01 January 2019

Up Close with Johan Ishak on TV vs Digital Content Play

Interviewer: Haminder Singh, Marketing Magazine.
Interviewee: Johan Ishak, Media Prima Television Networks.
Date: 24 September 2018

1. As the original OTT (Over-The-Top) in Malaysia with tonton, what sort of OTT business models do you think will thrive in the sprawling ecosystem?

This depends on the type of content. Content that are mass generally are catered for lower income earners who do not have the propensity to subscribe for a fee. This, you should go for Advertising Video on Demand (AVOD) which is what tonton.com.my has become today. For a more premium and urban programs that cater to higher income brackets, a Subscription Video on Demand (SVOD) can work provided that a sweet spot for pricing is achieved. Such pricing requires trial and error to determine the equilibrium between affordability and microeconomic sense of the OTT. If you do not have enough fresh content to sustain the viewer's willingness to subscribe, you should allow for Transaction Video on Demand (TVOD) that only sells programs on selection basis with a more dynamic pricing mechanism to allow such individualistic transactions.

2.  Is the local OTT model dead, now that regional and global players have disrupted the Malaysian media landscape? 
The regional and global players attack the market segments that are niche, i.e. via urban programs. This may not necessarily overlap with the programs by local OTTs that are more localised and mass. The issue here is economies of scale. An international OTT may be able to get subscribers from many countries who can afford SVOD even when the programs are niche. This means they can amortise their costs, be it content or technical expenditure, across that widespread consumer base. Local programs on OTTs require the volume game for a different perspective, that is, eyeballs. This is, again, to attract advertisers. For Media Prima, our tonton.com.my will behave as AVOD. If we see potential for SVOD, we may decide to be production partners with the other OTTs to share the SVOR money. This, again, only works with certain, more urban, types of programs. So, no, local OTT is not dead.

3. Some industry observers say the costs of production has been outsourced to OTTs (who have big funding) and they will drive the appeal of viewing. While televisions stations like MPTN, with their large local audience footprint, will monetise by collaborating with OTTs who cannot match MPTN’s massive local reach (yet). Where is the win-win or end game here?

The production cost stamina of a Free-to-Air Television (FTA TV) is dependent on its ability to generate FTA TV advertising revenues. To be able to make business sense, investments in production costs that are beyond this 'stamina' must have fair sources of revenues that are not from FTA TV advertisements. This amongst others, include the SVOD model revenue sharing between partners of  a particular production. For this, Media Prima has Primeworks Studios (PwS) who enters into deals with OTTs or any other production houses. Now, where this becomes a win-win is when the content has the opportunity to appear on FTA TV that are sister companies to PwS provided that the FTA TV gets a share of revenues that is fair to cover its airtime costs and exceeds margin it could have earned from a normal FTA program strategy. For the OTT partners, appearing (the content) on FTA TV is a mighty boosting promotion to the mass viewer base as its 'Not on Demand' nature will not cannibalise the OTT's economic model.

4. You’ve spoken about SVOD (Subscription Video On Demand) and AVOD (Advertising Video On Demand) at length previously. With MPTN content now available for free, including tonton which has gone from SVOD to AVOD, what is your new definition of MPTN's role as a media and content company? 

We are here to democratise content on the internet. This is so because of two reasons. Firstly, huge portion of the advertising expenditure (adex) has been allocated to digital platforms. To continue drawing distinction between digital and tv is to make TV's death a reality. We do not want that while TV is still strong and mighty. We have to uplift that distinction and make the two (digital and TV) as one of the same. We need to make it platform agnostic. The conventional statement "Switch on the TV!" Should now be "Switch on the content!". Where you switch it on, be it on the TV, handphone, tablets or the PC, it really does not matter, as long as you switch on to our content. For that reason, the universe of adex needs to also spread across this so called 'agnostic universe' of where content can be switched on to - Democratise Advertisement so to speak. Look at what happened to Kodak when they did not put enough focus on their digital products. The trick is, not to eye on the 'photographic film' but to eye on just 'photography' regardless of its medium. The second reason is to kill piracy. Piracy exists pragmatically because it is free to viewers - you'd have catched my drift by now, so, I will let your (readers') thoughts to do the conclusion.

