All screens great and small – content in a multiscreen world
Content owners now have an opportunity to deliver to new devices, but face the challenge of reconciling new opportunities with long-established relationships. Andy Fry reports.
Everything we used to take for granted about pay TV is changing, thanks to the rise of broadband and mobile technology. Although many consumers are yet to take full advantage of what’s on offer, their choice of what, where and when to watch TV no longer has to be defined by a small group of gatekeepers in the cable, satellite and IPTV industry.
For content creators and channel providers, this is an opportunity to target new audiences, develop innovative services and generate additional revenues. But it also brings with it an array of complicated commercial and editorial issues. The first of these is how to get content to end-users. Traditionally, channel owners have done this via cable and satellite operators’ platforms, with telecom operators coming on the scene during the last decade. But the rise of internet-based platforms, coupled with the rollout of devices such as smartphones, tablets, games consoles and connected TVs, means that there are many more ways to get content to consumers (Netflix, LoveFilm, Apple iTunes and Xbox being the classic examples right now).
“Channel operators that don’t have the rights to their content are limited in what they can offer.” Phillip O’Ferrall, VIMN
So the big question is this: how do content owners balance existing partnerships with emerging opportunities? For some, the choice is easy. Bruce Tuchman, president AMC/Sundance Channel Global, says his company is keen to explore new routes to market – but has decided to do so alongside the established pay TV players. “As a company, we’ve benefited very much from the pay TV ecosystem – because that’s what created the resources for us to make shows like Mad Men and Breaking Bad. So our instinct is to start exploring the potential of multiscreen distribution with the incumbent pay TV platforms, setting up deals which allow our partners’ authenticated subscribers to access our content across various platforms.”
Contrast that with the position at Walt Disney Company, where senior vice-president, media distribution EMEA Catherine Powell favours a platform-agnostic model: “We’re not in one camp or the other,” she says. “We’re very choosy about who we work with, but we think it is possible for pay TV platforms to exist alongside the newer players entering the distribution market.”
Where companies sit on this spectrum of opinion depends on a variety of factors. The first, says Powell, is how much content they have at their disposal. Disney, for example, is confident that it creates and owns enough intellectual property to keep everyone happy: “It’s about the way we window content, she explains, “and our ability to offer periods of exclusivity. A service like Hot From The US (which offers TV episodes via Apple iTunes) adds value for audiences without affecting our existing relationships.” In a similar way, Disney now has a deal with Amazon-owned Lovefilm which allows the latter to stream ABC dramas like Grey’s Anatomy and Desperate Housewives into the UK (in effect, delivering value from Disney’s vast back catalogue).
Non-standard deals of this kind sit alongside parallel deals with established cable companies. In the US, for example, Disney/ABC Television Group recently joined forces with ComCast’s Xfinity TV to launch Watch Disney Channel, Watch Disney XD and Watch Disney Junior, three apps that allow authenticated ComCast subscribers to access linear streams and on-demand on iPhone, iPad and iPod touch. In the UK, meanwhile, Disney UK has just hooked up with cable platform Virgin Media on a new Phineas and Ferb app designed to take advantage of the interactive functionality of Virgin’s TiVo boxes. The app sits in the Apps and Games section of customer TiVo boxes. At the same time, customers with Disney Channels subscriptions can catch-up with episodes of Phineas and Ferb through Virgin Media’s on-demand and online player services.
The second factor is the maturity of the business model. Disney has been in Europe for decades – so it sees non-standard platforms as a growth and revenue opportunity in its own right.
By contrast, Sundance is a recent arrival and sees linear channel distribution as its growth priority. This means that non-standard rights are best regarded as a way of incentivising platforms to do carriage deals. A good case in point is the channel’s recent carriage deal with Poland’s DTH platform ‘n’. Under the terms of that deal, Sundance will be available as both linear and on-demand within the platform’s Film Hits package. In addition, subscribers to mobile network Orange’s Film Hits tier will also become subscribers to channel.
