Formats, Digital Key to Televisa’s Future

CANNES: Televisa's Emilio Azcárraga was interviewed on stage by World Screen's Anna Carugati at MIPCOM today, discussing the Mexican media giant's production prowess, the opportunities it is seeing with digital platforms and his goals for the company's growing formats business.

The chairman and CEO of the world's largest Spanish-language content producer—it makes some 90,000 hours a year—is in Cannes as part of MIPCOM's Mexico Country of Honour activities. "Spanish, as you know, is the second or the third most-spoken language in the world," Azcárraga said. "And Mexico is either the first or the second economy in the Spanish-speaking world. That makes it very important in the entertainment industry." Moreover, he added, Mexico's proximity to the U.S. is a tremendous asset. "You are close to 60 million people who speak Spanish, and basically 65 to 70 percent of them are of Mexican origin." Azcárraga is also bullish on growth prospects for the Mexican economy, given the reforms that have been put in place over the last few years. "It’s a land of opportunities for us as Mexicans and also for international companies. We’re very proud as Mexicans to be able to be the Country of Honour for this year."

Much has changed in Mexico since Azcárraga took the reins of the company in 1997. "Pay-TV penetration was only around 18 to 20 percent,” he said. “That has grown to 50 or 50-plus percent right now. It’s not just the penetration, the number of subscribers, it’s the amount also of channels” that has increased. Plus, Internet penetration back then was negligible. “And now, it’s more than 50 percent penetration in Mexico. Pay television and Internet penetration is growing at around 20 percent per year, and that is going to grow still for the next few years.”

Televisa has benefited from these gains, given its prominence as a content producer and distributor. Its production prowess has evolved over the years, with the company diversifying beyond its traditional telenovela base to also make comedies, musicals, sports coverage and more. It has also been ramping up its formats business. Televisa, he said, is “a creative company that not only produces stories but produces ideas.”

Asked about Televisa’s approach to embracing new technologies, Azcárraga stated: “You need to do trial and error because there are a lot of these new technologies that you don’t know if they’re going to [disappear], or if they’re going to be there for a long time. But I believe that we need to try every technology. Obviously, the storytelling process is basically the same really—it’s providing the best story with the best quality production. But now I believe that there’s two things that we can do. [One is] the optimization of the usage of windows—this means not just producing for over the air, but maybe producing for certain platforms only, or maybe instead of starting over the air or on pay television, actually starting through the Internet or other platforms. [The second is] to have a second-screen idea that…interacts as much as possible with the viewer. This builds a better experience for the viewer.” To demonstrate this approach, Azcárraga introduced a video clip from the over-the-air network Channel 5, which has switched its focus to young audiences and allows them to interact with the content. He also referenced the U.S. Hispanic broadcaster Univision, which takes much of its prime-time content from Televisa and is partly owned by the company. “It’s incredible the amount of tweets or interactions that are done in English, although the programming is in Spanish. You see the importance of the bilingual community in that country—they can watch the content in Spanish, but they can use their native language, or the language of the country in this case, to interact with audiences.”

Azcárraga went on to note the importance for Televisa in being included in every part of the distribution chain. However, “You cannot have the same content in all the different platforms. You need to understand how each platform is working, how the user is using that platform, and adapt the content to those platforms.”

“We have looked at technology in two ways,” he continued. “First is when technology puts the rules to the content,” for example, a platform only allowing a video to run for 15 seconds. “You need to be riskier, edgier, to really have success in those 15 seconds.” Users of streaming video, he added, don’t care about where content is coming from and don’t think it’s going to fail. “We need to use those kinds of technology achievements for the distribution of content.” He also emphasized that in order to create a better experience for viewers, “you really, really need to access the second and the third screens.” Towards that end, Televisa will be introducing a new series in 2015 where “the tablet is part of the show. If you have a tablet and you have access to Internet, you will have a greater experience. But you’re not going to lose anything if you just watch it on television.”

Azcárraga went on to discuss business models for online platforms: ad-supported or transactional or subscription content on demand. “We’re working on both of those models. At the end of the day, we believe that the production that we do obviously needs to have a return. There’s still a lot of piracy, but people want to pay for good content and good quality to have on their screens…. If you have the right price, if you’re not overcharging, and you make it easy and good quality,” people will pay for content.

Discussing developments in the Mexican market, “there’s a prospect of greater competition on the television side because there are two national networks that are going to be in place next year.” He said he sees great opportunity in telecommunications. “These digital platforms we were talking about are very important for that content experience. The new law put in place by this administration opened that opportunity to us. If you do an analysis of all the reforms that have been put in place, they are going to change the environment of Mexico. There’s a lot of opportunities now in Mexico. This government is not just getting a lot of investment into Mexico but is helping companies in Mexico to be international. I see a bright future for our country. We want to take part in that future and work, not only for Televisa to be a great company, but also to have the best country we can have.”

The interview ended with Carugati asking Azcárraga about his vision for Televisa’s future. “We need to adapt to new technologies, that is very important.” Also of importance is driving growth in its international formats business. “When we’ve had formats from outside that came into Mexico, we learned that working with the people who developed that format, translating it into the culture that we have in Mexico and at Televisa, makes for a better program. We have had long-lasting relationships with a lot of the media partners that we have.” Televisa will be employing a similar strategy in exporting its own formats, such as Little Giants, which was presented at the end of his keynote.

Watch the entire interview below.