Monday, August 21, 2017

When Apple, Comcast, Facebook All are Key Content Distributors, Something Important Has Changed

One hallmark of market disruption caused by technology revolution, especially when accompanied by deregulation, is that new competitors enter older markets. Often, the most-disruptive new entrants are those from outside the traditional industry boundaries.

Consider that, in new discussions about releasing new movies to the streaming window faster than ever, primary distributors include Comcast and Apple. Such a new “premium movie download” product would allow viewers to watch streamed movie content just weeks after theatrical release.

Obviously, what is important about that pairing of names is that a major device manufacturer and one of the largest linear video distributors are linked. We are used to thinking of cable TV companies, TV and radio broadcasters as “content distributors.”

We are less used to device suppliers occupying that role, any less than we have been used to asset-light firms such as Netflix, Hulu or Amazon being “content distributors” as well.

That same sort of porous boundaries can be seen elsewhere in the communications business. Voice and messaging are supplied asset heavy and asset light, by facilities-based service providers and over-the-top app providers. Internet access sometimes is provided by traditional “access provider connections,” and at other times by Wi-Fi, a private network, in-building signal distribution platform.

In coming iterations, 4G and 5G will be provided simultaneously by “access” and private local area network assets, using Licensed Assisted Access and other methods of aggregating mobile network and fixed network spectrum assets.

The main point is that markets undergoing technology and other disruption often see the emergence of new competitors and rearranged industry structures. So it is that Apple and Comcast both are key content distribution vehicles. Facebook has become an important content distributor as well.

Another hallmark of industries under disruption is that revenue shares and magnitude tend to shift.

That shortened release window for streaming almost inevitably will reduce revenue shares earned by theater owners and increase revenues earned by streaming distributors. The incentive for content owners is a way to boost lost revenues from the DVD release window, which has dwindled.


source: Moffett Nathanson

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