Monday, January 4, 2021, 12:29 PM ET|Posted by Will Richmond
While lots of attention in 2020 focused on direct-to-consumer (DTC) streaming services, deals announced this first business day of 2021 are a reminder how important third-party distribution remains for premium content. The names and roles of some of these new distributors are different than in the past, but they all underscore how even in a DTC world, third-party partnerships are critical to success.
For example, Discovery highlighted the growing importance of device makers as distribution partners for its DTC discovery+ service which is now live, announcing deals today with Amazon (Fire TV), Apple (iOS devices and Apple TV), Google (Android, Chromecast, Android TV), Microsoft (Xbox), Roku and Samsung (smart TVs).
As traditional set-top boxes give way to OTT devices as the primary gateway for accessing video services, partnerships with these device makers are becoming more critical. Last year the market power of Roku and Amazon, for example, was on display in high-profile stalemates, since resolved, with Peacock and HBO Max.
Discovery also announced a multi-platform deal with Vodafone, an existing partner, in 12 European countries covering 100 million homes. Like Discovery’s previously announced deals with Verizon and Sky, Vodafone will put discovery+ in front of its subscribers for a varying promotional periods. Vodafone is a traditional TV, broadband and mobile services provider. Premium OTT services like discovery+ help it acquire and retain new subscribers.
Meanwhile, ViacomCBS announced an agreement to distribute 14 of its cable TV networks on Hulu + Live TV, a virtual MVPD with 4.1 million subscribers. Virtual MVPDs deliver their services completely over broadband, but their fundamental business model of aggregating linear TV networks and on-demand programming is comparable to traditional pay-TV providers.
vMVPDs now have over 11 million subscribers and so for premium content / TV networks like ViacomCBS they too have become important distribution partners. Even as ViacomCBS gears up for the launch of its DTC Paramount+ OTT service (building on the success of CBS All Access), vMVPD deals with Hulu + Live TV help sustain its linear TV business.
In today’s deals we can see the important, though changing nature of third-party distributors. Device-makers, broadband/mobile networks and vMVPDs are among those joining traditional pay-TV providers as critical pathways for premium content / TV networks to get in front of target audiences. The DTC business model has clear benefits such as customer ownership and data gathering, but third-party distributors will continue to play a pivotal role.