More Content Accessibility From OTT Services Could Affect Content Access Business Models
As over the top service providers expand their content, they move closer to controlling the programming and how they obtain it, said media and technology executives Tuesday during a Broadband Breakfast Club event in Washington. While there’s more OTT content at reasonable costs, customers still watch content mainly through traditional TV broadcasts, some media executives said.
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Netflix and other OTT services could eventually dictate terms, said Michael Drobac, senior policy advisor at Patton Boggs. “We're now seeing some traditional OTT services really gaining a lot of power and there’s going to be a deterrent for new entrants.” Barriers to entry through exclusive content or “windowing” is ending, Drobac said. “Studios are beginning to see that windowing and holding content doesn’t work.” The longer they hold content to make money on it through different windows and channels, the more likely it is to be pirated, he said.
CenturyLink has substantial challenges with respect to content costs, said Daren Miller, director-content partner management. The telco-TV provider tries to overcome those issues by buying content on a cost-effective basis from broadcasters and cable networks, he said. With bundling, there’s a significant value for the company and the consumer, Miller said. “For wireline video service, we see 80 to 90 percent bundled take rates with new video customers.” Video customer loss usually comes from consumers subscribing with other distributors as opposed to consumers preferring OTT content, he said.
There’s still more TV watching than time spent accessing content through OTT, Miller said. OTT services “are additive in nature as opposed to cannibalistic in nature,” he said. There’s 30 times as much TV being watched monthly per person on traditional, linear-channel TV than on all of the other forms of OTT and related services combined, said Eric Wolf, PBS technology strategy and planning vice president. “We're still watching on average … 150 hours per month of traditional television.” PBS is “very much like pretty much every other content distributor or owner in the business,” he said.
Technology allows new business models, but there’s still difficulty for new entrants in OTT services, said Sharon Peyer, business development vice president at HitBliss, a service offering recent TV episodes and movie content with an option to earn money toward the account by watching ads. “The studios can give us rights, but at the end of the day, those rights don’t necessarily matter,” she said: “It takes one big incumbent to complain to the studio,” and then content has to be removed. For small companies, there aren’t many practical remedies for this, she said.
The FCC has an incorrect interpretation of the definition of multichannel video programming distributor, said John Bergmayer, Public Knowledge senior staff attorney. To be an MVPD, “you can’t just be an online service,” he said. “And the various providers have tried to make the argument that they are online cable or an MVPD in some way.”
Station ownership consolidation could create a bigger challenge when it comes to retransmission consent agreements, Miller said. “Consolidation isn’t directly in the best interest of providing local voices.” Big, consolidated media companies can use their control of a large amount of content to control how everything works downstream, Bergmayer said. This trend toward consolidation isn’t healthy for the market, he said.
A win for remote antenna company Aereo in the courts will likely result in lobbying on Capitol Hill to change the copyright law, said Miller. The consumer wins to some extent, he said. Bergmayer cautioned against misinterpreting the public performance clause of the Copyright Act of 1976: If the public performance rate issue goes the wrong way, “it could be very damaging toward Internet services,” he said. “There are a lot of ways that copyright law could go wrong to the detriment of the Internet.” If Aereo wins court cases filed against it by broadcasters, there are a lot of opportunities for lobbying to change the law, and copyright advocates may try to tie it into the Satellite Television Extension and Localism Act reauthorization, he added. Broadcasters lost a challenge to Aereo before the entire 2nd U.S. Court of Appeals of a three-judge 2nd Circuit panel’s ruling denying the stations’ request for a preliminary injunction against the company retransmitting their signals without permission. (See related story in this issue.)
The habit of viewers watching content while using social media or “second screen viewing” will probably factor into business models in the future, Bergmayer said. “The rise of people always having connected devices around them, particularly when they're watching TV, can do a lot for discovery of new TV shows and advertising.”