As alternative TV content distribution platforms and services keep increasing, it’s become more complex than ever to manage content restrictions and doing it ineffectively can prove to be very costly for an organization, according to Tom McDonough, manager of solution delivery at Vistex.
For content licensors, bad restriction management can result in reduced brand value and respect, loss of revenue and scheduling conflicts or gaps, he said Oct. 12 during the webinar “Play By The Rules — Manage Your Restrictions.” For licensees, ineffective restriction management can lead to increased audits, penalty payments when there is a breach of contract and reduced brand respect, he said.
The idea for the webinar came to McDonough during a trip to London, when he logged onto Netflix while traveling and couldn’t watch what he wanted to, instead receiving an error message because there were restrictions on content he could watch outside of the U.S., he said.
Netflix signs deals with producers that restrict content to certain geographic boundaries and rights to view content on its service in London and the U.S. are different, he noted.
Such rights restrictions “can be annoying for the consumer, but it’s of great importance for the contractual parties,” he pointed out. Explaining the reasons for rights restrictions, he said: “While today’s content is getting more accessible, owners have to enforce more restrictive access in order to maximize value and maintain brand integrity. There may be competing services vying for the same product or the provider may wish to maintain brand value by limiting the access.”
In the case of Netflix, which uses a non-linear content viewing model, he said: “The basis for a restriction begins with the contractual rights elements: the title, the territory, the exploitation right or the method of consumption, along with the date window when it is offered. Other factors include the mode of consumption, like a tablet or a PC or a phone, or language may be a factor. The contract may also be written to specify certain elements that are excluded from the deal, and that could be based on any of the rights combinations … such as Europe excluding France… .
The deal may also involve some type of a holdback where the company granting the rights agrees not to sell the product to any competing service at the same time. If you have exclusive rights, then you have premium control, so nobody else can show your title when you do. Now, these types of deals are generally the most valuable and the most expensive.”
Legal rules such as when social media avenues can be used may come into play, or whether or not clips can be used for marketing, he went on to say. There also may be a requirement for a licensee to check with a producer before offering content in certain areas or under certain conditions like TV marathons, he said.
There could also be restrictions on usage over how to exploit a title for linear usage, ranging from airing windows, the number of runs permitted per day or the acceptable number of repeats, he said. On the non-linear TV side, there could be restrictions on the number of downloads, the number of episodes available, and which platforms can show the title, he said, adding there may also be a specific percentage of titles shown that must be locally produced.
This is all happening as we are seeing an evolution in the way we consume content, he noted, pointing out we’re also “seeing the content itself shifting to shorter story lines being viewed [via] smaller devices.” Many pieces of video content now run only five minutes or less, he noted.
There is an inherent danger in these rights restrictions. After all, he said: “This becomes very frustrating for a consumer because as the industry begins to split off into more a la carte models, it gets harder to locate what you want to see, much less having to sign up for yet another service to get to it.”
But it’s a “difficult field to navigate from the licensees’ or the licensors’ perspective” because, in a “world of content is king, the last thing a Netflix or a Hulu wants is to be in breach of a contract due to a violation” of a content restriction agreement, he said.
Companies must find the most efficient way to manage all the restrictions, he noted, telling participants: “First, you want to consolidate your information. You want to consolidate your source systems so that you have a central place for all of the contractual rules. Now, many systems that are in place can be a mixed bag of localized Word documents and spreadsheets [and] the trouble with these [is] they’re extremely flexible. Now, they’re so flexible that everybody manages these documents or spreadsheets differently. Information can be spread across one staff or the next and the workbooks used to track loads of specific information tend to stay with the person who created it.”
Although spreadsheets “have a great place in the management of complex data, their usage must be regarded more like a tool rather than a source record,” he said.
A dedicated rights management system or a contract management system stores all the contractual terms for both the licensor and the licensee, he went on to note, adding companies must also “capture the rules.” That means they must make sure the system they’re using can “capture all the deal terms with the references that are universal,” he said, adding: “Systems don’t do much good if the people operating them are confused by the terminology, much less the various deal points that need to be considered. What is important here is to have your teams all working under the same structure, which will happen when they’re able to operate under one system, which can maintain consistent values to represent the restrictions that you’re tracking.”
Organizations must also “stay consistent, yet flexible” with their rights management systems, he said. Streamlining the deal-making process and saying no to one-off-type of contracts help, he pointed out, adding they must adapt to changing models because, he explained: “Business is always evolving and any system must be flexible enough to adapt with the times. Much of the industry is undergoing rapid change right now, as we all know, and in the distribution methods, so staying nimble from a systems perspective also keeps the business in step with the industry.”
Once an organization has a restriction management system in place, it must integrate that with an effective scheduling and reporting system, he went on to say, noting a good, accurate reporting system is needed that provides real time insight “anytime, anywhere” on content and helps an organization negotiate the best deals possible.
There are many benefits to following all these steps, including better insight leading to better deals, increased support being created for sales teams, help in capturing all windows of opportunity for content, happier customers who remain loyal and a better evaluation of pricing, he said, adding it also “speeds up your deal decisions” and “gives you the first-mover advantage.”