I had the privilege this week to interview George Kliavkoff, outgoing Chief Digital Officer for NBC Universal, at the NY:MIEG (New York Media Information Exchange Group) [http://www.sobelmedia.com/2008/07/29/2396/] Breakfast held at the Samsung Experience in the Time Warner Building.
With a focus on gift wrapping 2008 and casting forward to opportunities in 2009, we covered a number of different topics. The full interview is available on TV Mainstream. Here are some highlights:
Olympic Online Consumption
Customers want to consume media wherever they are and they are proving this with viewing behavior. The Olympics stats are impressive: 2200 hours of live programming, 52M unique on line viewers, 1.4B page views, and 10M hours of streaming media over the 16 day period of the Olympics. Note however, that 90-95% of Olympic coverage consumption was on the TV, with the remainder on the Internet and a very small amount on mobile. The numbers show what a success the Olympic Games were for NBC Universal, and proves the adage that customer experience needs to be a driver of product and services development. If it is, advertising, investment, and other revenue streams will follow.
Smart Co-opetition Partnerships Can Build Success
Consumers want ease of use, convenience and a great customer experience. If you build it and there is value, consumers will come. Seeing the hunger for digital media and knowing quantity and quality of content were needed to draw consumers in, NBC sought out partners, and formed a joint venture with News Corporation to distribute premium content online with an advertising revenue model. Hulu was born and today reaches 98% of the US marketplace with its multiple and varied distribution partnerships. MSN, Yahoo! MySpace, AOL, Comcast, TV.com all stream Hulu video, with the video player skinned with that particular brand’s logo. CBS and ABC/Disney are the only two companies not working with Hulu, though their content can still be searched found and linked to through that site. The centralized aggregation and distribution of premium content gives Hulu the scale and means to be successful.
Kliavkoff believes monetizing content with advertising will not be as difficult as people think. Companies will be more concerned with the use of their dollars, so there will be a “flight to quality.” Though reduced in quantity, the money will be there.
One interesting nugget of learning from tests on Hulu is that while consumers don’t like to view advertising, they will view it for value received. And when given a choice between seeing a long movie trailer up front or a series of shorter advertisements over the course of a video steam, the surprising research results are that people are divided 50-50 as to preference.
Opportunities for Development Investment in 2009
Innovation is a key driver of revenue, and now is the time to invest in new technologies and new business models. NBC/U and GE Commercial Finance created the Peacock Equity fund to make Series B investments in technologies that are tangential yet related to NBC/U’s core business. Capitalized with $250M, the fund has invested $100M thus far in 11 companies. One company has successfully exited – Adify was acquired by Cox Enterprises for $300M within 6 months. Other investments include those in ad networks, mobile, and video games advertising companies. These give a sense of how NBC/U is perceiving its business going forward, what it considers “tangential,” and where the opportunities lie for companies starting to build technology now.
George believes that the future lies with digital platforms replacing traditional distribution and advertising mediums. Distribution of content across all platforms – traditional, internet, mobile and onward is the plan of the future. Companies wanting to place bets will find advertising dollars seeking out digital means to deliver their messages when they return to the market place. Local distribution and advertising will become personal. Advertising delivery systems that can target consumers with their specific needs (to buy an automobile) with advertising and information for as long as they need that content (once the car is bought, ads shift to nearby locations for road-trips or oil change discounts), will be of interest to consumers and investors.
Mobile has undergone an opening of the doors of possibility with the introduction of the iPhone, the Android OS and the G phone. George anticipates a marketplace for premium applications and a wave of new mobile development and associated business models. Of particular interest to him are companies focused on personal productivity and services. This is an underserved and compelling market sector.
As a final wrap, George named 2008 the year of “Great Achievements,” and sets the bar for 2009 with the tag, “Recession Accelerates Shift to Digital.”
You heard it here first and to listen to the full interview in George’s own words, go to NY:MIEG’s online TV Channel.