A Sprinkle of UX Magic for HBO Max?
WarnerMedia acquires TWC, using digital M&A to bring UX design expertise in-house.
“One of our key strategies is understanding what technology or components we need to ‘own’, and what we can simply buy in.” — Aksel Van der Wal, COO International, WarnerMedia
Media conglomerates and big tech are engaged in a brutal competition for dominance in the over-the-top (OTT) television, video and media entertainment market, investing billions, in the process, in original content production.
In 2019 alone, more that 500 new TV series were released just in the US and the pace of content proliferation is as relentless internationally.
With too much content in too many places, many consumers are confused and frustrated by too much choice and by the disintegration of the traditional TV bundle. User experience, personalization, targeting and dynamic UI interfaces have become critical to differentiate content offerings, prevent churn and sustain content consumption.
As WarnerMedia prepares to launch its flagship streaming service, HBO Max, it sought to strengthen its in-house UI and multi-platform development capabilities by acquiring The Widget Company, a little-known Dutch digital studio.
Who is WarnerMedia
Headquartered in New York, WarnerMedia is a global media conglomerate owned, since 2018, by American telecommunications giant AT&T.
With aggregate revenues of $33 billion and 25,000 employees, WarnerMedia group’s companies include a range of household-name entertainment brands and franchises, including HBO, Turner, Cinemax, TNT, HLN, Cartoon Network, Turner Classic Movies, Warner Bros., DC Comics and CNN.
WarnerMedia was originally born as Time Warner in 1990, following the historic, and contentious at the time, merger of Time Inc. and Warner Communications.
In 2000, Time Warner merged with internet pioneer AOL. The merger spurred a years-long struggle between different factions within the company, resulting in a string of reorganizations, divestitures and acquisitions, until, in 2009, Time Warner spun off its Time Warner Cable division and AOL as independent companies.
In the 2010s, the company expanded its digital footprint with the acquisition of digital-native media properties like Bleacher Report and Flixster. It also established Time Warner Investment, later renamed WarnerMedia Investments, a corporate venture capital vehicle designed to invest in strategic early-stage technology startups. It finally shuttered it in 2018.
The $85 billion acquisition of Time Warner by AT&T was one of the largest media deals in history and part of an epic realignment of the entertainment industry that has taken place in recent years. It also set the stage, after a series of internal shakeups, for the launch of HBO Max, a comprehensive, multi-brand streaming service that will finally be unveiled later this month.
Who is The Widget Company
The Widget Company (TWC) is a developer of creative solutions for connected TV, game console, set top box and mobile applications for the OTT TV industry. Based in the Netherlands and in Hungary, TWC was founded in 2009 in Amsterdam by Rutger Pinas.
Today TWC is a boutique digital studio with just over 30 employees, mostly software developers and designers. TWC customers and partners include Disney, RTL’s Videoland, NOS, Liberty Media’s Ziggo Sport, Samsung, IBM, Xite and, notably, HBO.
The Deal
On April 29, 2020, WarnerMedia publicly announced it had acquired TWC for an undisclosed amount. Regulatory filings show that the transaction was finalized in early April with the appointment of WarnerMedia executives to TWC’s board.
In a statement, WarnerMedia said that TWC staff will be integrated with “WarnerMedia’s international technology operations, bringing their expertise in creative digital and OTT solutions to current and future WarnerMedia projects for the international marketplace.”
Why it Matters
Over the last five years, there has been a global explosion in OTT streaming services. In the US alone, more than 300 OTT video streaming brands compete for consumers’ attention and subscription spend, with hundreds more in virtually every international and regional market.
In addition to native media and entertainment brands, such as Netflix, Disney and Hulu, all the major technology giants, such as Google/Youtube, Apple and Amazon, have thrown their hat in the race with massive investments in original and licensed content. Warner Media’s planned launch of HBO Max, later this year, will add another formidable competitor to the landscape.
The growth in the number of available SVOD (Subscription Video on Demand) and AVOD (Advertising-based Video on Demand) services has corresponded to unprecedented growth in content. As an illustrative data point, in 2019, “532 comedies, dramas and limited series were broadcast or streamed”, according to research by FX reported by the New York Times.
And yet, consumers are starting to feel the strain of excessive choice. ‘Subscriber fatigue”, as industry insiders call it, and consumers’ frustration are both real and measurable. According to research by Deloitte, almost 1 in 2 consumers “are frustrated by the growing number of subscriptions and services they need to piece together to watch what they want.”
“Despite having so many options, many consumers still feel that ‘a good show is hard to find.’” — Digital Media Trends Survey, Deloitte
Cognizant of this growing problem, well-funded OTT service providers have rushed to produce more and more quality, original content, in an effort to “lock in” fans who will maintain their subscriptions in order to continue watching their favorite original shows and movies.
In addition, the streaming video user experience is very different than, and in many ways inferior to, the old linear television experience. While the traditional channel lineup, typical of broadcast and pay TV, made it easy to “channel surf” and effortlessly stumble upon content, consuming streaming content requires more deliberate effort on the part of the viewer. Switching from one streaming service to another takes a relatively long time, with different logins and passwords, user interfaces and organization of content, overlapping offerings and different availability windows and price points. This can be enough to frustrate a large portion of consumers.
Another emerging approach to this friction is re-bundling, i.e. the assembly of multi-brand streaming offerings under a single umbrella and entry point. For example, Disney offers the option to bundle Disney+, Hulu, and ESPN in a single subscription. Another example is Amazon Channels, Amazon’s collection of SVOD partner streaming services.
In this context of rapid evolution of both the content market and the way consumers get access to it, the role of user experience has risen as one of the top strategic priorities for operators. User experience personalization, user profiling and UI technologies, once seen as secondary to a service launch and health, have become core enablers of strategies to increase content consumption, subscriber retention and deepen insights into consumer preferences.
Technology vendors like ContentWise, Digitalsmiths, Rovi, Thinkanalytics, Jinni, and Iris have grown tremendously by selling UX management and personalization solutions to OTT operators. At the same time, UI and app development specialists like TWC, 24i, Applicaster, and You.i have become vital partners to most OTT brands worldwide.
As Warner Media ramped up preparations for HBO Max launch, it found that strong competencies on UI design and user experience management are an important competitive advantage. As the opportunity presented itself it pulled the trigger to bring them in-house by acquiring TWC.
Just like consulting companies, retailers and industrial manufacturers have used M&A to acquire core digital competencies that promise to secure a leg up on the competition, media conglomerates are also starting to do the same. It should come at no surprise if companies that were customers of UX/UI technology vendors and developers end up being their parents at an accelerated clip.
TL;DR
- WarnerMedia, the media and entertainment conglomerate that controls HBO, Turner and Warner Bros, acquired The Widget Company (TWC) in April 2020.
- TWC is a Dutch developer of UI solutions for OTT TV service providers. WarnerMedia will bring “their expertise in creative digital and OTT solutions to current and future WarnerMedia projects.”
- With the explosion of VOD services and content user experience has risen as one of the top strategic priorities for operators.
- As WarnerMedia prepares to launch HBO Max, it decided to bring top UI and applications development expertise in house.
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