Sky’s Gary Davey


PREMIUM: Gary Davey, Sky’s managing director of content, talks to World Screen about original production, on-demand offerings, cord-cutting and more.

WS: Tell us about Sky’s newest set-top box, Sky Q.
DAVEY: It’s an extraordinary piece of [technology]. It’s fantastic because the guys who designed it really thought about reinventing television from a customer point of view, which is a really hard thing to do. Sky Q is so elegant and smooth and it looks so easy, that will give you some idea of how complex it is behind the scenes. It’s like there is an inverse relationship between ease of use and complexity of delivery. But it’s a brilliant proposition and it’s a hybrid between live and on demand, but really easy to use and designed around the current behavior patterns of the average modern day family. It empowers multiple locations around the house and multiple devices around the house. It supercharges Wi-Fi throughout the house and allows you to take TV with you outside the house. It’s a complete re-think and the way it’s presented is beautiful, very smooth; we call it fluid viewing.

WS: Do different viewing experiences call for different types of content?
DAVEY: Good question! When I first saw Sky Q it immediately became apparent to me that this reinvention of the way television is presented really begs the question should we now start thinking about what content belongs [on different platforms]. One of the things we are doing on Sky Q is we are curating short-form video from the internet. We’ve got deals now with 20 different content brands of short-form video and we’re presenting it in a really simple, elegant way, so that you can cherry pick the best of short-form video from the internet on your big-screen TV and on your iPad and anywhere in the house, alongside the world’s biggest collection of music videos through Vimeo, alongside multiple apps that you can access on the TV set through your remote control. You can connect your whole Facebook photo collection onto your TV network. You can interconnect your whole iTunes music library through your TV network. Sky Q is tearing down all the walls in your world. It’s pretty exciting stuff and I’m thinking, OK, here is this whole new blank canvas so maybe it’s time to really start rethinking the nature of content. It’s a really exciting time to be in the business, I have to say!

WS: What do linear channels have to do to remain relevant in this world of quickly changing viewing habits?
DAVEY: I think about this a lot, as you can imagine. I’ve been around a while; I’ve lived through 12 cycles of the prediction of the end of television as we know it! And yet, TV has been very, very, clever at reinventing itself. Every time there is some new technology or some new competitive entrant in the market [the reaction] goes two ways: first, This is the end of television and then someone says, Hang on, maybe not. So in answer to your question, first, we need to be relevant to a younger target group whose lifestyle is changing. I don’t think it’s about technology; it’s about lifestyle. And linear TV is still very healthy, by the way. Look, we are going through a transition from pure linear to a hybrid of linear and on demand, but it’s happening a lot slower than people think. Second, as we adapt as an industry, among the many things we all do, when we’re launching a TV program, whether it’s a one-off or a series episode, we’ll start thinking about it like a live event. We’ll start planning and thinking about it like a Champions League semifinal match so that there is a compulsion to be part of it like a live event. And God’s given us social media to make this happen! We’ve got the watercooler in real time, it’s called Twitter and Facebook and YouTube. We’ve got a bet going here at Sky. In April, when we launch season six of Game of Thrones, we will first make the episode available at 2 a.m. The 9 p.m. linear telecast will still be there like in the good old days, but we have a bet as to how many of our customers will watch the episode before 9 p.m. It will be a huge number but I guarantee you the 9 p.m. number will be equally huge.

I did an experiment in Germany last year. We had a Game of Thrones pop-up channel where for three weeks, 24 hours a day, we just played Game of Thrones. Every one of those episodes had been available on demand but that pop-up channel went through the roof and 93 percent of the consumption of Game of Thrones through that three-week period was linear, because we made it special. We made it an event and people who love that content had to be part of the live experience so that they could engage in a conversation around it. I just think linear will start thinking about itself as live TV.

