This results from selling and licensing TV content -- whether to pay TV providers (traditional or virtual digital), syndicated TV platforms on TV stations/cable networks, or international networks.
New, yet-to-be-launched direct-to-consumer platforms from WarnerMedia, NBCUniversal and Walt Disney are mulling this as we speak. Here are the big questions: How much should be original, library products? How much from third-party producers?
According to MoffettNathanson Research, this is a concern, especially if big media companies find it difficult to sell content to competitors' new TV distribution platforms.
“AT&T, like Disney, will have to forgo high-margin licensing revenue (and vital free cash flow) that is on the books today,” says the report.
“To the extent that any new DTC SVOD service will only accelerate the decline of traditional distribution, AT&T will suffer faster defections not only from DirecTV but also from the Turner Networks. Such is the dilemma for a company with positions in every corner of media and distribution.”
MoffettNathanson estimates, in conjunction with data from IMDB, that Walt Disney (and Fox) control 19% of the top 100 TV shows, while Warner Bros is at 18%; Netflix, 16%; Comcast (NBCU), 12%; and CBS, 11%.
Factor in the top 200 films in terms of global box office: Disney and Fox are at 43%; Warner Bros, 21%; Universal Studios, 14%; Viacom (Paramount Pictures), 11%; and Sony, 6%. These numbers speak to the power of premium TV and movie content.
But as media companies continue to navigate around new DTC platforms, the question remains: What do you keep for your own distribution platform and what do you sell? History might say it is a combination.
Although not as prevalent as years ago, TV/movie studios have regularly sold content to network competitors -- broadcast and cable as well as TV stations. Industry-wide, broadcast TV network prime-time schedules are estimated to be filled with 60% to 70% of shows from their sister TV production companies, and the remainder are acquired.
Now that traditional major TV/movie companies own new entertainment OTT platforms, these numbers could change. For example, there is no need to make deals with programming middleman, like pay TV providers. Still, some would argue that broadband owners, who also own pay TV distributors, now play an increasingly important role.
We know consumers are not focused on this. Netflix does not identify that NBCUniversal owns “The Office” or Warner Bros. owns “Friends.”
In that regard, do new platforms need to find new ways of marketing to tell consumers where big popular TV and movie content is heading?
Then again, maybe all new OTT platforms will want to keep some information secret. A different kind of “walled garden” may be coming.