The Wild West: The Challenges, Opportunities and Identity of our TV Industry
How can we keep up in the Golden Age of ad-free streaming?
We are undeniably in the golden age of television. Never before has the medium seen such a wealth of content being created, across every genre and at this level of artistic and commercial achievement.
This golden age started in the early 2000s with the introduction of The Wire on HBO and with the advent of other streaming platforms like Netflix, Lightbox and Amazon Prime – changing the TV landscape dramatically. For viewers, these streaming platforms have introduced new and enticing ways to engage with the medium – offering a library of ad-free content ready for you to binge whenever you want.
However, the success of these services has disrupted the traditional broadcast model – and for a small country such as Aotearoa New Zealand, with a correspondingly small TV industry, the effect of this disruption is even more pronounced.
Aotearoa New Zealand’s TV industry has three main components: the production companies, the broadcasters and the funding agencies. All three agree that our TV industry is in an incredibly precarious position right now.
Production company South Pacific Pictures (SPP) Chief Executive, Kelly Martin, says our TV industry is “in an incredibly shaky territory” right now, “It feels like we are in the Wild West.” “Yes, there are opportunities and great things could happen – but, by the same token, it could all fall into a crashing heap,” she continues. As Aotearoa New Zealand’s largest producer of original TV content – including Shortland Street, Outrageous Fortune, and many other shows – Martin says SPP, and the rest of the industry, has been anticipating this change for over a decade. Now, looking back on the past three years, she says that it is clear this change came with the introduction of streaming services.
NZ on Air Chief Executive Jane Wrightson says it was with the arrival of Netflix in particular, “that the world changed.” She goes on to say, “The impact of that continues to be disruptive, and I don’t know how it is all going to play out – nobody does.”
Netflix has jostled the entire industry, causing sectors to reevaluate and adjust their approach to the business. But, unfortunately, it is not as easy as readjusting to the new state of the industry – because things have still not settled. As a result, the entire TV industry, including our own, is having to operate in incredibly murky waters.
To make matters worse, it doesn’t look like the waters will clear anytime soon – because, despite the market penetration of Netflix, its success is not yet a certain thing. In an incredibly daring business approach, Netflix has accrued US$20 billion in debt producing its original content – such as The Crown, Stranger Things and House of Cards. Netflix is working towards having its service populated by at least 50 percent original content. In fact, the company’s streaming division is yet to turn a dollar of profit, and still it continues to incur massive amounts of debt. Yet this risky approach seems to be paying off, with estimates last year showing Netflix had 104 million subscribers worldwide. At US$10.99 for a monthly subscription, this equates to US$14.4 billion a year in revenue.
As a result of this ambiguity, the rest of the industry is having to remain flexible and ready to adapt to whatever television will look like when the waters finally clear. In fact, NZ on Air restructured its entire organisation last year in an effort to be as malleable as possible. “The environment is so dynamic, we cannot predict what happens next,” Wrightson says.
This jostling has already had a marked effect on our TV industry’s original content. The most recent NZ on Air local content summary shows that while the output has not dropped, it has plateaued. “It has been static for some time,” Wrightson says. “The underlying trend for [scripted content] is a bit bleak at the moment – there is less of it being made, because there is less investment available.”
Audiences now struggle with the format and approach of dramas built around ad breaks
SPP’s Kelly Martin says there has also been a shift in the kind of content being produced, as audience expectations for drama, in particular, have changed considerably because of Netflix. Audiences now struggle with the format and approach of dramas built around ad breaks, Martin says. As a result, free-to-air networks are shifting away from scripted content and into more reality shows. “Free-to-air are really struggling to get people watching drama, and there have been conversations in which people say ‘drama is broken – we can’t get people to watch it’.”
“That is 100 percent incorrect. What you can’t get, is people to watch drama on free-to-air TV with ads. Because now we know how good it is to watch drama without any.” Martin says that if these networks want drama to succeed on their platforms, they are going to have to get creative with how they incorporate advertising into the airing of these shows – such as, only airing one ad block in the middle of an episode. “I guarantee that if they got a bit creative with how they brought it to an audience, then audiences would come back to it.”
In the meantime, reality TV is representing an increasingly large portion of Aotearoa New Zealand’s original output. In fact, Wrightson says reality TV is a large factor in why we have simply seen the content output plateau, rather than drop – these reality shows bolster the content hours. “Not everybody watches highbrow content all the time – if they say they do, they are telling you fibs. Everyone has a guilty-pleasure show, and generally, everyone will have a reality show that they like.”
