Winds of change
The world continues to change faster than ever before. It is of course amazing that you can watch content on your iPad, Android smartphone or any other device, but what is even more amazing is how people’s behaviors and ways of consuming content are changing as well. There was a lot of coverage last week about the PIPA and SOPA antipiracy bills in the US, after both were effectively stopped after a large amount of protests not only from businesses, but from consumers and viewers who felt that the language of the bills could pose a threat to an open internet.
The piracy legislation debate is a complicated one, and we as a media company are of course interested in legitimate solutions which benefit the industry as a whole. But our view has always been that the way forward is by offering our customers interesting and attractive legitimate high quality services, like our own Viaplay. One of our core rules at MTG is “see your customer”, and I continue to believe that if you offer what your customers want, they will be happy to pay for it because it provides them with value, saves them time and effort and makes their lives more interesting. There are plenty of examples out there that prove this, and I am convinced that the media industry players who continue to develop their offerings, adapt and embrace change and the many opportunities it brings will continue to thrive in the future as well.
Hans-Holger Albrecht
No need to run for the lifeboats, the pay-TV ship is still sailing
About a week ago, Credit Suisse issued a research report discussing the future of pay-TV, and the views presented by the bank were discussed in a wide range of media in Sweden. I found the Credit Suisse report interesting, and it is always valuable to get a feel for what goes on in the US pay-TV market. However, it is important to remember that the Scandinavian pay-TV markets, in which we have been operating for 20 years now, are arguably the most competitive markets in the world. Broadband penetration in our countries is among the highest anywhere, and the internet speeds delivered in the Nordic countries among the best. All of our TV has been fully digitalized for several years, and DTT, IPTV, satellite and cable distribution is more or less ubiquitously available. On top of that, OTT services have now been present and growing in our markets for several years.
This year we celebrated the twentieth anniversary of our pay-TV operations – the core of our pay-TV activities in the Nordics today. What Credit Suisse discusses in the report is not that these ‘more traditional’ pay-TV services are dead, or “about to fall off a cliff”, but rather that there is a potential shift in consumer behaviour on the horizon, as a new generation of viewers emerges. These viewers are technologically savvy, and time is their most valuable commodity. They expect to be able to access their content no matter where they are, independently of time or device.
The idea that the market share of traditional pay-TV distribution like satellite or cable TV services will be stable, or decline slightly over time is not new and were one to look at satellite and cable TV subscribers in Scandinavia over the last year or so, this trend is clearly observable.
My view, however, continues to be that this presents a huge opportunity for us as a company. Our view has always been that the technology of distribution is always secondary to the content offering and viewer experience. MTG has an old saying, that “content is king, and distribution is the throne it sits on”. TV is about delivering content and experiences to viewers, in the most exciting way possible, and this is what MTG is all about.
And we have come a long way. Twenty years ago, we were just starting out, and analogue TV offered three channels. Today, we have, and continue to be, instrumental in pioneering new viewer experiences. Not only can our viewers access our pay-TV packages on our own satellite platform, or through third party cable and IPTV networks, but they can also go online to access a broad range of films, TV series and premium sports on Viaplay, our OTT platform, which like is Hulu, Netflix and ESPN all in one place.
Our ambition has always been to be where our customer is, and to deliver what our customer wants, when she or he wants it. Keep in mind that the development of these services takes time, and that we still are in the early stages of our work with Viaplay, but are already seeing promising trends, ones which we hope to harness both to grow as a company, and to continue delivering a faster, broader and better TV experience to our customers. And we are getting recognized for it. Just recently, three people from MTG were recognized in the recent Digital TV Europe 50 list, and all three have been deeply involved in our Viaplay offering and our technological development.
In the meantime, we will also continue to improve and refine our satellite pay-TV services. Satellite is still the best way to deliver a broad range of content in data intensive formats like HD and 3D, and there are opportunities here as well, both in terms of programs and service offering, as we increasingly integrate our linear and on-demand services to create seamless user experiences.
