Five Risks of Failing to Manage OTT Content Rights Effectively
Internet-delivered TV has come of age. OTT services are no longer a side show — they are now central to the future business of content owners, broadcast networks and platforms. That was the conclusion of conference speakers at the IBC broadcasting convention in Amsterdam.
The proliferation of OTT delivery platforms, devices, formats and charging models means there are now significant risks to content owners and distributors in failing to have an effective strategy for managing content rights and licensing.
Not surprisingly, this topic was highlighted by many IBC speakers as a critical enabler for their digital future. There are now clear reasons why failing to manage intellectual property is a competitive disadvantage.
1. Failure to Fully Exploit Content
When exploitation rights for content are locked away in paper contracts or are just unclear, content inevitably gets left on the shelf — leaving money on the table. As the volume of content and distribution channels increases it becomes impossible to manage rights manually with spreadsheets.
Every major content creator and distributor aspires to have a clear enterprise view of all of the rights they own or license, ensuring they can maximize the exploitation of content they have already paid for.
2. Litigation When Content Used Incorrectly
Where content rights are unclear or not readily available, it’s just as likely that content will be used incorrectly and distributed in a way that is not licensed — leaving the distributor open to litigation and penalties.
In the past, this was almost an accepted part of doing business, the “publish and be damned” approach; in the digital world with more complex rights and distribution channels this is no longer viable. Witness recent cases — such as ESPN’s dispute with Verizon over “unbundling” its content in FiOS TV, or SiriusXM’s $210m settlement over playing pre-1972 music tracks.
3. Agile Competitors Exploiting Slow Incumbents
Where content owners and distributors don’t have the tools, processes and information to exploit their assets, they can become slow to launch innovative new services, miss gaps in the market — or do nothing at all.
This leaves the field wide open for digital-native competitors to enter the market and fill the void. Many of the new generation of successful content streaming services — Netflix, Amazon, Spotify — depend on effective content licensing strategies that exploit niches left untapped by other players.
4. Unhappy Content Suppliers and Talent
If it can be difficult to manage content rights, it’s even harder to ensure suppliers and talent are paid quickly and accurately without the right systems in place. With new charging models for content the calculations become more complex. And with streaming services, a small number of large transactions is replaced by millions of micro-transactions to account for.
A failure to pay correctly, on time or to show transparently how payments were calculated leads to unhappy suppliers and talent who may take their business elsewhere. Or who may sue — for example Jillian Michaels demanding $10m from Lionsgate for the use of fitness videos on YouTube.
5. Inefficient, Expensive Back Office Processes
In an increasingly competitive media business, every content company is looking to cut costs and overhead. Yet manual paper and spreadsheet processes for managing content rights, licensing and royalties are extraordinarily inefficient and slow. And many media businesses have grown through acquisition, leaving a patchwork of silo systems for managing rights — with huge IT and integration costs and fragmentation of business processes.