And Stoessel doesn’t hold back. He has brought in creative producers and developers (“To have good content and a method to deliver it, that’s what is at stake here"), he leased triple the studio space and spends hundreds of millions of koruna to create content. He reinvented the stagnating online project Voyo, making it a pillar of his strategy and that now brings Nova hundreds of millions each year. Stoessel still sees a series of challenges: competition on the market (“our biggest competitor is sleep – that’s 6-7 hours per day when you don’t consume our content”), the economic slowdown, or the constant drop in the viewership of linear broadcasting. How does one of the most significant television executives in Czechia plan to handle them?
Difficult times are coming to the Czech Republic. Inflation is climbing to 20%, real wages are falling, and a recession is on the horizon. What does this mean for TV Nova?
Of course we know what's going on. Difficult times are coming and not only for us TV companies, but for most other industries as well. For us, it is specific in that households have a designated budget for entertainment, and the moment this budget comes under pressure, we feel it.
Can you already see in your numbers that people are saving?
Not yet, but it will come as households are exposed to ever higher costs. However, even if the most difficult times await us, I do not believe that they will change the overall trend - and that is the share of people who are looking for quality video content is growing. Yes, there may be a slowdown, a stutter, we have to prepare and adapt to it, but that doesn't mean we stop doing our jobs and offering people our content.
In addition, the good news is that TV Nova is free to broadcast on terrestrial, so a substantial part of our content can be watched by most households.
When Netflix presented its latest results, it was revealed that it had lost over a million subscribers. As someone who is building a similar service in the Czech Republic - does it bother you?
Our positions are different. Netflix is in 70% of households in the US market, and clearly when you have that kind of penetration and you're newly competing with a growing number of other streaming companies, there are going to be fluctuations.
However, the situation is different in the Czech Republic and Slovakia. The rate of penetration of SVOD services here is only around 25%, so I don't think we should see such a sharp decline. On the other hand, low penetration means a big opportunity, and I'm confident that whether it takes three years or five years, we'll eventually catch up with America and Western Europe.
The SVOD service Voyo is a bet on the future for TV Nova. You make it clear that you want to reach a million subscribers within three years. Are online video libraries like Voyo or Netflix the future of television? It may be fashionable to think so now. SVOD is in the limelight and these services are mushrooming. But SVOD is only one part of the answer. What I'm really after is coming up with the ideal mix of channels through which our viewers can watch premium video. I want to create a durable, resistant model, such as the Nova Content Hub where everyone will choose a service according to their preferences: some will watch linear TV, some SVOD, some AVOD, and others will prefer formats like HbbTV. My goal is not to focus on a single channel in this ecosystem, but to deliver content on each of them: each of us is different and each of us watches TV differently - my job is to have all these ways captured - and to be present in as many homes, tablets, and mobile phones as possible. If we stay briefly with Voyo - the trend in the world today is to introduce ad-supported SVOD subscription models. They are offered by HBO or Hulu, it is being tested by Netflix and others. Is this an approach that makes sense from your point of view? The reason why Netflix and others introduce ad-supported subscriptions is simple - if you have the aforementioned 70% market penetration and want to get another 10-15% of households, you need to introduce a cheaper subscription model to attract new customers. And this is happening now, although the implementation of ad-supported SVOD services will be interesting to watch in practice. Personally, I'm not at all sure this ad-supported subscription model will be implemented in Western markets, especially in the premium US market, because by getting Netflix to take on a new 10% of subscribers, they could also cannibalize 20% of current subscribers who are currently paying full price. On the contrary, this model will almost certainly be introduced in Asia, for example in India where Netflix could gain tens of millions of potential subscribers.
You aren’t considering a similar model for Voyo?
No, we’re not. Voyo is in a different situation. It's a premium product where the original content is constantly growing: We currently have 35 scripted projects in development, pre-production, or production. When I joined CME two years ago, we had three such programs.
Is this programming offensive coming at the expense of linear television?
We manage both. We also are preparing a lot of new programs for linear broadcasting. We will present the autumn program schedule this week, and I think the audience will be surprised. I'll compare it again to when PPF acquired TV Nova, which I described at the time as a sleeping giant with not enough development or new ideas.
I said at that time that my mission was to reinvent TV Nova and now we are in the middle of that process. Storytelling, the content we produce is key. In the television business you either make people laugh or cry, or you're not going to be successful. It's that simple. Therefore, I focus half of my time on the development of new content, thanks to which we have a strong creative team that maybe surpasses the capabilities of Czech Television. “In the television business you either make people laugh or cry, or you're not going to be successful.”
