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Summary

According to Ovum's European Rights & Royalties Survey 2015/16, for two-thirds (67%) of premium media asset owners, the acceleration of multiplatform content monetization and operational efficiency are the core objectives behind the deployment of a rights and royalties system. Furthermore, as Internet-enabled devices and content formats continue to proliferate, more than a third (38%) of media enterprises highlighted that the efficient management of multiscreen rights and third-party royalty processing stood as their core challenge in 2015. Therefore, as the number of digital monetization and engagement avenues increases, media enterprises face greater complexities in managing their pivotal assets (i.e. content rights). In 2016, the unprecedented audience engagement rates for Pokémon Go have indicated that augmented reality (AR) might be one of the leading online monetization avenues for premium media asset owners in coming years. Although virtual reality (VR) is still at a nascent stage, growing investment in devices (Samsung Gear, Facebook's Oculus Rift) and niche content (gaming, short-form film entertainment, and TV promos) might push enterprises to integrate AR into their monetization strategies. Ovum believes that as VR content becomes mainstream, existing rights and royalties vendors will need to accommodate and adapt to this next-generation 360-degree monetization avenue to improve competitive edge.

VR will open up a new premium rights monetization window along with increased royalty-processing complexities

Today, the VR segment is following the 3D technology roadmap – that is, it is initially being dominated by hardware vendors, similar to the TV screen manufacturers in 2010. The eventual rise in adoption of VR devices will push tomorrow's media enterprises to invest aggressively in 360-degree video repositories involving production costs that are, on average, 40–50% higher than SD format-centric rich media. Although this opens up a new monetization window for premium media asset owners such as content aggregators and broadcast TV and video companies, the new content format also introduces rights management challenges. VR content acquisition, production, and delivery is bound to follow a cooperative and open ecosystem attributed to the immersive approach and convergence of multimedia segments, for example entertainment, gaming, merchandising, and advertising can be embedded around a single audience environment.

Historically, the majority of rights and royalties deployments have failed due to a lack of in-depth data configuration and poor end-to-end automation of contract modification functionalities. A single VR content rights monetization cycle might involve the addition of newer multichannel distribution agreements (e.g. on Samsung's Gear and smartphones), customized participation royalty processing (as per the multimedia segment, including film, TV, and gaming), and diverse windowing policies. Therefore, legacy rights and royalties solutions should fit these new business requirements (i.e. multiple contract processes, royalty accounting, rights limitations, tight integration with financial ERP, and tailored multiplatform analytics and reporting, including VR devices).

VR content and 360-degree video will eventually become some of the most engaging content formats across both media and non-media segments, such as healthcare (virtual doctors) and education (virtual classrooms). This video format produces constant real-time data streams that, when effectively integrated with a rights and royalties system, will provide strong multiscreen average revenue per user (ARPU) and lifetime customer retention rates. This could pave the way for premium media asset owners embarking on the VR journey to leverage managed services relating to a rights and royalties module. In a complex VR content production ecosystem involving multiple stakeholders, enterprises can leverage managed services pertaining to contract administration and royalty processing, and data entry, configuration, and integration with internal and shared systems on a regular basis. Therefore, Ovum reasserts that the emergence of VR and its dynamic business needs will result in close collaboration between IT service and rights and royalties solution providers to offer an end-to-end, scalable, and modular augmented reality experience, anytime and everywhere (two examples are IBM-FADEL and Infosys-Oracle).

Finally, demand for niche industry-specific managed services (contract data entry and interpretation, predictive multiplatform analytics, and royalty accounting) will be driven by VR as it becomes a pivotal element of audience engagement strategies in the next few years (2018–20).

Appendix

Further reading

European Rights and Royalties Market Outlook by Country, IT0006-000271 (October 2015)

Monetizing Multi-platform Rights: Creating Opportunities in a Fragmented Online Video Market, IT0006-000254 (April 2015)

Author

Kedar Mohite, Senior Analyst, Media & Broadcast Technology

kedar.mohite@ovum.com

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