The seemingly endless rise in content licensing costs might not go on forever, according to the expert panel assembled at last week’s OTTtv World Summit.
For the present, of course, digital windowing rights continue to increase in expense.
As Simon Brown (Executive Director of Strategy and Research, UKTV) pointed out, as more and more broadcasters and pure OTT players go head to head to acquire precious digital windowing rights, studios are looking to this bidding war as a way to compensate for the decline in their physical ownership/DVD market. “We’re seeing is a very overheated VOD market in terms of the costs,” observed Brown.
A related question concerned that of TVOD (transactional video on demand). Brown pointed out that the streaming market was far outweighing the digital ownership market in terms of size and revenue, and that digital ownership was much less appealing to viewers than physical. However, Wuaki.tv’s European Content Director Simon Homent pointed out that the two models can quite happily co-exist, pointing to the ‘big overlap’ of Wuaki.tv customers also subscribing to an SVOD service such as Netflix.
Although Brown admitted that the thought of the studios all releasing standalone OTTs was hardly a welcome one, there was a general consensus that such a model was unlikely to work to the studios’ satisfaction. Excluding select players such as Disney and HBO, the panelists argued that most studios simply didn’t have a firm enough identity with which to market themselves directly to consumers, who in turn could find it difficultto afford multiple standalone OTTs.
Moderator Jon Watts (Director and Co-founder, MTM) asked if licensing prices were now so over inflated that it would be almost impossible for a new OTT entrant to amass the requisite amount of content to compete.
Homent said that, while the door wasn’t closed, it would require the “very deep pockets” of a telco or a Sky to carve out a new significant space in the market, and that such an entrant would anyhow be more likely to invest in producing their own content that in licensing it.
The inevitability and viability of this trend for self-producing content (not least since the producer of content immediately acquires all rights on all platforms for perpetuity) was reiterated by the panelists throughout the discussion. The appeal, Brown pointed out, was apparent in purchases by the likes of ITV, BT and Virgin in recent years, all investing heavily in production and exclusive content.
Could all of the above lead to an eventual leveling-out of content licensing rights, completing the cycle? The panelists thought that it might.