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Q&A with Cignal TV CEO Jane Basas on Growth Through Innovation

Q&A with Cignal TV CEO Jane Basas on Growth Through Innovation

Jane Jimenez-Basas is President and CEO of CignalTV, the first pay-TV provider in the Philippines to reach 2 million subscribers. Jane won the Mansmith Young Market Masters Awards (YMMA) in 2007 and was named Asia’s Media Woman of the Year by Content Asia in 2017. She shares insights about innovation as a market leader. 

Q1: You have taken Cignal from content aggregator to original content provider. What is your process of knowing what content subscribers will like?  

A: It’s really about getting the pulse of our customers.  Each of the organic channels for which we produce original content for has its own core target viewers.  We have developed a deep understanding of what appeals to each one of them through extensive research – both third party as well as internal. We are armed with this insight and market knowledge when we develop original programs.

On top of this, we engage creative consultants who have established a strong reputation in the industry for producing content that appeals to a wide range of customers/audiences. Our consultants are experts coming from varied genres and formats (i.e., narratives- series/mini-series, feature length films, short films, sports coverages and magazine programs, news & current affairs programs, interstitials, vignettes, etc.).  We are able to tap these resources by regularly conducting open pitches and inviting varied types of content creators across multiple disciplines.  This way, we get exposed to all kinds of ideas and to all kinds of talents, and filter the high potential concepts and content teams and prioritize our funding support towards these opportunities.

Q2: Which is better in terms of return on investment — your own content R&D (research and development) or external C&D (connect and develop) where original content creators offer you what they have or can do and you just pay or share revenues for it?

A: Cignal, as a multi-channel and multi-platform broadcast network, prefers to work with external content creators because doing so gives us access to the widest possible creative ideas. While we are internally guided by a specific content strategy for each of our organic channels, we choose to regularly conduct open pitches to be able to crowd source. By doing so, we are able to gather a variety of materials from a variety of content partners, and we then individually funnel these ideas based on our channel and platform strategies.

However, we maintain a unit that handles internally-developed content, IPs, short-form content, and event coverages that find its way for airing in our 5 organic channels.  This team is important for quick turn-around requirements which is very critical for a 24/7 multi-channel broadcast network.

In terms of ROI, generally, in-house content investments are recovered faster because more often than not, they are done with a confirmed revenue stream in sight already.  But the diversity and the richness that external content provide strengthen our content proposition and therefore protects our long-term viability as a content business.  The ROI on content investment is also highly dependent on the genre, as narratives (series, movies) typically have longer development timeframes and require larger investments.

Q3: Original content creation is a natural move of a market leader with economies of scale. How do you mitigate this risk of innovation ?

A: Our decision to go into original Filipino content production is precisely to mitigate certain business risks and ensure the long-term growth and competitiveness of Cignal. 

Historically, Cignal started out as payTV business that’s into channel aggregation and curation.  This means that we would ‘rent’ content or channels either from international suppliers or local suppliers, and package them into logically tiered plans that our customers subscribe to.  The investments related to these content and channel rentals constitute the biggest cost line item in Cignal’s P&L.  And as most of the content are acquired from overseas and paid for in dollars, the business is subjected to huge FX risks especially since currently, we generate 100% of our revenues in Philippine Peso.

So when I joined Cignal in 2016, I decided to put more investment in original content production to give Cignal the ff advantages:

1. Respond to the viewing preferences of a huge bulk of our customers, who still prefer to watch local content over foreign content, as supported by various channel ratings data.  Producing content that is exclusively available on Cignal platforms provides differentiation that ensures we have a sustainable value proposition to our customers;

2. Ownership of IPs will allow Cignal to long-tail and multi-tail these properties across all our platformsand across geographical areas locally and internationally through syndication deals.  This allows us to create ancillary content as well which extends the value of our investment;

3. Translate a bigger portion of our content investment into Peso, thus, protecting the business from the FX fluctuations.

To date, we already have 5 organic or owned channels (One News, Sari-Sari Network, Colours, Hyper, and PBA Rush) and we produce original content across all these channels.  We plan to launch a few more organic channels this 2019.  We’ve recently launched CignalPlay (CPlay), our OTT service that have mobile-first original titles which are a bit edgier, more adventurous in their storylines and story treatments, as we target the more sophisticated content consumers who are exposed to other global streaming services.   We have ventured into our first full-length film, “Ang Babaeng Allergic sa Wifi” which was very well received by our millennial target audience, and will have several theatrical releases next year. And we’ve also recently partnered with VIVA to put up EpikStudios, a modern-mixed media creative hub that aims to develop multi-platform content based on our unique Filipino culture.  EPIK Studios’ initial salvo is the full-length film, Pedro Penduko, which will star James Reid as the lead character, and which should be out by mid-2019.  

Q4: You have reached your 2nd million subscribers in less than half the time versus seven and a half years for the first million. What are new key success factors that made you grow much, much faster?

A: When I was given the opportunity to head Cignal in January of 2016, I had 3 areas that I wanted to focus on immediately. The first was to strengthen the Cignalbrand which at that time was generally perceived as the weaker brand vs. Sky, the incumbent.  The second was to improve our pricing structure and at the same time, manage our content costs, as the shrinking ARPU amidst rising dollar-denominated expenses were affecting the financials.  We focused on the goal of generating profits, even if we knew we still had to invest a lot in the business for the long run. The third was to strengthen our distribution network, both by scaling up the availability of consumer touchpoints nationwide and at the same time improving the selling and business management capabilities of our tradepartners to make their distribution businesses, and effectively Cignal’s business, more sustainable.

