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We Want to Make Subscription Revenues our Pillar
January 5, 2012, mediaguru.cz
Towards the end of the year, you introduced the monthly subscription fee for voyo.cz. What were the motives behind it?
We had several reasons. We were inspired by the many U.S. services that use a monthly subscription fee model, such as Netflix, which work very well. We also believe it is a way to defend against pirate servers. Furthermore, when we looked at Voyo transactions, we found that some users played the same content repeatedly. I just want to clarify that the original free-of-charge content is still offered free and available to registered users.
It used to be possible to pay a one-off fee to watch advanced episodes of selected series. Did it work?
Yes, especially with some formats, viewers played a large amount of episodes in advance, namely Ulice, Ordinace v růžové zahradě (The Street, Rose Garden Medical Clinic). Also, a large fan club formed around Expozitura. We knew that people would spend the money with us anyway, but would probably welcome some additional content. With the old version of Voyo, if viewers wanted to watch Expozitura and, for example, foreign content, they had to pay quite a high amount. Now viewers pay CZK 189 (about EUR 7) and can watch their favorite series as well as hundreds of Czech and international films.
Right now you only offer monthly subscriptions. Weren’t you also considering quarterly or half-yearly subscriptions?
We were considering it but we didn´t want to scare people with too high a fee. I consider the CZK 189 monthly subscription fee to be very reasonable. We were thinking about trying a weekly fee, in line with what you’d pay for a weekly magazine. However, we wanted to launch a simple service with a simple message. This way it is clear: you pay a monthly fee and you get everything.
Generally, when media operators talk about paying for internet content, the willingness of users to pay is brought up. However, the reality, not only in the Czech Republic, is that people don´t want to pay for content on the internet. Why should it be any different in your case?
We are convinced that the driver for subscriptions is the exclusive content on Voyo.cz. If you are interested in what will happen next in certain series, Voyo.cz is the only place you can find it and, in addition, you will get extra legal content on top of it. I also believe there are people who are uncomfortable searching for content on pirate servers. Another motivational factor may be that, after paying the subscription fee, you can watch content with no advertising, just like on paid channels.
What is your predication for the demand for Voyo.cz subscriptions?
We would like to reach a level of 100,000 subscribers by the end of 2012. That is our target. However, we are aware of the fact it is an extremely ambitious plan.
Are we talking about monthly subscribers?
Yes. We realize the plan depends on us being able to offer a large volume of content.
In terms of business models, advertising is currently the main source of revenues. Do you expect the ratio of video advertising versus subscription to shift significantly towards subscription or do you think advertising revenues will continue to be the main source?
Naturally, video advertising represents the most significant source of revenues at the moment; however it should be the other way around in the long run. Our company is always seeking to diversify its revenue sources. We want to make subscription revenues one of our new pillars.
Would you say that within 5 years, subscription revenues will account for more than 50% of the overall revenues?
I’d say it may be the case within 2 years. Within this timeframe, subscription revenues could account for more than 50% of all revenues generated from online activities.
How large is the volume of video advertising on Nova´s portals?
It is comparable to the largest servers. However, video advertising is not monitored, so I wouldn’t want to give a specific number.
The monitoring of video advertising is set to become the hot topic of 2012, though.
And we’ll be one of the first companies to start measuring video advertising.
Going back to internet subscriptions; it’s still at a very early stage, and hasn’t been tested in these market conditions. Should we perceive it as a trial or is it a part of your long-term strategy?
It is our long-term strategy and an absolutely crucial project for CME. We even launched the service in two countries simultaneously. Our development teams worked very closely together and it proved to CME that our central team has developed a product usable universally in a number of countries. Other countries will follow and launch the subscription model.
How difficult is it to ensure that copyright is not breached upon the sale of the content?
This is one of the reasons the project has taken so long. We had to convince the copyright holders.
How did you achieve that?
We were helped by the situation in the US as people there understand that it is no longer possible to provide content for an absurdly high price, and that a subscription model was necessary. Netflix (until recently a video-rental shop) even launched a model where you did not pay for the rental of a single DVD, but could hire more DVD´s for a monthly fee. All this changed the opinions copyright holders had on the role of DVD´s. We are looking for a way that would also change the perception of users – they feel that everything is free and that we are taking something away from them by imposing a fee on it.
You launched Voyo iPhone and iPad in the spring. Are you working on other platforms?
We developed an application for the iPhone rather quickly, intending to test whether users were willing to pay for content. The conditions were quite strict because users had to pay for content which we offered free of charge on our websites. This is because Apple does not support the flash technology which makes it possible to play content for free. These results, acquired through a “try and see” approach were used for the new Voyo. However, this application will soon be switched off and replaced with a fully-developed application, subject to subscription just like Voyo. I believe it will be possible to properly browse Voyo on the iPad as early as in March.
How about other distribution platforms?
We are interested in developing more platforms. This year, we definitely plan a break through on platforms called connected devices. They are intended for people who don´t want to connect their notebook to a TV set or find it difficult to get connected via WIFI. With connected devices, viewers can make their choice using the remote control. It is already supported by smart TV sets like Panasonic, and Samsung should launch it in 2012. For example, over the last two weeks, 25,000 thousand people used the Voyo application in Panasonic, making it the second most used Panasonic TV application in Europe. However, connected devices also include blu-ray players, and internet connected DVD players can also be included. For us, it is another path to increasing viewership so we will pursue it.
Voyo is not Nova’s only website. Are you planning any changes to other internet projects in the future?
We plan on significantly reshaping the server tn.cz. The change should be visible at the end of the month. Internally, the companies Mediafax, Jyxo and Blog have merged, following which we created an integrated news desk, yet another reason our content will be more attractive for our users. Our goal is that out of all the viewers watching TV Nova news during the entire day, about 10% of them will also consume news on tn.cz. We plan on bringing tn.cz closer to TV Nova.
Česká televizeplans to launch an “embryo” of HbbTV hybrid TV. What is Nova´s position on hybrid broadcasting?
In my opinion, the biggest issue is that standard HbbTV is too new a project, and not supported by all manufacturers. I have a feeling that hybrid TV is used as a buzzword. I believe in absolute simplicity, as Panasonic demonstrates with its VieraConnect. Quite simply, it is not possible for us to implement all of the new promising trends in the interactive technology field. However, Česká televise is a player with an unbelievable budget and therefore can afford a different attitude without taking any responsibility whatsoever.
Ok, but in case of ČT it is a different kind of a TV service, justified by its service to society.
However, it is business just like any other. Why doesn’t the state publish a nation-wide newspaper? The times have changed and it is possible to distribute your opinions more easily than before. All the TV stations fight for people´s time and offer them entertainment and it should be a level playing field.
For additional information, please contact:
Romana Wyllie
Vice President of Corporate Communications
Central European Media Enterprises
Krizeneckeho nam. 1078/5
152 00 Praha 5
Czech Republic
+420 242 465 525
romana.wyllie@cme.net