Third, and no less importantly, the approach to platform partnerships depends on the target audience. While Tuchman describes Sundance audiences as “sophisticated users of digital technology”, there’s no question that pressure on Disney to be digitally delivered is much more intense. Like its rivals over at Viacom International Media Networks (VIMN), Disney knows that failure to track the youth audience’s movement across social, gaming and digital platforms is simply not an option.
How to get the right balance between proven partnerships and new opportunities is just one issue among many for channel owners, adds Philip O’Ferrall, senior vice-president of digital at Viacom International Media Networks: “No less important are the content rights at your disposal. When pay TV platforms want to take services on to tablets and smartphones and then out-of-home, channel operators that don’t have the rights to their content are limited in what they can offer.”
VIMN, as owner of brands including MTV, Nickeoloden and Comedy Central, is in a pretty strong position when it comes to rights because it produces so much content: “But even so there are challenges,” says O’Ferrall. “What happens, for example, if your show contains a pop song that belongs to someone else? And how do you negotiate image rights if you have created iconic talent through one of your shows – for example Jersey Shore. Even something as simple as mentioning a name on Twitter or Facebook can require permission from the talent.”
For O’Ferrall, the rights issue has become even more important now that audiences are starting to exhibit different behaviour across different screens: “Our audiences aren’t necessarily looking for simulcast video on tablets and phones. They might be looking for a social experience or a game. So for us, having the rights allows us to build a distinctive experience for each platform. It also means we can use content to promote a show ahead of transmission and extend its life afterwards.”
Lack of 360-degree rights isn’t a complete disaster. But it is a business consideration that is complicating relationships up and down the content food chain. In the case of VIMN, for example, the things it can do with sitcom acquisition Friends on Comedy Central are limited by the fact it doesn’t own the show. Over at AMC/Sundance, Tuchman agrees that “the range of rights we are able to secure can affect whether we acquire it or not.”
A similar point is made by Eduardo Zulueta, director-general of Chello Multicanal in Spain: “We have a mix of wholly-owned channels and joint-ventures – some of which are more origination-based and some of which are more acquisition-based. There’s no doubt we can do more with a channel like Cocina (cooking) because we produce 75% of content in house. For example we have an iPad app which has already had 1 million downloads.”
Like Tuchman, Zulueta says that buying decisions are, to some extent, affected by what a rights holders is willing to give up: “Security from piracy is a big issue. So we see some reluctance among the US majors to sign off on all rights. Independent movie-makers and documentary makers are a bit more relaxed, because they want to be part of the new model being created.”
Access to core rights and windowing across platforms may be critical considerations. But they are still only the first pieces of a complex jigsaw puzzle, says Caleb Weinsten, senior vice-president and general manager of distribution for Discovery Networks in EMEA. For Weinstein, there are two more issues that deserve attention.
“The first is around editorial. Discovery has built its business on great storytelling and consistent, recognisable brands. We have to ensure that these carry through into the new model. As the TV model changes, a lot of operators are focused more on building their profile as technology navigators – and that isn’t necessarily the right approach for extending channel brands.”
The issue of brands is one that Disney is also taking seriously, says Powell. This is why it has devised ABC TV On Demand, a VOD service that offers archive runs of ABC dramas. Licensed to 14 platform partners, ABC TV On demand is a way of making sure that the ABC brand is lodged in consumers’ minds as the home of good quality US drama. “At the same time,” says Powell, “it’s where they can discover new shows of ours.” If, instead, Disney licensed its US drama franchises to third party aggregators on an individual basis, the ABC brand would develop no traction and there would be no cross-promotion.
Back at Discovery, Weinstein’s second concern is making sure content owners get value: “TV Everywhere (the name for pay TV operators’ multiscreen strategy) is not just an anti-churn device. It is helping platforms drive ARPU in a number of territories. So after a period of major investment on our part what we want to see is fair and equitable value for content.”
In practical terms, what all this means is that Discovery is taking a fairly prudent approach to letting its content loose across platforms. But it isn’t averse to doing deals when it is convinced of the value proposition. In the US, for example, it has wide-ranging archive deals with both Netflix and Amazon Prime. While the company is keen to retain the highest possible valuation for new shows, library episodes of shows like Dirty Jobs, Say Yes To The Dress and Whale Wars are a way to extract revenues from a relatively under-utilised part of the business.
Much of the above is about whether channel owners and content creators should directly monetise IP across traditional pay TV platforms or what are generally referred to as over-the-top services (see sidebar for more on terminology).
But there’s another strand to this debate which is significant, says Herman De Vries, who heads up new media at Sport1, a Dutch sports broadcasters which offers all the main live events across a six-channel service and a variety of non-linear platforms: “Younger viewers expect a social component to what they are watching, so we have to be able to deliver that. It’s definitely got to the point with our programming that people are as engaged with the debates surrounding key turning points as they are with the live event itself. We see that by looking at the rise in Twitter traffic around those moments.”
VIMN’s O’Ferrall sees something similar: “Our audience expects to be connected all the time. Social media is incredibly important in decision-making so we have to be part of that.”
This may represent another tier of complexity. But get it right and social has numerous benefits, say De Vries and O’Ferrall. It can, for example, be used to promote a new show or event, migrate audiences towards TV channels, increase stickiness once they are watching a show/event and deliver research insights. On top of all this, social is appealing to advertisers, which want partnerships that go far beyond spot ads.
Chello Multicanal’s Zulueta supports this view: “We have evidence that social media engagement drives audience back to TV. We’ve seen it with our children’s channel Panda where the audience can double or treble if we get social media right.”
In terms of content, the need to make TV social has two implications, says O’Ferrall. The first is that investment in content add-ons is needed – “for example super-fan events like exclusive online interviews, live after-show events or competitions to meet cast members”. The second is that more emphasis is placed on fewer properties: “I think it’s fair to say that this kind of 360-degree deployment around a show involves a lot of resource,” he explains, “which means more attention is paid to fewer headline properties. This includes formats – for example Jersey Shore and Geordie Shore – where you may not have the same show, but you do have the same learnings.”
As indicated above, the speed at which different genres have entered the digital debate depends a lot on their audience. Gregory Dorcel, CEO of French adult entertainment provider Marc Dorcel, says his company first went VOD in 2001 and continues to prioritise multiplatform distribution.
“Our job is to distribute content to the widest possible audience, so it is vital that we are on every device,” Dorcel explains. “The job is made a little easier for us because adult entertainment is one of the few areas where the audience is actively looking for content – the others are live sport and new blockbuster movies.”
Examples of recent Marc Dorcel activity include the launch of an subscription VOD platform on the Orange IPTV platform in France. For a ?25 monthly fee, subscribers now have access to more than 200 videos on a 24-hour-a-day basis. This service is already available on the Free, Numericable & SFR platforms. Separately, Dorcel has launched connected TV apps in partnership with Panasonic, Philips, Samsung and Sony and provides content via Dailymotion. In the case of Dailymotion, there is a two-tier relationship that allows users to see soft porn content for free and hardcore porn at a range of prices. The free porn, which acts as a kind of taster, has so far generated around 25 million views for the platform.
Based on a decade’s experience, what does Dorcel regard as the biggest issue facing the business? “For us, we’d like to see the platform operators co-operate over their databases so that we could have one centralised relationship with customers, one billing, one payment. But I don’t think that’s very close.”
One thing everyone is agreed on is that the rise of new platforms does not spell the end of the pay TV players that have run the business in recent years (though they might have to work harder to maintain their position). “Let’s not lose sight of the fact linear TV consumption continues to grow,” says Zulueta, “and pay TV platforms have a key role in delivering that in a way consumers understand. People like choice, but most still need professional packaging to help them navigate.”
Part of the protection for pay TV platforms is that they are using their cash-piles to get into the OTT space themselves (Sky in the UK being a good example, Modern Times Group’s Viaplay in Scandinavia being another). But they also share Zulueta’s view that they have the necessary retail skills to survive the change. Hans-Holger Albrecht, CEO of MTG puts it this way: “Our view has always been that the technology of distribution is secondary to the content offering and viewer experience. TV is about delivering content and experiences to viewers, in the most exciting way possible, and this is what MTG is all about.”