Last week’s profile in Variety of Turner’s Kevin Reilly had an interesting line about media distribution that struck a chord. Reilly is quoted as saying “Probably the biggest frustration of the age is that we’ve tied ourselves into a distribution partnership for the most part with partners who have not been focused on the consumer experience,” in reference to MVPDs.
I recently spent about two years as the global manager for the Disney account for a market research firm, and there too one sees the interesting disconnect of “traditional” media brands from their end consumers – something I hadn’t really recognized until it sort of slapped me in the face.
For as much as media giants such as “Disney” or “Warner Bros” are household names, the truth is that (putting aside theme parks and smallish direct-to-consumer specialty sales) they have been totally dependent on third-party intermediaries to deliver their product to consumers.
TV content: whether on their owned networks or another network, it relies on an MVPD to distribute it via pay TV, or a broadcast affiliate to send it out over-the-air. Through rental services, SVOD services, or retail outlets for home video.
Movie content: distribution through movie theatre chains for first run. Through rental services, SVOD services, or retail outlets for home video.
Consumer products: almost all brand or character products are designed and manufactured by third party licensees, and sold through online or brick-and-mortar retailers.
Thus one begins to understand the great business opportunity that streaming and digital offers these giants – taking back control of their relationship with the end consumer, either directly or by using it as leverage to demand better performance from their partners.
The drawbacks of not owning your relationship
Imaging having your business tied to cable TV companies. Deservedly or not, they are among the most disliked and distrusted companies with which consumers have to deal. And they are responsible for delivering your content through networks or VOD to consumers, and the consumer relationship?
Movie chains are not so reviled but they too are no paragons of consumer value. Many people consider movies to be over-priced and most people understand that the cost of concessions are exorbitant. And don’t get me started on the up-charges for “assigned seats” and buying your tickets online. But that’s where consumers have to go to experience first-run films.
And Amazon, a bastion of home video and licensed sales, while being extremely focused to create good consumer experiences, is no bargain. To keep prices low, it drives deep discounting through wholesaler relationships, as well as other considerations that impact placement, display, promotion, and the like.
While the above covers far more ground than strictly TV or movie content, it does show that a move away from the traditional distribution channels could benefit media companies in a number of ways. By increasing their direct dealings with the consumer, it offers a way to control the experience – which is great as long as it’s done right! And, as is so important in today’s world, it would also give them first-party data from their interactions with consumers.
So whether it’s a stand-alone SVOD/OTT service, or the advent of day-and-date home distribution of theatricals, movement downstream to get closer to the consumers’ actual touch-points could pay big dividends (figuratively and literally).
David Tice is the principal of TiceVision LLC, a media research consultancy.
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