It is not surprising that locally scripted content is suffering in this crowded TV landscape. High-quality international content is beginning to equal, even surpassing in some cases, the production quality of film. As a small market, it is not possible for Aotearoa producers to match the scale of these international productions – many of which cost tens of millions of dollars an episode. Plus, this trend is only going to grow, with reports showing that Amazon’s Lord of the Rings TV show could cost half a billion dollars to produce.
TVNZ Head of Content Cate Slater says, with our market size, this is not a scale our TV content can ever hope to match – yet, NZ shows still need to find ways of standing next to these productions. “Luckily we have got a bit of Kiwi ingenuity that helps us do that – we can make content of a really good quality at a lower cost for other markets.”
Currently moving its focus away from acquiring international programming, TVNZ sees local original content as its way of maintaining viewership alongside these mammoth international productions. “Local is our differentiator – it is really important for us to be creating original content,” Slater says. “Looking into the future, that is absolutely going to be an important differentiator, with our audience relying on that international content.” Slater says, despite this trend in high production values, when it comes down to it, all that really matters is that the content is engaging.
It is important for TVNZ’s financial viability to find ways of differentiating itself in this market, and keep people connected with local broadcast TV. As a broadcaster, TVNZ’s entire business is built upon advertising – so the more eyes that are lost to subscription streaming services, the less viable their business model becomes and the less local content they will be able to fund.
However, despite the market fracturing, both Slater and Wrightson say advertisers still see broadcast TV as an important aspect of their business – particularly because it reaches the broadest market of any advertising platform. “The broadcast business is still large – though smaller than it was,” Wrightson says. “It is still attracting [a larger] amount of commercial advertising than any other medium.”
Despite these challenges, the changing landscape actually presents our industry with some exciting opportunities.
For instance, this globalising market has led to a growing interest in cultural cross-pollination, with content now easier to sell in countries such as the US – markets that previously were not receptive to other countries’ shows. The Scandinavian TV industry is a great example of this cross-market potential, with dark crime dramas such as The Bridge being huge crossover hits in the UK.
Another promising avenue is shows created in collaboration with international broadcasters and platforms. Slater says, in Aotearoa and around the world, you are going to start seeing more of this co-production approach to creating original TV content. “Networks and studios are forming alliances and looking at how you can pool resources to make really high-quality, high-budget drama.” “Often it takes the budget from pooled resources,” she continues. An example of this is TVNZ’s The New Legends of Monkey.
However, it is the production companies who hold the IP rights to these shows, so TVNZ makes little money from these distribution deals with streaming providers. Rather, it is production companies such as SPP who are in a position to profit internationally from the increasing interest in local content. SPP creates content using upfront investment from NZ on Air, and then makes its revenue through selling that content to other markets.
For decades, NZ on Air has been the primary investor in original content. However, the government opened this up somewhat by introducing the Screen Production Grant in 2014. While NZ on Air funding is strictly for producing stories culturally relevant to Aotearoa New Zealand, this fund allows producers to create content that has a larger focus on being marketable overseas. The New Legends of Monkey was funded through this grant, as is SPP’s drama 800 Words.
Though this fund was introduced in 2014, Martin says that only in the past few years have producers begun to recognise it as an avenue for funding projects. In the 2017 budget, $63.9 million of this fund was allocated to the production of domestic content. “I think there is a tsunami of potential content coming [through this fund] – a whole lot of new stuff that is starting to bubble up.”
Retaining Our Voice
Although there are opportunities through which the Aotearoa TV industry could survive these changing times – perhaps even thrive in them – there still remains the question of how we will retain and continue to develop our voice in this medium.
This co-production model may not be the best way to do this. Because of the cross-cultural approach, by their very nature they require a lesser emphasis on New Zealand culture. The New Legends of Monkey, for example, is based on a Japanese fairytale, with a tinge of New Zealand comedy mixed in. “It will be fascinating to watch as these co-productions come through, how much of a New Zealand voice is retained in them,” Martin says. “Will it homogenise out, so that we just end up with a bland, general international voice that is not particularly New Zealand?”
There was a consensus, among these agencies, that we need to be prioritising the cultivation of our country’s creative voice in the television medium
There was a consensus, among these agencies, that we need to be prioritising the cultivation of our country’s creative voice in the television medium. Because, if you look at the biggest breakout successes from Aotearoa – such as the work of Jemaine Clement, Bret McKenzie and Taika Waititi – it has been the uniqueness of their local style and approach which has connected so strongly overseas.
