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OTT TV Media

Dawn of a new entertainment era: the future is OTT

By Adam Rubins, chief executive officer

Way To Blue

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February 8, 2018 | 6 min read

It’s no secret, the future of television and possibly the media and entertainment industry as a whole is OTT (or Over The Top), a way of distributing content to the consumer over the internet via streaming. Rather significantly at Super Bowl LII last weekend we were treated to two defining moments that presented both the good and the bad of what’s in store.

A wall of TV screens.

Will too much choice collapse the entertainment market as we know it?

Firstly, Netflix launched The Cloverfield Paradox with no advance warning using the Super Bowl as its singular marketing vehicle. This showed that in a world where surprises are few and far between when it comes to premium content that true innovation from a distribution stand point is coming from the streaming platforms. Also, in a world where rules are upheld by rigorous release windows from theatrical (cinema) to premium VOD, to home entertainment (DVD/Blu-ray EST, VOD, PPV) to Pay television (SVOD) through to free TV (AVOD), the streaming platforms are bypassing this structure and building a far less complicated model for the future. Put simply, we are quickly running out of growth in this traditional model so businesses are compelled to act and drive towards future-proof growth opportunities.

Equally on another highly publicised platform, this story made the headlines as Hulu’s live TV subscription service cut off the end of the Super Bowl during the climactic final moments of the game. Clearly if OTT is to work, sports will play a key role and there is a huge difference between buffering on Adam Sandler’s latest release, and those final moments of a major sporting event. Sport will play a major role as content bundlers and platforms stake their claim as the future of media and entertainment.

Disney and Fox in context

All of this puts in context Disney’s acquisition of Fox. Disney is a business that has made the vast majority of its margins from theme parks, consumer products and media networks. Each of its major acquisitions in recent times (Pixar, Lucas and Marvel) have served to drive profits in one of those three areas with the theatrical window almost serving as an advert for those ancillary revenue chains. And the acquisition of Fox is no different, it is an investment (albeit a costly one) in the media networks part of their business and it is an investment in the future of the distribution windows.

The question in my mind is how they integrate Disney Media Networks with Fox's Cable Networks and Television businesses. There is no doubt that their 60% ownership of Hulu could hold the key to this integration as it ticks all the boxes (owned content, content bundling, data and platform).

To make it simple, because it is not, we have content (film, TV, sport etc), and we have distribution. Currently we know distribution as cinemas, physical units such as DVDs, television and digital content we can purchase through Sky, iTunes and so on.

And then there are the current OTT providers at scale, Netflix and Amazon Prime Video. However, distribution in the future will look very different. The future of distribution is about owning platforms that can bundle owned content (and beyond) and critically owning and keeping the data that allows you to better target and segment your audience. This not only changes the distribution model but the advertising paradigm as well.

Currently there are two major gaps:

Sports - the opportunity to acquire sports content globally for a singular platform, something that right now just doesn’t seem feasible. I can only assume that SKY will eventually be rolled into Hulu with ESPN to create a major sports and entertainment platform. But there will be others playing in this space too (content pipes such as BT and Comcast).

More competition - we have Amazon, we have Netflix, we are also starting to see the major studios play in this space (Hulu is currently limited internationally). But where is Apple? Facebook? Google? It is only a matter of time before they announce their intentions, possibly with an acquisition of their own?

We live in a world where for the most part, content owners and distribution outlets are disassociated (ie Disney owns the content, but Odeon show it or HMV sells it). This means that content owners are also dis-associated from data and owning the full conversion funnel. The opportunity for content owners to put their own content in front of a more targeted audience and complete the conversion chain is far too good a prospect and this will ultimately lead the windows collapsing.

For me, the power will not only lie with the platforms (or content bundlers) but with the aggregators. I can see a world where I have subscriptions to Hulu (with SKY), Apple/Netflix (?) Amazon Prime, BBC iPlayer, HBO Go and others. But with niche players coming into the market, we may well find ourselves in a position where there is just too much choice, and a monthly subscription fee that becomes cost prohibitive. So who will choose to aggregate the content bundlers and what will that commercial model look like? One thing is for sure, we are on the cusp on significant change in a world that hasn’t changed a great deal in the last 50 years.

Adam Rubins is chief executive officer of Way To Blue

OTT TV Media

Content by The Drum Network member:

Way To Blue

We are Way To Blue, an award-winning global integrated communications agency working with consumer, lifestyle and entertainment brands.

We develop digital-led,...

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