technology at Channel 4, pointed to dramatic growth in digital revenues and declared: “Today we are broadly agnostic about whether someone is watching our content on All 4 or on Channel 4. We are adding digital pounds to analogue pounds.”

This final sentence refers to the famous quote by Jeff Zucker, then of NBC Universal, at the start of the great digital disruption. He warned that media companies could end up “trading analogue dollars for digital pennies.”

Channel 4 should have held a press conference, raised some flags from their London headquarters and followed that with a huge party. What they have achieved deserves more recognition. The company still has its traditional linear channels and as Underwood pointed out: “Traditional broadcasting is stubbornly resilient”. Now the broadcaster can compete for broadcast audiences, for catch-up audiences but also for SVOD and box-set audiences, and for short-form audiences, too.

If commercial broadcasters can ensure that ‘digital’ viewing does not undermine their core advertising-funded business model, they become free to innovate and expand online. It opens the way for the strongest broadcasters – those with the best content and the best commissioning and curation skills – to treat digital as a new market opportunity. Channel 4 is showing just how far this can lead; the company now has significant interest from global distributors to take the ‘Walter Presents’ proposition to new markets.

Underwood pointed out: “Walter Presents is not niche art-house programming. It is box-office content that just happens to be in another language. It has attracted 7 million views since welaunched it in January.”

Underwood used the DTG Summit to outline Channel 4’s growing digital ambition. He highlighted the importance of a traditional broadcast powerbase and the desire to see how the company can exploit convergence. “We are driving innovation in the on-demand space but doing so from a position of incredible strength in the traditional broadcast space.” He added that broadcasting has a big role to play for the foreseeable future. The message was clear enough – this is not about diminishing broadcast but building upon it.

He noted how Channel 4 had viewed online video as an opportunity and had emerged from a period of unprecedented disruption, having evolved its business model. Then he made it clear that channels and catch-up services were no longer enough. So to achieve its digital ambitions, Channel 4 had to replace 4oD with All 4.

“4oD was based on driving catch-up consumption. It gave us a high-value, low-cost audience but placed constraints on our ability to grow. Scale was almost entirely dependent on last night’s TV. We decided that ‘playing catch-up’ was not enough. Our vision for All 4 was to move beyond the perception of being a pure catch-up service and for it to become a destination of choice in its own right.”

Channel 4 wanted All 4 and its content to be listed in the TV magazines and discussed by TV critics, something it has already achieved with some of the ‘Walter Presents’ shows. The broadcaster did not want All 4 to be subservient to channels, as Underwood put it, but standing alongside channels. “We wanted to diversify and broaden our [online] platform and build a platform that can showcase new content and attract new audiences.”

He added: “We are able to experiment with content that does not fit within mainstream channels. We started to produce ‘shorts’ that are under ten minutes in length. Shorts make up one-in-twenty of the views on the platform where they are available. But our ambition for original content stretches way beyond shorts.”

Underwood said All 4 can be used as an incubator service for new content producers. Half the production companies making content for All 4 are completely new partners for Channel 4. “All 4 allows us to take even greater risks and drive diversity. With All 4 we get to work with a whole new sector of the creative economy.” The broadcaster views this diversification as part of its remit as a public service broadcaster.

Only 65% of the consumption on All 4 today comes from catch-up TV viewing, demonstrating that the digital destination is achieving one of its primary goals (4oD was 100% catch-up). Underwood predicts this figure will continue to fall, partly driven by the success of online originals.

Channel 4 was especially well placed to follow this road, given its young audience. “We are the only public service broadcaster in the world with a higher viewing share among youngsters than for the population as a whole,” Underwood claimed. As a result, the company has a lot of tech-savvy and online-friendly viewers.

[As the fourth channel to launch in the UK, Channel 4 was given a government remit from day one to be different, to push boundaries and champion alternative voices. The channel has lots of popular shows for young audiences, like The Inbetweeners – one of the rudest shows ever to hit the living room screen! As the company declares in its own promotional content: “From the very start, Channel 4 was born to take risks.”]

The broadcaster was early to introduce a registration and log-in to its online service (4oD and now All 4). Half the 16-34 year-olds in the UK are registered, with 13 million users registered in total. This is the result of a long-term data strategy. The first party data, which includes demographic details like date of birth, gender and postcode, underpins advanced advertising technologies including targeted advertising and programmatic trading. These in turn have helped to grow digital revenues to the point where online/multiscreen viewing is as valuable to Channel 4 as traditional linear viewing. That allows the broadcaster to champion ‘digital-first’ viewing without hurting its established linear business.

Editor’s Comment

There is a trend towards broadcasters in Europe expanding their multiscreen offers and bringing more content under one digital roof. The best of them have a chance to fulfill a bigger aggregation role. Their growing strength online is more evidence of how traditional media companies have weathered the ‘digital’ storm and partly reinvented themselves.

For advertisers worried about audiences migrating into ad-free zones like Netflix, this trend is good news. All 4, for example, is totally ad-funded. If someone watches ‘Walter Presents’ for an hour instead of Amazon Prime Video that is a win for the advertising industry.

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