5. How do you balance profit expectations while wrestling with critical inescapable investments in technology?

Technology cannot be escaped from. However, costs of technology can be optimised to achieve better profitability. Why pay so much to the banks for a car loan as well as the continuous automotive maintenance cost when you can have cheaper options such as Grab? The same with OTT. We will partner with the best Online Video Players (OVP) to distribute our content on our tonton.com.my portal or anywhere else that can make money. At this moment, we have partnered with Daily Motion for live online telecast and You Tube for catch up viewing. If, in the future, the cost of managing OTT technical platform can be cheaper, we can always invest in it. Surely you won't mind buying a car if it is as cheap as the cost of Grab?

6. How do you strategise differentiation in a market where everybody is championing local and Asian content now? 

Local and Asian mean two different things. Korean is Asian yet foreign to Malaysia. We are strong at producing local content be it Malay or Chinese. The Malaysian mass has a very strong preference to localised content. Of course there are competitors for local content. Here is where we will reinforce the quality that appeals to the mass. This is why we can reach out as the number one TV network in the country as the content on our four stations can reach to 30% of the TV household market share. TV3 in particular is the number 1 station overall for the country and 8TV is the number 1 station for the mass Chinese audience. Such statistic makes it efficient for marketing spend as it also includes Pay TV households in its calculation.

7. The days of audience monopoly appear to be over, how will a 34 year-old player like TV3 hold on to its audience leadership in this age of media democratisation?

Do not look at TV3 as a linear channel anymore. Look at TV3 as the mark of quality for the content. Content on TV3 can appear on the linear TV3 programming as well as on other non-linear such as On-Demand. As long as it garners eyeballs and the money, it really does not matter where the content appears. Conventionally you would quote an example such as, "Anugerah Juara Lagu (AJL) garnered 3.8 million average viewers on the TV". Now, you should say, "AJL not only garnered 3.8 million average viewers on the TV, it also accumulates 12 million views on You Tube, and growing." Can you see the difference now? What used to be a myopic perspective has now been liberalised into a bigger saga: 'Democratise Content' and 'Democratise Advertisement'; and 'Change' shall be our catalyst for success.

Specific to partnership with Viu:

1. How do you see partnerships with OTT players like Viu working towards your goals? Especially since Viu is an OTT highly focused on local content.

This partnership is all about making sense from 2 perspectives, they are: audience reach for free-to-air (fta) TV advertisement revenue play and targeting segment for subscription video on demand (SVOD) revenue play. The former goes for the mass audience and the latter for niche audience. That way Media Prima TV can earn advertising revenue from a production cost investment that is far more superior and Viu can benefit from a widespread fta reach that will drive viewers onto Viu on SVOD basis.

2. On the point of regional budgets: Has partnering with Viu to produce original content with higher production values been something that works towards your goals?

This is the first of its kind where we partner with a competitor OTT such as Viu even though we have our own OTT that is tonton.com.my. For us, it is easy, we uplift restrictions in order for greater good. If the content works better on other platforms than ours, so be it, we will use that better avenue. It is also about the best of 2 scenario on the tv side:  profit margin from our own program cost investment of a particular slot vs profit margin from a combined effort with Viu in the program for the same slot. So it is a trial and error game, case on case basis. So far, we have just started and it is gaining traction on viewership. The advertisement revenue side should follow suit.

3. On the marketing front, has working with an external OTT partner helped you with marketing be it digital ads or PR/events? 

The promotion works well for both sides. The hipe on tv side certainly capitalises the power of mass audience and the inclusivity of Viu as a content partner opens the eyes of our non-traditional viewers, i.e. the more urban and less mass. This is a unique position of both 'divide and conquer' as well as 'combine and conquer'.

