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Online video ads account for just 1% of TV revenues

The latest predictions from analysts at Deloitte about the global TV market will make comforting reading for traditional broadcasters.

In its predictions for the media sector in 2015, Deloitte’s TMT practice plays down the impact of competition from short form video on YouTube, as well as from online VOD services like Netflix and Amazon Prime.

The report says ad revenues from short online videos will be worth over £3bn globally in 2015 - a spectacular achievement for a format that barely existed a decade ago.

However, Deloitte points out that short form video from vloggers like Zoella (pictured above) will represent only a tiny fraction of the revenues and viewing generated by traditional, long form broadcasters.

It says that overall revenues from online video will account for about 1% of the over £260bn that traditional broadcasters generate from advertising and subscription revenues. The professional services firm predicts that broadcasters will take £134bn from long-form advertising on television. Pay-TV subscriptions should approach £128bn.

In terms of viewing, the report says that online short-form video should generate ten billion hours of viewing a month.

However, Deloitte estimates that in an average month over 360 billion hours of long-form video will be watched, principally on television sets, and mostly live.

Meanwhile, Deloitte also predicts that online subscription video on demand (SVOD) services like Netflix and Amazon Prime Instant Video will generate about £5bn globally this year - around 3% of the £168bn pay-TV market.

“SVOD should not be considered solely as a competitor to pay-TV but more as a complementary service and replacement for DVD box sets.  In addition, SVOD players will struggle to match TV broadcasters’ investment in brand new high-end content,” said the report.

Posted 13 January 2015 by Tim Dams

Taking virtual reality to the next level

2015 trends: After years of false starts, virtual reality looks set for a bigger stage.

Asked recently about the technology he is most excited about, 21st Century Fox boss James Murdoch didn’t even hesitate before replying: virtual reality.

There have been years of false starts for the technology, which has been held back for several reasons – chief among them that it made users feel nauseous and that the environments weren’t real enough. But these problems are slowly being overcome as tech companies invest huge sums in virtual reality.

The nascent technology was thrust into the limelight last year when VR pioneer Oculus Rift was acquired by Facebook for an eye-watering $2bn. Facebook has been investing heavily in the Rift headset, which is expected to start selling to consumers this year.

Sony is seen as a key rival to Oculus Rift in the VR arena. Last year it unveiled its Project Morpheus prototype headset, but has not specified a price or release date for the device. There’s also great excitement around new VR outfit Magic Leap, which has secured $542m in funding from investors including Google.

Oculus Rift, Project Morpheus and Magic Leap’s technology are linked to computers or gaming platforms to create powerful VR experiences.

Other players have gone down the cheaper mobile route – which allows content to be played via VR apps on phones which can be slotted into cheap, specially designed headsets.

Google has launched Google Cardboard. Users download Google’s Cardboard VR app onto their phone, build their own headset with cardboard, and start watching.   Samsung has produced a mobile phone based headset, Gear VR, which went on sale to developers last month for $199. And lens manufacturer Carl Zeiss is already selling the VR One, a smartphone-enabled mobile headset that is selling to developers for $99.

As well as gaming, VR presents  plenty of possibilities for film and TV. This month’s Sundance Film Festival will be awash with VR installations, showcasing the technology to filmmakers. Sky plans to conduct VR trials on up to 15 shows, following investment in VR start up Jaunt.

British companies Atlantic Productions and Framestore have already pushed into the VR space. Indie producer Atlantic is pioneering VR content with a range of manufacturers and developers. They include two David Attenborough narrated projects, about the ancient seas (pictured above) and the world of insects, as well as projects about the ancient pyramids and life in the oceans. “2015 is going to be a very exciting year. A lot of projects are going to come out and I think people are going to be very excited by them,” says Atlantic CEO Anthony Geffen.

Framestore, meanwhile, launched a VR studio last year. It has produced several VR projects including one for Paramount Pictures based on the film Interstellar.and a VR ad for Volvo.

Relatively affordable devices that can deliver immersive experiences to consumers means that VR will be far more accessible than 3D. “Within two years the tech will be so far advanced and costs so low that millions of people will be able to have these experiences,” says Phil Harper, head of digital at Atlantic Productions.

Posted 12 January 2015 by Tim Dams

Indies fight to keep terms of trade

2015 trends: Moves to overhaul the terms of trade will be hard fought by producers this year

The independent production sector goes into 2015 off the back of a year of huge structural change – and will be dealing with the implications for the next 12 months.