Last week, your competitor, Prima TV, announced the arrival of its own SVOD platform. Isn't the Czech market small for two local services?
Maybe it will sound arrogant of me, but I don't see them as our competition. I'll say it again in numbers: We currently produce around 35 different shows for Voyo. They announced three or four. There is a quantum difference in how much work and energy we devote to the development of our SVOD platforms at both stations. With all due respect - it's night and day. But to answer the question: Yes the Czech market is too small for two local platforms and two services with local content will not survive. In addition, an SVOD service is not something you can do half throttle. You need a dedicated, long-term strategy. It takes four to five years to get anywhere. We at TV Nova decided to build a premium service to produce local content. Within two years we had hired 10 to 12 creative producers, we tripled our production capacity, the number of studios we rent for filming also increased. Voyo currently has close to 400,000 subscribers. Our ambitions are of course seven figures, and quite frankly it's quite clear that there's no room for two players here.
You yourself said a while ago that Voyo was also involved in three original productions two years ago. Are you not underestimating Prima?
I'm not underestimating them, but I prefer looking forward rather than backwards and my competition is Netflix. They can't catch up to us because of the current bottleneck in creative production capacity.
Which is limited in the Czech Republic.
Exactly. We realized very early on that in order to grow and scale very quickly, we needed to hire and train enough creative producers. We succeeded in this, also thanks to the fact that we were able to recruit talent – such as Michal Reitler for example - from competing stations and thereby secure capacity. But you won't that creative production capacity on the market anymore - and it is clear from this that the local SVOD market is a "winner takes it all" proposition. Personally, I can't even imagine how it would be possible to build a new SVOD service with a production capacity of around 30 originals a year. In short, objectively, there are not enough people here who could handle it. Furthermore, we’re launching the CME Content Academy where we want to support new talents and the beginning of their careers in TV by incorporating them into our production process..
Is the previously speculated Czechflix project done for good?
First: I don't believe Czechflix was ever a realistic proposition. Second, a similar approach in Europe has not worked, look at the results of Britbox or other similar services in France or Germany. I think that the idea of Czechflix arose from the fact that nobody in the Czech Republic wanted to invest heavily in their own SVOD service - and everyone waited until we took up the gauntlet at TV Nova. And we are now extremely confident that our content distribution strategy is correct, we currently have close to 400 000 Voyo subscribers in the Czech Republic and Slovakia. Netflix has around 600-700 000 in the Czech Republic.
Based on your research?
Yes, in the Czech Republic and Slovakia they might have between 900 000 and one million subscribers, but of course, only they know the real numbers. But the growth rate is key. In the last two years, we have grown practically from zero to number two in the market, which shows not that only are people interested in quality local content, but also that we are probably doing something right.
Okay, but how many of those 400,000 people are actual subscribers who voluntarily pay for Voyo - and how many of them gained access through a marketing campaign?
About 98% of our subscribers are people who have proactively decided to subscribe to Voyo themselves. We have some marketing events - and we'll be focusing a lot more on that in the next six months - but the subscribers we have now are completely organic. They subscribe to us themselves and directly for the full price. We do not give any discounts apart from the 7-day trial.
Some time ago, Netflix identified neither HBO or cable TV as its biggest competitor, but the online game Fortnite. Do you agree with that view?
Our biggest competitor is sleep – that's the six to seven hours a day you're not consuming our content. But if we look at the time you're awake, in the United States the proportion of time people spend on online entertainment is something like this: basically 20% is spent on social media, 20% on cable TV, 25% on streaming, and the rest goes to gaming and other activities. It is thus clear that all online activities, including gaming, are big competition for us, the boundaries are blurring, and everything is now about content, about entertainment. This is the reason why I say that I am not competing with other local broadcasters. I compete with all services for which Czech households spend money from their entertainment and content consumption budget - whether it's cinema, SVOD services, or mobile games. And I'm mostly interested in how much time households choose to spend with my content compared with other types of online entertainment.
Once again, we are back to the content.
Content is where it all starts. Unless you are the strongest storyteller and the strongest local content producer, you can't even think about creating the Nova Hub I spoke about earlier.
But you are talking about premium content?
