INTERVIEWER: I want to
introduce our next speaker.
We're going back not into the
world of phone, not into
the world of radio.
We're going back firmly into
the world of multimedia
digital enabled TV.
And we're into the
world of Endemol.
Endemol, the creative,
dynamic private sector
content producer.
We're going to be hearing from
Peter Bazalgette, who was
responsible for bringing
Big Brother to the UK.
He has a long track record of
innovation in broadcasting
with all kinds of creative
medias and formats.
He's also an author; he's
written a book on gaming.
I'd like you to
welcome him now.
Peter, please come and tell
us the future of television,
radio, and all the rest.
Thank you.
[MUSIC PLAYING]
[APPLAUSE]
PETER BAZALGETTE: Having just
listened to what you've told
us, Patrick in your very
entertaining style, if I may
say so, I've realized I
made a terrible mistake.
Because I've come here this
afternoon, and I've decided
to talk to you in words.
I should have presented
you said with an email
of my presentation.
It clearly would have been much
more enjoyable, and digested
much will quickly, since there
is pressure of time, I know.
But I haven't time to swap
my words into e-mail.
So you have to just
go with my words.
What I am going to do this
afternoon, is I'm going to
challenge four or five of
what I regard as the great
cliches of the digital age.
And when I come to the end of
it, I'm going to conclude that
there no winners and losers
in this digital age.
There are simply businesses
that if they were working more
together and seeing the
opportunities of cooperating,
we would be creating
a lot more value.
So let's start by taking the
first cliche, commercial
terrestrial TV is declining.
Well we know, we hear
it all the time.
Share is declining, competition
is on the up, competition
for eyeballs from different
platforms, from all the other
digital channels, and so on.
But as we saw from Mark's very
good chart, I think your second
chart Mark, TV advertising is
actually forecast to grow 5% a
year for the next five years.
TV is very, very healthy.
TV is getting more
sexy to watch.
HDTV, flat screens, that TV
screen in the corner of the
room is getting more and more
entertaining and more and more
attractive all the time.
And indeed television
companies, the companies that
run these channels, have a
fantastic ability to pull
together talent to make
long form entertainment.
That's a hell of a skill.
And it's something that doesn't
exist in other areas, that
platforms in other pieces
of entertainment.
And something that can really
leverage, and will in my
opinion leverage in the future.
So the second great cliche,
that's my mother in the 1950s
when color just came in.
Commercial breaks
are less effective.
We hear about it all the time.
We heard about it this morning
from Martin Sorrell and others.
We know about people
time-shifting, skipping
through, and all
the rest of it.
But the truth is, advertisers
want to get closer to
shows, and that's now
becoming possible.
Regulations are being relaxed.
It's possible now to sponsor
shows, and put product
placement into shows in a way
it wasn't, and the regulations
are going to change
more and more.
And viewers still
want free content.
Now there's a very
interesting statistic here.
And you may be
familiar with it.
Went ABC started offering their
programs last summer in the
States, they put Lost,
Desperate Housewives, and made
it available for download.
They decided not to go
the subscription route.
They decided to put a 20
second add on the front.
It was fantastically popular.
It worked very well.
The ads had an 87% recall,
which is higher than the recall
for commercial television.
It proved enormously
successful.
And it shows that if you
think about it, what
is that transaction?
The individual user is selling
their attention in a
transaction, their eyeballs to
the person supplying the
entertainment, in a contract.
And the future for
that is huge.
Because in the old days, these
ads were corralled into three
minute sections, and nobody saw
the point of them because
they were so cut off
from the content.
Now there's fantastic
opportunity for advertisers and
content creators going forward.
Because you can make a direct
connection between the
advertisement and the content.
The advertisement now has a
function, a demonstrable
function it didn't
have in the past.
And so to prove to you, even
more than the ABC experiment,
how much viewers
like free content.
And let me give
you a statistic.
In 2005, offering Big Brother
downloads, minute downloads.
We sell millions of
these on mobiles.
In the UK-- Big Brother
downloads are offered in 15
countries around the world.
But in the UK in 2005, it
was also made available
on subscription model
on channel 4's website.
They sold 25,000 downloads.
Twenty-five thousand.
OK.
That same year they sold
millions, we sold millions of
downloads of Big Brother on
various mobile platforms.
In 2006, they made it free
with a small ad on the
front of the download.
Instead of 25,000 downloads in
2006, they sold 25 million,
25 million downloads.
That's the power off of content
with advertising on the front
of it, which is directly
connected if you like,
in functionality.
And for my next cliche.
This one goes to my heart.
Because this isn't
my 16-year-old son,
but it could be.
For those of you who don't live
in the UK, the exam you take
when you're 16 is the GCSE.
And now we're right in
the middle of it now.
And my son is meant to be
revising for his GCSEs.