WS: Sky made a significant commitment to original production a few years ago. How has that strategy been working out?
DAVEY: We are two or three years into a big commitment to investing in original productions and we are starting to see some interesting signs of maturity coming out of that strategy. One is that we’ve got five dramas, Fortitude, Penny Dreadful, The Tunnel, Gomorrah and 1992, and four comedies, Stella, Trollied, Mount Pleasant and Yonderland, returning this year. That’s a pretty big deal because getting a series to come back is always a challenge, especially in the comedy category. Second, we’ve got six of our shows in U.S. prime time this year: You, Me and the Apocalypse, Last Panthers, Penny Dreadful, Fortitude, Gomorrah and The Young Pope. And our ambition is to double that number over the next three years. We are not in the business of creating TV for U.S. prime time, it’s not the ambition; it’s the by-product of the ambition.

We’ve also got working pretty well a European approach to original production. We’ve got a really clever structure where we encourage bottom-up creativity, in other words we encourage the U.K. team, the German team and the Italian team to identify projects, get them into development and then present them. Where we see a project that’s got potential, we supercharge it into a Sky Europe project and then an international project. The most glaring example of that is The Young Pope, which started life as an Italian project, then made its way to Germany, then to the U.K. It became a European priority, by which time we had Jude Law and Diane Keaton signed on, so CANAL+ and HBO came in as international co-production partners. That’s what I mean by bottom up, we get localized ideas that have potential and then supercharge them all the way up to international status.

WS: Sky Deutschland has been a little slower at developing original productions. Is it getting up to speed now?
DAVEY: I got to Germany in 2010 and was there for four important formative years as we got the program agenda into shape. History will tell that the three Sky entities evolved in very similar ways but on very different timelines. When we look at where Sky in the U.K. is today we sometimes forget that it has taken us 27 years to get us here! Equally, Italy has been a long-term project and it’s at a particular stage in its evolution and Germany is really just beginning the production part of its journey. So it’s a question of timing. We all have very similar ambitions and that is best illustrated by the way Sky Atlantic has worked so well in each of the three territories. It ticked all of the boxes that we had in each of the territories. It ticked the box about wanting to achieve a high level of quality. It ticked the box about achieving a high level of serialized shows, and it also ticked the box of being able to go into places that free TV couldn’t or wouldn’t or maybe shouldn’t go—more challenging stories, more complex stories, edgier and riskier. So Sky Atlantic is the poster child for our common ambitions.

WS: Sky recently closed an important deal with Showtime.
DAVEY: Yes, we are really delighted. We are really proud of being able to put the Sky brand alongside HBO and Showtime. We’ve been the custodians of the HBO brand for about five years and it’s worked really well for us and for HBO. Showtime has seen how that’s worked and is really happy to be part of this big family. We are in a position to present the Sky original content right up there alongside HBO and Showtime [on Sky Atlantic]. It was a perfect fit.

WS: Germany has historically been slow to build its pay-TV business, for many reasons. What did Sky Deutschland get right and what growth potential do you see for it?
DAVEY: It’s really interesting. Unfortunately, the company suffered from poor execution for a very long time. So when News Corp. started buying shares in the company and then eventually got effective control of it, we had such a lot of work to do, it was a really tough project. By the time I got there in 2010 we had a plan to go aggressively at a younger audience. We had an established older audience through football, but I think a whole generation of younger people in Germany had gone from free TV to the internet and completely bypassed pay TV. And to be honest with you, for pretty good reason because I don’t think there was an awful lot there to attract them. I got there at about the same time as the CEO Brian Sullivan, who is really a very clever products guy. Brian pretty quickly identified that we needed to come up with a set of products that appealed to a younger profile. We invested really heavily in Sky GO as an app. I tried to get my teams excited about the idea of visualizing a 22-year-old watching True Detective on an iPad. If we got that right, the rest would follow. We also aired HBO content day-and-date with New York, so we were able to push an agenda that kicked off a conversation with a younger target group that until then was really not engaged with Sky. We kicked off an interesting conversation that continues to this day. We are pretty excited about that now and the potential is huge. I always remind everybody that in Germany we have 34 million of the richest households in Europe still to sell to. I think the German business could turn out to be bigger than the U.K. business in the long term.

