This week's Straight Talk is written by guest columnist Ed Barton
As audience viewing habits evolve, an enduring theme has been the increase in the type and complexity of content rights. For TV and video rights deals, whoever owns the content and whoever wishes to distribute the content must acknowledge more ways for content to be packaged, sold, and distributed than ever before. Content rights tend to be downplayed by many people outside of the entertainment industry – particularly by those in the technology industry, where content is often viewed as simply another asset to be sweated. In the digital age, the incremental cost of one more copy of a digital movie or TV show is nothing, and release windows often collapse in the face of the merciless economics of digital distribution. Many feel that content is fungible and that the entertainment industry should take its rightful place alongside more compliant industries such as whiteboard manufacturers and post-it vendors.
The ability of the entertainment industry to maintain the value of content rests largely on release windows which make a virtue of access and availability sooner, enabling multiple trips to the cash register for the same show. Competition for content rights in any given release window is often intense, and content owners are adept at using exclusivity to drive prices higher – particularly when it comes to sports rights.
But as distribution options for visual entertainment proliferate, so do the levers that content owners can pull during rights negotiations. Ovum's TV team has done a lot of work on content rights, and we are constantly fascinated by the ever-growing number of issues that must be agreed on. Rights owners tend to be loath to make deals if there is uncertainty over valuations or how content will be used. But affecting a precious and sensitive temperament can be a useful negotiating tactic.
Because of their complexity, content rights deals often lag behind what is technically possible. Network DVR, for instance, has been viable on a technical level for years; however, myriad rights issues mean that actual deployments are thin on the ground despite the impact on operator data volumes and incredibly high levels of customer satisfaction from the few that have hit the market (see Swisscom and Telefonica). Multi-territory or even global rights deals are just as complicated and hence don't get completed in any significant number, but we expect these kinds of deals to proliferate, driven by multi-territory SVOD services.
The variables of content deals will multiply as audiences demand more. Rights owners should be cautious and focus on short-term agreements if there is any lingering uncertainty on the value of what they are agreeing to. Content is not a commodity and it is not fungible or substitutable: A Battlestar Galactica fan won't be happy watching Blake's 7 or Serenity instead.
“Windowing” has played a key role in ensuring visual entertainment doesn't suffer the same fate as aural entertainment at the hands of digital distribution. If anything, there is potential for more release windows rather than fewer: SVOD has already carved out a new window after pay TV in many markets, and there may be further opportunities around mobile TV and video.
Ultimately though the day job for content owners remains the same as it ever was: make great shows that the audience doesn't just want to watch, but has to watch. Nobody subscribes to a service or buys a device for specs or silicon; they get more excited by the entertainment experiences that service or device enables. Without shows that prompt stampedes from audiences desperate to watch, there are fewer complexities to deal with over content rights deals. But not in a good way.
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