My wife is away, and I was
in charge of the revision
regime this weekend.
And my son was meant to
be revising all weekend.
He spent the entirely weekend
playing online multiplayer
gaming on the TV set.
And in the end I went in and
I ripped off his earphones.
And I said, you're meant to be
revising the Second World War.
And he said, I decided not to
revise the Second World War,
I decided to re-fight
the Second World War.
[LAUGHTER]
And I'm afraid that's
what he's doing.
But yes, it's true.
Sixteen to 24-year-olds are
deserting TV and going online.
Of course they are.
But that all audience online
is creating far more revenue
streams for content.
And that's a huge opportunity
for those traditional channels
and content creators who know
how to put together the talent
to make a half hour and an
hour-long piece of long
form entertainment.
It's a fantastic opportunity.
It's one, Les Moonves who runs
CBS is really, genuinely
very cockahoop about it.
It's just a story he
tells his share holders.
Not CSI which is his
best-selling show around the
world, but one of his other
shows, one see of CBS's
other shows they first
made it available.
CBS has gone a sort of
platform neutral route.
They're selling their
content across all sorts
of digital platforms.
They made about half a million
dollars from it in 2006,
this particular show.
And going to he proudly told me
last week, they're going to
make $13 million this
year and 85% margin.
He's very excited.
So all those people who aren't
sitting corralled watching TV v
exactly as we think they're
meant to under the control
watching the three minute
outbreaks and so on, are a huge
audience, and they're
devouring content.
And it's very, very exciting
and full of opportunities.
And now something we've
already heard a lot about.
Sorry I almost moved
on to my next cliche.
But I was ahead of myself.
I just wanted to make the point
that when you establish on a
broad medium, like a
traditional broadcaster, a show
and DOND stands for Deal or No
Deal Endemol game show in
about 56 territories.
Once you've established that
entertainment brand, the
possibilities in the digital
arena are fantastic.
We have in the countries where
it's legal, which is the UK
amongst others and the other
flags are on the right there.
We have an online betting
game attached to that game.
It uses the brand of that game,
and it turns over millions of
pounds a week because people
want to go and play that game
because they recognize
that brand.
So that TV migrating
to digital.
I'm going to give you an
example in a minute of digital
content migrating back to TV.
Which is the whole point of
what I'm saying this afternoon.
It's the interconnectivity
between all these
platforms that's going to
create extra value.
Around Deal of No Deal we
now have 26 digital games.
Twenty-six digital
games, some are skill.
Some are betting.
Some of for IPTV.
Some are Broadband.
Some are mobile platforms.
And all of that's possible
around that broadcast model.
Right.
Now I'm catching up with myself
back to user generated content.
So of course this generation
likes to create and
swap their own content.
And I feel that we hear
a lot of hogwash about
user generated content.
One of the reasons is I
don't think it's new.
I think talk radio is user
generated content, and that's
been around 30 years.
think America's Funniest
Home Videos is user
generated content.
And that's been
around for 20 years.
So the idea that people enjoy
creating content is not new.
But of course it's very dynamic
now with the way in which
technology is enabling it.
But what we said Endemol is
being the ring master for
user generated content
is a very rich prize.
In other words, being there
creating the environment that
Mark, in fact Mark Thompson was
talking about like the way BBC
View is contributing
to BBC News.
They effectively become
the ring master.
They create the ring in
which people contributed.
And I want to show you
a piece of video now.
We've done a deal with
Comcast, one of the digital
platforms in the States.
It's cool 10 Day Take, and
people post their own amateur
two minute scripted videos.
And on the YouTube model,
it's watched as the
most popular ones.
And the most popular ones, the
most watched ones we then
select with Comcast's help, we
take to LA, and we remake them
as a piece of television,
the longer form piece of
television entertainment.
This has huge significance
into the future.
I say we used to have six
people in our creative teams.
We now about six million.
Because all the people out
there in their bedrooms
creating this stuff are the
creative people of the future.
They are the people.
There's people making
two minute videos in
their bedrooms now.
The people who are going to be
making half hour, hour-long
hit shows in the future,
very, very exciting way.
So let's look at this video.
And this is just one of
the entries that came
into our 10 Day Take.
I don't know who the guys are.
[VIDEO PLAYBACK]
SPEAKER 1: Mr. Ivy?
SPEAKER 2: Yes, that's me.
SPEAKER 1: This
is Agent Squire.
I'm Agent [? Toose. ?]
You familiar with
the Department of
Homeland Security?
SPEAKER 2: Yes of course.
SPEAKER 3: I bet you are.
SPEAKER 1: [UNINTELLIGIBLE].
Listen Mr. Ivy, due to a
certain song on your iPod,
we have reason to believe
that you're a terrorist.
SPEAKER 2: I'm not a terrorist.
