MTV's Approach to the Digital Mesh

Sydney.
The next speaker here at the Australasian Media & Broadcasting Congress is Gerry Gouy, Commercial Director for International Digital Media at MTV Networks. He begins by saying that today, there is no digital media any more - there is only media. Convergence is here - not for everyone, but for many.

Big media companies have been guilty of siloing media into old and new - so why the tipping point now? Gerry says that there has been a rapid shift of TV online, ubiquitous high-speed broadband (well, outside of Australia, at least...), a drop in broadcast media ad sales, and a simultaneous growth in online advertising (and here especially search and video ads).

MTV Networks is the largest TV and digital platform network, with a variety of brands; it now also has a large number of digital distribution deals around the world. The digital mesh is crucial here, especially for a company with a youthful focus - that is, a young and impatient audience. MTV tracks what patterns are emerging in such audience demand, and what linkages exist between different forms of media use.

The world today is no longer flat, then - it is fragmented. MTV's focus here remains on North America, Western Europe, North East Asia, and Australia/New Zealand - not so much the emerging economies where the digital mesh has yet to materialise fully. The mesh includes services in addition to networks and hardware, and a widespread adoption of new customer propositions and business models - Australia actually leads the world in some such propositions (Telstra's NextG video service with full-length TV shows and DVD-style chapter divisions, similar services on 3, and catch-up TV offerings online), but perhaps not yet in take-up.

There are also key battles between and within conventional media organisations (the now-resolved rivalry between Sensis and Google, internal discussions about the impact of catch-up video on demand on first-run ratings); there is a sense of fragmentation and chaos here. This is especially the case in music; music experience is now a mixture of discovery, exploration, owning, sharing, and collaborating, and no longer a simple linear process from discovery through exploration to owning music.

MTV and other media companies must now learn to love fragmentation. This is infinitely more complex than the introduction of cable TV was some 25 years ago. There is a need to accept that niche is the new normal, and that the digital mesh must be used to connect everything, cross-promote everything, and prepare for content access through search engines rather than content portals - "the media company's front door doesn't matter any more".

Broadcast and online video have divorced and re-married, in other words; online video has been combined with traditional broadcast TV, and the two platforms are rapidly merging (as are the advertising models that support them). Catch-up TV cements the link between TV advertising rates and online video streaming CPM (cost per thousand). In Western Europe, online now has enough scale in terms of CPM to directly affect TV, and online video is the fastest-growing media sector for advertising spending (redirecting funding away from TV). Similarly, especially through iTunes, paid online video is growing rapidly on a global scale.

And finally, mobile video is at last starting to become normal - it begins to matter, although in many cases mobile video remains an afterthought in cross-media content strategies. Operators are slowly giving up control to aggregators and media owners, and flat-rate data plans are beginning to arrive in some markets, making it cheaper for users to use mobile video.

MTV's approach is to coordinate this digital mesh, and to both protect existing TV and home video properties and innovate in video-on-demand and download-to-own markets. MTV's approach is now to serve those latter markets as soon as possible under existing licencing arrangements in the markets that it operates in. These digital options have the potential to find a new audience. MTV has also introduced Web Catch-up+, which offers traditional broadcasters worldwide a structured way to extend their advertising and content to the Web.

There will never be a mass audience again, Gerry says; online is now mainstream, even for TV viewing (at least two thirds of US Internet users watched at least one programme online during May. However, there is a way to aggregate these fragmented audiences into lucrative markets.

(In comments, Peter Cox mentions that, based on what happened in 1989 and 2001, there's a significant likelihood of a massive reduction in advertising spending due to the global economic slow-down. Tough times ahead...)

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