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Natpe 2009 - Final Report
The year of the Cost-Benefit ratio

Beyond the virtues and drawbacks of the trade convention in itself, Natpe 2009 has delivered a clear message to the industry: a complicated year has started. Several of the rules that worked well until now are no longer effective. And, it is good to review certain aspects of the business in order to continue prospering.

The worldwide crisis is shaking the different regions in uneven ways; some, among them Latin America, are little affected.

Most of the distributors polled by Prensario at Natpe have agreed in that it has been a "business as usual" show. Other regions: the U.S. domestic market, certain European countries, some Southeast Asian nations- appear disturbed. Yet, nobody doubts that the business will go on: the television channels, free or pay, must continue displaying programming to attract audiences and advertisers; in times of crisis, "free" home entertainment is the most appreciated.

Under the new circumstances, the relationship between content cost and benefit is what counts: it is now necessary to obtain good results with lower budgets. New, fresh ideas are required for this; changes that lower spending are welcome, too. Certain twists that will slash production costs or spending on commodities , such as two broadcasters sharing a location, are being also considered.

The essence of the business remains unchanged. It is true that finished programming is more valuable during rough times, because it is less expensive and less risky than in-house product. But it is also true that prime time programming is the core of the broadcast business. And formats are currently providing the larger revenue volumes needed by the providers (producers, distributors) to pay for their operation. So, new mixes are appearing: in a nation with three broadcasters with in-house production, the leader will weather the crisis by combining high-end projects with less expensive ones and canned product. The runner-up will focus on budget-friendly ideas and the third channel will exhibit canned programming. Each type of programming provides an opportunity, all aspects must be kept in mind.

The new context, does it open or consolidate the market? Both alternatives are valid. On the one hand, there is more room for small- and medium-sized players, who are better used to work on limited budgets; and, market resizing allows emerging players to replace incumbents. On the other hand, there is less money for everything, advertising pies shrink and second-tier and third-tier channels are the most affected; second-tier vendors are equally affected. Therefore, results will depend on the strategy deployed. At the same time, the crisis puts the spotlight on those who are playing the right cards. When the situation is rosy, everybody fares well; when it becomes rough, only some players stand out. This opens market chances as well.

New Media? Must keep on going. But, crises slow migration processes. Purchase of advanced technology devices plummets, technologic infrastructure replacement suffers. This is more visible in the case of new media content, where no sustainable business models are still available. It looks like, during 2009, it shouldn't be wise to forget traditional media. This, without abandoning the transition to digital.

Rising genres? This is a good moment for movies, series and canned product, because these are the items sought first for prime time programming. And, everything around comedy will work, because audiences need a relief and having some fun. Regarding the swings between realities and fiction, it looks like there will be room for both: fiction gains appreciation at the expense of realities, and vice versa. Concerning the world map, it could be argued that each distributor should widen its supply within the range of the programming offered: U.S. companies are strong at series and sitcoms; Germans can combine game-shows with realities; Asian vendors can offer drama variations, Latins can deliver daily fiction, not only as telenovelas but also formatted as series, comedy and so on.

These hard times call for being creative and flexible at the same time. MIPTV, at the end of March, will be a good test about how the market is evolving. The worldwide range of this business will help to see ups and not only downs. Stay tuned.

 

Nicolás Smirnoff

 

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