Casten, in April you announced a major restructuring process in order to “stay two steps ahead” as viewers have been switching quicker than expected from linear to online TV. What were the main strategic points of this process?
Like no other media in Sweden, TV4 reaches 70% of the population every week through traditional TV – it still stands extremely strong. However, it’s inevitable that consumers are shifting from linear to online TV. Linear TV consumption is slowly decreasing while online TV grows very quickly. The new landscape and the online competition is something completely different from the traditional TV market. We realized several years ago that we needed to adapt to that change and transform our business from a viewer perspective to a user perspective.
The transformation from viewer to user has been the main target for all the organizational changes we’ve made over the last couple of years. The key elements of that have been an increased focus on domestic content and investment in technology. At the same time, we’ve changed the culture and organization to work smarter and more efficient, and furthermore aligned our linear, AVOD and SVOD businesses. We have integrated all parts of the companies and started working in a platform-agnostic way, no more separate digital departments. The changes we made just before the summer were part of this, and also a way of increasing our transformation speed and flexibility.
From a financial point of view TV4 Group is quite stable as it posted record revenues in the first half of the year. Is TV4 now where you would like it to be or are you planning more changes?
Change is a constant condition if you want to be successful in our industry. We need to be one step ahead, or even two steps ahead if we can, to build sustainable and strong businesses in a long-term perspective. From a financial point of view TV4 stands strong. As long as we are the Swedes’ number one choice, we are also the best advertising partner. We’ve seen a strong trend where advertisers who shifted quite heavily into digital and social advertising could not get the effect they wanted. They are rapidly shifting back to traditional TV again, something we benefit from. However, we are aware that it is a temporary bounce-back and it is TV4 Play that stands for our massive growth when it comes to advertising. On top of that, we are currently building a more balanced portfolio of revenues from advertising and consumers as we are also investing heavily in our SVOD service C More.
TV4 remains the leading TV group in Sweden and has even improved its ratings this year, while other commercial nets in the region have suffered greatly. How do you manage to do that?
We’ve invested heavily in two areas – technology and domestic content. Technology is a hygiene factor, a license to play; and the strong domestic content is what differs us from both local and global competitors. And that goes for news, current affairs, camp-fire entertainment, scripted drama and sports. This has resulted in high consumer satisfaction with users who appreciate what we do and how we do it. They stick to our channels and platforms which in turn attracts the advertisers, who can’t get the same reach and ROI anywhere else. Needless to say – this is not something that comes for free, but something we work hard for. The competition is getting tougher and tougher with global players coming into the Swedish market.
In these times of transformation for the television business it seems like broadcasters are quite afraid of taking risks in their programming. Is that also the case for TV4?
I don’t think so, but you need to balance the potential risk of new content with the safety of existing formats that continue to attract big audiences. You also need to dare to make changes and tweak the formats you’ve had for years in order to stay relevant. And I would say we’ve managed to do so, while also launching new shows every year that has become great success stories, from domestic drama to entertainment.
As you mentioned, your TV4 Play service is quite popular among the young viewers. How do you take viewers from your TV channels to the Play service and vice versa?
TV4 Play is an immense success. In May 2016, we decided to launch mandatory login on our AVOD service. It was a scary and brave decision for a company that for more than 25 years had lived on making the content as accessible as possible. But we felt we needed to do that, as it allows us to get to know our users better and consequently we are able to personalize the service and offer our advertisers tailored target groups. Today, we’ve passed 3.4 million registered users (in a country of 10 million), which makes TV4 Play the largest Swedish online TV service and one of the largest login services in total.
We want a similar position in the digital environment like the one we have on the traditional TV market, therefore we need to transform TV4 Play from a catch-up service into a go-to destination. To reach this goal we strive to make all our content platform-agnostic with the exception of some web exclusive formats. We use our traditional windows to refer to our Play service where the user can access our content on their own terms. Additionally, we push our SVOD service C More for those users who want the best from TV4 ad-free.
You recently decided to close some of your linear TV channels. Why? Will they eventually turn into online TV channels?