4. Do you see benefits with Viu for your content to travel? 

Yes we do. Having a strong regional player not only puts us in a wider footprint in the industry, it also enhances the depth of content programming to produce what we would traditionally not. Out usual content will reside on tonton.com.my as well as our entertainment portal xtra.com.my as an extension of reach; whereas partnership such as with Viu will ride on the sailing of a more regional and urban base consumers.

5. Would you see a future with your production arm working on content that’s OTT first with Viu? 

Definitely. Our sister company, Primework Studios is negotiating with many parties to arrive at mutually benefiting co-productions that includes partners from other OTT players like Viu as well as other production houses, broadcasters and many more. As mentioned earlier, keep the door open and democratising both content and revenue sources can only mean opportunities rather than otherwise.

6. In the vein of democratising content, could we expect to see much more of MPTN’s library along with new shows on OTTs like Viu?

At this juncture, we had just democratised tonton.com.my in August 2018 in conjunction with the 'Merdeka' month. What it means is that all of our tv content that we own will be made available first on tv and live on tonton.com.my and xtra.com.my as powered by Daily Motion. And then, on those same portals as well as on You Tube, the catch up window will resume in a matter of hours after the first tv transmission. The next step is to play with the window of opportunity within the catch up phase. If revenues from distributing to other OTTs or broadcasters or other buyers make better sense, then it is worth swithing off on those free platforms for a specified time frame. Go to where the money makes better sense.

Embrace Entrepreneurship in the Creative Industry

By Johan Ishak

ENTREPRENEURIAL dreams are quite pervasively spread amongst our youngsters but very few coveted the ingredients necessary for a successful entrepreneurship. This is scary especially when our economy relies heavily on Small and Medium Enterprises (SME’s). According to Datuk Habsah, the Ex-Chief Executive Officer (CEO) of SME Corporation, it is believed that at least a third of the economy is driven by SMEs. The research at MyCreative revealed the same statistics when narrowing into the Creative Industry. There are many small players struggling to grab small pieces of the pie. In the end, only those with business acumen will survive. When this happens, creative people get frustrated and they stop being creative. The industry then deteriorates. 

The remedy for this is simple but yet, sophisticated: We Must Connect the Right Brain to the Left Brain. Players of the Creative Industry must endeavour to forego their ‘purist’ tendencies (i.e. sometimes mistakenly taken as arrogance) and start building their skills as a Creative Industry entrepreneur. Yes! Creative Industry ‘Entrepreneur’ rather than Creative Industry ‘Artists’. This is crucial. Only when this is embraced will the players of the Creative Industry be able to grow economically. Otherwise, it will remain as a ‘Subsidised Industry’ and will die a natural death.

The purist approach can be very dangerous. It is this character that causes the production costs to run in the millions with pathetic box office collection. Creativity that does not connect to the market or consumer demand will not be viable. Another example would be avant garde fashion designers. Avant garde designs are only meant to be signature pieces to introduce fashion statements to the market. It is never meant to be produced for sale. Many people lack this understanding. In the end, they fail, as they did not meet consumers’ demands. The same goes for visual artists that expect collectors to buy huge art installations and theatre shows that are too subliminally driven. A writer once told me, “Jangan sebab duit seni diperogol!” (Do not rape art for the sake of money). My reply would be, “Sure, by the time you realise that you have no money, you’d have been raped by art itself!” Therefore, it is obvious that the change should start from within the creative person him/herself.

What is Entrepreneurship? There are many definitions given by the academicians but a good one is as described in the lecture notes for Business Consultancy at the Faculty of Film, Theatre and Animation (FiTA) at Universiti Institut Teknologi Mara UiTM). Entrepreneurship is defined in a formula, E = MC2. The formula E = MC2, here, is not a formula by Einstein for the physics Theory of Relativity. E = MC2, here, is a formula in Economics solely created for the students at FiTA, UiTM by their lecturer. Einstein came up with a relationship between matter and energy. Well, here it is a relationship between money and entrepreneurship. Entrepreneurship is a function of Money Matters via the synergy of Confidence and Competitive Edge.

