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Engaging the consumer and delivering innovation

CorporatePortal

Thank you and good morning. Events like this, which bring together thinkers from every aspect of the media and technology value chain, are vital in my view in helping us all to understand the opportunities that the converged landscape can bring us, and so I am delighted to be able to share some of my own thoughts on that debate today.

All of us in the media are trying to navigate through one of the most disruptive periods in history and I believe it will be those who are unafraid of trying new things and finding new ways to engage their audiences that will last the course. Innovation is something that defines Channel 4: whether it is through our approach to tackling big ideas on-screen or the way we connect with viewers, it is our commitment to being bold, taking risks and backing the new that drives us forward.

For example, in the past week alone we have explored D-Day as if it happened in an era of 24 hour rolling news and social media; launched The Returned, the first foreign language drama on terrestrial television for decades; and announced the first second screen app too - of which more a little later.

When we published Channel 4’s annual report last month, it described 2012 as the first year of what I have called our “investment in innovation” strategy. Using the significant financial surpluses that have built up over the last few years, we are preparing ourselves for the future by investing in innovative creative and commercial strategies. This includes a record investment on original content spend, a plethora of new award-wining programming titles, the marketing and funding of our BAFTA-winning Paralympic Games, as well as bold new strategic initiatives such as the launch of an entirely new kind of TV channel, 4seven and support for the launch of connected TV service YouView, and the development of our data relationship platform.

Before I talk in more detail about some of these areas, and what delivering innovation means to Channel 4, I do also want to touch on the things that remain constant – both for us and for the industry as a whole. In the whirlwind of technological change that we find ourselves in, it is easy to forget the core fact that television as a medium has remained as resilient as ever. In a world where we spend more time than ever on our computers, smartphones and tablets, it is remarkable that linear TV viewing, on TV sets, has been level – at an average of more than 4 hours a day - for the last 3 years. According to Ofcom television remains the activity people say they would miss most – ahead of their mobile and even their internet.

Of the television they are consuming, it is free to air public service broadcasting that remains the most popular. This is true despite a huge increase in the number of channels and pay-TV options. Following last year’s hugely successful completion of digital switchover - a project which I think could be seen as a hallmark of broadcasting innovation – DTT is now the central means by which PSBs like Channel 4 can deliver universally available, free to air broadcasting. As a debate begins in both the UK and Europe about the future of DTT - how it should evolve as viewers demand more choice and flexibility, and how we should respond to demand from mobile operators eyeing up the airwaves currently used for DTT, it is important that in the desire to embrace new platforms we don’t lose those on which the majority of viewers still rely.

Another constant, and something that is specific to Channel 4, is our unique public service remit, combined with a not-for profit status. It is no coincidence that innovation has been a hallmark of Channel 4 since our inception – it is literally in our DNA, what we were set up to deliver. It is a part of our statutory remit, alongside a whole host of other important elements such as being experimental, distinctive and diverse, investing in talent and giving a voice to alternative views.

We invest as much revenue as we can back into fulfilling this remit – in 2012 investing £434 million on original UK content, spread across 460 creative suppliers, including many digital specialists.

Our approach can be showcased by the many creative successes of the last 12 months: from unique landmark events like the Paralympics and the Grand National, the raw social insights of shows like Skint or 999 challenging contemporary drama like Utopia and Black Mirror to the searing journalism of Olly Lambert’s Syria: Across All Lines. We have backed exciting talent such as Grayson Perry through to film directors, like Shane Meadows who last week launched his documentary about The Stone Roses streamed in cinemas from live events across the UK.

It’s content like this that has seen key reputational measures for Channel 4 strengthening over the past 12 months. Both the Chairman and I have said several times that we believe it is our unique model and status that enables Channel 4 to go on playing the distinctive cultural, social and economic role that it does today - and we know that preserving the essential strengths of Channel 4’s model is one of the greatest responsibilities we have been given.

So - the enduring popularity of television; universally available, free to air access; a statutory public service remit and a not-for-profit model. In a rapidly changing landscape, these are the foundations that hold us steady, that enable us to take risks and innovate, and empower us to look firmly and confidently to the future.

And looking to the future we certainly are. I firmly believe that technology presents a huge opportunity to strengthen our core business of providing great PSB content, rather than undermining it. So I would like to talk to you now about the major creative, technological and commercial innovations we are currently investing in.

Firstly, we have been pioneers in developing new kinds of creative content. Interactive technology enables us to enrich the viewing experience – helping viewers interact with, participate in, share, debate and discover our content. It means we can tell stories in completely new ways - whether that is connecting the consumers outraged by Hugh’s Fish Fight with the means to campaign for change or live streaming eggs as they hatch baby chicks in the fantastically named Easter Eggs Live or – the recent D Day as it Happened. Another area of success for us has been with live play along Games –our Million Pound Drop game has now achieved more than 2 million downloads while our Snowman game at Christmas was played by over a million. This commitment has been reflected in our recent BAFTA win for Digital Creativity – for the third consecutive year.