Of course. From time to time we see new TV channels pop up on the Czech market, which, to be honest, are basically just an aggregation of foreign content. Someone simply buys content from foreign studios, aggregates it, and puts ads in the background. But this isn’t the future of television. This is the approach that will soon be overtaken by streaming companies, be it AVOD or SVOD. And personally, I am no longer interested in bluntly adding channels with foreign content. That is a game of the past. I want to focus on building a form and content that is relevant now. “Voyo currently has close to 400 000 subscribers. Our ambitions are of course seven figures, and quite frankly it's quite clear that there's no room for two players here.”
What does all this mean for classic linear TV? Where can it excel?
There are still plenty of room. Take the evening news, for example. They don’t have that on Netflix. We have the most popular news in the country every day at 19.30, which is watched by 1.7 million people. That's a huge number of people - and, of course, huge advertising potential. It can also excel in local content - that's why when we present the program for the autumn season, there will be 5-6 days dedicated to local content. In the spring season, we will broadcast local content six days a week.
What exactly does that mean?
That we will broadcast either a Czech series, a Czech reality show, or another Czech product. If you look at our program a few years back, it was more based on foreign production. We don't want to go in that direction anymore. On the contrary, we will be local. And this applies to both linear and non-linear production. We don't want to focus only on content for Voyo. We're also putting huge effort into recreating TV Nova, as I mentioned. We're still airing some long-running shows and that's why great. But I'm also looking forward to being able to supplement them during the next year: between spring and autumn we will launch 6 new series purely for linear TV.
Is the role of linear television changing with the advent of online video stores such as Voyo or Netflix?
The linear world, whether you like it or not, is already becoming a non-linear world, especially as time-shifted viewing increases dramatically. In the last ten years, we have seen a decrease in viewership of linear broadcasting by two to three percentage points per year, but the number of people who watch our content does not change - It is stable. What we lose in live linear broadcasting, we gain in time-shifted viewing. And even though I am convinced the viewership of live broadcasts will continue to decrease slightly in the years to come, we must not forget that people in the Czech Republic still spend more than 4 hours a day in front of screens, and linear broadcasting is thus still an important source of content consumption.
However, it also depends on who is watching it. Advertising's lucrative Generation Z has all but abandoned it.
But Gen Z also wants to watch great stories and original content. That hasn't changed. It's just the way young people want to consume these stories. They want freedom, the ability to watch stories when it suits them, not the TV, and with the option to eliminate ads. And this is all possible if you have good content and you can adapt to them both in terms of content and technology. After content, technology is the second most important area that we emphasize. Voyo has become a very technologically advanced platform, and we are still working on it. We're not at Netflix’s level yet, but we're getting close. If you ask me about the two biggest changes to the soul of TV Nova where we are changing what the brand means, what our DNA is, the first is storytelling and greater drama/script capacity, and the second is technological excellence. For comparison: Two years ago we started with around 30 digital professionals who took care of the development of our platforms. Now we have about 170. Great production quality and technological understanding and excellence are two things you absolutely need as a CEO. In today's television world, if you have these two competencies, you will succeed. Content without the right technologies will get only you halfway. If viewers experience choppy images, the platform crashes, or they can't download their favourite movie, you won't get very far. Image quality, latency, download capacity: They cost us a lot of time and resources, but they are extremely important.
When you joined the group, you heralded TV Nova's return to prominence. However, the group's ratings have been steadily declining in the last four years.
The numbers you are basing it on are from the 15+ audience, which I never look at. Our strategy is aimed at the 15-54 age group. Just to remind you, TV Nova is at least double the size of the next local broadcaster. I for myself sometimes follow the even more specific category 15-40, where we have a share of over 40% and we are much better represented in this group of viewers than the competition. The data clearly confirms that we have the youngest demographic profile of all major television stations. The reason why the 15-54 category is so extremely relevant to us is that it is required of us by advertisers. They try to reach a younger audience and create brand awareness for their product, which if they succeed often means they manage to create a relationship between the brand and the consumer for life. That's why younger audiences are so important - and I'm extremely happy that we have that group of viewers. And a word about ratings - rating numbers are not as simple as they often seem. You need to have a comprehensive picture in front of you because as you create new distribution channels you partially cannibalize your older, traditional channels. For example, we recently calculated that if Voyo were a separate TV channel, it would have a market share of about 4%. If you wanted to be consistent and measure the Nova group's share, you would have to take Nova's current market share and add 4 percentage points to it. Same with our AVOD platform, that would also add another few percentage points. In other words, the better channels you use to deliver content to viewers today, the more pressure it puts on your traditional channels, in this case linear broadcasting, because you give viewers a better chance to watch the content they like.
