Will the tech giants burst the value of content?

Will text giants burst the bubble of content value

Content is king! So much so that the tech giants (a.k.a FAANG – Facebook, Apple, Amazon, Netflix, Google) are allocating huge budgets to acquiring original content.  They want to get into the TV space.  What does this mean for the pay-TV industry? Is it simply supply and demand? Or will inflating content values reach bursting point?

Diversification of customers

The pay-TV industry is continually evolving to meet the changing needs of its consumers.  With advancements in technology over recent years, we’ve seen viewing habits move from linear TV to OTT.  In fact, Pew Research’s recent study, found that 61% of young adults (18-29) use streaming services as their primary way to watch TV.  At the same time, we have an aging population.  By 2050 Deloitte reports that 22% of the population will be over 65 – up from 10% today.  Is there one provider that can meet these diverse needs? Or will we always be hopping between different providers depending on what we want to watch?

Getting serious about content

Certainly, the tech giants have the resources, budgets and ambition to take on this challenge.  Over the last year or so the FAANGs have been making their TV intentions clear.

Apple has hired 2 key Sony TV executives, with plans to spend US$1billion on TV shows.  Yet, this number is small compared to Netflix (US$6bn) and Amazon (USD$4.5bn).

Google also has plans for creating bigger budget shows for its subscription YouTube Red channel.  And then there’s Facebook.  They’re reported to be willing to spend millions an episode on new programming.

Now here’s the question.  Why are they serious about content? After all, these companies already have a revenue figure equivalent to the GDP of a small country.  Are they merely exploiting content to drive their core revenue generators – for instance, ad-sales?

Protecting the investment

No doubt, the initial interest from such companies will drive up the value of the content.  But whether it’s the tech giants, studios, sports rights holders or traditional pay-TV operators; they all need to protect their investment. If the content is freely available elsewhere, consumers will vote with their feet: reduced number of eyeballs for advertising and fewer subscriptions.

This means securing the content.  If the tech giants are really serious about content, they will also need to invest in technology and services to protect that content from online pirates.  For instance, online piracy detection services enable you to identify if your valuable content has been leaked, and provide business intelligence to help your content acquisition and release strategies.  Combining these services with forensic watermarking means you can trace the source of the leak –  be it within your distribution network or to an individual consumer – allowing you to implement counter measures.

Unfortunately, failure to securely deliver the content will result in the bubble bursting. Content will lose its value, impacting  the whole media ecosystem.  I can’t imagine what the industry would look like then.

Bengt Jonsson | SVP Sales