Turner Asia Pacific’s Steve Marcopoto

 

This interview originally appeared in the MIPCOM 2011 issue of TV Asia Pacific.

 

Since bringing CNN and Cartoon Network to the Asia Pacific in the ’90s, Turner Broadcasting System has dramatically expanded and diversified its regional business. Once a company focused on importing international content to Asia, Turner has spent the last few years acquiring locally originated channel brands, including MondoTV in Japan, QTV in Korea and Imagine TV in India, and rolling out localized feeds for flagship services like Cartoon Network. Steve Marcopoto, the president and managing director of Turner Broadcasting System Asia Pacific, discusses the importance of investing in local content and weighs in on the challenges of working across the region’s widely divergent markets.

 

TV ASIA PACIFIC: TV Everywhere is a priority for your parent company in the U.S. What kinds of opportunities are you exploring for Turner’s content on new-media platforms in Asia?

MARCOPOTO: TV Everywhere is top of mind in the States and it’s been a big development that our parent company’s been involved with. It’s a much different story out here, and it’s largely because of the different dynamics in this marketplace. Asia has never been a single market. As it’s grown and developed, and pay TV and digital platforms have grown over the last ten years in particular, it’s less of a single market than it ever was. That impacts so many elements of our businesses, and one of them is this whole over-the-top phenomenon. In the States, it’s very much an industry content-led initiative in partnership with the platforms. Out here, it’s a piecemeal application and almost early-stage experimentation with just a couple of platforms. That goes back to the market not being a contiguous one, with a couple of mega platform operators. The other thing has to do with the piracy issues that have prevented everybody from Apple to Netflix from putting their content up online [in Asia].

 

As a broad concept we are happy to transfer our know-how, our technology, and have early-stage conversations with people. There’s a possibility in a market like China, where you don’t have linear television services from international [companies] at this point, that this presents an opportunity. Folks like us who can’t get our content in on our channels because of regulations have the opportunity to work with licensed video-player operators. Tudou is now starting to do deals with studios. You know about the highly publicized Youku deal with Warner Bros. It’s not a large-scale opportunity but it at least is an opportunity in a market where networks have been highly restricted from entering, other than the hotel distribution.

 

TV ASIA PACIFIC: Do you think that some platforms will leapfrog the cable VOD model directly to offer content online and on portable devices?

MARCOPOTO: Our experience so far has been that the classic linear bundle pay-TV offering still seems to be the bedrock of the proposition. I don’t think it’s mutually exclusive in terms of the development of apps and content that’s rolling out for them. We do know that from a penetration and usage perspective, Asia is far ahead of the West in specific markets in terms of mobile usage and mobile applications, so there’s probably going to be a fair bit of opportunity there. But again, generally we’re seeing that develop at uneven paces. You can look at India, a highly under-declared [subscriber] market that is not even fully digitized yet on the cable side. Meanwhile, in Hong Kong, if you look at now TV with their IPTV offering, it’s rolled out fast, to a degree it almost did leapfrog the incumbent [cable operator] in the sense of technological applications that they brought to the market, and they have a pretty robust VOD suite. We did a Cartoon Network VOD product with them. We have to be opportunistic and work with customers on a market-by-market basis. On the one hand you’re dealing in a market which has a very leading-edge sensibility to it, on the other hand, you’re in a place that’s 20 years behind in the shape and the form of the business. And others are in between.

 

TV ASIA PACIFIC: Given increased competition, how do you maintain and increase your slice of the ad pie, both pan-regionally and on the local level?

MARCOPOTO: You have to do a lot of things simultaneously. Our core proposition on the news side was always pan-regional CNN. The pan-regional business has remained very robust, and that has been for a number of reasons. We’ve had the foundation of our core advertisers that have been partners with CNN for many years—luxury goods, airlines, tourist boards, banks, technology companies. On top of that you see new emerging brands coming out of India, you’re getting cities in China that are promoting economic development and investment, much in the ways that places like Malaysia and Singapore used to do in the ’80s. Korea has really hit its stride as a first-world market of leading brands. Japan has snapped back remarkably from where they were off the back of the tsunami and earthquake. All in all, we’ve had a really good run on the pan-regional business.

 

The other side of our business is the entertainment channels, which tend to be much more locally focused. These range from our suite of Cartoon Networks to our movie channels and our local channels in Japan and in Korea. The models for these all vary, but generally they’re all basing off of high growth rates in these individual markets, with the exception of Japan, which has a very modest growth rate and a pay-TV market that is really under­developed in terms of advertising.

 

Singapore, Hong Kong, Malaysia, Thailand, basically the ASEAN or Southeast Asian markets, each one of those is about the size of an American city—you’re not going to see a great scale there. But if you roll them up together, you have a good story to tell advertisers.

 

Off the back of that we’ve developed a new department called Turner Media Solutions for our entertainment portfolio. We’ve got 12 channel brands across the market, in nine languages approaching about 300 million households. [The new] in-house agency group can cater to advertisers’ needs across the region with a 360-degree approach.

 

India is a stand-alone market, scalable like Japan but the absolute opposite in terms of the Japanese model in that it’s all advertising driven—there’s very little distribution [revenue]. In India, you have a full-on, almost U.S.-network type of ad-sales proposition to make, complete with upfronts and meaningful ratings.

 

The overall driver dynamic is that Asia Pacific is a market with very robust growth rates across the board. It’s just that different models need to be used in various markets.

 

Digital is an increasingly important part of Turner’s overall advertising growth strategy as clients become more comfortable with investing in the digital space. Currently 75 percent of CNN’s advertising spend by clients includes a digital component; with 60 percent for our entertainment channels. The 30-second ad is now just a component of more holistic campaign solutions to engage audiences—on whichever screen they’re viewing.

 

TV ASIA PACIFIC: What led to Turner evolving from a business that was importing international brands to one that is building and rolling out Asian-originated brands?

MARCOPOTO: We’ve been executing that for quite some time now. It was quite obvious, going back to the nature of this marketplace and the growth of individual markets, that we needed to move quickly to start to cater to different tastes, cultures, languages. That’s very much been the driving principle for us for some years now and the main strategy for growth of the business. We know that we’ve got great brands to build local businesses on. We know that the basis of a local business goes beyond local language. It’s not just a translation, it does come down to the nature of the program that you’re going to put on a particular channel, the manner in which you schedule it and also marketing and promotion and the like. Essentially we know that deeper penetration in the markets is going to rest on localized product, and a large piece of that is original production. The business that we do in Japan on [our channels] Tabi and MondoTV and to a lesser degree on CNN, if you roll up all those hours that we produce, we’re the largest foreign producers of local content. What we produce in India is going to grow, for Pogo, for Cartoon, where we do original animation, and for Imagine, where we do, right now, three to four hours a night of dramas; it’s more original content than we’d do in North America on a TNT or a TBS. So we’re going long and deep on original content, which is what’s going to drive this strategy of taking the global brands and applying them locally. That’s going to go across the board for everything from established brands like Cartoon Network to new emerging brands of ours like truTV.

 

TV ASIA PACIFIC: A lot of companies have rushed to roll out in the Asia Pacific over the last few years. Do you think some have unrealistic expectations about the potential returns?

MARCOPOTO: There’s often a difference between headlines and bottom lines in Asia Pacific. The regional numbers trumpeted often include markets that are inaccessible for various reasons. It can be a different story when you net those out. And costs are escalating dramatically. It’s not the slam-dunk the numbers might seem to indicate.