Digital Transformation

Media companies ‘probably can’t beat tech companies’ – BBC Worldwide chief digital officer Dan Heaf

By Angela Haggerty | Reporter

May 19, 2014 | 5 min read

The changing landscape of content consumption and emerging competitors such as Netflix and Amazon is “extremely worrying” for media companies, BBC Worldwide chief digital officer Dan Heaf has said.

Speaking at the Open Mobile Media summit in London, Heaf said that media companies have realised that in order to be successful in the digital market they must have a bigger international presence, but said they are now playing catch up with online tech and media brands already ahead of them.

Speaker: Dan Heaf

“Media companies have realised this,” he said. “Every week a UK broadcaster buys a US production company, or vice versa – everyone now understands that in order to afford the content audiences want to watch in a domestic market you need international distribution.

“The big worry is, are we too late in realising this? Because our friends Netflix, Amazon, AOL, Yahoo have already. AOL, Amazon, Yahoo are all pouring money into original, scripted long-form drama.

“This is either a great strategy or they’re just following Netflix’s lead. Time will tell where this all ends up.”

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He continued: “There’s a live debate and it’s extremely worrying for media companies. You have to ask the question: can media companies beat tech companies? The answer in my opinion is probably not. Even companies like this one [the BBC] that have a good heritage should probably just stick to their knitting and really think about putting money into content.”

Heaf said that companies like Netflix were spending significantly more on software than the BBC was able to invest into iPlayer, and he acknowledged that media companies had been particularly slow to see the explosion of video and the benefits of using channels such as YouTube. According to figures from eMarketer last year, young people in the US visit YouTube more often than Facebook.

“Media companies have realised they’ve not really got into this game and built any organic talent in this area,” Heaf said. “You’re about to see a huge raft of deals flow in this area, because media companies now realise this is not some passing fad, this is something that’s going to be more and more important in their ecosystem.”

Heaf told the conference that TV was changing massively and he was optimistic about its future.

“The global media market will grow at roughly six per cent over the next five years,” he said, “but about 45 per cent will come from the US. You can’t be a global media brand unless you have a US presence.

“We all know the explosion of mobile will have a profound effect on media. Many geographies will use mobile phones as their primary source for media. That will influence the type of content created.

“Video will be a massive category. It was slow to take off but is accelerating. It’s estimated that a quarter to a third of news page views by 2016 will come from video. Audiences are going to need multiple ways to discover content. To be an empire in content you need to be able to operate in all of these areas.”

On the issue of net neutrality as online video consumption continues to rise, Heaf said maintaining net neutrality was “desirable” but “unsustainable” in the long term because of the cost of networks carrying video content.

“In media there will be big content fiefdoms and those fiefdoms that can pay will outperform their competitors in the main,” he added.

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