Securing content rights

The possibility of viewing content whenever viewers want, where and however they want is a fundamentally different proposition from that of conventional TV services. Content creators, whether they are major film studios or small independent production companies, are excited about the implications this holds for their own businesses but are also careful to ensure that new agreements do not create poor precedents in a new market.

The Communications Act of 2003 radically redrew the terms of trade between broadcasters and independent TV producers, allowing the latter to retain intellectual property for exploitation beyond the original broadcast exposure. IpTV presents such an opportunity. However traditional broadcasters wish to preserve their own position in the new world, avoiding a ‘dis-intermediation’ as producers go direct to viewers. Broadcasters wish to offer their viewers opportunities to engage with shows for a period in a ‘primary window’ before releasing rights back to content creators. Meanwhile, producers wish to explore the opportunities presented by ipTV as a potentially lucrative secondary market, unfettered by primary broadcasters. So negotiations on new media rights have been protracted and difficult. Under threat of Ofcom intervention, these have now mainly been agreed. Recognising the uncertainty in the new market they will be reviewed in 12 months.

The BBC has reached agreement with Pact, the trade association for independent producers, allowing viewers to catch up on any episodes of a series they’ve missed on-demand while the series is still going out. They will also be able to download programmes to view later within a seven day window. Channel 4 has maintained a more hard line stance throughout their negotiations and has secured a 30 day primary window, giving them greater flexibility to exploit programme rights. Importantly, they’ve also agreed a 5 month holdback period for Channel 4 commissions. This is very important to Channel 4 as, unlike the BBC, it has no in-house production function. Without this protection, Channel 4 programming could be sold on to rivals shortly after transmission, thereby weakening its brand.

Negotiations have been hampered by the very many unknowns about how consumers will react to ipTV offers. Broadcasters and Film studios are concerned about the potential for VoD to cannibalise existing business. Would a consumer be willing to pay significantly more for a packaged, physical copy of a film in the form of a DVD than they would for a digital download? Yet the rewards are potentially large. The VHS cassette and the DVD have in the past been sensationally hailed as the end of the film industry but both have actually contributed to revenues.

The competition for content

As more companies seek to present themselves as providers of ipTV ventures, the scramble for rights to premium content will intensify. Aggregators will pay highly to win exclusive rights to ‘must-see’ programmes as a means to secure competitive differentiation.

Existing relationships with production companies and viewers give established TV broadcasters a head start. Making content available by ipTV alongside existing linear platforms is an advantage, presenting cross promotion opportunities, helping them to migrate traditional viewers to their own ipTV offers.

Nonetheless, the prize of winning a place in this market is sufficiently great to entice newcomers to the TV business. BT has already announced deals in film & TV with BBC Worldwide, Paramount and National Geographic, to name but a few. AOL will benefit from its ties to Time Warner, whilst Microsoft has initiated partnerships with Hollywood production companies to create original content for their Internet TV service.

Outside the mass market, niche content provides an opportunity for those with more modest ambitions. VoD over internet TV is a viable alternative for smaller operators and can be implemented with relatively low risk. Many website operators cater to specific interests and have dedicated audiences that welcome the more focused approach they take. Internet TV services can be used to exploit this loyalty and deliver content to a very receptive audience.

The internet is already the most effective medium to address specialist interests and ipTV can serve them just as well. VoD will allow enthusiasts to access archives of their favourite programmes, low budget films will get exposure far beyond their usual limited cinema release and community programming could report on issues of local interest. Programming covering hobbies and interests, from wind surfing to stamp collecting, and more esoteric topics will be easily accessible.

This extensive catalogue of content is not only attractive to the ever more individualistic viewer but can be extremely valuable to broadcasters. Unconfined by the limitations of TV scheduling, they will be able to take advantage of what is known as long tail economics. The low storage and distribution costs of VoD content make it economically viable to provide a large number of programmes that will only be viewed by comparatively small audiences. As more and more viewers explore niche programming, the collective interest could be as valuable to broadcasters as the more popular premium content like sport and new movies. Antony Carbonari of BT believes that the combination of premium and niche content will form the basis for a strong ipTV proposition,”Get the foundations in place, the big movies and major episodic series, and build the rest of it, the niche programming, around it.”