Has There Been A U-Turn On The Global Media Strategy?
A couple of years ago the promise of a ‘convergence’ of traditional media content with that of the internet and interactive media was the holy grail for many media corporations. Indeed, Time Warner and AOL forged their record-breaking merger largely on the promise of a global, fully ‘converged’ 21st century media empire. Things have so far not turned out quite as planned.
The giants are not exactly thriving. AOL is largely still confined to the US; Kirch Media has become insolvent and Vivendi has just about stabilised itself for the time being by securing extra loans and selling of whole divisions. It seems that the big media players are in trouble and a lot of this is to do with the exploitation of content rights, according to a new report from Accenture.
“In 2000, the aspiration was twofold: to create value through ‘convergence’ – whatever that was – and to be multinational. This vision has not been realised in its execution. The reasons for this have a great deal to do with the challenges of rights exploitation in general,” says the report’s author, Theresa Wise.
Expanding a dominant domestic model internationally, for example, will not succeed unless the same level of dominance can be achieved on a local scale. “It’s no good being part of AOL Time Warner globally when it comes to negotiations with UK platform operators about fees for distribution of CNN, The Cartoon Network and TNT. The negotiation power these channels have in the UK is not a function of the strength in the US, but of critical mass in the UK,” says the report by way of example.
Rights exploitation is a complicated business which can encompass many different aspects, from straight programme sales, to merchandising, to format licensing, to the creation of interactive and on-demand elements. No company has yet achieved successful handling of these factors on a global scale across a range of local markets.
Accenture says that the revised global strategy for the media giants is now to concentrate on prioritising which markets to enter and then taking a view not just on how to enter them, but also on how to dominate them. This ‘dominating’ would likely be a version of the ‘crowding out’ technique used by consumer magazine publishers, where a major group such as IPC or EMAP will launch titles in a whole range of sectors, literally squeezing single title publishers off the news shelves.
The geographical priority approach is critical, says Wise, as it takes a great deal of focus to dominate even the home market, let alone any other and there are not enough management resources to focus on all regions. “It is possible, therefore, that we have seen the demise of the truly global strategy,” Wise claims.
The UK television market The report claims the UK television industry needs to learn some of these lessons of rights management and exploitation. The UK currently spends £3 billion annually on programme investment. From this, the return from exports each year is a mere £400 million and this is despite the dominance of the English language.
UK TV operators, particularly the content-producing terrestrials, are not well-geared for rights exploitation; they do not have the rights organisation or the capability, according to Accenture’s report.
“The traditional linear model of commissioning a programme, transmitting it and then looking around for ways to exploit it is less effective for maximising broader rights. A more powerful model is to take the exploitation possibilities into account from the start of the process, since it is more cost-effective to produce for several media simultaneously,” notes Wise.
The UK lacks the industrialised approach to rights management and sales that other larger media groups have developed. “The UK market has enormous potential in rights and brand exploitation, but first there is a great deal to learn from global media giants which have industrialised the process and from shrewd consumer-focused operators such as BSkyB about how to connect with what consumers want,” concludes the report.