How bright is the future for Swedish TV-producers?

Och den ljusnande framtid är vår?

Agenda for today’s seminar

• 14.00-15.00 Presentation of the study• Short break (wine/beer/coffee available)• 15.15-16.00 Discussion in groups (audience

participates) about key issues for the future of the Swedish TV- production industry

The study of the Swedish TV-production industry

• Strategies and business models• Industry structure• Legal and regulatory framework

– With European comparisons

Background

• The Swedish TV-production industry coming of age: maturing and professionalizing

• Technical, economic and regulatory changes make for a turbulent environment for Swedish TV-producers

Turbulent and exciting times ahead!

• Technological development allows for new distribution platforms as well as new business models and revenue streams

• Regulatory changes• Globalization of the TV production

industry: formats and foreign ownership

Rolf A. Lundin

Handling Strategies and Projects in TV Production Companies

Why projects?

Open interviews with relevant actors more than three years ago

• Lots of references to creativity

• Three types of projects:

1. Production projects2. Format projects3. Strategy projects

Ad 1) Production: Coordination, freelancers, well prepared!

• Impressively efficient. • TV producers do not have much to learn but

have a lot to teach others!

Ad 2) Format: From first idea and marketing through bible work• The bible phase is orderly. • The phases prior to the bible phase are less

clear. • One problem is how ideas are generated and

kept • No correspondence to “shelving” in traditional

product development.

• Action was unclear.

• The interviewees did not seem to know how to handle the question!

• Why is that so – ”Is he a spy?” Ad hoc? System?

• No clear projects related to strategy, not even to learn.

• The TV producer association for common problems (IPR, relations to SVT, etc.) providing a forum for “industrial wisdom”.

Ad 3) Strategy: The problems were described in similar terms.

Discussions with actors in TV production in November 2011:

• Less talk about creativity• No change when it comes to production projects• Less stress on development of formats • Strategy a lot more developed for the company (less

about the association) • A system for strategic development. Similarities with

traditional, ripe industries. • More discussions about new market opportunities in

parallel to the traditional ones. Translation of trends to development and action.

• Conclusions about projects in the companies: Still very efficient in exploitation and the competence for exploration has definitely grown.

• But the Swedish TV production market is all too small. Successful innovation demands a big market. Swedish film seems to be riding on a wave of new attention. Can this wave be utilized?

The Regulatory Framework

Pernilla Rendahl

The regulatory framework

• Initial ideas – The link between intellectual property rights and

VAT distorts competition?– The regulatory framework cannot coop with the

transformation without causing more competitive distortions?

– More regulation v. less regulation?

The regulatory framework

The regulatory framework

• Particular Swedish concerns- Need to be strong within the EU and other

international organisations- X-border problems cannot be solved with

unilateral measures- VAT creates distortions

- link between copyright and VAT- Deductibility of input VAT

The regulatory framework

• Intellectual property and licencing– Key issues that need to be prioritized by regulators– One-stop shopping (?)

• VAT – EU Commission: too many distortions– One-stop shop 2015

• Freedom to provide and receive services?• One framework, but issues are discussed

separately

The regulatory framework

• More and larger groups of companies

• New business models?

• Shift of powers?

The regulatory framework

• More or less regulation?

• Sweden difficult to compare due to its size and structure

• Unilateral measures are not enough• Regional and international coordination is

needed

The regulatory future

• How can business affect the legislators?

• Should business affect the legislators?

• Utopia – one single market?

Independent TV production in Europesome preliminary findings

Lucia Naldi

• Turbulent times– Changes in technology– Regulations

• Change/extension of business models?

2 possible business model extensions

– Tapping into advertising funding as a replacement for declining broadcaster funding

– Integrate the distribution: starting in-house distribution

In fall 2010, MMTC scholars and a team of researchers from the University of Zurich have jointly designed and carry out a European-wide survey

A pan-european study (1)

The survey was directed at independent TV producers in the following EU countries: Sweden, Norway, Denmark, Holland, Germany, Switzerland, the UK, Ireland, Spain and Croatia

Identified using the registers of members of the national industry association

E-mail questionnaire

Targeted responded: the company’s CEO

A pan-European study (2)

A pan-European study (3)

14%

30%

12%

10%

16%

8%

2%

2%

5%

1%

CHDEUKIEESCRDKNOSENL

431 responses (155 complete) out of 1467 emails. Response rate 29% (11%).

