Cross-media partnerships hint at a deeper consolidation to come
Last week (19th June) saw Spotify announce a deal in which characters from the DC universe will narrate new, story-driven podcasts. This deal is one of a growing number of cross-media partnerships which trade IP and new functions for consumer access.
As the growth of new digital services slows, and in many cases, margins are squeezed in many cases, owners will be keen to find additional ways to monetise their client base. At the same time, consumers are inundated with accounts and fragmented services, and bringing together billing solutions is sure to drive demand.
AVoD will not be stand-alone
Pay-TV platforms carrying SVoD services has become an established norm and integration of BVoD services is also commonplace. It is also likely that over the next few years AVoD services from commercial channel groups will feature more prominently.
Channel groups are facing increased pressure on higher channel number (multichannel) slots. Some have voiced concerns about content being devalued, with consequences for their tangible assets. As an example: in 2017 Discovery and Sky had major ‘US-style’ carriage dispute in the UK, complete with inflammatory consumer messaging and channel blackouts. Eventually Discovery was forced to accept reduced terms of carriage.
For some channel operators, AVoD services are a way to add that value back, especially by monetising library content (ViacomCBS’s Pluto TV has become increasingly successful in this area). Following the dispute, Discovery focussed on its range of VoD services, which include specialist sport and AVoD service DPlay. These services now form a key part of Discovery’s new Sky deal, announced earlier this month.
Direct integration of channel owned AVoD services across pay-TV, telco and OTT aggregators is likely to feature as the next, simplest form of content aggregation.
Cloud gaming may be seen by many as the latest fad for tech companies, but it has a number of qualities which imply it is truly sustainable. Cloud gaming is more accessible than the current format, which requires dedicated and expensive hardware. In general consumers tend to drift to solutions which are simple and have a lower cost of entry.
Cloud gaming does, however, require control of company-owned hardware to make it cost efficient for the provider. Microsoft and Nvidia for example draw on established computing power.
Telcos control the ‘playout’, meaning that they optimise latency and delivery, while not incurring data costs over networks that they already own. Telcos are currently facing a huge need to find new revenue streams as data costs decrease and cloud gaming may hold the next service to add to the traditional telco bundle, alongside broadband, mobile, TV and telephony.
Some groups, including Deutsche Telecom are already developing their own solutions, but traditionally telcos have done best when aggregating 3rd party services. If cloud gaming picks up, expect to see a plethora of telco deals with the likes of Microsoft, Playstation, Nvidia and newcomers such as Shadow.
Music and more
A new wave of music services is emerging, catering to niche audiences. As with video, the now-crowded market creates discoverability problems as smaller nascent voices struggle to be heard.
Finding an existing platform to carry the service is the key to discovery. In the digital age, any company that controls consumer access could be an aggregator, and that extends to the new wave of SVoDs.
Big SVoDs tend to offer single services, but their large number of subscribers gives them the potential to be effective at launching new products. Netflix now has more than 200m accounts, and while it has eschewed advertising for a purity of experience, adding music streaming would not dilute the brand and may enhance consumers experiences.
Work that Vertical Integration
One company stands above all as an example of how to monetise product across multiple verticals. Disney re-uses familiar IP in its theme parks, movies, toys and TV series. Disney’s selling strategies are so effective that it made its money back on its Star Wars investment on the sale of toys alone.
Disney has launched a mixed media ‘fansite’ called D23 that is targeted at superfans, but holds many of the key principles of cross media integration: it uses a single touchpoint (and billing), to retail merchandise, video content, theme parks and events.
In the past, franchises tended to be limited to film, and only few channel groups could build a vertically integrated solution. But with the increased push to original video content, most large studios and channel groups (including Netflix) now own substantial rights to music, games, attractions and events, based off their proprietary IP. Netflix is pushing into gaming territory, with upcoming interactive series including Puss in Book, Minecraft Story Mode and Carmen Sandiego, however its first attempt (Bandersnatch) drew more heavily from TV than games and many mistakes that experienced game dev’s who produce in the same genre (such as TellTale games) soled years ago.
Expect simple VoD services to either evolve additional facets, or to spin-off sister services, which offer additional functionality.
The Bottom line
Re-aggregation of TV services has been talked about as the final step in a grand arc, which would see multiple SVoD services bundled together to create the contemporary version of a traditional channel bundle.
But the evolution of the telco has proved that integrating more diverse services also works, especially where they can share infrastructure.
Cross media deals indicate that distribution avenues, which were typically reserved for a single format, such as broadcast video, music, or movies are ripe to branch out into new areas. The Spotify deal, and other like it indicates that perhaps true aggregation will occur deeper that at the functional level and instead will occur at the consumer level, while the medium delivered matters less.
Consumer gatekeepers can, and will, expand the type of content that they provide to maximise the return in ‘owning’ a consumer relationship, and their billing details.