Getting yourself equipped with knowledge about Money Matters makes you more dynamic in understanding how your respective creative businesses can be affected by the economy, the imperfect ecosystem of the industry that give rise to gaps, policies formulated to address those gaps, requirement for sourcing funds and the whole philosophy developed by various parties in their effort to grow the Creative Industry into a viable economic sector. To not acquire this knowledge is plain stupid. Why? Because others have done so much to develop it. You just need to learn it.

If knowledge about Money Matters is the engine to a car, Confidence is the driver. If you do not have that, you will not be encouraged to drive. It is an important ingredient to achieve business acumen state that allows you to approach your market segment efficiently. For example, when you pitch a proposal about a particular content to a television station, you will be more likely to succeed if you are able to demonstrate your certainty about market’s acceptance. A production company that proposes a format that has been tested elsewhere is able to provide statistics. With statistics, you can eliminate significant portion of doubtfulness. With that, you simultaneously give birth to Confidence and synergising that with Money Matter knowledge provides a strong foundation for Entrepreneurship. 

Now assume there are hundreds of other entrepreneurs who are already equipped with Money Matter knowledge as well as Confidence (whether substantiated or not). How would you rise above them? How do you get noticed? Remember, in many committees that are assessing numerous proposals, the ones (proposals) that have Unique Selling Proposition(s) (USP) will get noticed first even without proper viability analysis. It is unfair, but it is the reality. You need that USP. You need a Competitive Edge per se. In this new era of digital and all things internet, competition becomes so intense that very few are able to achieve Competitive Edge. On the flipside, it (internet) also provides an effective platform for many Competitive Edge to be uncovered. The problem is, many Competitive Edge makes it not Competitive Edge anymore. You really need to shine like a crazy diamond. In the 1980’s, if you show a Sijil Pelajaran Malaysia (SPM) certificate with 8 A’s, you would have achieved Competitive Edge. Today, there are hundreds of them with 8 A’s on their SPM certificates. But if you show that you have other awards, like winning a singing contest, or a national science project, you are one notch up.

Let us now analyse the three components in greater depth and granularity: 1. Confidence, 2. Competitive Edge and 3. Money Matters. The first, Confidence, is a psychological state of fearlessness. It grows in tandem with the four letter word that starts with F, i.e. F.A.C.K, representing Frequency, Attitude, Courage and Knowledge. Frequency suggests that the more you repeat, the more confident you will be in performing the same act. From entrepreneurship perspective, the more you think like a business person, the better you will be at it. On 11 February 2012, Phantom of the Opera played its 10,000th show on Broadway. With that kind of Frequency, no one can doubt how they have achieved perfectness in their performances.

Attitude is crucial in setting the tone. If you keep on saying ‘No’, chances are, you will be saying ‘No’ all the way. You need to break that monotonous trend. Say ‘Yes’ for a change. This has been proven to be effective by many successful people so much so that even Nike has taken ‘Just Do It’ as their powerful slogan. Courage is the cousin of Attitude. Your Courage to move forward requires some form of leap of faith and never stop believing. Many years ago no one would have imagine that a woman can be a jet fighter pilot. Today, because of Courage, Malaysia has its first and only jet fighter pilot, Patricia Yapp Syau Yin, who was bent on becoming a pilot and pursued her dreams. When she was young, her parents wanted her to become a piano teacher. Instead, she followed her dreams. 

The last alphabet in the F word that constitute Confidence is K. K for Knowledge. As an entrepreneur, you should know your products and services and with that, know your customers and suppliers. You should know your market and your competitors. You should know the laws and regulations. You should know how to talk money and when to grab opportunities. Many players in the Creative Industry are lazy enough to say, “I am an artist, why do I need to do the work of an accountant or a lawyer?” Well, no one is asking you to become an accountant or a lawyer. You can hire them on your payroll or take them in as a business partner. What you really need to do is to make a point to know what the accountants and lawyers are trying to say. As a business person, you should at least make sense of that sea of knowledge to the extent it facilitates you to run a business, a viable business that is.

