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.


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