Continued – Advice for Companies Planning or
Doing Business in the Streaming Media Industry
Doing Business in the Streaming Media Industry
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Written by
Stephen J. Kerr & Sarah Nean Bruce
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Written by
Stephen J. Kerr & Sarah Nean Bruce
************************************************************
Image - streaming-media-where-do-i-go
– 10 MINUTE READ –
PREAMBLE:
This second article of our two-part series was written to educate, illuminate, and advise streaming company owners about their business – and its future. We continue discussion with our industry experts regarding the present and future value of streaming companies, as well as the state of the industry.
We are long past the time when anyone needs to justify the existence of streaming media as a business. Traditional broadcast media is not going anywhere… yet. But streaming video services are clearly the future of the entertainment industry.
→ We’ve been saying for years that, “Consumers want their entertainment, when-ever, where-ever, and how-ever they want to view it.”And now they have it.
Here is Part Two (Expert Answers to Questions 6 - 10).
Part 1 was published in May.
This second article of our two-part series was written to educate, illuminate, and advise streaming company owners about their business – and its future. We continue discussion with our industry experts regarding the present and future value of streaming companies, as well as the state of the industry.
We are long past the time when anyone needs to justify the existence of streaming media as a business. Traditional broadcast media is not going anywhere… yet. But streaming video services are clearly the future of the entertainment industry.
→ We’ve been saying for years that, “Consumers want their entertainment, when-ever, where-ever, and how-ever they want to view it.”And now they have it.
Here is Part Two (Expert Answers to Questions 6 - 10).
Part 1 was published in May.
6. If a Streamer has plateaued and stopped growing, how does a new owner create a higher value than the current owner?
Gene Pao (Shout!FactoryTV): reveals that –
- You need to secure or produce more content.
- In fact, you need to constantly refresh your content to maintain your viewership or subscribers.
- If you don’t have the appetite to acquire or produce original content on an ongoing basis, merging with another channel could be a better strategy.
- The new owner would need to be looking at the content.
- Perhaps a content rich company without a platform would look to acquire a company that has a good operational platform and the expertise to on-board content quickly.
- There are some very small, niche channels that had an unusual level of growth because there wasn’t a lot of competition.
- There is now fiercecompetition... and that is one of the reasons that these streaming channels are stalling.
- I think you should look at who is stalling very carefully (instead of saying ‘stalling’ I’d use a different word ‘maxed out’). Maybe the audience was not nearly as big as the company thought that it was… and maybe they are reaching a natural saturation level of what I would call ‘core fans’ - people who are willing to spend an additional amount of money to watch their passion.
- If you have reached your natural layer of core consumers, can you still capture ‘casual consumers’ - ones that may like to view your content but may not be willing to pay $5 or $10 a month? That is where AVOD can become a critical factor for growth.
- The other factor for growth that you need to look at is the quality and variety of your content.
- Many content rich OTT channels were created by media companies that put their content over marketing and audience engagement or tech companies that put tech ahead of content or marketing. It is a balance of all four: content, marketing, audience and tech.
- A new owner does not have to go through the Start Up process again. They should be able to create a higher value by reigning in spending, increasing market awareness for the channel and building their subscriber or advertising base, slowly.
Overall Consensus: Netflix, Hulu, Amazon and Disney+ and the other giant streaming platforms can play the game of content, content, content.
→ Smaller channels simply cannot play the game of being every-thing, to every-one.
7. Are AVOD or SVOD Streaming companies more valuable? What if the company operates both AVOD & SVOD (even T-VOD)?
Frazier: I think typically both AVOD and SVOD will be blended to the best success.
Havelka: Like many streaming businesses, we started off as SVOD; as parents we did not want kids to be exposed to advertising.
Sondheim: We used AVODs as what we called a “sampling device”–
Overall Consensus: There was once a strong demarcation line between SVOD subscribers and AVOD viewers. Streaming companies had to choose which way to go. But now, many of the streaming companies offer a hybridof both SVOD and AVOD for consumers, where the AVOD can be both the preferred way viewers watch their content, or a steppingstone to a SVOD subscription.
