The adage about content being king is absolutely true and the precipitous drop in the value of Netflix shares related to losing Starz programming reminds us that distribution can be considered a distant second to content. This is true because the world has flattened with the advent of broadband meaning any content provider can stream directly without the need for cable companies or telcos to take a cut.
Glenn Beck’s recent launch of GBTV for example shows us how a content provider can take his or her show and produce it just fine without the need to deal with traditional distribution.
But from the standpoint of the consumer, having access to a smattering of programs on disparate websites is not the same as accessing them all seamlessly through a single aggregator. In fact consumers pay cable and IPTV companies for the convenience of getting all the programs they want in a single location without the hassle associated with myriad platforms.
Amazon’s recent release of the Kindle Fire is part of the company’s play to leverage its rich video library to push the sale of a device which helps in-turn push other products which are part of the company’s ecosystem.
The natural progression for Amazon of course is to try and develop its own content so it doesn’t find itself in the same situation as Netflix and cable companies who have to deal with content providers who demand ever-more money in exchange for distribution rights. In fact, TMC’s Tom Keating opines that the leading ecommerce site needs to follow the HBO model and even make content purchases.
And he is right about content being king – to a point. You see content providers are certainly in control but only to the extent that they can build a following and keep it. When a customer signs up for a TV bundle they don’t know necessarily that they will be getting hours of programming relating to fishing. Moreover, if they had the choice they may not have chosen to pay for the channel at all. In fact, a consumer’s decision to become a fishing enthusiast could in fact be driven by watching a fishing channel they would have chosen not to purchase in the first place.
And this is why the a la carte direction the FCC is pushing the cable companies in is so interesting to me.
Moreover, it shows the importance of “platform” to content providers.
Netflix is obviously one of the biggest streaming platform providers around and Amazon, Google and Apple are doing their best to catch up.
But regardless of who the top platform vendors are, content providers should be careful to develop direct relationships with customers while not losing the “tacit endorsement” a platform relationship provides.
And as the content and platform wars escalate, I sense the losers will continue to be the platforms, content providers and consumers. This is something execs at platform and content companies should realize as they head into their negotiations.
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