Static says games cut Sky’s churn by 1.5%

UK-based Static 2358 recently extended its portfolio of carriers by rolling out its Playjam interactive games channel on US cable network Cablevision following two months of trials. Interspace spoke to the company’s Chief Executive, Jasper Smith, to gauge his opinion on the US interactive market and on the future for interactive television gaming in the current economic climate. By Chris Forrester

“(Interactive TV) games have been shown to be a proven churn-reducer. Sky says games reduce churn by about 1.5 per cent per annum. That means a saving for Sky of around $50 million (E56.2 million) a year,” says Jasper Smith, Static 2358’s CEO. Static are now owned by OpenTV and say they see very strong growth for themselves over the next few years. “Our reach will increase and we will also be boosting the quality of the brands themselves, so that the average revenue per unit (ARPU) goes up. Digital television is still going through attractive growth patterns.”

Smith adds: “I think if you look at it in Europe, purely from a Playjam perspective, we’ve had 1.4 billion game plays on Sky Digital’s network alone since launch in December last year, and that’s about a 100 million games a month, or just over in some months, from 5 million consumers.” According to Smith, the BARB audience research organisation have measured the channels as consistently achieving between the eighth and fifteenth highest rated spot across all television amongst sixteen to thirty-four-year- olds: “That’s a fairly amazing traffic profile, and we sell that traffic profile to advertisers and brands. I think there are two reasons why they are interested; one is because the ratings are good, and the second is that the average viewing period for games is about 31 minutes versus about 11 minutes for normal television. So for their money, they’re getting great reach, and a really deep, immersive experience. More and more advertisers are interested, so we’ve had people like Egg [online bank], Proctor & Gamble, Mars, Aquafresh and people like that coming in.”

Static’s analysis shows that not all Playjam’s customers are kiddies or boys. Indeed, “some 55 per cent are females, and 66 per cent of the audience is aged between 16 and 34. The way the technology is going means the experience for gamers is improving all the time,” says Smith. “In comparison to normal TV spot advertising, games offer a very deep and immersive experience for consumers and the brand-owners. Playjam has about one-third of its audience in the 4-15 age range, and most countries forbid broadcasters from charging these youngsters. With kids you cannot promote premium rate telephony, nor would you want to. But what you are doing is offering free-to-play services for all the family.”

Smith believes the Cablevision deal in the US represents the first step in what he sees as a “fantastic growth market.” He adds that Static structures its deals either by acquiring bandwidth from the operator and launching the service, “or we negotiate a revenue share with the platform. Some want minimum risk, while others want to share the opportunity. The games also operate on two levels. A series of games are free-to-air at no cost to viewers, while others operate in the pay arena. We have about 160 games in the library and rotate them through the service.” Although Smith says that the company has been in negotiations with “four of five major networks in the States to see what other opportunities exist,” he will not elaborate on the precise details.

Many commentators have suggested that Europe is frequently praised for its creative talent in both television and games. However, Smith says this is not the reason why Static was selected. “Certainly we’re there because we can point at things that have definitely worked. We’re not for a moment saying that we know more than anyone else at all. We’re learning as much from them as much as they, I hope, are learning from us.”

Smith adds that he expects Static to reach breakeven towards the middle of 2002, and is targeting something like ten to twelve million game plays a month. “It’s quite bullish, very bullish,” he admitted, “but that would tally with the sort of usage rates we have on Sky, and TPS and Canal+, NTL and such.”

Static has a relationship with News Corp in Japan (through SkyPerfecTV) and is looking at exploiting the link and moving forward to do some work there. “Scandinavia, Germany and key markets like that are important for us – I think Scandinavia is certainly a milestone for next year for us.” Smith adds that although there are no firm plans, the company is looking to launch three more channels, the first of which might concentrate on messaging between mobile devices and television sets. “So we’re looking at communications-based systems that will flow information between those two types of devices through community groups and services such as chat and stuff like that. The idea is obviously to make it run across all platforms, but initially, we’ll probably run on one platform, and we’ll try to roll it out from there, based on its performance.”

Smith admits that Static had been adversely affected by the current downturn. “As a business, we’ve migrated from being an agency-based consultancy to being a media business, which has meant that our customer base has shifted from being trade to consumer and the recession that we’ve been going through has been felt very aggressively from a trade angle. So from a trade point of view, we’re lucky that we’ve moved out of that market, because it’s being squeezed day in, day out. The recession is less felt by consumers, so the propensity for consumers to spend is still there, but from a trade point of view, it’s slowed significantly, and has impacted us and our advertising billings.”

However, he predicted advertising revenues for Static would recover and grow from its current 15-20 percent of revenues to between 30 and 35 percent. Meanwhile, there are other channels using Static’s creative strengths, with Playjam already working directly with broadcasters like Cartoon Network on its games offerings.