A panel of experts discussed the impact of MCNs and the YouTube generation at OTT TV World Summit in London. There was little agreement on pay-TV efforts to package their content, and they were pessimistic YouTube’s subscription service Red would help them.
One of the first things the panel discussed was how Multi-channel Networks (MCNs) could build their business. Matt Heinman, Founder of Diagonal View, started out by saying aggregating as many channels as possible, or “getting big”, was the best way to attract revenue. He elaborated on this saying MCNs and online providers should focus on building “reach.” To maximize ad revenue it is very important to offer advertisers as broad a coverage as possible. However, he was very careful to distinguish reach from scale. Mr. Heinman said that several MCNs had great scale and were able to offer thousands of channels, but that they couldn’t aggregate them together for the purposes of ad sales. In order to sell a campaign with an advertiser like Avon, the MCN would have to negotiate with each channel.
Ron Horstman, MD and founder of Studio71, agreed with Mr. Heinman’s statement about reach, though he expanded on the definition a little. He said that a YouTube star’s reach extended well beyond YouTube. Social media was as important, and may be even more so.
Pay-TV operators are painfully aware of the disaffection of the young toward their products and are beginning to create services they hope will attract them. For example, Cox announced it would launch Flare MeTV, an iPad-based free service aggregating content from online providers. Sling TV and Comcast are also providing curated services which combine online content into linear channels.
Panel moderator Jon Watts, Director and Co-Founder of MTM, asked if these pay-TV efforts had any chance at success. On this subject the panel could not have been more divided.
Jeff Nathenson was clear on his opinion of these efforts. He simply stated they would fail, since the YouTube content is based on a two-way relationship with the viewer. Mr. Horstman disagreed, saying that if the dream of the YouTube personality was to become a TV personality pay-TV integrations could work out well. However, Mr. Rook said he thought many YouTube stars simply didn’t view TV as relevant to them. Mr. Heinman was sanguine about the approach, saying he viewed it as another opportunity to drive revenue.
Finally, the panel was unimpressed with YouTube’s new subscription service, Red. For $9.99 a month subscribers can watch the videos without ads. With one exception, nobody seemed to feel it was a very strong offering. The lone dissenter, Mr. Heinman, said, “I like Red, because I’m making money.” However, it was unclear if his company was making more money from Red through sharing in the subscription revenue than it would have earned through advertising revenue.
All-in-all the conversation showed just how immature the MCN market is. Strategies are shifting in response to market movements on an almost daily basis. However, one thing all would agree on: the eyeballs are there and that the revenue is sure to follow.