WS: Italy is experiencing tough economic times. Not withstanding all the problems, how is Sky Italia doing?
DAVEY: I’m very familiar with the situation in Italy because I worked there for four years and I launched Cielo, the free-TV channel there. I think the guys have done a fantastic job given the economic circumstances. It’s been a real struggle. We are seeing very tiny bits of growth there and it’s amazing. That’s because they have done a great job of igniting a whole range of entertainment categories that we haven’t even touched yet in the U.K. and Germany. I launched MasterChef there six years ago when we launched Cielo and I remember at the time everyone said, God, what is Italy going to do with another cooking show? And I said you are missing the point, MasterChef is not a cooking show, it’s a human drama. MasterChef was a great success and then almost immediately after we brought The X Factor to Sky One and then Got Talent and that enabled us to really supercharge Sky One as the leading commercial entertainment channel and [we’ve placed] lots and lots of smaller formats around that since. They have done a great job at carving out a unique position for Sky in Italy that has helped it defy the odds and very difficult economics.

WS: Linear channels have been the backbone of Sky, but how important have on-demand offerings become?
DAVEY: Very. We offer a balanced portfolio and always have. We launched our first OTT service ten years ago, we predate Netflix by a long stretch and we predate the iPad. It’s going to sound terribly trite but it’s true, we are so focused on the customer experience here that it’s completely natural for us to keep inventing different and new ways for the customer to get the most out of his subscription. That’s what drives us everyday. So on demand in all its various forms is really basic; it’s a part of our day-to-day lives and has been for a very long time. And now we’ve got a scenario where our consumers can enjoy content in seven different modalities, not just linear and on demand, but a multitude of different services and devices: pull VOD, push VOD and so on. What can’t keep up is the measurement system. The BARB panel barely covers three of those seven modalities. So it’s interesting to see how old-fashioned and traditional measurement looks when you see the way we behave with our customers. We have shows where less than 20 percent of the consumption is linear. A recent example of this is the new HBO drama Vinyl on Sky Atlantic: 88 percent of the audience in the U.K. viewed the first episode either on demand or through their Sky+ recordings, which makes it the highest non-linear viewing for a drama launch on Sky Atlantic over the past year. It’s very interesting how differently each show behaves. But we love the idea that our customers decide when, where and on what device they watch the show. I really don’t care as long as they watch the show. Our business model is based on engagement. If a customer is engaged in our content, we keep the customer; it’s simple. Engagement is the key word, how they exercise that engagement is really not relevant.

WS: There has been a lot of talk about cord cutting in the U.S., much of it has to do with disposable income, but I believe customer service—or the lack thereof—also plays a part. What is your view?
DAVEY: You just hit my hot button! One of the things I loved most about coming back to the U.K. after all these years [working in Italy and Germany] was to see the leadership of this company. Every time they speak about this business they use three words in a sentence: content, innovation and service. They were the three pillars upon which this company was built 27 years ago. And it is still exactly thus, and it’s something I am enormously proud of. I’ve got in my office a little wooden stool with three legs and each leg has one word on it: content, innovation and service. We talk about content and innovation a lot, right? But the service piece of what we do is completely integrated into the other two pieces. In the U.K. we’ve got 12,000 staff members who work full time just focused on customer service. They manage 42 million phone calls a year (that’s 115,000 phone calls a day), as well as 3 million engineer visits a year (8,200 a day). I remind my staff regularly that our greatest privilege and our greatest responsibility is that millions of families in this country have given us permission to take money out of their bank accounts. And that is a responsibility that we should take really seriously. That core commitment to customer service is something that doesn’t appear to exist in the U.S. cable industry and now I think they are paying the price. I think it’s really that simple. We went through a period in the latter half of 2015 where a lot of people were trying to make that connection about cord cutting to us, but the structure of the market is so fundamentally different it doesn’t really apply. That’s probably best illustrated by the fact that we have a lot of OTT competition now, and have for three or four years, and yet we have the best churn rate we’ve had for ten years. It demonstrates that we have maintained a very, very, positive relationship with our customer base. We work very hard at it, that’s what we get out of bed thinking about every day: how can we make the customer experience better today? A perfectly natural part of this whole technology, innovation, video-on-demand journey is that customer-service focus.