→The value of these businesses rests mainly on how well they attract and retain customers. AVOD, SVOD, or even pay-per-view TVOD, can work together to make a company profitable and valuable.
Frazier: I think typically both AVOD and SVOD will be blended to the best success.
- It is hard to get people to put up a credit card for something they can’t see.
- There should be a free component that may be ad supported to entice going deeper into the SVOD content.
Havelka: Like many streaming businesses, we started off as SVOD; as parents we did not want kids to be exposed to advertising.
- We use AVOD as leader to SVOD. SVOD is much more lucrative because advertisers have not been able to deliver eCPM rates high enough to challenge the earning power of consistent monthly subscription revenue.
- If you’re talking about ROI, SVOD has made us more valuable.
Sondheim: We used AVODs as what we called a “sampling device”–
- When everybody was focused on trying to ultimately build an SVOD service, AVOD was merely a steppingstone into the SVOD world. Gradually easing you into SVOD.
- Now I think we’re seeing a new phase: we’re getting into the era where you have multiple ‘must have’ SVOD services.
- The consumer thought that they were going to cut their cord so that they could cut their bill, but now the consumer is faced with all these new choices.
- The consumer has only so much money to spend on their entertainment choices and these new entries to the market will put pressure on them to choose. They’ll only put so many services on their credit card.
- If your streaming service is not on what I call the “premium tier,” I believe that AVOD will become the default way that most people will see your content.
Overall Consensus: There was once a strong demarcation line between SVOD subscribers and AVOD viewers. Streaming companies had to choose which way to go. But now, many of the streaming companies offer a hybridof both SVOD and AVOD for consumers, where the AVOD can be both the preferred way viewers watch their content, or a steppingstone to a SVOD subscription.
→The value of these businesses rests mainly on how well they attract and retain customers. AVOD, SVOD, or even pay-per-view TVOD, can work together to make a company profitable and valuable.
8. Are their true economies of scale by owning multiple Streaming channels?
Pao: Yes, there are definite economies of scale in operations (e.g., ingestion, programming, ad sales) and in cross promotion.
Sondheim: The answer is absolutely.
Hopkins: Absolutely, especially if they are segmented by different audiences. Although, the maintenance of multiple OTT channels can be challenging without the editorial / programming resources.
Andreas Kisslinger (Lightcast.com): It does not cost that much more for Lightcast.com to manage five channels for you, than it does just one. Managing multiple streaming channels - from a technology point of view - is not a big deal for us.
Overall Consensus: Nearly every media company, especially broadcasters, know that bigger is most definitely better.
Our experts agree that –
→ As competition heats up for SVOD subscribers and AVOD viewership, the owners of these streaming companies will have to make a choice.
Pao: Yes, there are definite economies of scale in operations (e.g., ingestion, programming, ad sales) and in cross promotion.
Sondheim: The answer is absolutely.
- The more you can amortize the kinds of infrastructural investments that you have to make in creating these channels - the better. You can’t save on everything, but there are huge economies of scale. Accounting, tracking management system, same fixed cost.
- Use development expense on one channel across all your channels.
- If you have a great vendor that is creating new technologies for one service, you can then apply that technology to your other channels as well. Amortize across all your channels.
- Your management also gains greater skills. If your management team learns lessons from managing one channel, they can then apply that knowledge across your entire spectrum of channels. As they get better at running the business, everyone benefits.
- Yeah, I believe in economies of scale.
Hopkins: Absolutely, especially if they are segmented by different audiences. Although, the maintenance of multiple OTT channels can be challenging without the editorial / programming resources.
Andreas Kisslinger (Lightcast.com): It does not cost that much more for Lightcast.com to manage five channels for you, than it does just one. Managing multiple streaming channels - from a technology point of view - is not a big deal for us.
