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Will OTT Consolidation Hamper Innovation?

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The theatrical-only release of the James Bond film No Time to Die came after about 18 months of uncertainty. Part of the uncertainty was whether theaters would open back up, as the 007 producer team had to keep pushing back the release date until a time—maybe now is as good a time as any?—when enough theaters were open to give the film a fighting chance of achieving Bond-worthy ticket sales.

Also uncertain was whether No Time to Die would truly be released only in theaters for a standard theatrical run before it made its way to a premium on-demand platform. When the Bond franchise was under the MGM Studios tentpole, before the Bond film’s release was delayed three times, it looked like a sure thing.

But a lot has changed in the premium content world, not the least of which was the purchase of MGM by Amazon, which happens to own one of the major online streaming platforms for premium content. If ever there was a day-and-date release tie-up that made financial sense, it was this one. Yet as of publication, No Time to Die will still be in its theatrical run, even as it's come to VOD services.

The past 18 months have seen no shortage of mergers and acquisitions. But it has me wondering if all this consolidation will lead toward innovation. My gut says no, and plenty of industry pundits agree. And yet, one thing we saw in the streaming space about 12 years ago was the coalescence around the videoconferencing codec H.264 and what that consolidation to a single-codec era meant for the industry’s overall growth.

One area where we might see innovation through consolidation is a standardized way of authenticating users of premium video-on-demand (VOD) services, which is sorely needed, even after the single sign-on (SSO) TV Everywhere craze about 6 years ago. There are a number of SSO options available, such as from Apple, Amazon, Facebook, Google, and Samsung, but none of them have been consistently adopted by a large group of VOD/OTT providers.

Another area where we may see innovation is in the ability for subscribers to view content they subscribed to in their home country while they’re traveling abroad. After all, if Amazon owns MGM, that should solve most of the geoblocking issues that have hampered progress.

Like I said, a number of industry observers disagree with me, at least on the surface, for a variety of reasons. An article in Vox/Recode by Rani Molla and Peter Kafka sums it up nicely: “The media landscape used to be straightforward: Content companies (studios) made stuff (TV shows and movies) and sold it to pay TV distributors, who sold it to consumers. Now things are up for grabs: Netflix buys stuff from the studios, but it’s making its own stuff, too, and it’s selling it directly to consumers. That’s one of the reasons older media companies are trying to compete by consolidating.”

An article in WIRED captures the whole frustration just in its headline and deck: "The Next Era of the Streaming Wars Looks an Awful Lot Like TV. This week, WarnerMedia and Discovery announced they are merging. Soon, streaming could be dominated by a Big Three. Sound familiar?" 

And finally, in an article in Observer, "The Streaming Wars Will End in Treaties. They Won’t Be Pretty," writer Brandon Katz says that "the entertainment industry is far from finished with its consolidated gentrification. As such, it's only fair to wonder if the streaming wars will be decided for us as the media industry continues to narrow. If so, which services will be among the winners and how will a concentrated core of powerful streamers impact legacy entertainment?"

Stay tuned as we enter 2022 to find out which lucky contestant on "Entertainment M&A" wins the prize of being swallowed whole by a media conglomerate!

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