Crevan O'Grady, Partner (video)

It's quite hard to work out what a traditional free-to-air national broadcaster should do for the future.  I think fundamentally these businesses are in long term decline.  If you already own one that's fine, the capital's already invested.  We certainly don't believe you can make money by buying one.  In most geographies there are probably still areas, more pockets of growth.  What can they do?  I think if I did own one, I think you'd probably have to do what they're already doing, reduce cost, accept that you're going to have some fragmentation of your audience yourself.  If you don't cannibalise yourself, somebody else will.  Try to set up some specialist niches, try to find the best content, try to use the fact you already have a big audience, but you can't change the model, the model is what the model is and I think that's where these guys really wrestle.

I think recent history suggests in other media like in publishing, particularly newspapers but also in music, if you don't cannibalise yourself somebody else will do it for you.  When you look at the TV side or the video side of the world, setting up things like Hulu or Kangaroo, that is an effort to get ahead of the game and yes it could take your audience from your mainstream channel but you've already incurred the vast majority of the cost so holding your audience is an achievement in itself, improving your audience is even better so those people who are willing to take that jump and have confidence in their content and I suppose this goes to the reason we like the content side of the business, this is about changing your distribution model but making money out of the same content.  So that's probably evidence of that shift, as much as anything else.

Clearly the key risk in that business is the revenue you're getting per audience, whether it's per advertising impact or per minute or per thousand viewers or how ever you want to do it, that number online is generally lower than the equivalent number offline.  But equally the costs of that business should be slightly lower as well, the operating costs, but the content costs are the same, so at the moment it's a marginal return which will go straight to the bottom line, after development costs.  In the future, will that same model create the same ultimate profit?  We would argue it probably won't so we would argue that that's why the distribution model is challenged because in the long run the offline broadcast model will suffer that drop in margin, the replacement model might be less profitable and the only guy sitting across both of those strands is the guy who owns the content.

Jonathan Pfitzner, Co-founder and director Argent (audio)

I think it's in a tough spot.  I'm quite happy to say that I think it's going to continue to struggle.  It'll be interesting to see the extent to which they are going to invest more in programming, try and exploit the trend that we've just discussed about, you know, the fact that if you have formats in-house, you can exploit nationally and internationally, that might be where their value lies.  In terms of its ability to be able to exploit what have traditionally been its strengths, as in access to an enormous audience, so, it's got reach for commercial impacts for advertisers.  The power and the value of that position is diminishing and will continue to diminish.  I remain unconvinced that the power of the ITV brand is sufficiently strong that people that are looking to consume TV-type content on the Internet will necessarily naturally migrate there, I don't buy that, either.  So, I think ITV's in a tough spot and will continue to suffer.

My view on this is that – specifically with regard to Internet video, the consumer isn't necessarily controlling it, but the providers of content are going to have to accept that they are going to want the content to find the consumer.  So, if the consumer, again, is socially networking within a specific niche interest group, that is the point in time when, for example, I might be an avid eco green guy, and in my social network, I'm looking at some interesting short-form content about a water-shortage in Panama.  If I'm on my social network and I've got that piece of content, I want somebody else to view it, I will send it to them there and then, I would expect them to watch it then.  So, it's totally outside of any linear schedules, traditional broadcast, TV-type model.

The consumers there, me and the guy I'm socially networking with, are, to an extent, driving the requirement to get the content to that distribution point.  So, there is an extent of consumer control, but I think there's going to be far greater flexibility in allowing that content to follow those consumers, that audience, and ensuring that, insofar as there is a method of monetising that video, that that follows with that content.  But, the days of the traditional schedule or content such as that, is really pretty much going to be past in a couple of years' time.

Harish Thawani, CEO Nimbus (audio)

The most powerful content in the world of European sport is, without a shadow of doubt, the English Premier League.  And once in four years it is the FIFA World Cup.  But, if you look, on a year-on-year basis, the single biggest driver of European pay television is the English Premier League.  And I know outside of the UK, people might disagree, but it's six times bigger in revenue and eyeballs than any other form of sports content delivered.  In which case, the logical question is, why would the English Premier League not want to be a broadcaster themselves or deliver it to the public themselves?  But they don't, because there are three fundamental factors that make a broadcaster stand out for the value that they add.

A broadcaster takes the risk of acquiring the content, and, at the end of the day, content owners need to have a certain amount of assured income.  Packaging it, presenting it, but, more importantly, they have a distribution mechanism, which means they are onto the platforms, cable networks, which is a slow and painful process for anyone new to do.  And, thirdly, their own customers, they already have, you know, between hundreds of thousands to maybe tens of millions of subscribers, already subscribing to them.  And, as any start-up will tell you, it takes a long, long time to be able to get to a substantial subscriber base  – I mean, look at Setanta in the UK, they're now at a million subscribers compared to Sky Sports' 8 million plus.

And you would imagine that in a sports crazy country, with Setanta having both the US PGA tour, and one of the five packages of the English Premier League, apart from some other rather promising content, that they should have caught up with Sky Sports pretty rapidly, but they haven't.  And that just goes to show that consumer franchise in the existing ownership of subscribers, strong access to platforms, and, of course, the ability to sustainably acquire the product packages and present it well, does play a meaningful role.  I'm not saying that, a hundred years from now, when the world is completely broadbanded, or whatever the new form of technology equal to IP access that may prevail, fifty years, I don't know, X years from now, when people can just access anything from anywhere at any time, that content owners can't then just, you know, park themselves on a server and wait for everyone to come in and subscribe and collect it.

Yeah, I mean, I'm sure consumption patterns will change, but, I think, by then, broadcasters will re-model themselves.  ESPN is doing that, Sky is doing that, we are doing that, where we make sure that we have an online brand, because we have a set of consumers that have already got used to consuming that brand.  And, you're right, if the content guy cuts our legs off, we have a problem.  But, in the current context, I think, content people being able to reach consumers directly in sufficiently large numbers – it's a bit utopian, it hasn't happened anywhere.  There have been some pretty strong experiments done, by content owners and their attempt to what they call "disintermediate" but I don't think any of those experiments have gone and delivered any substantial results worth pursuing.

So, people who held back one form of rights, the US PGA, the English Premier League, they hold back the Internet rights and say, "we'll monetise this separately, maybe in partnership with Internet companies, maybe on our own."  You know, it's all very well, it's the kind of stuff that you take to seminars and talk about your 17 million page views.  But, when you ask them, "so how much money did you make out of it?"  And the answer is, "well, you know what, I mean, we've got the consumers and I'm sure the money will follow”, and that, I think, is the apt summary for why content owners will continue to require distribution platforms or delivery platforms or broadcasters, to partner with them.

Peter Smith, President NBC Universal (audio)

In hard commercial terms, Hulu, which is a newly-created venture, is now worth well over a billion dollars.  So, I'd argue it's created new asset value.

To date, we haven't seen the impact, we haven't seen a carnivorous impact on our DVD revenues or our syndication revenues.  If you're saying to me, describe what's going to happen ten years out, I think we'll have to manage that process.  If we do see that carnivorous effect, then we're going to have to think carefully about windows and when we make product available to different windows, and we might have to adjust the model.  But, at this point in time, we can't see it.