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INTX: Mediamorph Projects Growth for Programmatic Content; NCTA Criticizes FCC

The “explosive growth” seen in programmatic advertising last year will be paired this year with growth in programmatic content, with studios selling, merchandising and pricing their content to video service providers (VSPs) in the same adaptive manner (using algorithms and software), Mediamorph CEO Rob Gardos predicted May 16 during the Internet & Television Expo (INTX) in Boston.

VSPs in turn will use similar algorithms and software to “leverage” those offers and promote them to end consumers, according to a white paper released by the data management services company. That programmatic content will enable “far greater scale and monetization,” he said in the white paper: “The Future of Digital Home Entertainment Content Sales is Programmatic and Adaptive — and It Will Be Huge.”

Fifty-nine percent of all U.S. digital display advertising ($15.43 billion) was sold programmatically in 2015 and that will grow to almost 70% of U.S. display ads (more than $18 billion) this year, Gardos said, citing eMarketer data.

“Our customers are telling us the time is now to improve their supply chain technologies, tools, and analytics,” he said. Therefore, Mediamorph has invested in software solutions that leverage its global reach to make that happen, he added.

The digital home video market is expected to surpass box office revenue in 2017, and by 2019 will generate $16.5 billion in the U.S. and $30 billion globally, he said, pointing to PricewaterhouseCoopers (PwC) data. Digital home video growth has been accompanied by a supply chain that is “complex, highly fragmented, and managed in isolation with highly manual processes — holding back the full potential of digital content revenue generation,” Gardos said. “Creating a streamlined, programmatic, and adaptive supply chain will automate merchandising, pricing, and selling, driving more revenue for content creators, providers, and distributors.”

As display ad sales did, the digital content supply chain will adopt similar software tools to maximize revenue, he said. “[That] evolution has begun, and it is being driven by the largest players in the industry,” Gardos said.

Larger players, including Netflix, have already “embraced” programmatic concepts for many years, he added, predicting “widespread adoption will drive further disruption and growth in the industry.” Those content providers and VSPs who recognize and are quick to embrace the shift to programmatic content will be the winners, he projected.

But, he stressed, there are still three key areas that need to come together more aggressively to allow the shift to programmatic content. First, the industry needs to truly automate the video supply chain, from content creator to VSP to consumer, he said. That includes a “rigorous, full feedback loop where assets, enriched metadata, relational data, as well as pertinent information on rights and pricing flows freely between all stakeholders,” he said. Second, he said, “dramatically improved merchandising systems” for content creators and VSPs will present consumers with more targeted and flexible offerings, and allow for a “more robust revenue and profit engine.” Lastly, “Dynamic Data Exchange” will drive the supply chain efficiencies and intelligence from start to revenue, he said. “The more systems can communicate and exchange information in real-time, the better the opportunity to produce an effective overall supply chain, as well as underlying data for better decision-making,” Gardos said.

Too Much Regulation

Also at INTX May 16, industry executives criticized what they saw as over-regulation by FCC Chairman Tom Wheeler.

We are seeing “revolutionary change” in the industry now that includes a “market restructuring” resulting from the mergers of several media industry giants, “disruptive” new players, and apps that “turn every device imaginable into a TV screen,” said Michael Powell, president and CEO of the National Cable and Telecommunications Association (NCTA), producer of INTX.

This period is also “remarkable for one other reason,” Powell said, turning his attention to U.S. government regulations including the FCC’s set-top box and broadband Customer Proprietary Network Information (CPNI) proposals.

“We find ourselves the target of a relentless regulatory assault” by the FCC, he said. The FCC’s “governing mantra” has been “competition, competition, competition,” but that has only come to mean “regulation, regulation, regulation,” Powell said. The new regulations have brought about “thundering, tectonic shifts that have crumbled decades of settled law and policy,” he said. What is especially “distressing” is that a lot of the regulations have been put in place “without provocation,” he said. There has often been “no compelling evidence of harm to consumers or to competitors,” he said.

Later, Comcast CEO Brian Roberts added: “We don’t feel the government needs to get into the box business.” He questioned the logic of the government “regulating something that heretofore is evolving so fast.” This would be “the worst time to start regulating” because of the increased competition Comcast and other media companies are facing, he said, citing AT&T buying DirecTV and the strengths of companies including Apple, Dish Network, Google and Verizon.