By Nigel Walley
We have been looking at the role of PC VOD in the TV industry recently and reflecting on how, in attempting to capture the potential of this new medium, the industry seems to be making many of the same mistakes of the first dot.com boom. The way that the PC VOD teams appear to operate as separate fiefdoms in all the main broadcasters seems troubling, and strangely familiar.
People appear to have forgotten that, when the internet came crashing into corporate life in the mid nineties, confusion and conflict quickly blew up in many big companies. The battle lines were particularly drawn between IT and marketing over the vexed question of ‘who owned the web site’. The IT departments thought that, as they were the only people who understood the new technology, they should be in charge of the web site. Like the TV industry, the creative departments in most companies were slow to react. Suddenly, IT departments started recruiting web designers and content people to run the company web sites, and conflicts with the marketing teams broke out.
There were some bizarre outcomes. One UK bank (whose company colours are clearly red, white and black) had an olive green web site for a while because the IT department liked it. Inconsistency in marketing messages were everywhere. In retail companies, this problem was further complicated as the IT departments, not content with taking on the marketing teams, tried to set up rival retail operations. One major retailer faced a revolution amongst store managers who refused to stock the promo disks, or even mention their fledgling e-commerce service in the stores, because of the antics of the new department.
Part of this chaos came about because of the insistence of the development teams that they needed their own brand for the new service. Retailers in particular, fighting off competition from Boo.com and Amazon.com, were insistent that they needed a unique brand to play with in the dot.com space. This only served to confuse customers and make cross-marketing difficult, let alone doubling-up marketing teams and budgets. Some of the worst offenders were the publishing industry, who set up competitive digital divisions with separate editorial and sales teams in competition to their main magazine properties.
The blame for the chaos sat clearly with senior managers. Most were so befuddled by the arrival of the web that they weren’t able to fully appraise its strategic implications, and they therefore let their IT departments have their head. Eventually sanity re-appeared, the absurd brands were shut down and the web operations were broken up and integrated into each of the relevant departments. My favourite memory of this, came from an experienced older department store boss, who woke up to what was happening and exclaimed ‘who gave the IT department a fucking brand to play with? They should be making sure my photocopier works!’ There is nothing new in this. R&D teams always want to watch their babies grow. In every industry, there comes a point where these initiatives have to stop being R&D, and be integrated into the mainstream, and sometimes you have to prise control from the fingers of the boffins. Coming out of th dot.com chaos we learned a few basic rules of dealing with technology change:
- Don’t be bamboozled. If management don’t ‘get-it’ then the boffins aren’t doing a good enough job of explaining. Send them back to write a business model (its funny how the only bit of software that the boffins don’t appear to be able to use is a spreadsheet!)
- Don’t throw the baby out with the bathwater. Unless you are one of the unlucky few, your core business will stay your core business – don’t lose sight of it. (OK, that speech might not have gone down well in the typewriter industry when the PC arrived).
- Don’t let new technologies set themselves up in competition to the main business. Almost invariably the new systems should be positioned as supportive and complementary to the main business.
- Don’t let the boffins have a brand to play with (they are bound to create something in olive green or fluorescent pink!)
- Don’t let boffins speak directly to customers or make content decisions! (These people have no friends or family and play Dungeons and Dragons for fun. They shouldn’t be put near your customers!)
- Let the boffins run developments while the emphasis is technical, but put in place a plan to integrate back into the main business once an initiative gains momentum – then fire the techies! (They’ll only go round annoying people by grumbling that it was all their idea in the first place).
- Don’t let key people in your existing business abdicate their responsibility to understand and adopt the new capability. (
All of this seems logical with hindsight, but when we look at the rise of the PC VOD branded players, it feels as though senior management in the TV industry failed to learn any of the lessons of the first dot.com revolution. In every major broadcaster, senior management set up separate VOD R&D teams, in separate buildings, with separate objectives from the broadcast teams. These teams have effectively been set up as competitors to their parents. In some broadcasters it appears that the VOD teams KPIs are actually in conflict with the main broadcast business. The outcome has been cannibalistic, not complementary to broadcast audiences, and these needs to be reset. Nobody appears to have asked the question, ‘how can we build a VOD service that is supportive and complementary to our core broadcast business?’
If we had started with that question, we might not have ended up with broadcasters repeating the dot.com mistake of creating separate brands. In the case of the BBC and ITV the player brands that have been created are not even built out of the established brand architecture that the channels have paid a lot of money to develop. Once again, the outcome is confusing marketing messages and confusion in cross-marketing and branding. That is what happens when ‘you give the IT department a brand to play with!’
Creating separate entities made sense from an R&D point of view, particularly given that there was a need to drive a significant change of consumer behaviour into the market. iPlayer in particular has been a dramatic success on that front. However, we cannot ignore the organisational friction and chaos that all this is causing within the broadcasters. More importantly, this separation is putting unnecessary pressure on channel brands. Consumer research has been clear on this. Consumers still value and use channel brands as key editorial and navigational supports. More importantly, they view catch-up as part of a channel experience, not as a separate experience. With the current organisational structures around PC VOD, the opportunity to exploit these consumer perceptions of channel brands have been limited. More dangerously, when most commentators are realising that we need to bring catch-up much closer to broadcast, VOD teams are beginning to make syndication decisions for VOD based on their own needs and interests, rather than than synchronising with the interests of the main broadcast channels they are meant to support.
There is a very strong argument to say that iPlayer, and the other PC VOD teams now need to be broken up and the R&D teams focussed onto their next technological challenge. As Tom Peters once said, ‘If it ain’t broke, break it!’. Now is the time for that philosphy in the TV world. However, it appears the opposite is happening. In every broadcaster these R&D teams have morphing into their own permanent divisions. (In the BBC, they are moving towards letting the R&D team commission content.) In every case there appears to have been little integration planning for how to bring this new functionality into the main business. More worrying is that there appears to have been a hope among traditional channel managers that, having ‘solved VOD’ by setting up these separate teams, then the core business can get on with running the core business without changing anything. This means that management in the TV industry seem unprepared to take on responsibility for running VOD within the broader TV mix