The future of Australian content
Whether it’s due to shrugging off our colonial chip on the shoulder or improving our story-telling skills, over the last several years Australians’ tastes have shifted markedly towards a preference for Australian content. Evidence for this is found in the dominance of Australian content in our top forty television programs, notably sport, reality programs, news and high profile drama.1
While in some quarters it is fashionable to eschew commercial television - or even television in general - it is clear from the data2 that television viewing is still the activity that captures more people for more time than any other leisure activity and that the majority of this time is spent consuming Australian content.
The funding for Australian content is under pressure however. PwC forecasts modest compound annual growth rates (CAGR) to 2020 of -1.0 percent for free-to-air television and 6.1 percent for subscription television (including SVoD). Some content genres are feeling it more than others. The increase in the cost of sports rights has been well publicised, however a review of drama production commissioned over the last three years shows a decline in expenditure and titles each year - from $374 million (57 titles) in FY13 to $343 million (51 titles) in FY14 to $299 million (47 titles) in FY15.3
In addition, severe cuts to Screen Australia ($41.6 million over the next four years) and the fact the television production rebate used to encourage home-grown television projects is only half what it is for film-makers (20 percent of qualifying expenditure for television versus 40 percent for film) create economic constraints.
Australian commissioners' response
One common response by the commissioners of Australian content is to seek newer sources of supporting finance, especially international partners who can supplement production funding and provide international distribution. For example, the ABC’s Clever Man, a sci-fi story about an indigenous super hero, was co-financed by the US AMC channel. Enlisting new finance partners - often US studios - allows producers to spend more per hour and even hire A-listers, who, since House of Cards, have accepted that television is a medium worthy of their talents. The challenge, say the commissioners, is to keep the integrity and 'Australianness' of the story. Angus Ross, Chief Content Officer at Seven West Media warns: 'When you bring in international partners you can have a pudding with too many chefs. They can push an angle or a timing that doesn’t work for Australian audiences...'
For a view on what the future holds, PwC spoke to those in charge of content commissioning at all of Australia’s networks, as well as the CEO of the Screen Producers’ Association and the Chief Executive of Foxtel/Seven SVoD joint venture, Presto. Their frank responses are summarised below:
- Content is losing its middle, in terms of cost. More money per hour is being spent on premium content and 'event TV' which, while on air for a shorter time, has a large impact and is highly promotable. Think Seven’s Molly and Nine’s The Boy from Oz. The lower end sees an increase in hours of largely unscripted content. There are more platforms to fill and unscripted content is often produced in-house, where it’s easier to maintain tight cost control, a shareholder requirement consistent across the television landscape. Innovative hybrid models are also emerging to manage costs efficiently. Ten’s The Project is produced by Roving Enterprises who work from Ten’s offices and use Ten’s studio facilities.
The ABC’s Head of Television Richard Finlayson says, 'We’re reviewing the ROI we get from the middle of the slate - from both Charter and financial perspectives. We’ll squeeze more hours out of our lower-cost internal shows and long-running brands and push more resources towards super-high quality, cut-through commissions in both scripted and non-scripted. Working with US partners is helping us stretch both our resources and our ambitions...'
- The opportunity to sell programs and formats overseas is increasingly attractive. US SVoD services have demonstrated that high quality, well-told stories can find willing international audiences, although currently the direction is largely one-way with original US commissions becoming popular even in non-english speaking territories. Think Making a Murderer at the factual end and Orange is the New Black for drama. Foxtel Networks Director of Production Duane Hatherly says: 'In a world where many dramas become international exports - HBO, Netflix & FX have all had huge global successes - when we commission we keep in mind the potential for a story and cast to travel'. Foxtel’s Wentworth, created almost shot for shot in Germany and The Netherlands, is a good illustration. The opportunity to supplement advertising income with overseas sales is also a driver behind Nine’s decision to move some of its production in-house: 'Owning the IP is very appealing to us,' says Nine’s Head of Content and Creative Development, Adrian Swift.
- Cost-consciousness is an essential part of a commissioner’s job but experienced commissioners manage the trade-offs while backing what they believe will have cut-through and be loved. According to Marshall Heald, formerly CDO and now Director of TV and Online Content at SBS, there is 'a dichotomy at play. We live in the most creative era [with abundant user-generated video] but the flipside is its more challenging to connect with audiences. This is why we need big projects - to punch above the parapet. Factual and drama are the best opportunities to deliver big, transformative messages...'.
