Archives for posts with tag: Prospero

We’re delighted to present another guest post from Tabitha Elwes of Prospero, an advisory firm that specialises in the media and sports industries. 

The global strength of UK independent production partially reflects the success of regulatory intervention in the form of the indie quotas and Terms of Trade. However, with the sale of All3 to Discovery and Liberty and the potential merger of Endemol, Shine and Core, is that intervention still fit for purpose? Prospero has undertaken a study to identify trends and implications for the sector.

Over the last five years the turnover of UK independent production has grown by 6% a year to £2.1bn in 20131. A rise in international and multi-channel spend has offset broadly flat UK PSB commissions.

Beneath the headline a more interesting story emerges. At a label level (i.e. before looking at consolidation into “mega-indies”) value is slowly but surely leaching away from smaller companies. In 2009 the top 50 indies accounted for 63% of sector revenue, by 2013 they accounted for 79%, with just 20 labels accounting for 54% of revenue.

Market Share of Major Labels

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It is the mid-tier labels that have seen the biggest growth, suggesting this may be the size that manages best to balance creative independence and scale synergies.

Average Annual Growth 2009-13

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The above analysis, however, understates the degree of change, notably the rise of the “mega-indie”. While stand-alone labels accounted for 67% of revenue in 2009, they now account for only 29%.

Share of Non-Consolidated Labels

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The acquisition of labels by international broadcasters means that (post the Endemol and All3 deals) indies accounting for nearly half the sector revenue will be non- qualifying. Only 44% will be UK-owned, while 47% will be owned by US players.

% Qualifying and UK-Owned

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Five groups will account for over 50% of sector revenue and the top ten will control nearly 70%. Only three of these top ten are controlled by UK companies.

Share of Major Groups

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Closer examination of these top five, shows how much the sector and players have changed since 2009.

Share of Major Groups

Diag 6

In summary, if the All3 and Endemol deals go through, only half of the indie sector will be “qualifying”, less than half will be UK- owned and ten groups will account for nearly 70% of revenues. Given this, are existing indie regulations still relevant and sustainable or has the intervention achieved its purpose? Specifically,

  • Can the BBC and ITV balance indie quotas with in-house production? The BBC in particular could see its qualifying hours decline significantly.
  • With 20% of UK commissioning now from commercial multi-channels with lower quotas, does the regulatory framework need to be rebalanced?
  • Is there risk to long-term investment if nearly 50% of the sector is US-owned?

We’re delighted to present a fascinating and illuminating guest post from our friends at Prospero, a strategic advisory firm, specialising in media and sports.

The currency for measuring return on investment in TV programming is well understood: eyeballs and international sales. By comparison evaluating success and ROI for digital or multiplatform commissions is considerably more difficult.

Digital or multiplatform content (MPC) is now core to broadcasters. At its most exciting it can substantially expand the TV proposition and in rare instances, such as Roar on CBBC, can outgrow its broadcast parent to build a life of its own. MPC can not only deliver new audiences, it can enhance audience engagement and stimulate advocacy. It can also open up new revenue streams.

Roles of MPC

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Evaluating the success of MPC investment is complicated. Value may be direct (on the web itself) or indirect (enhancing the TV share or building talent). Many of the potential sources of value are difficult to quantify. Even apparently direct revenues (such as advertising and sponsorship) are often packaged with TV sales, making it difficult to identify the specific contribution of digital investment.

Source of MPC Value

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A Prospero survey of MPC commissioners and producers in Europe and the US identified the following:

  • Commercial broadcasters are focussing on high reach entertainment and game shows which can be monetised. Experimentation is limited (to budgets of under £20k).
  • In the US this is even more marked with MPC spend limited to marketing budgets; the exception being big brands which adopt a studio-like 360o approach to exploitation;
  • PSBs are leading the way in experimentation and see MPC as an effective tool for delivering public value but are poor at monetisation
  • MPC is most effective when it has clear objectives (eg The Sopranos game based on knowing what happens next was aimed at keeping second screen viewers)
  • Synchronous activity is increasingly important especially in game shows (where it will become the norm) as it really enhances engagement

Current MPC Dynamics

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Broadcasters are focussing on fewer bigger projects with increasingly sophisticated approaches to how and when MPC is used. For instance, the BBC has identified four roles for MPC: to anticipate, to amplify, to extend and to bridge TV content.

BBC Four Purposes of MPC Investment

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Organisational approaches to MPC commissioning vary. Most broadcasters’ retain dedicated commissioners with specific digital skills, remits and relationships. Others, such as the BBC and YLE in Finland, have integrated MPC into genre and channel commissioning. These changes encourage measurement of success across platforms rather than in MPC “silos”.

Whatever the approach, the most successful MPC is rooted in the audience relationship with the programme; rather than in digital activity for its own sake. It requires close alignment with and understanding of the core brand. At its most effective (such as The Only Way is Essex and Million Pound Drop) MPC can help build appointment to view programming.

Over the next few years MPC will play a pivotal role helping broadcasters to build the direct consumer relationships, insight and data required to monetise audiences. Understanding which models are most effective will be essential.

Tabitha Elwes, Partner, Prospero: