Innovation boosts Cignal’s growth

Jane Jimenez-Basas

Jane Jimenez-Basas is president and CEO of CignalTV, the first pay-TV provider in the Philippines to reach two million subscribers. Basas won the Mansmith Young Market Masters Awards in 2007 and was named Asia’s Media Woman of the Year by Content Asia in 2017. She shares here her insights into the need to continuously innovate to keep market leadership.

Q: You have taken Cignal from content aggregator to original content provider. How do you determine the 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 and 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.

Q: Original content creation is a natural move of a market leader with economies of scale. How do you minimize 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 percent 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 following 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 platforms and 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 five 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 (over-the-top) 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 Epik Studios, a modern-mixed media creative hub that aims to develop multiplatform 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.

Q: You reached your second million subscribers in less than half the time it took you to generate 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 three areas that I wanted to focus on immediately. The first was to strengthen the Cignal brand, which at that time was generally perceived as the weaker brand versus Sky, the incumbent. The second was to improve our pricing structure and at the same time, manage our content costs, as the shrinking Arpu (average revenue per user) 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 touch points nationwide and at the same time improving the selling and business management capabilities of our trade partners 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 two-million subscriber base milestone in the middle of 2018 and sustainable profitability for the business.

Q: The market penetration rate of Cignal is just 10 percent of households. While there are still lots of opportunities, alternatives are eager to eat your share of the pie. What are your other 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 lineup and are determined to distribute 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 (video-on-demand) 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 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 lookout 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. —CONTRIBUTED