Here's how experts demystify and deconstruct the phenomenon.
'Batman and Superman will be owned by a telco,'screamed some news headlines reacting to the announcement of the acquisition of media conglomerate Time Warner by US telecom giant AT&T. This created a lot of buzz in global media, and if there was one thing that could match that on the buzz meter here, it would be the bidding war for the rights of the Indian Premier League (IPL).
With a whopping 18 bidders, the cricket league has attracted an eclectic mix of new media companies. Besides traditional broadcasters, global media and tech giants like Amazon, Facebook, and Twitter, even a media agency like GroupM is in the running.
These are only the latest developments in the evolving market relationship between cable companies, online streaming players and content producers in today's digital world. It puts into focus the phenomenon that the 'new age media company' is today. So what exactly makes for a new age media company?
CONTENT NEEDS PIPES, PIPES NEED CONTENT
On the one hand, there are traditional media networks watching the likes of Amazon, Facebook and Google taking their place among the world's most powerful companies. On the other, there is the content universe which - after overcoming the dotcom crash, combating digital piracy and being boosted by platforms like Netflix - is reinventing the very idea of television. Somewhere in between are the telecom companies, providing the infrastructure for all of the above.
Experts feel that with its $85.4 billion foray into the content industry, AT&T- which provides mobile and fixed telephone services as well as a broadband subscription television service, is attempting to fill a void created due to cord-cutting millennials forgoing cable TV in favour of digital platforms.
And then there's the reverse shift. Companies like Google, Facebook, Amazon and Netflix - the new media companies - have been known to aid their platforms by investing heavily in pipes. They have put hundreds of millions on undersea cables that link their data centres.
THE PERFECT MARRIAGE?
Girish Menon, director – TMT, KPMG in India, observes that it is all simply about following the consumer. According to him, as video consumption is moving online, telcos are realising that they are at risk of becoming only a distribution channel while the cream of the value is being generated by content providers. "By building out their own content arsenal, service providers are not only protecting themselves, but also tapping into the larger online potential as lines between content owners, platforms and distributors are becoming blurred," he says.
AT&T getting control of Time Warner the world's third-largest media conglomerate with assets like HBO (Game of Thrones), Warner Brothers (Harry Potter movies, Friends), CNN, Cartoon Network, DC Comics, and broadcast rights to many live sporting events is surely a move in that direction. In the US, this follows Verizon's AOL deal last year and its planned acquisition of Yahoo! this year. In Europe, many big telcos have dived into the content business, in varying degrees.
Closer home, telcos have started building their content ecosystems to target 4G consumers. Airtel has partnered with Zee Entertainment Enterprises' dittoTV app under which the MyAirtel App will provide customers free access to ditto TV's 100 odd live TV channels and popular TV shows.
New entrant Reliance Jio, meanwhile, is gunning for the IPL rights, as in the highly fragmented Indian market, a property like this is the big ticket to gaining relevance and infuence. It is, of course, competing with a diverse list of companies who also want to make that mark.
Premium sports content is universally known to make powerbrokers out of upstart media companies (much like what Sunday Night Football did to Fox in 1993).
Shashi Sinha, CEO of IPG MediaBrands India, emphasises that in this market, companies (both traditional and new), need to garner advertising as there's no revenue stream for most of them. He says, "The basic need here is long term commitment from advertisers, and eyeballs in terms of viewership. The IPL is one of the biggest tent-pole properties we have. If you latch on to more and more such properties, you become relevant, even if you end up becoming a loss leader.
He goes on to point out that India is an under-leveraged market in terms of pricing - be it TV or digital. So the cost per contact (CPC) is the lowest by global standards. "And because of high fragmentation, it is a buyer's market, so you only get a premium for big properties. It's all about selling volume. India has the largest volume with the lowest value," he says.
Predicting that this will be standard practice for all big standalone properties, he says, "If you are a platform or seller of inventory, creating a tent-pole enables aggregation of viewership on the back of which you can do packaging in different ways."
While Amazon can put out content on the Prime service, social media platforms are free, so it is finally all about monetisation.
According to Sinha, sports is a loss leader globally and one needs subscriptions. He adds, "In this space there will have to be a 25-30 per cent subscription model as advertising alone cannot support such a big property. In the UK football properties are subscription based. India may go that way but the heart of it will still be about where the revenue comes from."
THE VIDEO PUSHERS
Another IPL rights bidder, Amazon is looking to launch its Prime Video service India with a bang. Sports aside, Prime Video has been on a serious content-shopping spree as recently seen in its exclusive partnerships with the likes of Dharma Productions, Vishesh Films, T-Series and Greengold Animation (makers of Chhota Bheem). Experts feel that the company which started by selling books and DVDs, could be the disruptor here in the video space.
Experts credit Amazon Video's growth to factors like the roll-out of the standalone Prime Video, the success of its Fire TV devices (designed to stream digital audio/ video content to an HD-TV) and its increased investment in original content.
Menon feels that in India, it being the early stages of evolution, there is a fair bit of experimentation and trial and error in the digital space, resulting in increasing price points on quality content. He says, "A key concern is the sustainability of the economics given the lack of evolved subscription models," adding that content strategies would need to be re-evaluated since the audience profile is will become more mass once 4G gains momentum.
Sinha says, "This will be the era of partnerships. And it is all about control and dominance. In these collaborations, every partner will bring in their strengths." Vikram Sakhuja, CEO of Madison Media says, "A new age media company needs to be geared to provide customised content on demand to scale audiences."
On the new entrants vying for premium content he adds," Lowering of costs, explosion of platforms and access of digital technology and data ensure that content is not the preserve of the big boys alone. But just because access has increased does not mean that many more will succeed. Content needs to be viewed from a standpoint of creation, aggregation (and curation) and distribution. Each stakeholder getting into content, needs to be clear on their platform and within it their purpose."
Sakhuja sees an explosion of content creators - since that is driven by individual. However, the aggregation and distribution game will be split into two. The game for masses (that includes IPL), will be played by very few, and the game for tight segments will be played by many, each having expertise in their own niche.
As bundling gains momentum globally, in India too there could be all kinds of partnerships between DTH, telecom operators, OTT platforms, device makers, VOD platforms, film studios, and production companies. What remains is the question of where to watch that show.
A Note From the Editor
The recently held bid for the media and digital rights for the Indian Premier League was one of the most discussed events in the news these past few weeks. Our interest was piqued by the kind of players who picked up the tender for the latter. Each bidder represents a different world.
From traditional broadcasters, who had their sights set on both the media and digital rights, to telcos, who feared being reduced to mere distributors of content, to digital and technology-led companies like online publishers and e-commerce firms, who were merely staking claim to what logically appears to be right up their alley, to social media platforms and media buying firms, who are increasingly seeing merit in moving from a supporting role to a lead role in the game – why amplify when you can make the noise yourself? – the mix stretched across the sprawling spectrum that encapsulates the present day media landscape.
This assortment of 'digital bidders' is very telling. For one, it underscores the enormous need for hot content, and tells us a great deal about the kind of players looking to sink their teeth into content. Secondly, each type of bidding company had its own perspective and reasons for being in the race; today, competing entities don't necessarily resemble one another in form and purpose.
And thirdly, this is a glorious example of the way in which the lines between content owners, platforms and distributors are blurring. As one of the experts we spoke to puts it, we live in the era of partnerships. Content is no longer the preserve of the big boys.
Two years back, at an afaqs! event, Raghav Bahl said, "...the next generation news company will be 50 per cent content and 50 per cent technology." That, was just news. In this issue, we explore what 'the new age media company' is characterised by.