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INSIGHT REPORT July 2020 This confidential report covers the British Screen Forum Insight Event which took place via video conference on 2nd July 2020. It is for British Screen Forum Members and Associate Members only - not for wider circulation. 2 STRICTLY CONFIDENTIAL CONTENTS Executive Summary ……………………………………………… 2 Full Transcript ……..……………………………………………… 6 Welcome ………………………………………………….. 6 Jon Gisby, Chair, British Screen Forum Addressable TV Advertising ……………………………… 7 Ben Keen, Consultant, British Screen Forum Screen Sector Recovery 5 Point Plan …………………… 16 Neil Peplow, Director of International Affairs, BFI The Future of Entertainment – And How Video Streaming is changing the Game ……………………….. 24 Professor Anita Elberse, Lincoln Filene Professor of Business Administration, Harvard Business School Events and Policy Update ……………………………….. 25 Pete Johnson, Chief Executive, British Screen Forum Any Other Business ……………………………………… 26 Jon Gisby, Chair, British Screen Forum Attendees ………………………………………………… 27 3 STRICTLY CONFIDENTIAL EXECUTIVE SUMMARY WELCOME Jon Gisby, Chair, British Screen Forum Jon Gisby welcomed attendees and outlined the agenda. ADDRESSABLE TV ADVERTISING Ben Keen, Consultant British Screen Forum Ben Keen outlined that traditional broadcast had performed strongly during lockdown across all age groups, but increased viewership had not translated into higher ad spend. The drive to make TV advertising addressable and data-driven was partly about levelling the playing field with online, which has overtaken TV in terms of advertising expenditure. The addressable TV pitch from broadcasters was designed to offer some of the pros of online, but without the downsides that include concerns about supply chain transparency, data protection, fraud, and brand safety. Sky and Channel 4 have been pioneers of addressable TV advertising, while ITV has now made it a high strategic priority. Approximately 70% of TV households in the UK could potentially receive some kind of addressable advertising on their primary TV set. Data strategy was key and broadcasters needed to start with their own consumer data collected via registration for their video-on-demand services. TV data analytics was becoming increasingly powerful, but was always trying to prioritise protection of consumer privacy. The pricing of addressable ads was higher than traditional broadcast commercials, which was not always well-received by advertisers. Nevertheless, spending on all addressable advertising last year exceeded 4 STRICTLY CONFIDENTIAL 10% of the whole TV ad market. New AVOD services would be increasingly looking at addressable platforms as part of their UK distribution strategy. Summing up, Ben argued that addressable should be adopted as complementary to traditional broadcast and that there is a strong case for more collaboration between key broadcasters to provide a stronger alternative to online giants like Facebook and Google. Jon Gisby asked whether consumers had a higher tolerance for targeted ads. Ben Keen responded that Sky had found that overall appreciation levels increased significantly when consumers were delivered relevant ads. SCREEN SECTOR RECOVERY 5 POINT PLAN Neil Peplow, Director of International Affairs, BFI Neil Peplow outlined that there was a total projected loss of around £2.2 billion in HETV and £2 billion in film over the next two years as a consequence of COVID-19. The impact on cinemas was roughly £6 million per day. The Screen Sector Task Force was coordinating a longer-term recovery response and six outcomes from the groups were: • Health and safety production guidance; • Suggestions around a guaranteed fund for production insurance; • Time limited uplift to tax relief; • Quarantine exemption for cast and crew; • A global screen fund; • Financial support for the distribution and exhibition sector. The BFI also wanted to examine longer-term workforce issues around diversity and freelance work in light of The Film and TV Charity’s hardship fund. Neil Peplow understood that the plan accommodated a second spike in the COVID pandemic. Jon Gisby asked how a £17 million screen fund compared with the value received from Creative Europe. Neil Peplow replied that the screen fund would be approximately 10% larger, although it would have global ambitions. Tim Johnson asked how long the quarantine exemption and insurance guarantee would take to be delivered. Neil Peplow responded that he could not be specific, but there should be a response in the short term rather than medium term. 5 STRICTLY CONFIDENTIAL THE FUTURE OF ENTERTAINMENT - AND HOW VIDEO STREAMING IS CHANGING THE GAME Professor Anita Elberse, Lincoln Filene Professor of Business Administration, Harvard Business School In her presentation, Prof. Elberse drew on her extensive research, including case studies on dozens of entertainment companies (among them, Hulu, Marvel Enterprises, NBCUniversal and The Walt Disney Studios), to explore the content strategies that work best and how video