Deal making was unprecedented in 2014 in terms of size and scale, led by the £550m takeover of All3Media by Discovery and Liberty Global, and the £2bn merger of Shine, Endemol and Core Media under the ownership of 21st Century Fox and Apollo Global Management.

Consolidation, which has gathered pace over the past three years, has fundamentally altered the character of the production sector.

Ofcom reported last month that “seven of the biggest 12 UK independent production companies are vertically integrated with broadcaster owning companies that have significant global scale.”

Ofcom welcomes the fact that the production sector has become a fast growing and profitable market that is attractive to investors. The sector has grown 3.4% on average each year since 2009, generating £2.8bn in revenue – largely as a result of increasing overseas revenue. (Ofcom notes, however, that margins are not particularly high, and have fallen in recent years as broadcaster spend has dipped.)

But, given such significant structural change in the sector, Ofcom has said it will review the terms of trade.  It says it will look at whether the relationship needs ‘rebalancing’ between production companies and broadcasters which offer terms of trade.

This follows calls by Channel 4 chief executive David Abraham and BBC director of television Danny Cohen to overhaul the terms of trade.  The BBC, for example, is working on plans to introduce distinct terms of trade models for different indies, as part of wider proposals to scrap commissioning quotas and open up inhouse programming to indies.

However, it’s questionable whether a fundamental change to the terms of trade is needed.

Several of the major superindies, such as All3Media and Endemol, will gradually lose their qualifying status because they have been acquired by broadcaster-owning companies. The only remaining superindies whose commissions will qualify as indie productions are Tinopolis, Zodiak, Fremantle and IMG Sports Media.

Moreover, there appears to be little evidence that consolidation has led to fewer opportunities for smaller producers to win commissions. Indeed, Televisual recently reported that there had been a slew of new indie launches.
Despite the trend of consolidation and increasing concentration in the market, smaller independent producers have actually increased market share, according to Ofcom.

The terms of trade have been a key contributing factor to the success of the indie sector – and moves to change them will be hard fought by producers in 2015.

Posted 09 January 2015 by Tim Dams

Where are they now? Andy Barmer - from Soho to MA graduate

What do people do after they have spent most of their career working in post production in Soho?

It's a question that's often asked at the start of each new year, when people reassess their careers and think about exploring new opportunities.

One person who has already done so is Andy Barmer, the former managing director of The Mill and Absolute Post.

In 2013, Barmer went back to university to study an MA in Photojournalism and Documentary Photography at LCC (London College of Communication).

After many years of managing creatives, Barmer says he felt it was high time he gave it a go himself and the LCC course gave him the chance to develop his hobby of photography and explore his interest in the documentary form.

Barmer’s graduation piece, Abide With Me, is a 14 minute short he shot, edited, graded and produced himself. It looks at the lives of three generations of one family, and how the past has shaped their present.

Abide With Me from Andy Barmer on Vimeo.

Barmer maintains involvement in Absolute Post as a part-time non-exec director and having recently graduated will combine this with developing documentary film and photography projects.

Other work from Barmer’s colleagues on LCC’s MAPJD course can be seen here: An exhibition of their work can be seen at the college from 9 to 15 January.

Posted 08 January 2015 by Tim Dams

TV battles to keep young viewers

2015 trends: Broadcasters will spend much of 2015 battling for the hearts and minds of young viewers.

Young people are watching less traditional television in favour of online pursuits such as Facebook, YouTube or watching on demand services like Netflix and BBC iPlayer, said Ofcom last month.

The regulator thinks the generation gap between older and younger viewers is getting wider in terms of TV viewing. It found that 16-24 year olds spent an average of 148 minutes a day watching TV in 2013, down from 169 minutes in 2010 – compared to an average of 232 minutes for all viewers.

Given these findings, the relaunch of BBC3 as an online only channel later this year will be watched very closely by all broadcasters and producers.

BBC3 is being axed as a TV channel principally to save money, but also to reinvent the service for a young audience that is increasingly online.

The decision to focus the channel on two “editorial pillars” – Make Me Laugh and Make Me Think – attracted some derision after initial details of plans for BBC3 were announced. However, it’s clear the corporation sees the relaunch of BBC3 as a key experiment in how it can keep in touch with the licence fee payers of the future.

