Social media plays a role in sustenance of linear TV: Sky's Gary Davey

A pay TV business is more local than an OTT, says Gary

You spent £6 billion on content last year. How do you decide what to buy?

Right now our priority is regional production. So in Italy, it is shiny floor shows — Italy’s Got Talent, X-factor, and MasterChef. Because free TV has never done well. We took them to a higher level of scale and glamour. In Germany, it is drama. The German TV market is very good with TV movies, drama series. It has never been good with long arc, complex stories, with lots of characters. Babylon Berlin (2017), our drama series, is set in the Berlin of 1929, with a big budget (€40 million). The first two seasons had 16 episodes, and season three is due this year. In the pay TV business, if you want to be a success, you don’t want to impose. In Italy, Germany, all the international operations are committed to serving local consumers.

Netflix’s head of content Ted Sarandos spent $8 billion on content last year. How is your job different?

Ted’s starting point is the global scale, he looks at global data; mine is local interest to be relevant and deeply authentic. We know in real time what people are watching. Therefore, our mission is more audacious than free TV, and more local than OTT. In the UK, for instance, our big priority is comedy, authentic British comedy. A lot of it will not travel, may be less profitable. But we are a pay TV business; we don’t need to be global. He has to. Being authentic and local in each country and then being global is tough and expensive.

Among sports, entertainment and movies, which works best from a return perspective?

Sky started very heavily reliant on sports and movies. But we were never sure where entertainment fitted in. Now entertainment (drama, comedy) is the third leg. We ask our consumers, “are we providing content worth paying for” weekly, monthly, for each programme… in different ways.

Is there yet a problem of plenty (on content)?

I don’t believe in something like too much choice. What we will get better at is how we present, recommend. We don’t offer all the content and say “consume it all”. We don’t think of consumers as millions of people consuming content. In every household, a consumer is seeing a different product.

Isn’t that what OTTs are doing?

I have been a Netflix subscriber for years. I don’t understand why they recommend some of the stuff they do.

Does linear versus on-demand change what content is consumed? Don’t you still need that one big hit?

We have been on-demand for 13 years now (since 2006), we understand on-demand. But linear is still a powerful opportunity to showcase content. A household (mum, dad, kids) has different needs. It is very unusual to be able to satisfy those needs with one show. Therefore social media plays a role in the sustenance of linear TV because everyone wants to be part of the conversation.

There are so many OTT apps. Shouldn’t someone be aggregating them? Play the role that TV distribution firms played with so many channels.

Customers are not going to embrace infinite number of apps that is why there is a race, a rush to build direct-to-consumer relationships. In the end, the consumer will settle for a small number, so a shakeout is due.

What has been happening to the content production industry? Has that changed? 

Content costs have been rising by 10-15 per cent a year. They are driven up more because of consumer expectation of quality. The TV viewer today is a sophisticated consumer — cheap sets, sloppy productions are gone. Lazy production is brutally punished. People say that competition increases costs. But in drama/comedy, nobody can have a monopoly on ideas. Though the volume of original content has quadrupled, it hasn’t stopped the development of great TV content. I don’t think we are running out of ideas.

You have worked in the TV industries across Australia, UK, US, Asia, what are the learnings?

The common need is to understand local culture and to be able to adapt to that. In India, for instance (Davey was CEO of Star TV from 1993-1999), we couldn’t use the existing TV industry as a benchmark because there was only Doordarshan. Therefore, we had to do something completely different instead of doing Western programming in a culture we didn’t understand. All we could bring was the production technology constructively to people who understood the local culture. So, there was a lot of trial and error — it was a combi-nation of external expertise plus local content.