streaming is changing the game. In doing so, she illuminated and developed the insights contained in her bestselling first book, ‘Blockbusters: Hit-making, Risk- taking, and the Big Business of Entertainment’ and in her recently updated papers ‘The Video Streaming Wars – Can Disney Catch Netflix’ and ‘Jason Blum’s Blumhouse Productions’. Following her presentation, Prof. Elberse took questions from British Screen Forum Members and Future Leaders. EVENTS AND POLICY UPDATE Pete Johnson, Chief Executive, British Screen Forum Pete Johnson highlighted that two upcoming events were roundtables with Rupert Daniels from DIT and Susannah Storey from DCMS on 8 July and 3 September respectively. The full draft of the potential submission to the BEIS Select Committee inquiry on post-pandemic growth would be circulated for comment. ANY OTHER BUSINESS Jon Gisby, Chair, British Screen Forum Jon Gisby welcomed William Sayers as a new member of the British Screen Forum events team, thanked attendees and closed the meeting. 6 STRICTLY CONFIDENTIAL FULL TRANSCRIPT WELCOME Jon Gisby, Chair, British Screen Forum Welcome one and all. The interesting thing about moving this type of event to this time of day is it is peak contention on domestic broadband, at least in this household, so if for any reason you cannot hear me at any point, then do feel free to just leave a message in the chat and I will switch broadband or Wi-Fi connections or something and hopefully it will be better. We have a very packed agenda. There are only three topics, but we are going to try to cram quite a lot into the next two hours, so I am going to move pretty rapidly on. For those of you who have not been to one of our virtual events, this is our second virtual Insight Event. There are two presentations up front. We will, of course, have questions along the way. If you want to raise a question, the easiest way of doing it is either to message me privately or just put your hand up, or put a message in the chat and I will call you into the conversation. In the meantime, if you can just stay on mute, as it will obviously make it a lot easier for everybody to hear. This is one of the few times that I see my backdrop in the way that you guys actually see it. I may move that small half bottle of champagne in a second. 7 STRICTLY CONFIDENTIAL ADDRESSABLE TV ADVERTISING Ben Keen, Consultant British Screen Forum Jon Gisby (Chair): We are starting today with Ben, a long-time adviser, consultant and expert witness to these meetings. I am going to hand straight over to Ben, who has a packed half hour on addressable TV advertising. Ben, the floor is yours. Ben Keen: Thank you very much, Jon. First of all, traditional broadcast has proven to be a pretty strong performer in many ways during this very difficult period during the lockdown. You can see that compared with similar times last year viewing has done extraordinarily well, really across every age group, even those younger age groups, but unfortunately that did not really translate into improved performance on ad spend. Viewing is up; ad spend is not. In this fragmented media landscape we have, you are well aware that there are lots of other things taking up viewer time. For adults, broadcast still has a pretty strong share of time, as you can see here, compared with all the other attention takers that are in our lives. For younger people that is not quite as true, although broadcast is still holding a reasonable share, but all the different forms of online media have collectively usurped and overtaken that TV viewing time. Still, TV is pretty unrivalled in delivering a mass market commercial audience. You only have to look at examples like I’m a Celebrity delivering over 13 million viewers in November of last year. That classic form of broadcast advertising is perhaps unfairly called by some a “spray and pray” advertising strategy, but it is incredibly effective. One of the most quoted quotes in advertising of all time is this one from John Wanamaker, where he said, ‘Half the money I spend on advertising is wasted. The trouble is I don’t know which half that is’. That really sums up that conundrum of efficiency in advertising and how you deliver the right ads to the right people at the right time. That was, of course, the potential that was offered and promised by online advertising, and so TV has always been somewhat envious of that potential and that possibility. The drive to make TV addressable and data-driven is really partly about levelling the playing field with online. There are four elements to it. One is instead of broadcasting the same ad to all viewers, it gives the option of delivering ads to chosen viewers. Number two, it offers the possibility of targeting audiences based on specific profiles and it enables real-time interaction with viewers and insights on who has viewed which ad. Lastly, it 8 STRICTLY CONFIDENTIAL offers or at least promises a more efficient means of planning and buying those ads in the first place.

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