Hans-Holger Albrecht
Turbulent times… But we are well positioned
I don’t think that anyone could have avoided the broad range of news regarding the uncertainty of the Euro, the economic problems in Greece, and what is going on in large European countries like Italy and Portugal. The financial markets have also been pressured recently, with our home Stockholm market down 17% this year. At the same time, our home Scandinavian economies have continued to perform well, and we haven’t seen any signs of deterioration in the Scandinavian advertising markets so far. We are of course not immune to what’s going on globally, and we have to remember that things can change quickly, but demand levels for our core Scandinavian free-TV businesses remained strong during the first nine months of the year.
In our Eastern European markets the picture remains somewhat different and the advertising market recovery is lagging, while pricing levels remain low. Despite that, and thanks to our consistent work with the channel schedules and brands in these territories over the last couple of years, we increased our advertising market shares in all but two territories during the first nine months of the year. Separately, our pay-TV operations continue to grow. And, as we have seen during the recent recession, these kinds of businesses tend to be more stable during an economic downturn, even if no service or business can be immune to what is going on in the broader market.
I think it is fair to say that we live in times where change can happen faster than ever before. Whether this change is brought about by news, new technology and services or regulatory changes, we have to be able to adapt quickly or risk falling behind. We have to continuously re-evaluate our business models, our service offerings and how we run our company, and we have to be prepared to take tough decisions if that should prove necessary.
At the same time, I am convinced that we are correctly positioned as a Group. Our mix of mature countries and businesses with new platforms and emerging markets gives us a diversity which almost no other company can demonstrate. And it also allows us to be at the forefront of our industry, providing our customers with innovative solutions like Viaplay, which we will be able to export across our territories as and when the time is right. And, equally important, we have a fighters mentality as a Group, which makes us work smarter, run faster and be even tougher when the times demand it. As the saying goes – when the going gets tough, the tough get going.
Hans-Holger Albrecht
Busy days
As a CEO of a multinational company, I spend quite a lot of my time travelling between our countries. Even if it can be tiring to be on the road, it is both inspiring and rewarding to meet and learn from people who have a deep understanding of local market dynamics. These important face to face meetings also help me to get the helicopter perspective needed to observe the whole playing field and get a feel for the broader trends.
Today, this is more important than ever before. As some of you will have seen, we recently implemented a revised management structure for MTG. We will now coordinate our free-TV and pay-TV businesses on a geographical basis, but will continue to keep the structures which benefit from centralization in our London offices.
As a company operating in over 30 markets, it’s easy to get pulled into the details. All countries are different after all. They all have their individual flavour and quirks. So it’s only by taking a step back that you can begin to see the broader picture and the trends which emerge across the landscape. But all landscapes aren’t geographical. You also need somebody to concentrate on the rapid changes in areas like technology, programming or legislation. All of which the new operating structure will help facilitate even better.
At the same time, the new structure is built on people who have many years of experience with the MTG, as one of our goals has always been to develop and grow talent internally whenever possible. And people who have been with us for many years understand the markets, as well as our business and people, but also our strengths and weaknesses. All in all, it’s been a busy couple of weeks, but this is positive. We continue to push forward, to adapt and change quickly and when necessary. This will allow us to continue to grow, and to keep MTG exciting, fresh and dynamic.
Today I am travelling to Russia. It may still only be a small part of MTG’s overall sales and profits, but it is an area of great potential, and I look forward to meeting the team.
Hans-Holger Albrecht
The MTG United for Peace Cup Finals
Last Saturday I arrived at the LSK sports centre in Lillestrøm, just outside of Oslo in Norway, to watch 120 children from twelve countries and two continents take part in the MTG United for Peace Cup finals. If you want to find out more about the actual event or the charity, I recommend visiting the United for Peace web site. It has information about the event and the charity, pictures, stories from our ambassadors and more. For my part, I got the opportunity to play football together with Norwegian and international football players as well as to meet each of our young participants during the prize ceremony.
But the real highlight of the day for me was the tournament where we create the teams by mixing together children from the different countries. It took place after the individual country finals, and I can honestly say that it was a great pleasure to watch the young players come together, despite the barriers that their different backgrounds and languages would seem to present. It’s a tangible thing – when they arrive they stick to their own teams and people from their own country. But by the end, after having played and fought together and against each other, they mix with one another, they laugh despite not sharing a langue, they hug and applaud each other.