Overall Consensus: Nearly every media company, especially broadcasters, know that bigger is most definitely better.
Our experts agree that –
- There is no comfortable middle ground; and
- There is little or no room at the bottom.
→ As competition heats up for SVOD subscribers and AVOD viewership, the owners of these streaming companies will have to make a choice.
9. Is a Streaming business that licenses most of its content and technology from third parties as valuable as one that owns most of its content and/or tech?
Frazier: My thoughts are that owning content is best, technology should be farmed out.
Side Note: As appraisers, we (Bel Age Medias) look at streaming companies the same way we look at production companies and broadcasters:
Frazier: My thoughts are that owning content is best, technology should be farmed out.
- There are white label systems that can seamlessly present a fixed brand.
- These systems have constant challenges to stay current as the internet and system keep evolving, and a company is never done developing to meet the changes in browsers, smartphones, and other delivery devices.
- Let someone who is focused on the platform technology keep growing it.
- Understanding what type of business you are is critical to success. Are you a tech company? A marketing company? A production company? Each has their strengths and weaknesses. By embracing the kind of company you are, you can partner with others instead of taking on the risk yourselves.
- Owning a lot of content is no guarantee of success.
- Our value resides in our market position and our customer growth and loyalty.
- The fact that we own all our own backbone technology is essential to be responsive to changing market conditions. If you are locked into someone else’s idea of how a streaming service should operate, you may miss an opportunity for growth.
Side Note: As appraisers, we (Bel Age Medias) look at streaming companies the same way we look at production companies and broadcasters:
- Is their revenue growing and sustainable?
- Are they profitable?
- Does this company have management and systems that others could utilize; or
- Or are they simply a silo of content?
10. What other revenue streams, besides AVOD or SVOD income, can be generated by an OTT / Streaming business?
Sondheim: Depending on the rights available... a company like Cinedigm buys all rights to the content. So, it is not just streaming. They get the DVD rights, and pay based on the mature business, (like DVD or broadcast). And in some cases, be able to then give that content to our streaming channels at a low, or almost “free” basis. We have to pay royalties (participations), but we could put those on our service at a very reduced cost. That is one important way that people can do that.
Also,
Hopkins: An OTT platform can also act as an incubator for launching any type of content and promotional opportunities.
When you hit the ceiling (or the floor), you need to either -
→ Get Creative… or Go Home.
Summary:
Nearly every major (and minor) media company in the world has created, or is in the process of launching, a streaming business to complement their linear broadcast business. With so many new streaming channels being created, it is inevitable that these channels and companies are going to consolidate. In any marketplace, there are winners and losers. The consolidation of streaming media into oligopolies is already happening.
End of Part Two (of Two).
Sondheim: Depending on the rights available... a company like Cinedigm buys all rights to the content. So, it is not just streaming. They get the DVD rights, and pay based on the mature business, (like DVD or broadcast). And in some cases, be able to then give that content to our streaming channels at a low, or almost “free” basis. We have to pay royalties (participations), but we could put those on our service at a very reduced cost. That is one important way that people can do that.
Also,
- Roll content in and out of your service. When you roll it out you go try to find some syndication or TV deal to make money.
- License it to someone else. Repurpose content. Combine two westerns and release it as a DVD.
- You need to go back and forth at the different channels of distribution and then look at your assets and find new ways to re-monetize them, or monetize them before you bring them to OTT.
Hopkins: An OTT platform can also act as an incubator for launching any type of content and promotional opportunities.
- Corporate sponsorships are good options.
- The Film Detective.com leverages its growing collection of classic Hollywood movies.
- We have linear channels on both Direct TV and STIRR (Sinclair); as well as
- Licensing films and series to other OTT / streaming channels and broadcasters.
- We have always kept one foot in the DVD business as well.
- When you’re a small streaming platform you need to seek out every opportunity to create additional revenue.
- Smaller streaming businesses need to get creative with their marketing dollars and find inexpensive ways to build their subscriber base and drive AVOD traffic.
