How are media adapting to the world of digital content? Part one of a two-part look at what's over the horizon

A Colmar Brunton/NZ On Air study last week confirmed what most people in media already knew: Kiwis do most of their watching and listening through traditional broadcast channels, not the plethora of online outlets now available.

The report was commissioned to help NZ On Air decide how much funding it should offer to new media. But it confirmed media firms' internal research on the way the digital revolution is going. As NZ On Air chief executive Jane Wrightson says, "Our main focus is on the size of the audience. While this is changing it is still predominantly with traditional outlets."

For those in the business, the fundamental issue is finding a way to make money off the internet - and that is a quest most traditional media companies are still working on.

Fifty years ago there were dire warnings that television would kill cinema - which it hasn't managed yet. Now we have prophecies that streamed internet TV and digital radio will destroy old-fashioned "linear" TV channels and broadcast radio.


True or not, New Zealand's belated uptake of subscription video on demand (SVOD) services such as Quickflix, and the planned new Lightbox service from Telecom, will up the ante. In fact, 2014 may go down as the year when mainstream television knuckled down to deal with the new world order of digital media.

Radio is also part of the digital revolution, and Radio NZ is taking the leap into digital media after spending much of the past decade in denial. RNZ has put more resources into its online offering, and is planning to introduce video content. The question is whether it can do that without undermining the broadcast radio content it offers on its National and Concert services.

Chief executive Paul Thompson is said to have been agreeably surprised by uptake of The Wireless - the name of its website for a younger age group, which aims to challenge the generally older skew of RNZ's audience. RNZ is also making better use of its rejigged main website, to promote its radio content.

Strategically, there are questions about the dangers of taking its focus off commercial-free radio, in order to compete online with myriad well-resourced and aggressive private sector websites.

Thompson has said broadcast radio content will come under pressure as the world goes digital. Some argue that the online push reflects his previous role as editorial chief at Fairfax New Zealand newspapers, which have been disrupted by online media, including social media providing quality content free.

Elsewhere in commercial radio, there is an increasing emphasis on filming in studios and screening the footage online.


TVNZ's approach to digital has been the opposite of RNZ's. It had already made a big push online, and appears to be refocusing on the core business, while developing digital assets.


Under former chief executive Rick Ellis, TVNZ was highly focused on the new digital world, but with his replacement, Kevin Kenrick, there has been a renewed concentration on the revenue-earning capabilities of its core assets - TV One and TV2.

Uneconomic channels such as the youth-orientated TVNZ U and Heartland on Sky have been or are being pulled off air as the state-owned broadcaster meets demands to make a better return for the government.

TVNZ's most advanced digital initiative has been its Ondemand service, which wins plaudits for offering consumers a good service. Much of TVNZ's digital strategy is to build on the foundation of that service.

Sceptics point out that Ondemand is generously resourced. A financial analysis last year by Craigs Investment Partners estimated that TVNZ's digital media revenue amounted to about $10 million, though there is little clarity on its impact on the bottom line, if any.
In that sense TVNZ is the same as most traditional media companies, struggling to find ways to monetise digital expansion.

TVNZ is now "refurbishing" the Ondemand service, to make content more accessible and give it an edge in creating and sourcing content.

But the bulk of its revenue comes from advertising attached to its traditional programming, and that is under pressure due to the fragmentation of media.

MediaWorks has lagged behind TVNZ in developing its digital imprint, partly because it has not had shareholder permission to pump resources into an arm that is essential in the medium and long term, but does not immediately deliver profits and dividends.


Under new and more secure ownership, MediaWorks has been catching up, improving its on-demand services and promoting on-air content. But it has a long way to go.

MediaWorks says its "Interactive" service - which offers TV and radio content - is profitable, but it seems likely there will be pressure to improve its digital services.

As the recent Colmar Brunton/NZ On Air study showed, New Zealanders spend most of their time with TV and radio, but also use a wide range of other media. For example, MediaWorks claims great success with its apps, which have been downloaded one million times and are widely used.

These range from the video on demand service 3NOW, to the popular 3 News app, to radio apps like The Edge, which allow users to livestream the radio station or the TV channel in question. Expect their initiative with The Edge TV station to be at the centre of the company's push to impose itself online.


SKY TV is arguably New Zealand's first digital media company. It has been criticised for the delay in advancing new media initiatives, and even blamed for creating the demand for pirated programmes that are not legitimately available here.

Chief executive John Fellet points out that there is no rush to do things which don't make a profit, noting that "I don't want to have the most watched platform as we go bankrupt".

The Sky Go platform offers streaming to existing customers, and a so-far-unnamed new SVOD service will offer more choice later in the year.

As New Zealand's biggest buyer of TV content, Sky has the advantage of exclusive deals for Hollywood content, which SVOD services need to stand out from competitors.

The big question will be how Sky uses its dominance of sports rights in the digital arena, and the degree to which it allows internet services to take those rights away.

The Craigs analysis pointed to other opportunities, such as extending the functionality of the Sky Go platform, and using TV on demand to offer premium channels such as SoHo and premium sports content.