I believe in competition. I believe that it is healthy, and I believe that by competing we learn both about ourselves and the world. And while professional competition can be fierce and brutal, often pitting people against each other, there is also playful competition, full of laughter, energy and fun. And on Saturday, that is what we saw. Make no mistake, when the children play, they play to win. I really believe that our young participants truly want to win every match. They give their best to the team, but at the same time, they also reach out to each other, and the joint task of making that goal and defending your own posts creates a bridge that spans across age, culture, background and gender.
But as much as this is about people and not about football, it is also about football. I know of no other sport that is so much about cooperation, about understanding each other and working together, and which is so simple to do. You don’t need any tools besides a ball, and if you don’t have that, you can use a can, a bag, anything that you can kick between two posts. And that’s why I love playing it – it’s about unity and competition at the same time, anytime, anywhere.
Hans-Holger Albrecht
The leaves grow, but the roots remain
Facebook recently announced the next step in its development. There are plenty of articles and reports on the changes Facebook is making, so I am not going to go into it too much, but the point is that the upcoming transformation will increase Facebook’s integration into the lives of its users. Many of the coming changes have to do with how users relate to and consume media – articles, books, music or video content, and Facebook has also announced that it will partner with both Netflix and Hulu, to stream TV content via the social network itself. The purpose of these changes is both to improve the experience for users, and to create a platform where content is shared and recommended between users, continuously and organically. It is too early to say if this will lead to significantly increased sales of TV and music content or not, but judging by the news flow, plenty of service providers seem keen to use the new features.
But Facebook’s partnership with both Hulu and Netflix also highlights an important point – that content is king, and that it will remain king. For a long time now, my view has been that the leading positions in the online TV environment will be taken by companies who become successful content aggregators. This is a top of mind kind of game: when you have the content, and when you can deliver it in an easily accessible way, users will appreciate and support your service. The move by both Hulu and Netflix therefore seems perfectly reasonable – it’s about coming closer to users and making your content available anytime, anywhere.
As usual, changes like these lead to discussions of whether traditional TV is on the decline or not. Surely all content will now move online, and traditional TV will become obsolete? The future is, as always, unknown. But we should remember that TV unites. While the new media spaces which emerge online are important and exciting, they are not the only spaces, and there are plenty of people who still like to receive their TV through a television set in the living room, recording it on their DVRs, watching programmes together, discussing news, laughing at comedies. And, furthermore, it’s not an exclusivity game. Just because a person uses online services to watch TV doesn’t mean that they will let their TV set gather dust. The ecosystem is not dying, it is expanding. And as long as we keep our eyes on what our customers want, whether it’s traditional TV roots and new media, we will continue to grow and develop.
Hans-Holger Albrecht
We are launching TV8 in Lithuania
On the third of October we will launch a new free-TV channel in Lithuania. It will be called TV8, and will target a predominantly female audience, aged 35 and upwards. The new launch will provide us with a channel which will complement our existing free-TV offering in the country, both in terms of audience and programming. MTG is the leading commercial broadcaster in the Baltic states, and the launch is also the next step in the development of our Baltic free-TV portfolio. It is the first free-TV channel we have introduced in the Baltics during the last three years. This does not mean that we have not been actively developing our Baltic presence, but rather that a majority of our news flow has been devoted to important developments on the pay-TV side.
As you know, the Baltic economies were heavily impacted during the global financial crisis which began in 2008. Both the public and private sectors had to make adjustments, and the broadcasting sector and advertising markets were no exception. If you were to look back at the results from the Baltic businesses during the last two years, the numbers tell the story, and we are still living in the recovery period after this recession.
We did not, however, just keep our heads down and wait for things to get better. We restructured the operations in all three Baltic countries, adjusted our cost bases and streamlined the businesses in every possible way. At the same time, we continued to invest selectively, primarily in programming, in order to maintain our market positions and to keep up the strength and popularity of our brands. All of this flows from our broader philosophy as a Group: to think long term and to always aim to take steps which will position in the best way possible for the future.