Yet, while these artists represent a successful aspect of the Aotearoa New Zealand voice, our country’s culture and identity is obviously so much more diverse than just this one approach. Martin says despite producers’ attempts to analyse and implement ‘The New Zealand voice,’ it is not so simple to distil something so intangible. “If you take the work of Jane Campion with Top of the Lake and compare it to the work of Taika – they are so different, and yet there is something New Zealand about both of them that resonates.”
It can be surprising which local content is most marketable overseas. For instance, one of the most successful shows SPP has produced is The Brokenwood Mysteries – a procedural detective series that has been airing on Prime since 2014. “It sells unbelievably well in the international market – selling to over 100 countries around the world and airing on primetime on French telly.” In this case, Martin says, the ‘New Zealand voice’ of the show is in the landscape of Aotearoa New Zealand itself. Much of the show is filmed on location, making the visual appeal of our country’s scenery the drawcard for international audiences.
Another consideration is the difference between telling Aotearoa New Zealand stories, and telling stories in an Aotearoa New Zealand way. An example of this is What We Do in the Shadows – a film which doesn’t necessarily tell a local story, but is still very Kiwi in its style and tone. As opposed to a film like Whale Rider, which is a local story in both content and tone. Wrightson says this is a common funding debate at NZ on Air, and is the kind of decision that needs to be made on a case-by-case basis. For instance, she argued that by making Wellington a central part of the character of What We Do in the Shadows, it had a very local perspective, as well as telling its story in a Kiwi style.
An important aspect of recognising and keeping pace with the creative voice of our country is the proper development and retention of artists
An important aspect of recognising and keeping pace with the creative voice of our country is the proper development and retention of artists. There is an argument to be made that the voice of our country is not to be determined in production boardrooms, but simply by letting artists create content, and recognising that their work by nature reflects the character of our country. In a similar vein, it is important to fill the creative space with as diverse a collection of creators as possible, so that the wide scope of Aotearoa New Zealand voices can be reflected in the TV medium.
Slater says the TVNZ web-series platform, New Blood, is all about talent development and creating greater relationships with artists at all levels – such as onscreen, camera, writing and directing. In addition, New Blood is helping them understand what younger viewers want from content, “It is resonating with a younger demographic – a demographic which is getting harder and harder to reach across the board, on all platforms.”
The Importance of NZ on Air
Speaking to these three pillar agencies, it became very clear just how important NZ on Air is for the continued development and support of our culture and identity in this medium. In a country of our size, without a funding body dedicated to this purpose, the financial math around the creation of important cultural productions just doesn’t work, making NZ on Air the key to our continued creative output in the TV space – and in other media too for that matter.
After all, the official mandate of NZ on Air is to serve Aotearoa New Zealand audiences with content that reflects and develops our identity and culture. It is dedicated to ensuring we don’t lose our cultural output in an increasingly globalised world. So, in effect, the question of how to maintain our voice in television in this changing TV landscape has quite a simple answer – the government’s continuing support of NZ on Air.
Wrightson says herself that the agency is platform ambiguous. Its only concern is making sure New Zealanders are being served with content that reflects their identity and culture in the places they will find it – whether that be broadcast networks, the airwaves, online, or on a streaming platform.
However, despite how rapidly changing the entertainment industry has been for the past several decades, NZ on Air has had a budget freeze for the past ten years. A freeze which has had a resulting opportunity cost. The current government funding for NZ on Air in 2018 is $132 million. Though Wrightson was reluctant to put a number on the budget amount NZ on Air needs in this rapidly changing landscape, she did say that ten years ago the organisation was in a strong position to “cheerfully march in” when a market opportunity emerged – now it is not.
To regain the ability to take advantage of opportunities, Wrightson says NZ on Air plans to end a range of their projects and services – “some of which are at the end of their natural life, and others of which their demise may have been slightly hastened.” Although Wrightson could not say what these projects and services would be.
Ultimately, although our TV industry is seated on a knife-edge, there is a lot to feel hopeful about
The Labour Government has set aside $38 million for RNZ and NZ on Air, the allocation of which is currently being discussed in select committee. However, it’s already been made clear to NZ on Air that much of this funding will be going to RNZ.
Ultimately, although our TV industry is seated on a knife-edge, there is a lot to feel hopeful about. Depending on how the next several years play out, we could see ourselves enter a golden age of local television – but, if things could go the other way, there could be some very tight times ahead for original local content.
Thankfully, the continued government support of NZ on Air offers an avenue through which an Aotearoa New Zealand voice can be maintained in this medium, regardless of the state of the industry. Plus, the potential for extra NZ on Air funding, as well as the Screen Production Grant, means we will hopefully soon see the output of original content move from its current plateau, and into an uptick.