SPEAKER 3: Play the tape.
[MUSIC PLAYING]
SPEAKER 2: All right, and?
SPEAKER 1: All right, yeah.
It sounds fine.
But let's listen to
it again through the
Homeland Security filter.
SPEAKER 3: Play it
through the filter.
[MUSIC PLAYING]
[END VIDEO PLAYBACK]
PETER BAZALGETTE: OK thanks.
I don't know who those guys
are, But that came in.
That's one of many, I don't
know hundreds, even thousands
of submissions that we've got.
And it's very creative.
It's very amusing.
It may even be a
winner, I don't know.
It's an example.
I told you earlier, you create
an entertainment brand on a
broad medium like a
commercial channel.
And then you can create all
those digital entertainments
like the Deal or No
Deal games off it.
Well here it's the
other way around.
Here coming out of the
digital sphere is some
user generated content.
But it's going to turn into
some long form content.
Now just think about
what I'm saying.
When the conventional older
medium is feeding into the new
one, and then the new media is
feeding into the old one, how
much extra value, how much
incremental value when that
really takes off
can you create?
And that's why, if I can come
to my final slide, I think
it's a great mistake when
we're talking about
winners and losers.
About three weeks ago
Nick [? Ishakur ?]
and I were at a dinner
hosted by a well-known
consultancy firm.
And they gave a pretty good
presentation before dinner.
But it was absolutely based
around what I think is over
conventional thinking, talking
about these industries going
downhill, these industries
coming through,
winners and losers.
We shouldn't be talking
about winners and losers.
Because together we really
can't create incremental value.
Endemol is doing a show
at the movement for AOL.
And it's a sign of the times
that AOL for the first
time this year in the
States did up front.
You know the presentations in
the spring they do for the
advertising industry for
Madison Avenue, they sell
billions of advertising
afterwards.
AOL like the TV channels
did not front.
And this very short video of an
Endemol project that we're
doing for AOL, a piece
of entertainment.
We'll show it now.
If we could see the video?
Thank you.
[VIDEO PLAYBACK]
NARRATOR: One island paradise,
one small task, start
a new civilization.
AOL with Endemol producers of
Deal or No Deal, will present
iLand, a ground-breaking
interactive experience in which
millions will play online for a
chance to compete for their
own tropical island.
iLand: win paradise.
[END VIDEO PLAYBACK]
PETER BAZALGETTE: So
short and sweet.
So my overall message
is that it's not about
winners and losers.
It is about creating
incremental value.
It's about the
interchange you get.
And user generated
content is not a threat.
It's a fantastically
exciting thing.
Two minute videos are not
going to replace long
form entertainment.
If I may say so, I hope that's
an example of [? Reple's ?]
Law, Matthias.
Yes?
I think it is.
Until I met you, I
thought [? Reple's ?]
Law was a cop show
on ProSieben.
But now I know different.
It's profoundly more
important than that.
So just if I may summarize.
At Endemol we've heard about
Web 1.0 of course when the
infrastructure of all the
digital media was set up.
We've heard about Web 2.0
today, services interactivity.
We like to dream at Endemol.
We should now be talking about
Web 3.0, when we're really
just talking about content.
We're talking about your
interrelationship with content,
and enjoying the content ad not
worrying about the technology.
That's what we're
looking forward to.
Thanks, Patrick
INTERVIEWER: Thank you.
Thank you.
That's fascinating That will
lead us very, very well
on to the next interview.
I've got one question
to ask you.
In the past, people would have
said Endemol was a TV company.
Today they would describe
you as a what, a digital
communications company?
PETER BAZALGETTE: Somebody's
just paid a rather lot of money
for it last weekend actually.
So I hope they
understand what we are.
TV and digital entertainment
is what we call ourselves.
INTERVIEWER: And my next
question is in ten years time,
what do you think the company
will be thought of as?
PETER BAZALGETTE: Well it will
be a company that creates,
produces, and exploits
entertainment, as it does
today, across multiplatforms.
That's what it will be doing.
I'm not entirely sure exactly
what all the funding models
will be in ten years time.
I think I can predict them
for the next five years.
And I'm not entirely sure how
much we will go into the areas
of aggregation and
even distribution.
Because it's difficult to
predict those functions.
But we will be creating,
producing, exploiting,
entertainment on multiplatforms
and continuing to engender the
creative atmosphere in our
company that enables us to
collect eyeballs to get
people's attention around
that entertainment.
INTERVIEWER: And of course the
way you've done that is release
very clever formats, you know
these games that you've shown.
And I think if someone were to
ask me, I would say one of the
key distinctives of your future
is bound to be that creative
genius, the ability to create
an idea for a game that
suddenly spawns from
TV into online.
Something becomes this,
becomes that, becomes a West
End show, I don't know.
And I look forward to
all kinds of news.