It is of course something of a luxury to be able to invest strategically in businesses like these even during periods when markets are tough. Not everybody has been able to do to so during the last couple of years, and we saw the effects of this all over Europe, both in the mature and emerging territories. For our part, these investments were made possible by our unique scope and structure – our blend of free-TV and pay-TV assets in Scandinavia, Eastern Europe and Russia as well as the CIS and African countries. The mix of revenue streams and geographies that MTG’s structure generates, allows us to direct investments throughout the Group in order to build for the future. At the same time, we managed to retain profitability and deliver healthy cash flows throughout the whole recession. And every step we take, whether it’s the launch of a new channel in the Baltics, or prolongation of key sports rights like the Champion’s League, helps to secure continued growth and stability for the future.
Hans-Holger Albrecht
On the evolution of online TV advertising
UK’s Channel 4′s recently announced that its digital media ad sales teams are going to use viewer data taken from registration profiles in order to offer advertisers a demographic breakdown of its VOD audiences. Channel 4 is both going to be using data generated by their own systems as well as data generated by Quantcast, which provides online viewing information to Hulu in the US. The data will be based on Channel 4′s registered online users’ catch-up viewing, who at this stage represent around 30% of the total user base.
The number may seem low at first, but it is worth remembering that the science of measuring online viewing still is in the early stages of development. Companies are still trying out a range of approaches in order to measure and monetise its online viewing. When it comes to our own business, the approach has been somewhat different. Sweden is currently the country which has come the furthest. Traditional viewing is measured by MMS, which is owned jointly by the broadcasters. As catch-up services and online viewing becomes increasingly important, MMS is focused on the development of precise and efficient measurement technologies and methods. Today, MMS measures average online viewing for individual programmes, and presents it in a similar way to traditional TV, but the data is not yet consolidated into global total viewing, nor segmented demographically. Going forward, we should expect to see more specific target audience data, improved information on reach and a high analytical range, as well as the fusion of measured viewing between programmes watched traditionally and offline. We also have our own internal technologies in place, in order to sell advertising for online viewing even more effectively.
All in all, there is still a lot to be done before we can measure online viewing with the same level of precision as the traditionally aired programmes. While we already successfully sell ads for catch-up services, often at higher individual prices than for traditional TV, this is an area which is going to continue to grow both in volumes and complexity. As with most things, it will not happen overnight, but as TV viewing changes, we must change with it in order to offer our advertisers the most precise and effective reach and demographic profiles possible. As evidenced by the news from Channel 4, broadcasters are today trying out a range of approaches and methods, which is a good thing. After all, if one cannot break new ground, it’s good to have an option to copy. With pride, and precision.
Hans-Holger Albrecht
Modern TV through a Modern TV Set
Those of you who have been following us for a while, will remember the gradual evolution of our on-demand pay-TV service. It operates under the Viaplay brand and began its journey as Viasat OnDemand, originally an internet based TV streaming portal. This was over three years ago, and I can gladly say that we have come a long way since then.
One of MTG’s corporate commandments is to “Copy with pride and precision”. This has shaped quite a few aspects of our traditional pay-TV offering, but try as we might, there wasn’t really anyone out there to copy, even if we wanted to, when it came to our efforts online and on demand. I am not implying that we were the first in the world to broadcast TV online, but even if we have looked closely at successful businesses like Hulu or Netflix, there was nobody out there offering the comprehensive free and paid for service that we wanted to build. There was no aggregator of TV content to look at or learn from. So we struck out on our own.
During our development, we went through a number of technologies and business models. As with any evolution, many of the steps taken along the way can seem small. They can be events like the introduction of competitive catch-up services under one roof, as we did in September 2009, or the launch of a subscription based online video on demand service, which we announced in February 2010. Or the agreement with LG Electronics, which we signed in November 2010 and which made the Viasat OnDemand service available on LG’s internet enabled TV sets. Each of those steps took us closer and closer to the Viaplay service that we have today, and represented important milestones along the way.
The current incarnation of Viaplay was launched at the end of February this year, and was the first service in Scandinavia that allowed subscribers to use a single ID and password to access premium sports, hit movies and great TV series independent of how, when and where they wanted to do it.
On the 31st of August, we announced the next step in the evolution of our Viaplay service. We have now signed an agreement with Samsung Electronics Nordic, making Viaplay available on Samsung’s internet enabled TV sets across the Nordic region, at the fingertips of even more people. Our goal remains the same – to deliver entertainment to our customers at any time and on any device. There is still lots to do, but we are proud of each step we take.
Hans-Holger Albrecht