So are viewership ratings still meaningful to you?
Of course, but you have to look at the total numbers. I'll give an example: an episode of Survivor, a show aimed at a young audience, which, by the way, worked great on Voyo. Even before the episode hit TV screens, 120 000 people watched it in Preview mode. Subsequently, it went on linear where it was watched by approximately 320 000 people who turned it on live or watched it with delayed viewing, and after three days another 50-60 000 people played it on our website and other places. If you add it up, it’s a different number place than if you're only interested in live numbers.
Does this mean we need a new metric to measure viewership?
It’s rather about changing the current approach. We want to focus more and more on how to measure the overall consumption of premium video rather than the viewership of individual channels. In the future, the market will fragment more and more, and we do not want to get into a situation where we would measure something that would not, in principle, reflect the real state of viewership.
Are you working on it yet?
Yes, we have a pilot project where we measure where and how our premium content is viewed. As I mentioned we invest a lot of energy and money into content. Every hour of filming costs us millions of crowns, so we want to be really sure we can correctly measure the impact of such content.
“If you look at our program a few years back, it was more based on foreign production. We don't want to go in that direction anymore. On the contrary, we will be local.”
When PPF bought the CME group two years ago, many expected synergies with telecom operator O2. However, we don't see much of that yet. Will it change?
I'll start in broad terms: The media has undergone a major transformation in the last decade or two. 20 years ago, top management practically only dealt with producers and advertisers. They didn't really know much about who their audience was. Of course, such an approach no longer holds up today. A b2b (business to business) principle is changing to d2c (direct to consumer). And who is the best in d2c? Telecommunications operators that have millions of clients, tried and tested technological systems, and the appropriate know-how. And regarding our synergies with O2, it was clear that before we could offer Voyo to a wider audience through this operator, for example, we needed to make it an excellent product both in terms of technology and content. We didn't have that two years ago.
Today, however, Voyo meets these demands.
Yes, today we are where we want to be. So, if you’re asking me about d2c, in the coming weeks and months we will be announcing several partnerships with telecom operators – basically joining forces with them to reach an even wider audience with our product. As for working with O2, they are a sister company, so a partnership there is more than logical. On the other hand, our aim is to be the market leader and in this position we want to deal with all relevant parties.
TV Nova has not yet released its financial results for last year. Can you give us an indication of what they will be?
Good. Sales exceeded six billion koruna. A year earlier, during the covid period, we were just over five billion. But we'll see how it goes. As you mentioned, economically difficult times await the entire Czech Republic.
Voyo revenue should be in the high hundreds of millions this year if I'm doing my math right?
I'm sure you can do the math. As I just told you, 98% of subscriptions are d2c, so just multiply that by the number of subscribers and the retail price minus VAT.
So about 600 million crowns. Within three years when you want to have a million subscribers, this will be a solid income vertical.
Yes, but I don't look at it that way. More fundamental is the question of how much of the content people will watch non-linearly in 2025. And the answer is that about half: through time-shift, which today has a share of 15-18%, it will be 30 percent in three years. SVOD will also continue to grow, and when I say we want to get to a million subscribers, I'm being conservative. And AVOD will represent 5-10% of viewership. When you add it up, possibly up to 50% of our revenues will come from sources other than advertising.
When you mention time-shift - Prima recently banned operators from skipping ads. Will you follow?
It is not planned now. We are in a slightly different position than our competitor. The difference is in our strong viewership. By having higher absolute viewership, we don't have to repeat ads as many times as our competitors, so we have fewer of them, and skipping ads in delayed viewership mode doesn't burn us as much as them. In other words, in order to reach, for example, a million people, we only need to play the ad 5 times, not 20 times.
At the same time, advertisers and their agencies have to fulfil their campaign reach such as 60% of the population and they want to ensure that people see the commercial at least 3 times during the campaign. And despite skipping commercials, we are able to deliver such an assignment relatively easily and quickly - as I mentioned - if we have a viewership of 1.7 million in prime time, it's not that complicated. But when you have more fragmented content, it's more difficult - and you're looking for a place where it’s possible.
Source (Czech only): https://www.info.cz/zpravodajstvi/strategie/bud-dokazete-lidi-rozplakat-a-rozesmat-nebo-v-televiznim-byznysu-neuspejete-rika-sef-cme-didier-stoessel?odemknout=BFXWFTQFGI
Author: Vojtěch Kristen