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How Real-Time Data is Overhauling the OTT Space

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Now that entertainment is an Internet-delivered product, most people are consuming that entertainment with a logged-in identity, as opposed to the longtime model of mass media, in which individual consumers were anonymous.

Providers now have a longitudinal record of consumption from those login identities. This generates powerful data about content engagement, offering a far more accurate and detailed view of the actual value of that content.

Content strategies are now data-driven rather than based on industry rubric, relationships or gut feel. Projections, negotiations and acquisitions all become simpler and more productive as a result. 

In fact, the role of data in the OTT space is being defined in real time. Information has enabled performance-based pricing models that establish risk sharing between exhibitor and seller. Data can identify content that would help a service attract new subscriptions or retain existing subscribers, based on insights into users’ viewing habits.

The trend in this new age of data-driven content acquisition is that most  VOD/FAST platforms no longer pay studios and producers a single flat fee for content, but instead sign performance deals with or without a Minimum Guarantee. This means that the Seller will know the minimum they will receive from the transaction, with an upside.  based on metrics such as minutes streamed or number of people who watched or percentage share of ad revenue. 

This pricing model moves the conversation away from Buyer and Seller haggling as to the value of the content — upfront before the deal is done — to one where the audience decides. Good content will pull a bigger audience and hence generate more value. And that value flows back to the makers of the content.

Content succeeds or fails based on its own merits, rather than the whims or biased projections of powerful industry insiders. The perceived value of content is no longer determined solely by the power of a buyer vs the seller, but instead – rightfully – by the demand of consumers. At the end of the day, the inescapable reality is that it does not matter what buyers and sellers believe the right price for content should be, the only opinion that matters is that of the audience. If they don't want to watch it, then it does not matter what the production budget was, or who is in it.

Like many industries before it, this industry is pivoting to understand the value of this data and having direct relationships with the end consumer. 

In an ideal world this would span from an individual watching a film in theatre to watching at home to give a complete picture of that person’s consumption preferences. 

In a world where tentpole films have promotion budgets in the same range to their production budgets, having the data to move the needle just a few % in terms of converting promotional spend to revenue will have a major impact on the bottom line. 

For smaller budget films, the ability to more precisely target based on a historical preference will mean that the slimmer A&P budgets of Indie films are much more effective and will highlight who is likely to watch the film in theatre and who prefers to watch it at home and can be offered the appropriate option. 

For that reason, expect the industry to further embrace data as more normative databases are created and better understood. In other spaces, such as CPG and pharma, we’ve already witnessed the value of anonymized databases and the benefits they’ve created for those industries on the whole. We hope the same becomes true for the entertainment industry, sooner rather than later.

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