Kate Bulkley, Media Analyst.

Adam Crozier’s King Canute strategy

By Kate Bulkley

Broadcast News

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For Broadcast July 30, 2015

ITV boss cannot ignore the rising digital tide, writes Kate Bulkley

It couldn’t all be good news. ITV’s recent upturn – buying more production companies, increases in cash flow, a stock price that kept climbing – hiccupped this week with the announcement of its latest viewing figures. ITV’s share of viewing has slumped to its lowest point in 15 years.

No one is saying ITV is not a successful business: its finances are strong overall, with ITV Studios revenues surging 23% and pre-tax profits up 25%. ITV’s stock price even rose by 3% after the viewing figures revelation. But there are other major commercial broadcasters that are doing a better job at what most analysts believe is a hugely important next step: maximising digital to find audiences.

ITV’s nearly single-minded focus on reaching mass audiences is a King Canute strategy that means chief executive Adam Crozier is already getting his feet wet when it comes to audience diversification.

He should (and maybe has) take note of what’s happening in Germany with Maxdome, the SVoD service that is part of ProSiebenSat1, the country’s nearest equivalent to ITV.

Getting content to viewers in many different ways is what Maxdome is doing better than almost anyone else.

“Now it is all about binge viewing,” says Filmon Zerai, managing director and chief operating officer of Maxdome. “A year ago, we would have just one season of a show available, now we are getting them all because we know that is where the market is going.”

Recently, Maxdome integrated its service into German cable system Unity Media, which is owned by Liberty Global, offering all flavours of Maxdome: subscription and ad-supported VoD, as well as one-off payments for recently released films and livestreamed events such as WWE wrestling.

Relaunched with a less techy and male-oriented feel as part of ProSeibenSat.1’s ‘business intelligence’ drive in late 2014, Maxdome is tracking customer behaviour data and starting to look at predictive statistics for churn management. The moves have helped increase usage by 40% in that time, despite heavy competition from rivals Amazon Prime, Netflix, Sky Deutschland’s Sky Snap and a Vivendi product called Watchever, which is now on the sales block.

According to Maxdome’s Zerai, the next step is to find “sensible distribution partnerships” to increase customers’ ability to find and use the service.

If Crozier wants to stare into a crystal ball to identify ITV’s viewing future, then he could do worse than study the Maxdome model – particularly at a time when tracking viewers is getting increasingly difficult because demand for VoD content is on the rise (ITV’s long-form video requests are up 29% to 422 million).

Even though he can say that his pre-tax profit is up, advertising has risen 5% and that the fall in viewing “is not impacting commercial performance”, one analyst has already seen cracks in this philosophy.

Investment bank Jefferies stated this week that the ITV viewing share decline “may be a cause for introspection going forward”. I couldn’t have put it better myself.

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