The digital challenge is front and center in James Packer’s vision for Nine’s parent company PBL and the online face of the network, Ninemsn, a joint venture with Microsoft and its Microsoft Network formed in 1997.
Packer’s confidence in new technology is understandable. While the most recent TV ad revenue data show that third-quarter 2005 spend was off 11.7% to A$4.2 billion ($3.1 billion), online revenues jumped 60% in 2005 to $445 million, compared with the previous year, and similar growth is expected this year.
And the trend is global: For example, the U.S.-based Television Bureau of Advertising recently conducted a survey that found the online presence from the U.S. networks’ Web sites generated an estimated $283 million in advertising in 2005, twice as much as in 2004. The same report touts a 39% jump thus far in 2006.
Despite these figures, Ninemsn topper Martin Hoffman is keen to point out that most of the technology that is exciting the media industry is still in its infancy.
“We shouldn’t get ahead of ourselves,” Hoffman warns. “Free to air TV is still a great business and will continue to get good audiences for a number of years to come, and Ninemsn will layer in on top of that.”
He is taking an understandably cautious approach for another reason: The new online world presents a conundrum to PBL and its slew of media interests. It is seeking to grow its online penetration without cannibalizing auds from free-to-air network Nine and from its 25% shareholding in Oz’s feevee platform Foxtel.
Hoffman believes that all PBL businesses can live together. He says the fight they all have is with technology: making content faster, more accessible and more portable. There will be plenty of time to argue over the spoils of techno war.
Ninemsn plays off the relationship it has with the network. “At the moment, we are enjoying the cross-promotion and synergies we can get working with Nine — for example, taking ‘National Nine News’ broadcasts at the classic 6 p.m. and 10 p.m. times and then allowing them to communicate news values and the brand across the whole day,” he says.
Hoffman says the news component is the most popular content on the portal, with viewers compiling their own bulletins in the order, and at the time, they desire.
The Ninemsn site (ninemsn.com.au) is primarily clip-based, and though it plans to move into full downloads of TV skeins, the thrust is to make it easier for consumers.
“If you want to watch (the download) on your PC, that’s fine, but if you want to watch it on your TV, it is either legally or technically impossible — or just difficult,” Hoffman says.
On the mobile front, Ninemsn recently purchased mobile marketing company 5th Finger and mobile content group HWW, and it is taking part in Oz’s Digital Video Broadcast Handheld trial, which is testing broadcasting the terrestrial TV signal to handheld devices; the trial continues into the second half of this year.
Whoever solves the puzzle of what works in the mobile world is in for some healthy gains. The Oz market in online content was worth A$128 million ($94 million) last year, but 70% of that was for ringtones and wallpaper, so Ninemsn’s challenge is to work out where its content fits into that growing market.
Hoffman acknowledges that “personalization,” such as wallpaper and ringtones, keeps surprising media groups with its strength and that the challenges for his company is managing both costs and consumer demand.
“I’m not sure the demand is there to watch an hour’s worth of TV on a 5 centimeter screen,” he says. But he does believe that portability — in some form, be it video “snacking” or watching longer programs — will play an important part for both networks and Internet companies.
“You can see the starting signs of a culture where broadcast streams are available wherever and whenever you want them,” he adds.