nScreenMedia OTT multiscreen media analysis

The emerging interdependence of Pay TV and OTT

The idea that online TV is waging war against the traditional television establishment is an appealing one, but increasingly outdated. Certainly, conventional television programmers are now fully engaged in expanding distribution beyond pay TV providers through online delivery. However, they are still relying on pay TV to make their OTT efforts a success. At the same time, online TV providers are finding that partnering with traditional TV distributors can be beneficial for both parties. Here are two recent examples of the trend.

Expand online AVOD with linear pay TV

ZoneTV partners with online video providers to help expand their audience to traditional pay TV viewers. The company constructs 13 linear-like channels around specific themes – like Brainiac, Hang-out, and inform – from the on-demand assets of partner content providers. It has already brought these free ad-supported TV (FAST) channels to Comcast’s X1 customers. Today, the company announced that Cox Contour TV and Contour Stream Player users could access those same channels through the company’s Zone-ify app.

The channels delivered by ZoneTV are distinctly different from traditional linear TV. Because ZoneTV brings content unbound by traditional television licensing rules, it can make improvements to the linear experience impossible to achieve with traditional TV channel providers. A human programmer creates the playlist for 12 of the channels. Viewers can watch a segment that interests them or skip it if it doesn’t. In the background, AI is learning the likes and dislikes of the viewer. Viewers can customize their experience by saying “Zone-ify” into the Contour remote, and the stories they are seeing become more closely matched to their interests.

The 13th channel – my-zone – is a personalized channel for each viewer programmed by the Zone-ify A.I. The AI picks the stories and topics across all channels that will be of most interest to each viewer.

Zone·ify is a win for operators like Cox because they do not pay a license fee for the content, as they do for traditional TV. As well, operators participate in a share of the ad revenue generated by the service. Zone·tv’s content partners can generate extra ad revenue by reaching an audience still heavily vested in the traditional TV ecosystem and unlikely to watch the content anywhere else.

Disney+ on SkyQ set-top boxes

Disney is borrowing from Netflix’s playbook. It has struck a deal with Comcast-owned Sky in the UK to put the Disney+ app on the satellite operator’s SkyQ set-top boxes and the internet-based Now TV streaming media player. As part of the multi-year deal, Sky also gets 20th Century movies in the first pay window. Disney struck a similar deal with Canal Plus in France in December.

The deal with Sky is a smart move by Disney. Sky is the largest pay TV operator in the UK, with over 10 million customers between its satellite and Now TV services. Disney will no doubt launch a massive ad campaign for the March 24th launch. The barriers to signing up will be the lowest among Sky customers, who will find the app on their TV device and be able to subscribe through their TV provider.

The deal is a smart move for Sky. No other pay TV operator so far has announced it will have the service available at launch. As well, the integration of Disney+ reinforces the benefit of subscribing to the Sky.

There are many reasons why SVOD and AVOD providers should consider working with pay TV operators to expand their distribution. nScreenMedia will be exploring them in a forthcoming free white paper entitled D2C is Not Enough: How pay TV can help drive SVOD/AVOD success. To be among the first to get a copy of the white paper, send an email to info@nscreenmedia.com with “I want D2C is not enough” in the title.

Why it matters

The idea that online TV’s gain is pay TV’s loss is becoming increasingly outdated.

There are good reasons for pay TV and online TV providers to work together. Both can benefit from the partnership.

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