LORD PUTTNAM OF QUEENSGATE CBE
Speech To TAM Event
As Delivered
To be Delivered at:
Aviva Stadium
Dublin
June 25, 2014
Good morning.
I’d like to begin with a clip from an interview I conducted with Barry Norman, the host of the UK’s Film Programme, over 30 years ago, in early 1982.
(Barry Norman interview - 4 minutes)
Now let’s cut to the present day: a what is now truly a cornucopia of choice - and those choices are only going to get more diverse.
The continuing speed of change in the digital landscape is quite extraordinary.
Thanks to WhatsApp, Snapchat and Instagram - 'Facebook' is even beginning to feel a bit 'old hat'!
For example, as some of you may have read, last week 'Yo', a messaging appwhich simply sends a single word message, 'Yo', became the fifth most popular app in the US Apple Store, jumping way ahead of Facebook’s new app Slingshot, as well as Instagram and Snapchat.
That app took just eight hours to make and last Thursday some 4 million 'Yo's were sent - with possibly another 20 million in the week that followed!
In short, this is a world which is moving incredibly fast, one in which there is absolutely no monopoly of wisdom on who or what will succeed, let alone how or why!
All these social networks have had the effect of recasting the media landscape, not least by massively extending our capacity to share our memories and our experiences.
This, in turn, has increased people’s power to influence choice– via the trusted voices and conversations which the social web increasingly enables.
Regardless of whether teenagers feel it’s as ‘cool’ as it used to be – largely because their parents have moved into what they regarded as ‘their space’ –
Facebook and Twitter keep evolving, adding features and functionality.
They have to – Twitter’s share price has fallen by about 40% since the beginning of the year and it remains far from clear how (or even whether) it becomes financially sustainable in the medium to long-term.
But whatever the underlying economic value, there’s no question that the success of such social media has challenged us to think harder about the boundaries between ‘public’ and ‘private’.
But in doing so, it's become inextricably linked with the democratisation of opinion.
You may feel, as I do, that some elements of the Establishment have only themselves to blame for the collapse of deference.
As we've seen, moral or political capital, built up over generations, can now – fairly or unfairly – be eroded in a flash.
Nevertheless, the internet encourages us not simply to be passive recipients of information, but to enquire for ourselves, and then to share whatever our searches uncover.
E-commerce or m-commerce, via our mobile keypads, has dramatically broadened the scope for impulse buying, sometimes triggered by a valued recommendation, sometimes not.
In any case, it’s increasingly important for brands to forge emotional as well as rational connections with consumers.
I’ve heard young consumers somewhat cursorily segmented as ‘Generation C’ – the rather cynical, media-savvy demographic who like to create, curate and comment – with a super-abundance of entertainment options open to them.
Ultimately, all of this has to be good news for both broadcasters and advertisers seeking content partnerships – stories and characters on film, or what we still conveniently call television, would appear to remain as desirable as ever.
Connected audiences expect flexible access to great content – most of which they are watching, rather as I predicted during that Barry Norman interview) on ever larger, better quality screens - at home.
So what do all these developments mean in terms of what and how people are watching here in Ireland?
Two things. People are watching more audiovisual material than ever before, and that humble 'television set' is still the primary means by which people access this material.
[Show Slide– Current viewing habits in Ireland]
[Show Slide– Ireland, traditionally early adopters]
As a recent Deloitte survey of UK consumer habits put it:
“Some 72% of respondents say they regularly watched ten or fewer channels, yet all TV households have access to at least 50.
And yet the difference between multichannel homes, and those that simply pay the compulsory licence fee, is only an average of around three extra channels watched.”
People are not 'cutting the cord' of TV and relying on internet-enabled devices.
But online, YouTube is way ahead of all of its competitors – because online people still overwhelmingly prefer watching material online!
[Show Slide – People Still Prefer Watching Free Videos online]
But of course, viewers using multiple screens to do a variety of different things.
Here’s how it looks in the US.
[Show Slide – Mobile Owners use Devices while watching TV]
Then there’s VoD and – although it’s been around for a while, it’s real potential and impact are only just becoming apparent.
