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Industry Report: Digital

Round Table on «IPTV: A New Distribution Form»


Round Table on «IPTV: A New Distribution Form»

Nicolás Lecocq, Telefónica
Marc Goodchild, BBC Children’s
Carter Pilcher, Shorts International
Stuart Collingwood, Sling Media
Moderator: Dominic Schreiber

Dominic Schreiber: Carter, you started some years ago to deliver short films over IPTV platforms, can you tell us which is the business model behind this strategy?
Carter Pilcher: Short International started originally as a short film distribution company. Two years ago we launched a mobile television in the US with iTunes. We release once a month a live action or an animated short films show. We started releasing in theatres in the UK and US markets all the Academy nominated short films. These short films were then sold on iTunes two weeks following their theatrical distribution. In the last 2 years it has been a big success.
Now the short films are quite popular. They were so popular that a year ago, in February 2007, we launched a linear television channel in France on Numericable, a cable operator. It is a sort of MTV channel for all kinds of audiences. We recruited a creative committee to select the short films. We have a chair for an actor, a chair for a critic, a chair for a director, a chair for a film composer. Roman Polanski, Sophie Marceau, Maurice Jarre (the composer of the music of Lawrence of Arabia) were invited to select the films. We are going on Sky in the UK and on ITPV in France. We have been recently invested as minority stakeholder by European cable operator, Liberty Global. We are on the edge of something.
The real trick on any kind of electronic sell through is the marketing support behind it. If we have big celebrities to select the films it is much easier. The interesting thing is that we can return to the rights holders substantial sums. For example we paid back 600.000 USD to the 2007 short film Oscar winner.

(The article continues below - Commercial information)Cine Iberoamericano Int

Dominic Schreiber: Stuart can you tell us how the Slingbox can help to accelerate the IPTV penetration?
Stuart Collingwood: The Slingbox is a device which plugs in on my TV in my living room in London. It is connected to a broadband network in my house. What I am doing is going over the internet from here in Murcia, using a computer or a mobile, and I can access and control my home setup box. In this case it is a Virgin Cable box. I can do everything from here than I can do from my living room. If I want to watch Cartoon Network, I can do it with the remote control. The remote control on the internet is the same that I have at home, so there is nothing new to learn.
I have a hard disk where I can record my programmes. I can watch my recorded shows from my hotel room when I’m abroad. The Slingbox allows you to send images from your computer to your TV.
One of the areas that is getting an incredible amount of interest is the mobile phone, particularly among young people. We are adapting our software to the mobile. The viewer will be able to watch his television on the mobile. For those who are producing content, a lot of companies are using Slingboxes to monitor and control the programmes directly. We have film studios using Slingboxes to monitor dailies. Our market is very much for a population of people between 22 to 45 year old. But a lot of children are also using Slingboxes (especially teenagers). Teenagers can watch television in their rooms with a parental control.

Dominic Schreiber: How is your business model evolving?
Stuart Collingwood: The boxes are sold between 199 euros to 250 euros. It is a traditional hardware business. The services we offer on the web site allow us to have additional revenues. Presently, the Sling Player software can be installed on an unlimited number of computing devices. However, a Slingbox can only stream content to one device at any given time. The software for a PC or a Mac is free. However, Sling Media charges a one-time fee of $29.99 for each device license of the Sling Player Mobile software.

Dominic Schreiber: How do you manage territorial rights?
Stuart Collingwood: It works on the basis that it is content that you have already subscribed to and you are accessing in a different way. You are consuming in your own home. The IP stream is domestic. Broadcasters are happy because people watch more of their shows, just because they can. The advertisers are also happy with the Slingbox. The viewer is watching advertisement which is relevant to him, even if he is viewing the show from another country. The idea of geographical rights is breaking down. It is going to be a long process, but rights holders will be able to exploit rights on most territories.

Dominic Schreiber: Which is Telefónica’s strategy concerning IPTV?
Nicolás Lecocq: We have two services, Terra TV and Imagenio. Terra TV is a historical portal which offers several TV channels about life style, sports, music and cinema. We have 9 million unique viewers a month. Imagenio is an IPTV service which is competing with Digital Blue in Spain. Imagenio has many interactive services. We have 500.000 unique subscribers with an average 2.8 viewers per subscription. We reached agreements with the major players like Fox and Disney and we also offer classical linear T V channels, subscribing video on demand and classical VOD. We offer films and football matches.
The price varies from 3 to 9 euros per match. We conceived also a downloading instrument, called Pix Box, which can be compared to iTunes, which offers the possibility to download-to-rent or download-to-sell. Terra TV is a free-for-user and ads funded platform. We will offer linear and live channels in the next future. It’s a new business model, very similar to Dailymotion. We have to convince people to come and see our films, instead of illegally download content from Emule.
We have also to convince the advertising market that this is a good solution for their products. The target group is 16-26 years old, which is the same who is downloading illegal content. The sites which are working best are the ones which allow the computer to remember the choices of the visitor. In this way, we can offer consumer profiles to advertisers.
The service is linked to a community platform which has been proven to be the best marketing tool of the site. The best marketing is sharing: make comment, send the link to a friend. The platform offers the possibility to advertise, not only the typical banner, but also spots which are launched in the television.

Dominic Schreiber: Which model do you apply with producers?
Nicolás Lecocq: There are no standard in the advertisement models. We work on a revenue share model: 30% for content owner and 70% for Telefónica. What is interesting in this model is that we know who the consumer is and why he is consuming.

Dominic Schreiber: Marc, when you see all these services and platforms, what do you see as an opportunity for the BBC?
Marc Goodchild: In 2002 we launched two channels Cbeebies and CBBC with two distinct digital brands. With CBeebies, the adults are making the choice of what the children can see.
The CBBC service is dedicated to teenagers from 8 to 12 years old. Children are making their own decision on what they want to see, and this is the real scary area. The parents are not monitoring what children are watching. There are 26 children channels in the UK: when children are making their choice, it is getting very tough. The Sling model is a good one because it allows parents to control what the kids are watching.

Dominic Schreiber: Which are the relationships between the BBC and the independent producers? Will producers be interested to catch directly the consumers and create their own distribution platform?
Marc Goodchild: There is a lot more negotiation going on nowadays. Probably for producers it is better to have their shows on BBC and take advantage of the millions of visitors of our web site.

Dominic Schreiber: What makes iTunes so successful?
Stuart Collingwood: One main factor which contributes to the success of iTunes is its simplicity. It is also the case of YouTube: in three easy steps you can upload your content. You do not need to learn complicated software.
Carter Pilcher: Kids want to create their own content and share it with friends. This is the reason why MySpace or YouTube is so popular. It’s very easy for a 14- year old teen to make a video with its mobile, edit it on its mac, send it to MySpace and share the experience with friends. In terms of entertainment consumption, this phenomenon makes a huge difference between kids and adults.

Dominic Schreiber: Is internet distribution changing the producer’s job? Is the producer moving from the B2B model to a B2C model?
Carter Pilcher: Probably yes. The classical value chain used to leave the producer with very little revenue at the end. The producer moved up in the value chain and this has created an enormous opportunity for rights holders. This new model is not coming at the expenses of the traditional broadcasters. Viewers are consuming more.
Stuart Collingwood: Internet is one of the areas where aggregator is key again. The sites that will succeed in the future will be the ones proposing personalisation and search algorithms, presented to the consumer in a very easy and friendly way.

Cartoon Master Murcia, Spain, April 2008


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