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Fighting Over That Crown

16 Nov, 2015 By: Stephanie Prange

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By now everyone in our industry has heard the saying “content is king” with regard to digital distribution. But considering the powerful rise of over-the-top distribution companies such as Netflix, I’ve begun to wonder if that saying is really true.

Certainly the fact that Netflix, Amazon and others have moved to distribute exclusive content is an argument in the favor of giving the crown to content. I remember when Netflix touted its famous recommendation engine as what made it unique. (As an aside, my mom once got frustrated that after watching one depressing drama, Netflix kept recommending the same depressing stuff. “I like to laugh, too!” she said.) Now, I don’t hear much about that engine as the driving force for Netflix’s success. Netflix is too busy pushing its own original content, such as “Orange Is the New Black,” “House of Cards” and theatrical releases such as Beasts of No Nation. Amazon, too, has gotten in on the originals game with such acclaimed series as “Transparent.” Score a point for content being king.

On the other hand, as evidence in favor of giving the crown to distribution is the growing dominance of OTT channels, which are helping consumers cut the cord on the studios’ cable revenue stream. Cable subs are down, and the research evidence of millennials’ cord-cutting is growing. Home entertainment sellthrough and rental, as well as theatrical revenue, are also under threat as OTT services help consumers bypass traditional revenue streams. Time Warner’s Jeff Bewkes in that company’s most recent financial call noted that his studio may have to revisit its content deals with SVOD services such as Netflix and widen those windows, while Disney’s Bob Iger said his studio could make “different decisions” with regard to OTT services as millennials cut the cord. Heck, even World Wrestling Entertainment Network’s OTT service is taking off after an alarmingly shaky start. Score one for distribution.

So which is king? Content or distribution. I think the kingdom is up for grabs.
 

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