- A single streaming channel has limited options when it comes down to building revenue and profits, but it can be accomplished by being active, pioneering, inventive, and dynamic.
When you hit the ceiling (or the floor), you need to either -
→ Get Creative… or Go Home.
Summary:
Nearly every major (and minor) media company in the world has created, or is in the process of launching, a streaming business to complement their linear broadcast business. With so many new streaming channels being created, it is inevitable that these channels and companies are going to consolidate. In any marketplace, there are winners and losers. The consolidation of streaming media into oligopolies is already happening.
End of Part Two (of Two).
 | Andreas Kisslinger, CEO [https://www.linkedin.com/in/andreas-kisslinger-98a46420/] Lightcast.com (Streaming Technology provider) |
 | Bill Sondheim, Former President [https://www.linkedin.com/in/bsondheim/] Cinedigm.com (Dove Channel, Combat GO, ConTV, Docurama) |
 | Tony Havelka, Founder [https://www.linkedin.com/in/tony-havelka-79b060b/] AmebaTV.com (Children's video streaming service) |
 | Philip Elliott Hopkins, Founder [https://www.linkedin.com/in/philip-elliott-hopkins-934a7b11/] TheFilmDetective.com • TheFilmDetective.TV (Archivist, Preservationist, App, On Line, On Cable) |
 | Gene Pao, Senior VP Digital Enterprises [https://www.linkedin.com/in/genepao/] Shout! Factory TV • ShoutFactoryTV.com (next-generation digital channel offering cult and classic TV and film) |
 | Ed Frazier, Chairman [https://www.linkedin.com/in/ed-frazier-685a815/] Centerpost Limited (Rural Media Group, BizTV, YouTooAmerica) |
If you’d like to Read, or Revisit, Part ONE
↓ Click on this Link ↓
→ HOW TO BUY, SELL, OR VALUE
A STREAMING BUSINESS (Part 1) ←
↓ Click on this Link ↓
→ HOW TO BUY, SELL, OR VALUE
A STREAMING BUSINESS (Part 1) ←
Let us help you.
Our firm, Bel Âge Médias (B.Â.M.}, is a company specializing in providing Business Development, Branding Guidance, Mergers & Acquisitions (M&A) expertise, Exit Strategies, and Investment Banking services. Additionally, under out ongoing Streaming / OTT / 4K / Ultra HD initiative, we continue pursuing strategic alignments with high-end, entertainment technology providers, and explore low-cost alternatives for theatrical, televised, streamed, and online distribution of 4K and 2K films & television programs globally.
Bel Âge Médias • Santa Monica, California
Call Us - or Visit Us Online - or Email Us:
+1 310 666-6474
https://belagemedias.com/
Stephen(@)BelAgeMedias.com • Sarah(@)BelAgeMedias.com
LinkedIn-Stephen J. Kerr – https://www.linkedin.com/in/stephenjkerr
LinkedIn Sarah Nean Bruce – https://www.linkedin.com/in/sarahneanbruce
Our firm, Bel Âge Médias (B.Â.M.}, is a company specializing in providing Business Development, Branding Guidance, Mergers & Acquisitions (M&A) expertise, Exit Strategies, and Investment Banking services. Additionally, under out ongoing Streaming / OTT / 4K / Ultra HD initiative, we continue pursuing strategic alignments with high-end, entertainment technology providers, and explore low-cost alternatives for theatrical, televised, streamed, and online distribution of 4K and 2K films & television programs globally.
