Turner is looking to Amazon and MVPDs to help in the struggle to reach potential customers. However, the company should be mindful of their limitations and not lose their customer experience and customer usage data in the process.
Being found a major challenge for Turner OTT services
Being found remains one of the biggest challenges for SVOD services. It’s all too easy for a quality brand to get lost in the hundreds of options available to potential customers. Turner is facing this problem with Filmstruck, a curated movie experience, and Boomerang, a children’s video service. According to Turner EVP Jennifer Mirgorod, it became clear the services needed help in distribution:
“What we saw is you launch a business, you kind of dip your toe in the water and you realize pretty quickly that a partner would help.”
It is easy to see why. According to TiVo, the top three SVOD services are Netflix, Amazon Prime Video, and Hulu. 51%, 22%, and 13% of US adults say they use these services, but there is a huge drop off from there. The fourth most popular service is Showtime, and it is used by less than half as many people as Hulu. Below the top 13 services, just 1.8% say they use one or more of the hundred or so other services.
OTT and MVPDs can help
Turner first looked to Amazon Channels to help in distributing Filmstruck and Boomerang. Now Turner is looking to traditional MVPDs to help too. Says Ms. Mirgorod:
“So, we have a deal with Amazon Channels, and we have talked to some of the traditional MVPD distributors about distributing our direct-to-consumer products.”
The MVPD approach appears to be working for Netflix. The service became available to Comcast customers on X1 set-top box last year and was already available on some Dish Network set-top boxes. The pay TV integration helped Netflix continue to grow subscribers by more than 10% in the US between Q3 2016 and Q3 2017.
Given Turner’s historically strong ties with MVPDs, the company might consider an even deeper level of pay TV integration. HayU is an SVOD service bringing US reality TV stars like the Kardashians to UK audiences. The NBC-owned service signed a distribution deal with Virgin Cable that integrates the OTT service into to the TV XL cable package, alongside regular television channels. Subscribers to TV XL automatically get access to HayU. Virgin customers can also sign up for HayU separately.
Distribution partners have limitations
With all distribution deals, it is important to recognize a partner’s limitations. MVPDs are great partners when it comes to reaching the television screen, but are not helpful in reaching mobile devices. HayU handles this nicely with Virgin Media. Virgin Media TV XL subscribers can still use the standard HayU app for mobile devices. They simply download the app, sign-up and input their Virgin Media customer ID.
The same cannot be said for Amazon Prime Video. A subscriber to Filmstruck through Amazon can only access the service through the Amazon Prime Video app. And that is a shame because the Filmstruck app provides an exceptional user experience.
Control of user data is critical
There is another much more important problem when working with distribution partners: control of customer usage data. Data is a critical resource in today’s media economy and SVOD providers need unfettered access to it if their service is to prosper.
Unfortunately, that is not the case with Amazon Channels. An SVOD provider can only know what Amazon tells them about the performance of their service. And that may not be enough. CuriosityStream was an early adopter of Amazon’s Channels program. Peter North, the company’s Chief Operating Office, had this to say about Amazon’s willingness to part with that data:
“We would love to know what’s popular and what’s not popular with the same content on the Amazon Channels marketplace versus our own. But we often don’t get to make the comparison and learn from it.”
Why it matters
SVOD providers can benefit from working with distribution partners like Amazon and MVPDs to help reach more potential customers.
The approach appears to be working well for Netflix and HayU.
It is critical that SVOD providers not lose control of customer experience and usage data when adding new distribution channels.