By Jim Delli Santi, VP Marketing, and Pranav Joshi, Director, Strategic Data Solutions, Spherex –
As global OTT revenue doubles over the next five years, (now estimated by Digital TV Research to exceed $129 billion by 2023), the M&E industry continues its inevitable march toward digital expansion, over a global supply chain that is becoming more fragile by the day. The explosion of original film and TV content across increasing channels, license types, windows, devices and formats is pressuring studios and intermediaries to find new ways to manage titles through an increasingly more complex digital supply chain.
At Spherex, we are seeing that finger-tip access to store-level visibility is paying real dividends to both film and television content providers — helping them generate measurable value, increase operating efficiency and recover lost revenue.
A major studio customer with digital distribution across 18 retailers — including 10-plus set-top boxes — has experienced significant benefits using our platform to manage its top titles. Compliance verifications that were taking weeks are now taking days. Post implementation, our customer experienced a 17 percent increase in titles monitored across its global stores compared to the same interval 12 months earlier. This increase in monitoring efficiency also resulted in 10 percent to 20 percent more compliance errors discovered, verified and corrected. These improvements reflect our customer’s ability to expand monitoring coverage of its titles, while at the same time improving the quality of titles already in stores across a combination of OTT and MVPD channels.
The cost of being late
A platform that provides store-level visibility also has the structured data needed to measure and compare compliance across stores and territories. It’s not uncommon for our customers to discover that their top titles are late to market on average between five and seven days depending on the store and territory, representing a large lost revenue opportunity globally.
To put this lost revenue into perspective, we combined DEG: The Digital Entertainment Group’s quarterly U.S. consumer spending report and SNL Kagan’s U.S. Availability Report (of “premium” content) to estimate the lost digital revenue for each day a top title is unavailable to consumers across global OTT channels. We conservatively scaled back DEG’s total digital U.S. consumer spending of $17.5 billion in 2018 with the 80:20 rule for premium titles.
To estimate the number of available premium digital titles in the US in 2018, we increased Kagan’s 2016 estimate of “premium content” U.S. titles available by 10 percent to 30 percent to arrive at a range of available 2018 premium U.S. digital titles (2,000 to 2,300 titles). Applying a factor of two on U.S. spending to estimate global spending on U.S. titles, we arrived at a global consumer spending range of between $50,000 to $58,000 per premium U.S. title, for each day it is available across a global network of digital stores.
To a major studio, this means that for every premium title delivered on average five days late (from its commercial availability date), the potential lost revenue ranges from $250,000 to $291,000 per title globally. If 10 to 15 premium titles are late on average five to seven days, the lost digital revenue ranges from $2.5 million to $6.1 million globally. Compounding this lost revenue is the number of marketing dollars wasted promoting titles in digital stores where they are not yet available.
In the TV industry, in which next day episodic compliance or on-demand EPG monitoring represents a killer combination of digital compliance requirements and business rules, we conducted a holiday season audit of one of the largest providers of global entertainment, news and information content. Using a mix of carefully selected daily and weekly titles across seven networks and fifteen platforms, we found only 30 percent compliance across hundreds of episodes from tens of thousands of compliance monitoring events.
A monitoring sample of this size gave our customer a bird’s eye view of its programming. It discovered that improving content availability started with upgrading its planners to daily changes and communications. Insufficient windows were planned for encoding and handshakes between stakeholders across content types, with no flexibility built-in to adjust schedules. Benchmarks did not exist to measure the gaps between hops along the supply chain.
Platform-level visibility let it for the first time test changes to its supply chain and measure the effects on title availability, providing a level of control not yet experienced in its supply chain operations.
At Spherex, our early data suggests the enterprise potential of having global store-level visibility can be expressed in recovering millions of dollars annually in lost revenue, driven in part by the improved operating efficiencies realized and control afforded by measurable compliance KPIs. We believe this data green lights an exciting new wave of digital services that will create significant value in the global digital M&E industry.
Our team is thrilled at the possibility of unlocking this value for our customers.