There are fewer waters more shark-infested than those occupied by programmers and content distributors during licensing negotiations. By all accounts, the deal-making process is brutal, with each side trying to extract as much advantage out of an agreement as possible.
Programmers have most of the leverage today, as evidenced by rapidly rising licensing fees. But service providers do have some levers of their own to pull, including the ability to offer perks like a better position in the channel lineup, or network promotion in the TV program guide.
And increasingly, pay-TV operators have something even more valuable to dangle in front of content owners: viewership data.
In a session titled "OTT: Buy, Build, Partner or Kill?" at Light Reading's recent Big Communications Event, panelists agreed on the value of user data as currency in content negotiations, particularly when it comes to haggling over new streaming video rights. Ric Brovedani, senior director for program management in the Arris Group Inc. (Nasdaq: ARRS) Global Services business, put the notion in context by recounting a situation where a partner agreed to provide content rights for a network DVR solution to a service provider, but only in exchange for information on subscriber viewing habits up to one week following the initial broadcast of licensed programming.
"OTT is, I think, going to be along those lines," noted Brovedani, "in terms of trade-offs between service provider capabilities [i.e. what content and features are offered] and what the content owners want to have."
Mitchell Weinraub, director of product development for Dish Network LLC (Nasdaq: DISH)'s AirTV business, added that data doesn't even have to be specific to individual viewers, the sharing of which may run afoul of privacy requirements. Data that paints a picture of broad audience patterns is also useful.
"There is an amazing amount of data that's now available, even in aggregated formats," said Weinraub, "and it has a lot of value."
This isn't the first time that industry officials have talked about using data to gain the upper hand in licensing deals. Way back in 2013, Verizon Communications Inc. (NYSE: VZ) proposed the idea to small and midsized media companies of tying programming fees to set-top viewership data, although it's not clear if that idea ever went anywhere. (See Cable Embraces Big Data.)
More recently, pay-TV providers have used viewing data to help them make judgments about whether certain networks are worth the cost of carriage. Shenandoah Telecommunications Co. (Nasdaq: SHEN) (aka Shentel) analyzed set-top data, for example, to determine whether or not to keep AMC in its channel line-up. When the cost/benefit analysis didn't line up, the service provider dropped the network. (See TV Retrans Wars Impact Broadband Too.)
The surge in OTT services only confers more value on viewership data. As Steve Sklar, vice president of OTT products and content strategy at CenturyLink Inc. (NYSE: CTL) put it during the BCE panel, no one can be in the OTT business without making use of dynamic advertising, and dynamic advertising is entirely fueled by information about audience behavior. Those data sets are something pay-TV operators can provide, and something content owners desperately want.
For Sklar's part, he suggests data has a direct impact on where CenturyLink is headed.
"Our video business is relatively small, and we have an opportunity with OTT to go wide with video across our entire footprint in a way that is not easy to do in the managed MVPD world," said Sklar. "You also have an opportunity with OTT to go beyond your footprint."
Negotiating the necessary streaming rights for such an OTT service won't be easy, but offering some type of data exchange could certainly help grease the skids.
— Mari Silbey, Senior Editor, Cable/Video, Light Reading