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Fewer people will pay less for less content, says GroupM boss in debate on future of pay-TV

In the future, there will see a decline in people who are prepared to pay for content, and brands will increasingly pick up the tab, the head of Asia’s most powerful media buying agency suggested this week.

Patterson: 'There will be less people paying less for less content"

Patterson: ‘There will be less people paying less for less content”

Talking in an at times brittle panel debate at the end of the CASBAA Convention in Macau, Mark Patterson, APAC CEO of GroupM, painted a confronting picture of the pay-TV industry that he said would become increasingly reliant on advertising to survive.

“In our industry [media buying], we don’t use the term pay-TV. We’re in the business of connecting people with audiences. My simplistic view is that people will pay for content, but there will be less people paying less for less content,” he said on a panel including executives from Sony Pictures, HBO and Middle Eastern pay-TV network OSB.

“What they will pay for is sport, or very, very niche financial services content,” said Patterson.

“There will be a requirement to get brands to get closer to content, to get brands in and around content, and the need to look at marketing models for how to do that.”

“The data we have now allows us to target more precisely, and draw a clearer line between the message and the outcome that we want for brands,” he said.

“We’ve got an opportunity to show the power of media and brand messaging to deliver specific outcomes over and above general awareness and the more clumsy metrics, right the way through to transaction.”

“The future is bright for the industry. But we are going to have to adapt at a much faster pace than we have in the last 20 years,” said Patterson, who sits on the board of pay-TV industry body CASBAA.

The session was notable for an exchange between Patterson and Jonathan Spink, the regional CEO of HBO, the maker of Games of Thrones and The Sopranos.

Jonathan Spink

Jonathan Spink: “We need to make CASBAA great again.”

On the topic of how to monetise content, the dominant theme of the session, Spink commented: “Fundamentally, there are really only two ways of making any money. You either sell your product to an audience, or you try to get a big enough audience so you can sell advertising around it.

Patterson interjected, “It doesn’t need to be a big audience.”

“But you need an audience,” Spink said. “You have to monetise a quality audience.”

“Well, a targeted audience,” Patterson cut back in.

Spink continued: “Tencent sells advertising and subscriptions. Everyone is following the same formula. What will change is how people access content.”

“People still pay for newspapers, for Netflix and access to news sites. People will always pay for things. Whether they will continue to pay for a large bundle of stuff is a different issue,” he said.

“There will always be demand. Somebody somewhere will make some money from selling things. It’s how it is done that will change, the infrastructure.”

The problem with the biggest opportunity for selling content, through OTT services, is that it was being sold “too cheaply too early,” Spink suggested.

“They’re never going to make money like that. People say revenue will increase over time, but if you start at a low price, it’s very difficult to push it up.

The need for change was another recurring them, Spink opening the session – which took place just after Donald Trump was elected US president – with the words “we need to make CASBAA great again.”

Reflecting an industry that has not been in a hurry to embrace change, he joked: “We should build a wall.”

“We adapt. Companies do adapt,” said Spink. “Technology is the thing that has changed rather than television itself. The way we consume it has changed, but the fundamentals remain the same. We produce something that people want to watch.”

“There’s a lot of talk about OTT [internet-delivered content]. But 99.999% of all content is made for linear television channels.”

Patterson said that a “mindset shift” was needed for media companies to start collaborating with different types of companies, even “frenemies” like Google and Facebook.

“We’ve got to be on it, and ahead of it. We need blood from outside the industry that challenges us with a different approach,” he said.

“The 20 year-olds of today have grown up knowing only a connected digital world that will become ever more connected.”

“They have different expectations. They are wired completely differently to pretty much everyone sitting in this room,” he said.

CASBAA panel

David Butorac (far left): There are too many of us with grey hair who are not representative of where the consumer audience is.”

Echoing that sentiment was David Butorac, the CEO of Middle Eastern pay-TV network OSN, who noted that the producers of content are often worryingly out of sync with consumers.

“Unfortunately in our industry there are too many of us with grey hair who are not representative of where the consumer audience is, or where they are going,” he said to an audience that was not noticeably young.

Does the pay-TV industry have the right people to push for change, asked panel moderator Marcel Fenez, the previous chairman of CASBAA until last year. “There are not enough people of my generation accepting that we don’t have the answers anymore,” said Butorac.

“We need more people who understand what young people want to consume,” he said.

In a later comment directed at Patterson and the advertising industry, Fenez proposed out that branded content hasn’t met quality expectations.

Patterson said that while some brand-produced material may “appear clumsy”, it works, and there was a need not to “over-intellectualise” it.

“You see some efforts that might appear clumsy, but in some markets this is an acceptable way a brand can appear. It doesn’t look subtle. You get some very clever stuff too.

“Consumers understand that brands get involved in content. I don’t think we should overintellectualise about it. Some of it works,” he said.

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