This strategic direction and the supporting tactical initiatives were regularly cascaded clearly and effectively at all levels of the organization to ensure that we move in cadence.  And all the hard work has paid off with a 2M subscriber base milestone in the middle of 2018 and sustainable profitability for the business.

Q5: The market penetration rate of Cignal is just 10% of households. While there are still lots of opportunities, alternatives are eager to eat your share of the pie. What else are your competitive advantages that can future proof Cignal’s lead?

A: We believe that content is king and distribution is queen.  As such, we are committed to improving and scaling up our original content line-up and are determined to distributing these to all relevant platforms. 

We have and continue to invest in new technologies that will allow us to compete with alternatives such as OTT streaming and DTT-based services.  CPlay is meant to address the needs of those looking for ways to access their favorite content anywhere and anytime.  The unique feature of CPlay is that it carries the live stream of our multiple linear channels, but also has VOD featuring fresh original Filipino content as well as premium international content such as the full 7 Seasons of Game of Thrones.  Now available as a companion app to our Cignal subscription service, it will soon be available as a stand-alone subscription service.

We make sure that we remain to be at the cutting edge of innovation.  From being the first to offer Direct-To-Home TV Service, to being the first to offer High Definition (HD) channels, to being the only one offering Dolby sound quality, and to leveraging on our group strengths by offering Cignal over PLDT Fiber and on Roku, we are constantly on the look-out for new technologies that will create value for our consumers, so that we can remain relevant and constantly present in the homes of our consumers.

Q6: What other major innovations have you introduced during your term as president? Why were these done? 

A: In July of 2018, we launched our value brand called SatLite.  As the market penetration in the higher-end home segment became more crowded, we needed to introduce a more affordable payTV service that will appeal to the broader-based DE segments.  With lower-priced payTV kits and load denominations, we’ve packaged SatLite with significantly less channels compared to the Cignal service and have limited them to SD video quality. Since its introduction, we’ve experienced phenomenal growth on our SatLite activations, while still achieving our growth objectives for Cignal because of the clearly differentiated value proposition of each brand.

In addition, the biggest innovation has really been the transformation of Cignal from being just a content aggregator to becoming a content producer, via CignalEntertainment.  Cignal Entertainment has allowed us to produce hundreds of hours of content beginning 2017, ranging from full length and mini-series narratives, live sports, talk and magazine shows, and sports documentaries, live news and public affairs shows, and lifestyle programs.  It was in my time when we commercially launched 3 additional channels, Sari-Sari Network, PBA Rush and One News, consistent with our strategy of increasing our portfolio of local channels that can contribute to our vision of expanding our Cignal-owned content library.

As a media company, we are now more confident in investing in our own digital platforms as we multi-tail and long-tail our content investments in these new digital touchpoints, accessible by Filipinos here and abroad.  This shift enabled us to enter into the OTT streaming space as well, initially through CPlay which we introduced in the 2nd quarter of this year, allowing us some room to future-proof the business given the changing content-consumption behavior of younger consumers. We’ve also been able to build new revenue streams via content syndication and international line production, which we see as contributing significantly to our revenue growth in the future.

In our short stint as a content company, we have received multiple global recognitions from award giving bodies like the Busan International Film Festival, Hong Kong Film Festival, Austin Film Festival, Cape Town Int’l Film Festival, Japan Prize, Taipei Golden Horse Film Festival, All Lights India International Film Festival, and the Asian TV Awards. These are testaments to Cignal Entertainment’s ability to create good quality content that offers something more compared to the normal fare that consumers are served on mainstream TV.

More recently, we had been the lead proponent to the development of the first franchise-based ESports league in the Philippines, called The Nationals.  ESports is a content space that we’ve decided to get into as this sport is growing much faster than any other mainstream sports both here and abroad.  The Nationals will be launched in the first quarter of 2019.

Q7: What are challenges facing the pay TV industry and how do you deal with them? 

A: While most payTV operators both locally and internationally are beset with growth challenges, that is not the case for Cignal, at least for now.  We continue to generate double digit growth in our core business as we continue to build our ancillary businesses to ensure we are able to maintain this growth in the medium to long term.

We are cognizant however of the threats posted by OTT streaming services as well as social media platforms like Facebook and YouTube.  As such, as we continue to innovate on our Cignal Boxes, we will likewise continue to invest in our TV Everywhere ambition to ensure that our brand will reach as many homes and as many individuals  as possible. 

More importantly, we will continue to produce the best Filipino content we can, and partner with the best content creators in the country, because at the end of the day, our belief is that people will always follow great compelling content.

(Jane Basas can be heard live. Join over 1,000 marketing executives and entrepreneurs to listen to how 35 marketing rockstars think, strategize and execute this April 3, 2019 in SMX Aura. Register via www.marketmastersconference.com)

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Josiah Go

About Josiah Go

Record-breaking, bestselling author Josiah Go is the Chairman of Mansmith and Fielders, Inc. (the leading marketing and sales training company in the Philippines), and Chairman of Waters Philippines (the market leader in the direct selling of premium home water purifiers in the Philippines). He is Chairman / Vice Chairman / Director of over a dozen companies.

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