Brazilian OTT business will be a big success, page-44

Hi Thermo
As the OTT industry has evolved the big 7 studios have been open to looking at other ways in which to get content to market in a safe accountable way. For a long time the Vubiquity model where they acted as the gate keeper and middlemen to the big studio content, and worked with the studios to create a commercial process country by country, region by region, format by format, even down to movie title by title, was a glorious exercise in micro-management that maximised the return to Vubiquity and the studios.

Piracy was always their bug bear and they could not beat it. Regional content was often owned by the regional broadcasters who created it but they were able to licence such content into Vubuiqity for global spread.

Vubiquity as we speak is subject to buyout and possible IPO. This is interesting for how do the new owners extract more shareholder returns out of the company. Meanwhile the big 7 studios themselves have been investigating not just being a content creator but toying with the idea of being broadcasters themself. Disney has shown their intention by starting to not renew content licencing renewals into some markets and own Hulu who are an established OTT broadcaster so they now potentially own their business value chain from studio to end consumer via leveraging their acquired assets towards that purpose.

Content is king and if the studios step on the content hose then broadcasters will hurt. The question is will the studios become broadcasters like Disney appear looking to want to do, but various anti-competitive and cartel legislation needs to be complied with, which might be antagonistic to such a move.

Meanwhile some regional content companies have sprung up to source and aggregate big studio as well as local regional content into catalogues for supply into cable, free to air, OTT or other forms of distribution. They appear to work to studio dictates, obtain the rights and then deal with the operator broadcasters, sort of like what Vubiquity once did, but with differences.

The trick becomes how the risks are shared and who pays for the minimum guarantees, insurance, meta data services like censorship, subtitling etc, and advertising contracts. If this SlimPack company has or will do the heavy lifting then the upfront cost and time to market with this approach can be less that a Vubiquity type licencing model.

The tradeoff is typically the cost per title paid and the revenue share model entered into from the end user subscriber base. Another piece of the revenue pie is now to be paid so the commercial skill is getting the cost equation right so that the service remains profitable for TV2U and any operator involved.

I foresee that something like this is being attempted. The company appears recently incorporated so I am wondering whether its a special purpose JV vehicle for this LATAM venture starting with Brazil. The owner will have the industry contacts/relationships and credibility to secure studio content deals that TV2U need but how long that will take and on what commercial footing I am none the wiser.

I could anticipate that TV2U will still need to satisfy some form of technical due diligence via a Technical Questionairre(TQ) to satisfy content governance requirements of studios. Some capital via con note might still need to be created if a financial liquidity test is demanded for proving the ability to pay content fees as they arise in case the actual end operator fails commercially.

It is conjecture but that is my interpreted reading of what is likely to be happening from reading between the lines of the announcement. It may prove to be something else but this type of model described here was recently entered into by Airtel in India for content supply services from a bunch of content providers such as Eros Now!!, Amazon Prime, Hotstar, and SonyLIV .

Content is now more fragmented and so several content deals might get done to stitch a catalogue together. Slimpack appear to be one of these type of hybrid aggregated content supply companies.

Telcos such as Airtel are now getting into the act as they have the network and the massive mobile phone wielding customer base, and so are deploying streaming apps which require the content mentioned they have gone out and got. My company is following this exact strategy in the content and services we provide as telcos have worked out that they need content to stop customer churn.

Telcos are the new threat to traditional dedicated OTT broadcasters such as TV2U as they have cut the cable and now going OTT themself within their own business. All IMO and DYOR.