- Beverley McGarvey, Chief Programming Officer at Ten offers an example: 'We have Offspring on the schedule again because we believe in it. We’ve reached 65 hours so we can no longer receive supporting finance from the screen agencies. The [funding] theory is that after 65 episodes it has proved it’s commercially viable but the truth is that Season Six is not more viable than Season Two...'
- Increasing sophistication is required by producers and broadcasters to finance future Australian content. While Australian production companies that don't have international investment are responsible for 52 percent of the commissioned hours in 2016, it may be more difficult for these businesses to compete in the future without international workers or partners. Matthew Deaner, CEO of SPA explains:
- 'The [funding] system is complicated because layers of policy levers exist to create an independent [production] sector. These include investment by Screen Australia and regulatory bonuses - broadcasters can acquit their drama points4 quicker if they commission. Producers with an international connection can access international money to make the cost of a production cheaper for the broadcaster. Independents have to stitch together many more investors. However having a mix of businesses operating in the market is important. It creates diversity in story and output and gives smaller creative businesses opportunity to succeed.'
- Nuanced consumption data, readily available as a result of online viewing, inform commissioning decisions and highlight emerging talent. Presto’s Chief Executive Shaun James explained how they came to commission the short form series Let’s Talk About, 'We commissioned ten episodes of Let’s Talk About with Matilda Brown - they’re about five minutes each - because we noticed a rise in viewing in commute times, morning and afternoon. These are shorter windows...'
Nine’s Adrian Swift points to Kate McLennan and Kate McCartney of The Katering Show, a successful online short form comedy now being produced for the ABC, 'online is a great audition medium for us now,' he says.
Commissioners reveal the shows that make them most proud:
Beverley McGarvey, Ten. Spelling Bee: 'It’s proper family entertainment. It had a really diverse cast and showed that being smart is now cool. The format is co-owned by Shine and Ten...'
Adrian Swift, Nine. The Voice: 'Fabulous people sing. Famous people comment on them…what’s not to love? If you’re a singer bashing away in pubs or in your bathroom it gives you a genuine opportunity to find an audience...'
Angus Ross, Seven. My Kitchen Rules: 'It’s been the number one program on television for a number of years now. It was created in house and has sold around the world - the tape and the format. It’s ticked every box for us...'
Richard Finlayson, ABC. Playschool and Catalyst: 'I’m proud of our big dramas and factual events but television doesn’t have enough long-standing, non-news brands. We will nurture and grow the ones we do have. Playschool is 50 years old now and every bit as relevant to kids as it was. And we’re getting behind Catalyst. Science is not only a fundamental ABC responsibility, but it’s also hot right now. We’ve increased the number of Catalyst episodes from 22 to 40 this year and peppering the schedule with big tentpole moments that will bring families together...'
Marshall Heald, SBS. The Principal and The Family Law. 'The Principal because it dealt with a lot of contemporary hot button issues and The Family Law because it’s the first dramedy series in Australia’s history to have a 95 percent Asian/Australian cast. We’re finding fresh new ways to tell the multicultural story...'
Duane Hatherly, Foxtel. River Cottage, Bake-off and Gogglebox. 'These are UK formats but I think our Australian translation of them is brilliant...'
Shaun James, Presto. Let’s Talk About. 'It’s a lovely story about a young couple who haven’t been going out long and find out they’re pregnant. It did well for us in commute times and it was innovative because each episode was only five to six minutes...'
- Free TV Australia TV Ratings Reports
- 87.4 percent of Australians watch broadcast television for on average 85 hours and 17 minutes per month. Nielsen’s Australian Multi-Screen Report Q4, 2015.
- Screen Australia Drama Report 2014/15
- Commercial broadcasters have obligations imposed by the broadcast regulator, the Australian Communications and Media Authority (ACMA), regarding the production of home grown drama. Free-to-air licensees are required to produce and air the equivalent of 250 drama points per annum and points are earned based on genre format and duration of the program. Subscription television is required to spend 10 percent of its production budget on new Australian drama.