So there you go, F.A.C.K can build the Confidence in you. Get some Frequency happening with your Attitude and Courage and apply relevant Knowledge as much as possible. You will be more confident of yourself and so will others (in you). Say to yourself, “What the Fack! I am doing this … ” Some good and interesting examples of successful people with loads of Confidence are Queen Elizabeth the First, Lady Gaga, Barbie (or at least it artificially promotes the idea of Confidence to young females, or males, if the case may be), Oprah Winfrey, Datuk Sheila Majid, Datuk Siti Nurhaliza, Susan Boyle, Margaret Thatcher and as anyone wouldn’t have guessed it, the Mother Alien in the movie, Aliens (That is a scary volume of Confidence). Noticed that these examples are female? This is purposely done as the World we live in has had a very long history of male-driven saga.

The second component of Entrepreneurship is Competitive Edge, a component that raises up the strong foundation built on both Confidence and Money Matters. Competitive Edge is the ability to make an offer that no one can refuse. It strives on a set of values with the four letter word that starts with F, i.e F.U.C.P, representing Financial, Utility, Coverage and Presence. In the old days of Kotler’s marketing text books, F.U.C.P is known as the 4P’s: Price, Product, Placement and Promotion; respectively. Knowing your business or your competitors’ businesses is not just about the actual creative products. Financial information provides strategic insights into how you can play the chess game better. You should make a point to understand your financial position as well as your competitors’. In fact, that curiosity should be extended to also include the financial status of your suppliers and customers.

There are many sources of funds but not necessarily easy to be procured. You can start with your own savings (or your family’s). That may not be enough. You are definitely stupid if you do not fill up forms and submit documents to at least try to get some financial grants from relevant Government agencies. You can take a loan but the confidence level of the bankers on Creative Industry is low so much so that the risk associated to it raises the interest rates to be as high as 12% per annum. As a last resort, you can find an angel, an investor, that is willing to take the risk and share your aspirations. Theoretically, an investor should be asking for a higher return than 12% but the friendly nature of investor(s) might just still make him/her smile (sarcastically) at you when you declare that the return is a negative 12% instead of positive. Whatever the case may be, a more robust portrayal of Entrepreneurship will certainly be a good fat tick instead of a cross in the books of those funders.

Utility is the satisfaction level of a product or services being consumed. For that to happen (consumption), you need a customer base. Do you have a customer base? What if the products that you are producing is a ‘Syiok Sendiri’ case (No viable customer base)? You think people will buy but instead, they don’t. A ‘Syiok Sendiri’ production can be very costly as it does not result in an eventual return or recovery. Big brands have proven to fail because of this too. For example, Pepsi introduced Crystal Pepsi in the early 1990’s. This is a clear soda. Unlike other clear carbonated drinks, this one did not have a lemon or lime flavour, yet it did not quite have a normal cola flavour either. Despite a very expensive media blitz, this see-through soda just did not catch on. Pepsi lost hundreds of millions guessing at straws, and they have never recovered fully.

Coverage is how you bring your products and services closer to your customers. A customer who can actually get what they want is a happy customer. Happy customer means $$$. Unhappy customer means !@#%. Imagine this: You are at a Mamak stall ordering for a Roti Canai and the waiter says, “Roti tak dak!” (No Roti Canai). That is like not being able to buy fried chicken at KFC. It is very easy for a customer to run away and if that happens enough, you die.

The last bit of the Competitive Edge equation is Presence. People are busy. They just do not have time to find out what is there in the market. Hence man created advertising and social media. To quote a famous music composer, Datuk Ahmad Izham Omar, “Tell people what they do not know what they want, and they will want it.” Despite the theory being contradictory to the ‘Syiok Sendiri’ phenomenon described earlier, this might just work. Perhaps in the music industry, new and fresh composition has a better chance at experimentation. Whatever the case may be, the power of persuasion via advertising and social media can make wonders in your financial performance. An iconic entrepreneur such as Dato’ Vida can spend millions of Ringgit sponsoring Gegarvaganza on Astro because the multiplier effect on her retail sales is huge – making a few million Ringgit sponsorship looking tiny.

