By the time BP’s Deepwater Horizon oil rig exploded in the Gulf of Mexico, the change in focus had reigned in costs and Fairfax video was at break-even for the first time, but a new challenge was emerging.
Video’s soaring popularity had caused a glut of advertising inventory, and commoditisation was leading ad agencies to demand publishers drop ad prices. With the video budget at break even, that would put the business back into loss.
What was to be done?
Before I joined, I had inserted an unusual clause into my contract. It was that once short form video was at break even, I could test a niggling hypothesis: If millions watched a short video with one pre-roll ad, maybe many of them would also watch a longer video, even if it had multiple ads.
As a journalist, my instinct told me that people would invest their time if the quality was good enough, and publishing full documentaries would enable Fairfax to tell the biggest new stories in greater and unprecedented depth.
To Fairfax’s credit, they made good on the deal and soon after we launched a long form video hub called smh.tv (named after Sydney Morning Herald).
In the process, we helped Fairfax become the first news media website in the world to offer a video on demand network.
Making shows of this quality was beyond us, so we set about acquiring them from broadcasters. Over a roller-coaster three years, we signed 147 rights deals with providers including the ABC, BBC, EndemolShine, Fremantle, the SBS, Vice and more.
We rapidly expanded the network to 2,000 programs and delivered 60 channels of shows over a dozen devices including mobiles, tablets and connected TVs. Data poured in and we began to gain amazing insights into our audience.
- They watched an average of 3.2 videos a month
- Even at work, they would watch for 11 minutes on a desktop. At lunchtime, viewing rose on tablet and viewing duration lengthened to 16 minutes. At home, it was 23 minutes for viewers on a connected TV
- Longest viewing durations were in parenting, mini series and military history, and
- Viewing was three minutes longer if the video prominently featured CGI
Yet one thing remained constant; the most viewing and the most money was derived from factual, documentary and current affairs programming, fed by the constant cycle of breaking news.
Soon, smh.tv was generating seven figures in advertising revenue but most critically, it was profitable. While long form represented only 20% of total viewing, it delivered 100% of the profits. Short form only broke even. We had the model and it was time to scale.