Commentary

Amazon And Epix Partnership Should Be A Call To Action For Content Owners

Amazon’s recently announced deal with Epix made headlines across the digital blogosphere and news outlets for doubling Amazon’s library with premium content from Paramount, Lionsgate, and MGM (the companies that make up Epix). While most commented on the threat this deal poses to competitor Netflix (who until recently had exclusive rights to Epix content), the macro trend that this news forecasts is equally worth exploring.  

In short, this partnership points to a significant opportunity for producers and aggregators to spread their content far and wide through non-exclusive agreements with as many publishers as possible. With audiences now expecting video content everywhere online and on every device, the Amazon-Epix partnership should be a call to action for content rights holders to make their content available on every video platform.

If other streaming video services want to stay competitive, Amazon’s deal with Epix will only be the beginning of nonexclusive agreements with the content rights holders. When audiences subscribe to a streaming video service, they expect access to a large library of quality content, much like the video rental days of yore.  If the service doesn’t deliver, the audience and their dollars won’t stick around. This puts content owners (especially those with premium content) in high demand. Content owners now have the leverage to expand their reach by striking nonexclusive agreements with many publishers who need their content more than they need an exclusive agreement. 

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Epix is just one example of a content owner already using this strategy to its advantage -- and the company has already mentioned striking similar deals with Google, Apple, and Hulu.  And, while Epix’s library is filled with high-end content, there is significant opportunity for every type of content producer and aggregator from Web-based episodic shows like those Google is sponsoring on YouTube to foreign film streaming services (like start-up Viki) to follow suit.

Noting Netflix’s stock loss of 11% after Amazon’s announcement was made, some may consider this democratization of content a threat to publishers.  But new opportunities for publishers to differentiate will arise as audiences have access to quality content across more and more publishing platforms. Those with limited content libraries will automatically be at a disadvantage, leaving the leading competitors to be judged on the user experience they offer and the cost of services. Consumers will comparison-shop for whether or not the platform is available on their favorite viewing devices (connected TV, tablet, smartphone, computer, etc.), whether the platform is powered by ads or subscription fees, and what the user experience is like. This leaves Netflix, Amazon, and other publishers able to stay competitive even with similar content.

To support the growing network of producers and publishers, the economics of their relationships must evolve.  In addition to exclusive distribution deals and upfront payments, other revenue generation methods could include producers receiving their share of revenue as it is being made – whether through subscriptions or advertisements. This may look less enticing for the rights holders at the outset, but it enables more publishers to flourish without the significant upfront cost burden that can lead to failure – a lose-lose for everyone.  Publishers then have the opportunity to focus on innovation and unique audience experiences that can drive more adoption and generate revenue for the entire ecosystem.  This democratization of content is really no different than the same products being sold in every grocery store, and sometimes at multiple types of grocers in the same shopping center (e.g., Ralphs, CVS, and the gas station). 

Likewise, the technology it takes to see these new agreements to their full potential comes with its own inherent obstacles that must be adapted to. With many new delivery agreements to meet, content syndication becomes more difficult and can cause producers and publishers to create fewer deals. The fear on their part is likely to be that every new deal will be similar to Rovi’s acclaimed acquisition of CinemaNow, and the resulting lackluster response when Rovi did not distribute the content to its full advantage.

Unfortunately, behind each new deal is an avalanche of technology and know-how that both producers and publishers must master in order to successfully get new content in front of the right audience. However, there are technology platform companies that specialize in handling the behind-the-scenes technology and can take over the responsibility of connecting all the right parties.

Instead of debating whether or not Amazon is set to upstage Netflix, the Epix partnership should be celebrated for the many doors this agreement (and others to come) will open for content owners and publishers, expanding their reach and giving audiences access to the content they want.

1 comment about "Amazon And Epix Partnership Should Be A Call To Action For Content Owners".
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  1. John Osborn from Turnstilâ„¢, September 28, 2012 at 2:34 p.m.

    Biff - this is an excellent analysis of what this partnership means. As cable and satellite distributors try and leverage providers to stay within the bounds of the profitable bundling system, the emergence of new delivery avenues, particularly among younger users, will be very attractive to producers. Pursuing unbundled opportunities (see Dish and Epix) and the long tail global monetization possibilities will at some point be too attractive for content producers to ignore, particularly as younger T/V users mature. This is a big step with a big player in the OTT space (Amazon) and should have positive impact on the business model for most parties.

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