Channel 4 also has an enviable history of delivering innovative, market-leading technology projects in-house. We were the first broadcaster in the world to offer long-form TV content on-demand, through our pioneering 4oD service. Since its launch in 2006 4oD has expanded exponentially, with more than 6000 hours of on-demand content available across multiple platforms and devices, including iPad, Xbox, PS3, Sky, Virgin, YouView and Samsung.

We were also:

o The first PSB to launch a red button service

o The first PSB to launch a simulcast HD service

o The first PSB to launch a +1 service

And last year, we were the first broadcaster to launch an entirely new kind of digital channel, 4Seven – which bridges the gap between a linear and an on-demand world by showing the best of Channel 4’s content from the last seven days, accompanied by some of the social media buzz that they have inspired. In less than a year it is already adding significantly to our portfolio share of 11.5% of individuals and 17.5% of 16-34s.

It is with this proud history of innovation that last week we announced the details of our brand new second screen experience, 4Now. This will be a new app that will in time bring together all of Channel 4’s interactive content in one destination, and recognises the growing importance of second screen interactions for our audience.

4Now will offer viewers the ability to access from a single platform real-time companion content for the programmes they are watching across all of our channels – including information about the shows that are on now, all the online social chatter around them, as well as real-time polls, votes and quizzes.

We are planning to launch 4Now in beta form, exclusively to Channel 4’s base of registered users, later this summer. We believe that it offers not just a fantastic new opportunity for our viewers to get closer to the content they love, but also presents a whole host of new commercial opportunities – for example, by allowing new synchronised advertising and sponsorship formats, or new targeted advertising opportunities.

It is this evolution of our business model that personally I think is one of the most exciting aspects of our investing in innovation strategy. All of the technological launches that I have talked about are important in their own right – as new kinds of creative content experiences that deliver to our PSB remit, and as means of ensuring that in an increasingly mobile world viewers can access our content wherever they are and however they want.

But we also believe that the interactive nature of these kinds of tools can deliver to wider strategic purpose – by giving us data. It is increasingly clear to me that data is becoming the essential lever in how businesses drive engagement with consumers, and if they can get it right, how they can develop an even stronger relationship with their user base.

It is for these reasons that over the last two years Channel 4 has been building up an innovative viewer engagement platform, which aims to harness the data given to us by viewers to strengthen both our creative and commercial offering and get closer to our audiences.

In return for providing information to Channel 4, registered users receive a range of benefits – from personalised recommendations to previews and exclusive content and access to one-off competitions and events. Aided by this, and our Viewer Promise, which pledges to give viewers greater transparency and control over the information they give us, we now have 8 million registered viewers, surpassing all targets and expectations that we had about the success of this strategy. For Channel 4, the trust we have built up over three decades as a broadcaster is now translating into the trust that underpins a closer and more connected form of engagement. And, as we have seen in the past few months, trust is increasingly at the centre of the debate about the future shape of relationships between media and technology brands.

4 key benefits of this strategy to have emerged so far:

o Data suggests our approach has already increased viewing. We offer our registered viewers additional functionality such as My4oD to stimulate increased viewing of C4 programmes. In 2012 millions of users engaged with our 'Playlist' and 'Favourites' features generating 14 million views of C4 content. Over 40% of registered users tell us they are more aware of Channel 4 programmes, and have watched more of them, since registering with us.

o It is also a new, and highly effective, marketing channel. In 2012 we sent over 40 million emails to our registered viewers about Channel 4 programmes. By sending data-enabled behaviourally targeted emails we have driven up open rates by a quarter, and we have doubled the level of click-through engagement with content.

o It provides us with valuable insight. We now have 1 in 3 16-24 year olds in the UK registered with us, an often elusive demographic to reach and research. We have launched 'Tribes Live', inviting them to join our online community which we and our advertiser and agency partners are using to get a real-time insight into British youth culture.

o And finally, the strategy is providing us with real commercial opportunities that go far beyond the traditional spot model that has tended to dominate free-to-air commercial broadcasting. We now offer advertisers, for the first time, demographically targeted ad packages on 4oD. Trading our main TV buying audiences on VOD has not been possible until now and allows advertisers to reach their target audience with minimal wastage, and allows media agencies to easily plan and buy TV advertising across multiple platforms. These are being taken up by major blue chip brands including Microsoft, O2, Unilever and B+Q. We have also partnered with brands to merge their databases with our own, allowing us to offer “handshake introductions” that are already proving extremely popular.

As a commercially funded, not-for-profit broadcaster, being able to innovate with the advertising model is good news for us and for viewers, as it is part of a virtuous circle where strengthening our commercial proposition means more revenue available to be reinvested back into content.

So I hope I have given you a flavour of how Channel 4 sees the future. Amidst intense competition and economic uncertainty, there are inevitably going to be challenges for all of us, but we believe that the solid foundations of our remit and model, combined with a strong relationship with our audiences and our commitment to innovation in all of its forms, means we are can successfully navigate through this wave of disruption.

(ENDS)

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