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
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.
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.
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,
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.
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
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.
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
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
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.
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
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.
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.
[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
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?
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
If I may say so, I hope that's an example of [? Reple's ?]
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.
INTERVIEWER: 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
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
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.