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How to Ease OTT Consumers Into Behind-the-Paywall Content

What are some possible pathways available to attract viewers to check out premium paid streaming content? Evan Shapiro, CEO, ESHAP, discusses this topic with Philippe Guelton, CRO, Chicken Soup for the Soul Entertainment, in this talk from Streaming Media Connect 2023.

Shapiro mentions that streamers such as Peacock allow viewers to access free content like NBC News, which gives them a chance also to investigate what’s behind their paywall for other options. “That to me feels like a really good gateway product to kind of ease the consumer in for something that they want and that they're fine watching ads in, and it is scalable, and then you ease them into the paywall later,” he says. He asks Guelton for his point of view on the topic.

Guelton emphasizes the newer trends towards bundling services – especially ones that are based on TV OEMs – as ideal gateways for introducing users to paid content. “I think TV OEMs are for consumers a new bundling mechanism,” he says. “If you buy whatever brand of TV, or it could even be a Roku TV now, you're going to find a built-in offering for free. It's like adding cable for free. And I think it empowers the consumers to then select what they want to pay for. So that is important for companies like us, because they are more likely to need our content. So that's the opportunity for independent programmers and streamers to have their content distributed but also promoted. I think you're going to see more and more of them producing original content.”

The Free Ad-Supported Television (FAST) platforms,” Shapiro says.

“Or Advertising-based Video on Demand (AVOD),” Guelton says. “Because Vizio, Samsung, they’re all in the AVOD business as well.”

“Don't you find that cost prohibitive?” Shapiro says. “I mean, you look at Roku's earnings call yesterday, and their revenue was flat quarter-on-quarter, but up 20% for the year, but their net income dropped like a stone almost entirely driven by content costs…”

“It is but look at the Subscription Video on Demand (SVOD) platforms and how much money they’re losing,” Guelton says. “The cost of content is problematic for everyone in the ecosystem, and I think you’ve got to be nimble.”

“Do you see that shifting [with] the unbundling of this ecosystem and the kind of leaking out of a lot of the economic underpinning of it?” Shapiro says. “Do you see the cost per hour of content reversing itself? Because it's really been astronomically ballooning, I think it's up…maybe close to 1500 or 2000% since House of Cards. Do you see now that things are reshaping themselves, the cost of hour per content going the other way? And you're kind of uniquely situated to have an opinion on this.”

“Our cost of content is so low compared to the other big [streamers],” Guelton says.

Shapiro says, “Think about it as ecosystem-wide, what you're selling to other third parties, because you make high-end premium stuff that you do sell to Netflix and some of the other premium services…”

“Yes, we sell to Disney+, we sell to Amazon Prime, that’s one of the things we do,” Guelton says.

“Do you see the economics changing on scripted and long-form content?” Shapiro says.

“They're cutting content,” Guelton says. “There's no question that they're cutting back. They're shutting down series and they're becoming…I wouldn't call it nimble, but they're definitely spending less billions of dollars in content.”

“And is that money coming out of the ecosystem or is it redirecting into things like sports rights?” Shapiro says.

“Sports rights prices keep increasing, right?” Guelton says. “That's something that's global, and that is driving a lot of marketing efforts from those platforms. So there's no question about it, but I do think that it opens up an opportunity for TV OEMs and the homegrown platforms to become more competitive and offer maybe not the same [type of] high-value original series, but content that matters maybe more to consumers.”

Learn more about OTT service bundlings and the business of other streaming service offerings at Streaming Media East 2023.

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