TVNZ is actively assessing paid content for its OnDemand service, chief executive Kevin Kenrick says.

ITV in the UK - which allows viewers to pay a small amount for an ad-free video streaming experience - is one of the models he's looking to.

Another is Hulu, the co-operative streaming venture between free-to-air channels movie studios in the US that is available in ad (US$5.99) and ad-free US$11.99 versions.

Music streaming service Spotify, with its ad-free premium version, is a third reference point.

Advertisement

The TVNZ boss emphasises that free, ad-supported content will remain at the centre of his company's model. But the option to pay to avoid ads could be just months away.

Kenrick's paid content comments to the Herald came as the state TV broadcaster revealed a drop in net profit to $10.7million for the first half, from $17.2m for the first half of 2018.

Foreign exchange was partly pegged for the fall, but Kenrick says it was also due to a decision to increase investment online, both by beefing up TVNZ OnDemand's content and work on digital subscriptions.

First-half revenue was up 1.8 per cent to $173.5m, something the TVNZ boss said should be celebrated in an era where "for the media industry, stability is the new growth."

TVNZ half-year result
(Six months to Dec 31)
• Net profit: $10.7m (first half-2018: $17.2m)
• Ebitdaf: $25.8m ($30.2m)
• Revenue: $173.4m ($170.4m)
• Dividend: n/a (paid annually)

TVNZ does not break out broadcast vs online earnings. But Kenrick said the former had been stable while OnDemand had seen double-digit growth in revenue - and the strongest growth since the platform launched in 2007.

More was spent on marketing and upgrading the user experience, but content was the key reason behind the jump in revenue and an attendant 101 per cent spike in total video streams served to 79.9 million and an average 310,000 online viewers a week - particularly the decision to make series like Killing Eve and Anika Moa unleased exclusive to online, or at least available online-first.

Digital registrations give TVNZ a handle on its OnDemand audience. Here are the most popular streams by gender. Source / TVNZ.
Digital registrations give TVNZ a handle on its OnDemand audience. Here are the most popular streams by gender. Source / TVNZ.

There is now also more content online. The number of TVNZ shows available through OnDemand has quadrupled to 1200 since late 2017.

Advertisement

Judged by the company they keep

Kenrick saw growing appreciation of the "brand safety" issue as another reason behind TVNZ's online revenue jump.

He praised Spark's recent decision to pull ads from Google's YouTube platform, where the telco said they were being paired with inappropriate content.

"Brands are judged by the company they keep," the chief executive said.

With people posting thousands of clips per hour directly to YouTube, content was impossible to police, Kenrick said. Local broadcasters and publishers, by contrast, were able to create a "brand-safe" environment - which he saw as a major point of difference and opportunity.

Pass the tissues: the most popular shows for solo viewing. Source / TVNZ.
Pass the tissues: the most popular shows for solo viewing. Source / TVNZ.

Earlier this week, Google said it had safeguards in place to filter and delete inappropriate content and comments on YouTube, but also acknowledged in a statement that, "There's more to be done, and we continue to work to improve and catch abuse more quickly."

Murders & executions

Kenrick said TVNZ has "been able to translate our leadership in entertainment online. But we need to accelerate news."

Could buying Stuff form part of the plan to boost the state broadcaster's presence in online news? National's Melissa Lee put that question to Kenrick and TVNZ chairwoman Therese Walsh at a February 14 Select Committee hearing.

Kenrick replied, "So we don't rule anything in. We don't rule anything out." (Trade Me has been mooted as nother potential buyer of Stuff, which has been put on the block by new owner Nine.)

Source / TVNZ.
Source / TVNZ.

However, the TVNZ head was willing to rule out another possibility put forward by Lee: a merger with RNZ. That possibility had only ever existed in the head of Auckland man Mark Jennings, Kenrick maintained (beyond Jennings' headspace, former Broadcasting Minister Clare Curran also floated the idea of closer state broadcaster relations).

Rebuilding sport

Kenrick is also keen to bolster sport, including a return to in-house live production capability. He says the Commonwealth Games last year and the pending America's Cup represent the state broadcaster's return as a serious sports rights contender.

TVNZ is also partnering with Spark on the 2019 Rugby World Cup. The Herald recently revealed a leaked fall-back plan that centres on games being transferred to TVNZ's Duke channel within five minutes of a problem with the Spark Sport theme.

TVNZ OnDemand viewing by device. Source / TVNZ.
TVNZ OnDemand viewing by device. Source / TVNZ.

Kenrick stuck to Spark's line that the fall-back plan, and other details, won't be revealed until April. The state broadcaster will show seven games, including the opener and final, but has yet to confirm which, if any, will be on a delay.

Bonus in the balance

Last year, TVNZ's rank-and-file staff got a $1000 bonus (and amount dwarfed by Kenrick's own incentive payment).

Kenrick said it was not certain that would be repeated. "That was a recognition of a multi-year effort to reach revenue stability," he said. "It won't necessarily be an annual thing."