While there remains a huge demand for great programming and large format entertainment, new business rules for the current consumption era are being worked out, noted James Murdoch, co-COO, 21st Century Fox. He took stage on day five of the Cannes Lions Festival of Creativity 2015, in conversation with Alexandra Suich, media editor, The Economist.
The challenge is to go beyond interruptive ad formats to those that give users a more engaging experience, said the junior Murdoch, prompting questions on whether this could lead to less ads on TV, or lesser yield with a drop in frequency.
He explained, “Certainly, in entertainment formats, we will see less interruptive formats; we have to replace that with new, engaging formats. I really believe a streaming environment for entertainment content is better for customers, media and advertisers.”
Murdoch underlined the importance of media owners to have their own capabilities to innovate and set the pace for the ecosystem, rather than try and follow the change. The new ad models could see more of ‘targeted and very, very engaging advertising’, he noted.
Questioned on the scenario five years hence, and whether pay TV consumption would come down, Murdoch answered in the contrary. In India and some Asian markets, Africa and Latin America, he noted that pay TV consumption was in fact growing. In the US, while traditional TV has flattened, the speaker pointed to the growth in online TV.
On the growth of ad-free consumption, he countered: “I just wouldn’t give up on ad-free networks. I don’t think we do ad-supported platforms as well as we can. New products will change how we engage with brands. People would watch less interruptive advertising, not necessarily less advertising.”
Rising cost of sports right
The case of Star India investing in cricket, alongside building the Indian Soccer League and the Pro-Kabaddi League was cited by the 21st Century Fox co-COO when asked about the rising cost of premium sports leagues. Ceding that the cost of some of the premium properties would continue to go up, he also forewarned that there would a ‘breaking point’.
The demand for things that are ‘fundamentally distinctive is very, very high’ and sports would continue to be a big driver, he said, adding that this did not mean something could command ‘any price’. “We try not to rely on one sport or the other,” he observed.
The speaker also cited the case of the Hotstar app from India, which he revealed to the global audience enjoyed 95 pc adoption from mobile. Powered by original, free programming, it had seen 20 million downloads in a short while from launch.
“It’s a whole new ad platform. We are working with a whole lot of partners to monetise it in a new way,” surmised Murdoch.