Director general Tony Hall says he wants BBC3 to be a pathfinder for the whole BBC, searching out new ways to engage and entertain young audiences on their terms.  “What we learn from this process, and we’ll learn a lot, we’ll use to set a new strategic direction for the BBC and reinvent public service for the digital world.”

Director of television Danny Cohen insists that linear television is going to remain strong for a long time yet – and that channels and scheduling are still very important for audiences.

“But I am struck every single day by the pace of digital change going on around us, and what that means for both the BBC and our overall media experience.”

In particular, he says the media behaviour of young people is changing fast “and we need to be part of it.”

“For me as a broadcaster that means we need to succeed for perhaps the next five years in a hybrid world – it is going to be a world of linear and digital, broadcast and narrowcast, global and personal – we are going to have to be good at all of them.”

The BBC – and by implication other broadcasters – have two options, he says. “Do we sit back as a legacy company and watch the generational change bite away at our impact or do we take a place at the forefront of that change? We need to learn, fail, learn again, innovate and succeed. “

The BBC charter renewal process will begin in earnest after May’s election. To secure the licence fee, the corporation will have to prove that it can appeal to as broad an audience as possible in the face of unprecedented digital upheaval. In this context, the success or failure of the BBC3 relaunch could have far reaching implications.

Posted 08 January 2015 by Tim Dams

Preparing for a 4K future

2015 trends: Will 4K Ultra HD go mainstream in 2015? In a word, no. But Televisual has included it in the top themes of the year because 4K is the future of television – and 2015 will see important progress along the road to widespread 4K production and broadcasting.

A recent poll conducted as part of Televisual’s Production Technology Survey estimated it would take five to six years before 4K goes fully mainstream. Unlike the industry’s fleeting obsession with 3D, respondents were sure that 4K would take off.

For now, 4K television set sales are slow but are starting to pick up as prices fall. A 40” Panasonic Viera Ultra HD set is currently available for £699, for example. All the big brands, including Samsung, Panasonic, LG and Sony, now offer large ranges of 4K TVs.

Cost of the sets aside, the key reason that 4K Ultra HD sets haven’t been flying off the shelves is that there is currently little to watch in 4K.

Very few broadcasters around the world are have launched 4K channels. In the UK, the key players are still testing the technology. Sky, for example, recently shot the Ryder Cup in 4K as part of an ongoing trial. The BBC, meanwhile, has experimented with 4K broadcasts during big sporting events, including Wimbledon, the Olympics and the World Cup.

For now, most 4K content is streamed via internet by outfits such as Amazon Prime Instant Video and Netflix.

Netflix has announced all its originated content, including House of Cards, will be shot, posted and streamed in 4K. It’s also offering all 62 episodes of Breaking Bad in 4K, which it has remastered from the original film negatives.

Amazon is serving up shows such as Transparent in 4K.

However, consumers need a fast broadband services of around 20Mbps to receive 4K via the internet.

4K shooting is starting to take off as 4K cameras don’t always command a huge investment over HD cameras. Blackmagic, AJA, Sony and Panasonic all offer very affordable 4K models.

Televisual’s Production Technology survey found that a remarkable 23% of respondents had shot in 4K over the past year, on cameras such as the Red Epic or Sony F55. 33% planned to shoot in the format in 2015.

Many said they are filming in 4K to future-proof their productions or because they want to achieve the best quality visuals possible for a high-end doc or commercial.

Fewer have mastered in 4K though, choosing to downconvert to HD for post production. The amount of data captured when shooting in 4K is immense and requires a great deal more and a great deal faster storage, along with much more time-consuming back-ups and much more powerful (and therefore more expensive) equipment to playback and monitor 4K content. This all has significant cost implications.

Still, the industry believes that 4K workflows will become increasingly common as prices start to fall and the technology improves over time. Just as HD workflows slowly but surely replaced SD production methods, so too 4K will steadily move centre stage in production.

Posted 23 December 2014 by Tim Dams

YouTube starts to come of age

2015 trends: It’s nearly ten years since the first YouTube video, Me at the Zoo, was first uploaded by the site’s co-founder Jawed Karim.

Since then YouTube has become the third most popular website in the world, behind Google and Facebook – where more than six billion hours of video are watched every month.

Despite it’s huge popularity, it’s fair to say that YouTube remains something of an enigma for the TV industry.