[Show Slide – Netflix Logo]
The phenomenon that is Netflix has recently announced its intention to invest $5.5 billion over the next 3 years in original programming, a remarkably ambitious sum.
With 38 million subscribers worldwide, Netflix makes its content available on-demand via as many devices as possible.
It's already starting to account for a significant proportion of internet traffic during evening viewing hours.
Jeffrey Katzenberg revealed last year that he’d offered $75 million for just 3 new episodes of AMC’s highly regarded drama, Breaking Bad.
His idea was to offer the episodes in instalments for 50 cents a day over 30 days – a total price of $15.
He was working on the entirely reasonable basis that if 10 million viewers worldwide opted to make that payment, it would generate an income of $150 million, doubling his original investment.
Amazon, a giant in the home entertainment realm, is now investing in developing its own slate of original content.
It’s a sure-fire way to distinguish its offer from other digital services, whilst all the time adding subscriber value.
So this is anything but a 'static marketplace'.
Earlier this year, the entire second season of the Emmy-winning House of Cards was unveiled on Netflix on the same day, Valentine’s Day, offering a new ‘box-set’ experience to relish.
As it happened I'd already ordered my 'box-set' - but couldn't wait for the DVD 'window' to expire, and watched it on Netflix'!
I've just received a mint Box Set of House of Cards which, unopened, I'm happy to give away as a present.
The movie industry's concept of 'Windows', that's to say delays in platform exploitation, are rapidly becoming a thing of the past – although within much of the industry this remains something of a heresy.
However I honestly believe we'll find ourselves moving to 'day and date' releasing patterns, for many if not most movies, within five years.
The possibilities that presents for your companies are immense in terms of marketing and promotional tie-ins across different media.
'Catch-up' is also transforming viewing habits.
On the other side of the Irish Sea, requests to the BBC iPlayer soared to 3 billion last year, a third more than in 2012.
As well as catch-up TV, the iPlayer premieres shows for subsequent transmission on a BBC channel, and streams exclusive short- and longer-form content of its own.
In a move that clearly reflects its strategic importance, the BBC is about to appoint a dedicated Controller of iPlayer.
And also of course, young people are using, sharing and repurposing content in ways never imagined even a decade ago.
All of these developments help ease TV programming into playlists, hash-tags, mentions, likes – recognising that in a people-led, relationship-driven, digital environment, listening and sharing experiences are vital cornerstones of success.
I think it’s fair to say that we’ve only just scratched the surface of the commercial power of the social web, not least as a recommendation engine adding new layers of value.
One of my favourite columnists, Tom Friedman, writing earlier this year in The New York Times, took this line of thought a step further –
"Something very, very big happened over the last decade,” he wrote. “The world went from ‘connected’ to ‘hyper-connected’.”
[Show Slide – Technology]
He – among others – considers that, 200 years after the first industrial revolution, we find ourselves in a second machine age, with a ‘technological hurricane’ reshaping our work and social lives in an exponential manner.
The spread of the internet to both people and things means that every smart product, wristwatch, refrigerator, thermostat, pair of shoes or 3D glasses can be tagged to transmit and receive digital data, facilitating much faster analysis, replication or improvement of those same products or services.
Just last week Google’s subsidiary Nest bought the video-monitoring startup Dropcam, which makes Web-connected home security cameras.
We are already moving into the era of the so-called 'Internet of Things.'
This isn’t science fiction or something that may, or may not, happen tomorrow.
It’s here today and again it’s going to shape massive changes in consumer behaviour - as well of course as equally huge concerns about privacy and data.
Similarly, the sharing economy – the use of taxi apps such as Uber or the accommodation service AirBnB – is going to transform patterns of consumer purchase; many of these services are likely to push people toward renting “services” rather than buying “things”.
All of this means underlying attitudes towards 'freedom of choice' are forever changed, as a result of which our own thinking has to embrace a far longer-term horizon.
One example of long-term change - the demographics of the world’s population is itself undergoing a remarkable transformation.
As a consequence of increases in the middle-aged demographic, and welcome improvements in life expectancy, the global population of senior citizens is projected to surge from just over half a billion to 1.5 billion by 2050.
