nScreenMedia OTT multiscreen media analysis

4 deals that show original video is the new OTT currency

Netflix versus iflix

Original content is the currency driving online video service adoption around the world. Here are four deals that illustrate the trend.

Netflix buys its first company

Netflix LogoNetflix purchased Millarworld, the comic book publisher responsible for titles such as Kick-Ass, Kingsman, and Reborn. Details of the deal have not been released, but it makes a lot of sense for the company to own the intellectual property rather than just license it.

Netflix has invested a lot in the Marvel world, owned by Disney. It struck a development deal with Disney in 2013 for four series: Daredevil, Jessica Jones, Iron Fist, and Luke Cage.  Though terms of the agreement were not revealed, Disney later said it would spend $200 million filming those series. So, it is clear this arrangement was very expensive.

Now all the Marvel shows have been delivered, Netflix must renegotiate with Disney for additional seasons of the existing shows. It could be a lot more efficient for Netflix to invest in developing Millarworld characters into movies and shows.

Hearst leads $133M investment in iflix

iflixIflix is Netflix’ Asian nemesis. With its mix of low cost and local content, it has been growing much faster than Netflix in Southeast Asia. It has also recently expanded into the Middle East and North Africa, bringing to 19 the number of countries it is currently available in. This is aggressive growth for such a young company (founded in 2014) and heavy external investment has helped drive the expansion. Rupert Murdoch and Sky have invested $135 million. Now Hearst Group has led another round of funding bringing in an addition $133 million.

A lot of the additional funding looks to be headed to bolster iflix’ local content strategy. The company’s first original show, a standup comedy program called Oi Jaga Mulut, is now the most popular show on the service. Talking about the funding round, Iflix CEO Mark Britt said:

“These new funds will allow us to further execute on our local content strategy and expand our technology and development teams so we can continue to rapidly evolve the iflix service to meet the unique challenges of emerging markets.”

Sport a key online focus, on all sides

Amazon seems to have decided that professional sports could be a key differentiator. In April, it agreed to pay $50 million to the NFL for online broadcast rights to 10 Thursday night football games in the 2017-2018 season. The games will be available to Prime members in every country it is available.

Last week, Amazon Prime Video agreed to £10 million ($13 million) a year for ATP Tennis in UK, beating out Sky satellite service. Sky was paying £8 million a year in a deal that ends in 2018.

Now it looks like the English Premier League wants a piece of the online action. EPL executive Chairman Richard Scudamore said he would welcome bids from companies like Amazon and Facebook:

“We would need some distribution criteria and to make sure it was readily available across platforms and everything else, but as long as it was widely available and distributed properly, we wouldn’t rule those [online providers] out.”

Facebook delays video interface waiting on originals

FacebookFacebook wouldn’t even think of launching its new video tab without a slate of originals. It has delayed the launch of the feature awaiting the delivery of a slate of short, inexpensive originals. It will add longer form, TV-style programs later. The current schedule shows launch of the video tab mid-August, but that could still slip.

Facebook hopes the new video content will help it bridge the gap to TV, and to a part of the $70 billion TV advertising market. The company has a good shot at the revenue. There is an increasing focus on attribution (knowing who watch an ad) in the TV industry and Facebook can deliver it. However, it needs that original content if it is to have a decent chance.

Why it matters

Online video providers are spending big money on original content.

They are buying everything from comic-books to professional sports to keep growing.

Expect to see many more deals in the coming months.

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