Kate Bulkley, Media Analyst.

BT TV = Freeview + VoD

By Kate Bulkley

Royal Television Society

February, 2006

Dan Marks explains to Kate Bulkley why he believes he has the formula to transform BT into a multimedia giant with an unbeatable VoD proposition

There is often a moment when the biggest brands morph into something entirely different from their origins. Remember when Virgin became more than its origins as a music company? If Dan Marks gets his way then this is BT’s moment, as he plans to take the once mighty telecoms giant into TV and beyond.

The 43-year-old moved to BT from running the Sci•Fi Channel in the UK a year ago this month. Before 2006 is out, he hopes the see the first fruits of his ambitions for BT.

Marks’s big idea is basically “Freeview Plus”. He is CEO of BT’s TV Services division, which is planning to sell BT-branded set-top TV boxes that include a built-in Freeview connection, plus lots of BT-related services (such as caller ID and video telephony), a hard-disk personal video recorder and, significantly, video on demand (VoD), including movies and individual TV shows. The boxes would probably retail for under £100.

“We are not exactly riding on the coat-tails of Freeview. But this concept of a hybrid service that combines Freeview with a pay component that is infinitely flexible to customer needs is a winning combination,” he claims.

But first Marks needs to find the winning combination within the bureaucratic behemoth that is BT. This is a company traditionally high on multimedia plans but low on delivery.

Marks knows that he has yet to prove himself within the BT empire. He might have produced a movie called My Crasy Life that won the Jury Prize at the Sundance Film Festival in 1992 and built up a national TV station in Russia in the late 1990s when most people were trying to get out of the former Soviet Union, but being what he calls an “exotic” among the long-term BT suits is not always an advantage.

Most of the suits don’t know him and certainly the majority of them don’t understand him… yet.

Our interview was a classic example of new-man-in-old-system. We talked in a broom cupboard-sized room that was all the BT press department could find. Marks suggested we leave the door open or we might have suffocated. I asked my questions to Marks with him wedged behind a pillar. The odd thing was that he didn’t care. He can still play the TV luvvie – the striped, multi-coloured socks, the obligatory name-dropping. But he does it consciously and you suspect he can turn it on or off better than most.

Pay as you go – or not pay at all – TV

“I think Dan can make a difference at BT,” says Tom Toumazis, executive vice-president and managing director of Buena Vista International EMEA. “He’s a highly regarded executive and he’s taking on a project within an organisation that is not naturally easy to navigate around and probably not easy to change.” Marks is determined to include plenty of BT offerings in his Freeview Plus service. He doesn’t care who he does business with so long as he gets the right programmes to attract viewers who will be able to buy single shows or movies on an à la carte basis.

So far, he has penned deals with National Geographic Channel (which makes and owns the majority of its programmes) and the BBC (Little Britain, Doctor Who, Teletubbies, and so on), in addition to two big kid’s programme makers: Nelvana, the maker of Maggie and the Ferocious Beast and Franklin, and HIT Entertainment, famed for Bob the Builder and Pingu.

He also has a deal with Paramount movie studio, both for current releases and archive films from Sahara to Forrest Gump and Officer and a Gentleman; and with Warner Music, whose artists include Madonna, The Darkness, The Flaming Lips and the Red Hot Chili Peppers. More deals are in the pipeline, with the goal of having thousands of hours of content signed up for this autumn’s launch.

The point is that BT TV is going to offer a very different consumer proposition to Sky or cable; BT TV will revolve around providing individual programmes or films without consumers having to take out a subscription to the BT service.

There will be some subscriptions offered for, say, a number of hours of programming from a certain genre such as kids or music videos, but the USP of BT TV will be the freedom to “churn in and churn out on a monthly basis,” says Marks. “Now that’s a big difference from the one-size-fits-all subscription approach you have with Sky and cable.”

Marks believes that BT TV has an opportunity to participate in, and even shape, the changes that are happening in the TV landscape by building a new relationship with the customer through interactive services developed from the programmes themselves, alongside services from other parts of the BT empire.

When BT TV launches it will initially be targeted at custom-ers of BT Broadband, which has signed up 2.2 mil-lion people. But not all the relationships with other parts of BT are clear.

For example, how will BT Yahoo! work with BT TV? “Yahoo! could potentially be a wonderful partner,” says Marks. “We are talking to them quite closely about a range of opportunities we have and let’s see where it goes. BT and Yahoo! have a relationship focused on the PC. We’re building relationships that are focused on the TV. There’s a big difference.”

Time is on VoD’s side as film release windows collapse He also has ambitions to help force some changes concerning when programmes are offered to consumers that could help accelerate the already collapsing viewing “windows”. These are created by Hollywood and the big TV brands to stagger the release dates from cinema to DVD to pay-TV premium channels to free-TV.

These are already under pressure from the internet and broadband delivery. “When the VoD exploitation window begins is obviously a dynamic issue. We’re in the middle of seeing what happens. We believe there is a point at which content like, say, that provided by the BBC, becomes commercially exploitable and we intend to make it available to people at the earliest possible moment.”

To help make these plans a reality, Marks has gone large on hiring names from the TV business.

Among his 55 staff (a number that will rise to 75 by the end of 2006) are: Liz Charlesworth, the former managing director at Freeview, who is on board as head of marketing; James Soames, the ex-marketing boss at Sky DTH, is BT TV’s head of new product development; Matt Woods, formerly marketing director at Hallmark Channel, is BT TV’s consumer marketing chief; Karen Saunders, formerly head of pay-per-view at BSkyB, will lead BT TV’s VoD programme purchasing; and just last month Anthony Carbonari was poached from Disney, where he was director of broadband services. At BT he will develop interactive and commercial media revenues from advertising, sponsorship, retail and games.

Born and raised in north London, Marks may have started his TV career with a masters degree from the University of Southern California’s Film School (he nearly got a PhD but instead started making movies) but he took what he describes as a “left turn” when in 1994 he helped launch and run Russian commercial station TV3.

From there he joined the fledgling UK VoD service Video Networks in 1998 as head of programming before being asked to help sort out Universal Studio’s worldwide network business, a job which had him working for the company’s wide variety of owners, including Seagram, Vivendi and finally Barry Diller.

“I had a front row seat at the best game in town,” recalls Marks. Just before joining BT he headed up Universal’s Sci•Fi channel in the UK following the departure of Janet Goldsmith.

Marks admits that when he joined BT he went through a bit of a conversion (although he doesn’t like that word) himself about the power of interactivity in the new landscape that TV is becoming.

“The cost-per-thousand measure is going to be replaced by a measure that takes into account the nature of the relationship you have with the customer; where you deliver a transaction and the size and value of it (and whether you can motivate a customer to do what you want them to do) will command a premium. A very, very considerable premium on what we now think of as the value of an eyeball,” says Marks.

“BT TV is an unusual TV business,” he says. “It is a platform but not just a platform. It requires programme understanding but not just that. It’s something more.”


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