Bel Âge Médias • Santa Monica, California
Call Us - or Visit Us Online - or Email Us:
+1 310 666-6474
https://belagemedias.com/
Stephen(@)BelAgeMedias.com • Sarah(@)BelAgeMedias.com
LinkedIn-Stephen J. Kerr – https://www.linkedin.com/in/stephenjkerr
LinkedIn Sarah Nean Bruce – https://www.linkedin.com/in/sarahneanbruce
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↓ Endnotes / References ↓
1 – OTT REVENUE GROWING BY $17B THIS YEAR, REACHING $159B By 2024 - STREAMINGMEDIA.com - June 10, 2019, By Troy Dreier, Senior Editor
https://www.streamingmedia.com/Articles/ReadArticle.aspx?ArticleID=132301
2 – CAPITALIZING ON OVER-THE-TOP CONTENT DEMAND – BMC Online – 09/11/2018 By Stephen J. Kerr
http://www.bizmark.net/blogs/capitalizing-on-over-the-top-content-demand
3 – TO EXIT, OR NOT TO EXIT – STRATEGIES FOR FILM DISTRIBUTORS– BMC Online – 09/18/2017 by Stephen J. Kerr
http://www.bizmark.net/blogs/to-exit-or-not-to-exit-strategies-for-film-distributors
4 – HOW STREAMING GIANTS ARE SPENDING MONEY FOR TV PUSH – THE HOLLYWOOD REPORTER – August 23, 2017 By Natalie Jarvey
http://www.hollywoodreporter.com/news/how-streaming-giants-are-spending-money-tv-push-1031885
5 – THE OTT VIEW-NIVERSE: A MAP OF THE NEW VIDEO ECOSYSTEM – VARIETY – 04/29/2015 By Andrew Wallenstein
http://variety.com/2015/digital/news/ott-map-video-ecosystem-1201480930/
6 – STREAMERS FLOCK TO AVOD – NAB SHOW MAG – April 2019 – By Daniel Franke
https://www.nabshow.com
7 – INTERNATIONAL STREAMERS INVESTING MILLIONS TO TAKE ON NETFLIX OVERSEAS – Hollywood Reporter – 04-02-2019 by Scott Roxborough
https://www.hollywoodreporter.com/news/international-streamers-investing-millions-take-netflix-overseas-1198653
Image Credits:
IMAGE-streaming-media-where-do-i-go.jpg – via AtHomeMMS
PHOTO_Sarah&Stephen.png – via BelÂgeMédias
Categories:#content #distribution #streaming #entertainment #OTT #streamers
https://www.streamingmedia.com/Articles/ReadArticle.aspx?ArticleID=132301
2 – CAPITALIZING ON OVER-THE-TOP CONTENT DEMAND – BMC Online – 09/11/2018 By Stephen J. Kerr
http://www.bizmark.net/blogs/capitalizing-on-over-the-top-content-demand
3 – TO EXIT, OR NOT TO EXIT – STRATEGIES FOR FILM DISTRIBUTORS– BMC Online – 09/18/2017 by Stephen J. Kerr
http://www.bizmark.net/blogs/to-exit-or-not-to-exit-strategies-for-film-distributors
4 – HOW STREAMING GIANTS ARE SPENDING MONEY FOR TV PUSH – THE HOLLYWOOD REPORTER – August 23, 2017 By Natalie Jarvey
http://www.hollywoodreporter.com/news/how-streaming-giants-are-spending-money-tv-push-1031885
5 – THE OTT VIEW-NIVERSE: A MAP OF THE NEW VIDEO ECOSYSTEM – VARIETY – 04/29/2015 By Andrew Wallenstein
http://variety.com/2015/digital/news/ott-map-video-ecosystem-1201480930/
6 – STREAMERS FLOCK TO AVOD – NAB SHOW MAG – April 2019 – By Daniel Franke
https://www.nabshow.com
7 – INTERNATIONAL STREAMERS INVESTING MILLIONS TO TAKE ON NETFLIX OVERSEAS – Hollywood Reporter – 04-02-2019 by Scott Roxborough
https://www.hollywoodreporter.com/news/international-streamers-investing-millions-take-netflix-overseas-1198653
Image Credits:
IMAGE-streaming-media-where-do-i-go.jpg – via AtHomeMMS
PHOTO_Sarah&Stephen.png – via BelÂgeMédias
Categories:#content #distribution #streaming #entertainment #OTT #streamers
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