Thursday, November 08, 2012

Content Is King -- Especially In the Cloud

[NOTE -- this is a post from early this year; I have updated it and am republishing for those who didn't see it the first time.]

The era of long-predicted video ubiquity is now upon us. It has been inevitable. Now here it is, thanks in large part to the power of the cloud. This new reality is welcome to both consumers and to premium video content owners and creators (including the major studios).

For consumers, cloud-based access to premium motion picture and television content gives tremendous freedom and flexibility to buy once, consume anywhere, anytime, on any device, and even seamlessly shift viewing from one device to another.

For content creators, the cloud opens up tremendous new power to reach those consumers -- anywhere, anytime, and on any device. This means that premium video content can touch - and touches - all of our  lives more relentlessly than ever before. And, this means that cloud delivery opens up unprecedented new ways for content owners to drive (and monetize!) significantly broader video consumption. While this may surprise some, content will be king like never before.

It is no wonder then that major premium content distribution outlets like Netflix and Apple already have been joined in the scrum by Amazon, Google, Wal-Mart (Vudu), Hulu, Comcast and a host of others large and small. Others, like Redbox, are waiting in the wings to pounce soon. The core strategies of these companies are founded on, or at least significantly influenced by, the need to be a force in video distribution. Much is at stake to "win" in the distribution game.

Due to competition from these behemoths to button up and market the deepest pool of scarce (unique) motion picture and television content in a never-ending quest for differentiation, major studios and other content owners and creators are starting to see the first real green (as in money) shoots sprouting up in this brave new cloud-enabled world. Just recently, most of these over-the-top (OTT) and "TV Everywhere" providers have ponied up big bucks to license necessary rights to distribute that premium video content. As just one example, several months ago, Netflix ponied up nearly $1 billion to stream shows from the CW Network. If the CW can command those kind of numbers, just think what real "premium" video content (like ESPN) can fetch! And, we are still only in the early innings of this online video game.

In this midst of this cloud distribution revolution, yes, there is significant disruption to existing business models. As examples, the major studios and cable operators have long relied upon established and cozy business terms which ultimately limited access to premium content to those consumers willing to shell out significant fees for programming packages. Cloud-based distribution challenges these established rules of the game and overall economics. Why? Because consumers are demanding it for all the reasons noted above.

That means there absolutely will be new winners and losers here. For one, "big" cable likely will lose its power over time as a principle source for premium video content - and likely will fall instead to the long-feared "dumb pipe" status (although fear not MSOs, more OTT distribution requires ever-fatter pipes and broadband margins are significantly higher!).  

But, no matter what, creators/owners of unique content ultimately will wear the crown of power, so long as that content strikes a chord with consumers.