Video programmers that are going direct to consumer by launching streaming apps are grappling with third-party distributors that have access to huge audiences, but offer very little in the way of audience data.
Today, video app programmers have a growing number of third-party distribution options. Marketplaces such as the iTunes App Store and Google Play ensure that their apps are available on almost every smartphone and tablet. Streaming video devices such as Amazon’s Fire TV, Roku and Apple TV offer similar app distribution on TV screens. Amazon and Roku are also channel resellers, which allows them to sell media companies’ apps as “channels” inside their own branded apps. (Apple is reportedly working on a similar product for its TV app.)
All of these distributors, whether it’s an app marketplace or channel reseller, allow users to subscribe through the distributor’s ecosystem (and billing system) instead of having to sign up directly with the programmer. This has created a challenge for video programmers, which need to be on third-party distribution platforms in order to reach a wider user base, but get a limited view into who is actually subscribing and how they are using the apps.
For instance, video programmers that agree to be on Amazon Prime Video Channels and The Roku Channel do not receive the email or credit-card information of those that have elected to subscribe. That information remains with Amazon and Roku, which also take a share of the revenue generated by their wholesale marketplaces. Last year, Amazon expanded its channels program to include ad-supported channels, which meant that the company does deliver back some anonymized user data on viewership trends and age and gender demographics, sources said. But again, there is no identifiable information that programmers could put to use outside of Amazon’s own ecosystem.
“Amazon wants you to do well on ads, because they want people to come back and buy stuff on Amazon, so they’ll give you some anonymized data,” said an executive at a TV programmer that distributes on Prime Video Channels.
“Amazon Channels and the wholesalers, in general, are basically a black box; you don’t really see what’s happening in terms of what people are watching,” added an exec at a niche subscription video programmer.
And yet, the potential to find new audiences in both Amazon and Roku’s customer base — Amazon’s Fire TV platform alone has 30 million active users and Roku has 27 million active users — makes both distributors difficult to ignore. It’s a big reason why Amazon Prime Video Channels has become a significant driver of subscription revenue for OTT programmers, accounting for anywhere from 25 percent to more than 50 percent of a subscription streaming app’s total number of users. (The fact that both Amazon and Roku also supply the technical infrastructure and handle billing services can be another benefit for programmers that don’t have the resources to handle both.)
The data challenge with OTT wholesalers also varies by programmer. For instance, ad-free subscription programmers such as HBO, Showtime and Starz are not as gung-ho about audience data as those that sell ads.
“If you are premium and have no ads, it’s a much easier decision,” said an exec at a premium cable and OTT network. “What you’re giving up is the timing on marketing and remarketing: I don’t have push notifications [with channel resellers], which means I don’t have the ability to alert a user to something unless I go through my partner.”
“But honestly, that loss of control is not the end of the world — especially since [distribution options] are getting more diversified, not less, which mitigates the risk,” he added.
These cable networks also have a history of being launch partners for wholesalers: HBO, Showtime and Starz are often included for free or at heavy discounts by pay-TV operators looking to sign up new subscribers.
“Premium networks are used to those types of deals,” said the niche SVOD exec. “It’s different for niche services.”
App marketplaces from Apple and Google, meanwhile, are not as walled off. In some cases, iTunes and Google Play offer email addresses — but never credit-card information, sources said.
But not all programmers have access to a user’s contact information. In these instances, programmers are experimenting with clever workarounds. For instance, the TV programming exec said that if a user signs up for the network’s streaming channel through iTunes, it will require that user to register with their email address if they want to access the same app on Roku devices.
The SVOD exec said there is also the potential to negotiate more favorable terms with third-party distributors. Many of these distributors are tech companies that have other businesses they’re investing in. One way to get more favorable terms — not only in the form of more audience data, but also in some instances a lower platform revenue fee — is by agreeing to participate in those initiatives. For instance, all of the major tech distributors are building universal search products, which would allow users to search for individual movies and TV shows inside different apps, sources said. Adding support for universal search is a requirement for a better revenue share from some of these vendors, said the SVOD exec.
“A lot of [the distributors] care more about people being in their ecosystem and buying their devices than any sort of services-related revenue,” said the premium cable and OTT exec.
Ultimately, video programmers agreed that while third-party OTT distributors can be restrictive in terms of how much data they supply, they are not all that different from legacy pay-TV companies such as Comcast and Charter.
“There are still gatekeepers,” said an executive at a prominent entertainment studio. “Historically, gatekeepers were defined by those that had satellites and cable pipes and billions of dollars in cap-x, now we’re seeing gatekeepers in companies that control both the hardware and software that people use.”
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