Perceptions of the dynamisms in the TV production industry?

- Technology-Competition

-Consumer behavior-Regulatory framework-Product maturity rate-Marketing practices

Moderately high dynamism

United Kingdom

Ireland

Spain

Norway

Sweden

Switzerla

nd

Germany

Croatia All

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

3.48 3.34 3.37 3.22 3.11 3.09 3.032.65

3.16

Developments within:

- Advertiser funding programming- Online distribution

Advertiser funded programming (+)

• It is getting more widespread among firms• Although with limitations• No major differences between European

countries

Share of production companies using ADF

2007 2009 20110%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Share of productions containing ADF

2007 2009 20110%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Advertiser funded programming (-)

• Advertiser funding is not clearly beneficial for producers—broadcasters can secure part of the advertising revenue

• Differences between European countries

United Kingdom

Norway

Switzerla

nd

SwedenSpain

Germany

Croatia

Ireland

1

2

3

4

5

6

7

BroadcasterProducer

Distribution of advertising revenue

• Only firms with first hand experience with AR• Differences across genres: fiction can retain higher share of

advertising

1-all revenue remains with broadcaster; 7= all revenue remain with producer

Online Distribution (+)

• Over the next three years, growth will come from non-traditional distribution channels

• Differences between countries

Distribution platforms(expected development)

TV

Cinema

Mobile

On-line

-3 -2 -1 0 1 2 3

-3 strong decrease; 3= strong increase

Distribution platforms across countries(expected development)

• Germany and Switzerland expect a major decline of TV market (-60%)

• Spain and Croatia some growth potential in the TV market

• Swedish producers have lower expectations on the opportunities in mobile and online compared to their European colleagues.

Online distribution (-)

• European producers expect themselves to have a less powerful position in the on-line space as compared to the traditional market

• Ranking the actors according to their expected revenue1. internet platforms2. telecommunication operators3. broadcasters/publishers4. Advertisers5. Producers

Possibility to retain broadcast and online rights

1-no rights at all retained; 7= all rights retained

Switzerla

nd

Netherlands

Norway

United Kingdom

DenmarkSpain

Germany

Sweden

Ireland

Croatia

Total1

2

3

4

5

6

7

brodcast rights retained online rights retained

New competences needed?

• 88% believe they need new competences in their organization to growth in adverting funding and online distribution

What new competences?

Adjusted training programs

Building cooperation with advertising

agencies

Necessity of marketing division

More expected skills per person

0%

10%

20%

30%

40%

50%

60%

70%

80%

Future?

• ADF is likely to establish• Growth of online and mobile distribution

• How can European producers retain ADF funding?

• How can they secure their position in the online space?

• Consolidation of the industry? Larger production companies

• Backwards integration- broadcasters acquiring production companies and reintegrating production to better serve the advertisers, i.e. their actual customers

Possible scenarios

The structure of the Swedish TV-marketSVT and production companies

Maria Norbäck

SVT’s co-productions

• More investment (and thus risk) is being demanded of the production companies

• In some genres production companies are responsible for finding additional financers

SVT’s co-productions

• SVT needs to professionalize and improve their commissioning practices

• There needs to be a discussion around the division of rights between SVT and production companies

Structure of the Swedish TV market

• SVT and the other distributors enjoy oligopoly-like position (buyers’ market)

• In other European countries the broadcasters’ power is less strong

• The issue of the division of rights is crucial for Swedish production companies’ future

The UK legislation a role model?

• The UK Communication Act of 2003 states that broadcasters must negotiate secondary rights, and that these not automatically end up with the broadcasters (which is something that many Swedish broadcasters today have written into their contracts).

• BBC has very clear policies regarding their commissioning practices (price per hour of programming, waiting times etc.)

Diskussionsfrågor

• Det främsta strategiska problemet nu?• Framtida affärsmodeller?

• Utopia – one single market?

• Vad har ni för förväntningar/förhoppningar på SVT i framtiden?