That’s essentially because YouTube and TV are platforms for very different kinds of content: YouTube works best for individuals who produce short clips with low production costs, while TV favours more expensive long form programming and is a much more collaborative medium.

YouTube also remains a difficult place for TV producers to make money. It’s estimated that one million hits – a substantial number for a YouTube video – will generate less than £1,000 in ad revenue. And that’s before YouTube takes its 45% cut.

Yet producers recognise that YouTube is a brilliant place to test out new ideas and to showcase content to a global audience.

Barcroft Media CEO Sam Barcroft produces content for YouTube, including one piece – The Only Man In The World Who Can Swim With A Polar Bear: Grizzly Man (pictured) – which has been viewed over 27m times. But his company also makes traditional factual TV. He said: “You can use YouTube as part of your business mix. Am I making a great deal of money out of it? Not really. Does it make people interested in my business? Yes.”

Barcroft said that traditional TV still provides the majority of his company’s income, but that YouTube was a great place to experiment with ideas for TV. 

A YouTube presence is also a useful calling card, which allows broadcasters, brands and other potential clients to see your work.

360 Productions head of development Emma Parkins, who works on science YouTube channel Headsqueeze, said her indie had won business with Microsoft as a result of its YouTube work. “It’s a shop window – people come to us as a result.”

TV execs also recognise that YouTube is where the next generation of talent is likely to come from. YouTubers like beauty vlogger Zoella make content that is watched by millions of young viewers.

Little wonder that major TV players are getting into the act, with many investing in multi-channel networks (MCNs) – companies that work with multiple YouTube channels to help monetise their content and talent.

Disney, for example, bought Maker Studios, home of YouTube sensation PewDiePie, while DreamWorks has  acquired Awesomeness TV, Warner Bros invested in MCN Machinima and Shine Group runs ChannelFlip. Fremantle Media recently invested in Divimove, the largest European MCN, while Rightster acquired Base 79. Expect these deals to start paying dividends in 2015.

Posted 23 December 2014 by Tim Dams

The rise of the over the top TV players

2015 trends: When Netflix confirmed its first UK production, The Crown, last month it underlined the impact of the OTT service on the broadcasting industry here.

The epic, big-budget royal drama teams up screenwriter Peter Morgan, producer Andy Harries and director Stephen Daldry. Just like House of Cards, the UK commission proves Netflix is now a serious player with serious budgets in the UK industry.

Fellow subscription-based OTT player Amazon Prime Instant Video is also ramping up its activity in the UK. Its first UK commission, the third series of Ripper Street, launched last month. Amazon has also greenlit Left Bank Pictures to remake Sky1 drama Mad Dogs for the US market, and is piloting an adaptation of Philip K Dick novel The Man in the High Castle from UK indie Big Light Productions.

Of course, the UK commissioning levels Netflix and Amazon have so far been limited, and are confined to very few UK production companies.

But the OTT players are also buying up UK content for distribution. Netflix, for example, picked up Red Production’s Happy Valley for the US market. For producers who have been mourning the decline in valuable DVD income for years, subscription based OTT services are becoming a useful source of income.

Chief creative officer Ted Sarandos recently said Netflix aimed to offer at least 20% of local content in each market it launched.

The relationship between OTT players and content creators will only grow in the years to come, as they seek to take advantage of their ability to distribute direct to millions of homes and devices via the internet.

It’s part of a slow but undeniable shift in power away from the traditional TV players to tech companies which now have their own means of distribution through high speed broadband.

Other Silicon Valley platforms, perhaps Google/YouTube, Facebook and Twitter, could also start to create long-form content. After all, if a former DVD platform like Netflix can create content, so can anyone.

Traditional pay-TV broadcasters like HBO and Sky have recognised the threat, launching their own subscription-based OTT services HBO Go and Now TV. 

UK terrestrials, meanwhile, have seen their viewers increasingly make use of their free OTT services like BBC iPlayer and 4oD. Indeed, BBC3 is to close as a TV channel in 2015, and will only be available online.

Certainly, the wide availability of OTT services across multiple devices as well as their user friendly interfaces and access to vast libraries is challenging the revenue streams of traditional pay-TV providers and undermining the historic importance of scheduled terrestrial channels. This only looks set to continue in 2015.

Posted 23 December 2014 by Tim Dams
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    Tim Dams is contributing editor of Televis...
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