So there you go. Be prepared with your Financials, focus on Utility values, get enough Coverage and show strong Presence. All these will give you the Competitive Edge that you covet for. Say to yourself, “What the Fucp! I am doing this … ” (Silent the ‘C’ please). Some good and interesting examples of successful people with loads of Competitive Edge are Cleopatra, Marylin Monroe, Wonder Woman, Madonna, Farah Fauzana, Datuk Nicol David, Smurfette (Well, she is the only female Smurf after all?!), Princess Diana, and the one most forgotten with tremendous Competitive Edge is Planet Earth, for there are no other planets that can replace it.

Money is the reason why entrepreneurs do what they do. Why would you make business decisions that do not make money? It is like buying a movie ticket but not watch the movie. Or like buying a Ferrari that sits in the garage not being driven. You must be clear. If what you do, do not make Money, then stop doing it, unless you have a different objective that does not involve Money. Even a charity move requires Money. To make Money, let us consider the F word again, F.U.R.K, representing Feasibility, Up Side, Return on Investment (ROI) and Kontinuity (Yes I know that it should start with a C, but why do we care if we can make money?).

In doing business, you got to know whether the mathematics can actually produce profits. Why bother if you are going to be in an unrecoverable loss position? This is what we call Feasibility. Before you venture in any project, do your Feasibility assessment first. In that assessment, you must always seek for an Up Side, which means, what you sell must always be more than what you paid for. If not, you are definitely digging your own grave. Even when you have a positive result, is that result worth it? When you have already done business for more than 5 years (an acceptable time frame for a business turnaround point), but yet you are still recording a small profit of 3% per annum, it may mean that you should cease doing business. That 3% per annum can be easily obtained if you had pumped in your Money into a Fixed Deposit with a Bank. Even if you can obtain a higher ROI of 7%, there are still better alternatives such as unit trust investments. Aim high with a premium to compensate your efforts and risks taken. Go for double, say 15%. To reach this, you need Kontinuity to allow for the business to grow steadily, if not fast.

How on Earth will you meet 15% ROI when it takes forever to achieve? Your business can only grow if you allow it to grow. Build it, it shall grow, or if you kill it, it will blow. This requires patience and a long term aim. There is no such thing as a quick money or getting rich fast. This also requires you to continue nourishing it and time is of essence. It is a balancing act to grow a business from a loss making into a profit making venture but yet still considering whether is it worth it to continue or not? The question is, when should you make that call? If 5 years is an acceptable number to the bankers and investors, so be it. But is that the right question? Perhaps the entire business needs reconsideration. Ask relevant fundamental questions: For the efforts that are being put in and the risks that are faced, given the financial returns that you are producing, are you producing the right products or services to the right customers who can accumulate sufficient demand for the products and services and who has the right income to pay you in the first place, at a price that is sufficient to cover both cost as well as an acceptable profit margin?

That is indeed a very complex series of questions tied together. It is not easy but those are the fundamental questions. Money comes when there is Feasibility, Up Side, ROI consideration as well as the drive for Kontinuity. So, go out there and say, “What the Furk!, I am doing this … “ (Silent K please). Many businesses grow significantly because of these factors being digested carefully. Some of the brand names that have grown into giants, together with their brand values (2012 statistics) are: Prada (USD2.8 million), Bvlgari (USD2.9 million), Tiffany & Co. (USD3.8 million), Hermes (USD3.9 million), Zara (USD4.2 million), Avon (USD5.0 million), Chanel (USD5.1 million), L’oreal (USD6.3 million), Gucci (USD7.1 million) and LV (USD17.6 million).

To conclude, entrepreneurs are significant to the economy. Therefore it is time you embrace Entrepreneurship.