That’s a tripling of people like myself who are over-65 in little more than a generation.
We’re heading towards a much older world in which 1 in 6 people are 65 and over.
And that has significant implications for every company in this room in the way in which you target, and connect with, audiences but also of course in terms of your own workforce.
Looking towards that broader horizon, one of my main concerns as Digital Champion is the way in which all these changes in people’s behaviour impact on education.
Because of course it is in young people, above all, that these changes are most evident.
Yet there seems to be an institutionalised resistance to change in parts of our school system.
[Show Slide – Net Children Go Mobile]
This dislocation between life outside the school gates and inside was made crystal clear in a report published three months ago entitled
'Net Children Go Mobile':
For example, most (53%) 9-16 year olds here in Ireland say they "never, or almost never use the internet in school"!
Of the five countries looked at, which included the UK and Italy, Ireland reported the lowest rate of internet use in school - at only 7%!
The gap between home use (73%) and school use (7%) is, in the words of the Report - “particularly stark” - I'd say that's putting it mildly!
Last but not least in this 'snapshot' - only 20% of young Irishmen and women used the internet for any aspect of their schoolwork in the past month!
It's surely not unreasonable to suspect that we may indeed be suffering from a form of 'institutionalised reluctance' - or is it simply resistance among a whole slew of stakeholders, aswell as a fair number of teachers and educationalists - to fullyembraceand optimise the potential of digital innovation.
[Show Slides – Country profile ICT, Youth Unemployment, Education as % of Total Public Expenditure]
Of course, people have always reacted defensively to new technologies.
[Show three Clips– FIDO, Nooo to Hollywood and Betamax Ad]
But as the Chinese President very recently said:
[Show Slide – President Xi Jinping quote:]
"We cannot allow other peoples yesterday's to become our tomorrow's".
Compare developments in Surgery and Medicine generally to that in a Teaching and Learning.
[Show Slides]
I’d encourage all of you here today to think about how your companies, expert as they are in dealing with the opportunities and challenges of digital, might help to change this rather lamentable situation in our schools.
As Digital Champion I’d particularly welcome the most creative and innovative ideas you can come up with, ideas which we could take forward.
[Show Slide – Digital]
Let me give you just one example from in the sphere of audiovisual copyright where I believe broadcasters will have an invaluable part of play.
[Show Slide]
The TES Connect site now has 5.9 million registered 'teacher users',
in 193 countries, and downloads are running at over one million a day!
If we can just improve the quality rather than the quantity (currently
700,000) of the resources) I believe we can achieve a step-change in
support to teachers in the classroom.
What's interesting is that whilst 71% of the total resources are user
(teacher) generated, almost 85% of the actual downloads come from thatsame source - which suggests that teachers prefer, or more greatly
trust, material that's been customised by other teachers.
But of course for audiovisual material, such as that broadcast on television, there is the issue of copyright and the problem of appropriate payment for that copyrighted material.
[Show Slide – Copyright Hub]
Europe can establish a world lead in this area, and myrecent conversations with Richard Hooper, the UK Chairman of the Copyright Hub regarding the potential of'one click' technology to generatemicro-paymentsmakes me morecertain than ever that this has to be the way forward - with enormous implications for all of your businesses.
So, to sum up:
1. In this converged, non-stop digital world, change happens fast– rather faster than many people seem prepared to acknowledge.
2. Linear narratives remain powerful and television as a medium has proved itself able to accommodate all manner of compelling storytelling and documentaries.
3. But digital media continues to 'stir the pot' in terms of ways in which intellectual property is created, distributed and consumed.
4. Despite the cornucopia of choice available to audiences – especially young audiences - given sufficient investment to enhance its unique experience, together with a flow of great product - effectively distributed – television can look forward to an extraordinarily exciting future; all the more reason to concentrate plans for growth on ‘audience connection’.
And ultimately, that ‘connectedness’ will remain much more about people than technology!
Thank you very much for listening to me.
[Show Slide 27 – Thank you]
Ends.
(About 2347 words, plus improvisation. Approx 25mins in all).
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