The two niche channels – TV4 Komedi and TV4 Fakta XL – have been successful and important components of our multichannel strategy. But the viewer demand for this type of channels and content has changed, and it is better met with streamed SVOD services today. Closing the two channels means that we can focus our investments on our broad channels TV4, Sjuan, TV12 and TV4 Play. Through that, we enhance their value for viewers and users – as well as for advertisers and operators. Prioritizing also means better ability to build C More, both regarding to content and technical development.
You are reversing this model with sports as C More is launching a new FTA sports channel this October. What is the reason for that? Is sport already too expensive for the viewers?
That’s part of it. Like elsewhere, sports rights in Sweden are very expensive and it is also spread out amongst several players. In the end, this puts a lot of pressure on consumers and their wallets. With regard to this, we want to provide a more affordable offer of high quality sports to a broader audience.
The other reason is that we see a clear niche on the market for this kind of FTA content. In our TV group, we have the ability to build a sports channel for Swedes which has been lacking, with a mixture of live and non-live content of the best quality. This demands both strong rights and high editorial competence, which is something we have.
Drama is the other major magnet keeping viewers in front of the screen. You are launching your major productions first on C More and several months later on linear TV. Does this strategy deliver the expected results?
This is our new window strategy for domestic drama which goes from pay to FTA and then back into library. We are still in an early stage as our first C More original series Farang just started in our FTA window, the second, Saknad, premieres in October. What we can see so far is that the premiere on TV4 gave Farang a boost on C More – and that the users who enter our SVOD service also start to discover our other domestic content such as Gåsmamman and Saknad.
Let’s dig a bit deeper into this. Farang was C More’s most successful original series this spring but the linear TV ratings have not been that high. Are SVOD revenues able to offset the lower ratings and ad income?
We build our long term-strategy on two revenue streams: advertising and consumer. It is the balance between AVOD and SVOD revenues that is key to our sustainable development and future success. Because of this, we invest in both.
Regarding Farang, this drama is not as broad as the ones we usually air on TV4. The characteristics are more known in a pay-window. Both Saknad and the upcoming second season of Modus (also C More original) differ in that way. We are constantly evaluating the balance in storytelling between AVOD and SVOD, it is truly an exciting journey exploring this. We need a balance in our content strategy regarding to these aspects as well.
C More keeps on posting losses. When do you expect to see a turnaround in the results?
C More operates on a market where the conditions change every day, and that’s why a specific date for turnaround needs to be flexible. Our focus is on growth through investments in content and technology to build the service in a long-term perspective. With that being said, the company needs to show profitability and with the qualifications that C More has, I’m sure it will. Our service has been growing twice as much as the SVOD market in general over the last couple of years, and with the close collaboration with TV4/TV4 Play we create services that attract users more than ever.
TV 2 in Norway has made the development of TV 2 Sumo an absolute priority with more original productions. In Denmark TV 2 Play does not boast a major originals slate but continues to improve its results. Where does TV4 stand with both C More and TV4 Play? Aren’t the two services in conflict with each other?
No, on the contrary, they are both key elements of our future, and very dependent on each other. We have one clear FTA/ad service in TV4 Play, where you get all of TV4’s content for free in a personalized service. And with C More you have a clear pay-TV offer, with the best premium content both in terms of domestic content, sports and international series and films. The C More offer also includes all of TV4’s content without ads, and all of the C More and TV4 linear channels streamed online. Through this co-existence of TV4 and C More and the windowing strategy that we’ve mentioned we manage to invest more, in stronger content, which we can use for a longer time and in a better way.
FX chief John Landgraf recently said that services like FX+ are the ones that could help networks like FX to survive and compete effectively with Netflix, Amazon, Facebook, Apple… Do you agree with him?
Scandinavia is one of the most competitive markets in the world, with global players having entered and transformed the market. But we are also part of that transformation. The domestic content is what differs us from both our national and global competitors, and I think we have a very strong position with both our FTA channels, AVOD and SVOD-services to grow our market shares even more on the Nordic market.
Is the “second screen” about to turn into a first screen?
You use different screens to access our content depending on where you are, what time it is and what you are doing. For example, a lot of our mobile consumption is airplayed or casted to the big screen in the evenings. That consumption is similar to linear consumption, with more than one person watching as well. What is the first, second and third screen for people might not be the most important thing, as long as we and are on all of those screens and manage to stay relevant. And that’s our way forward.