Wednesday, September 5, 2007

Peacock Flies to Amazon: DRM and Premium Pricing Woo NBC's Video Content

Sometimes it seems as if Apple can't win when it comes to playing the media game. After having been roundly criticized by some for having too much control over pricing via its iPod-compatible DRM content packaging and moving towards a more open model for content access Apple let the NBC television network take a walk when it wanted both higher pricing and tighter DRM controls. Ars Technica reports that NBC has opted to go instead with Amazon's Unbox video ecommerce service to package its content for online, home entertainment and mobile distribution.
This will allow NBC to sell entire season series of their television shows at hefty prices - about 30 percent off of a per-episode purchase - and in doing to retain some sense of traditional syndication revenues as they move to online distribtion of video content.

It's the syndication picture more than anything else that's at issue in this move, with NBC doubtless having concern that an easily pierced DRM scheme would enable audiences to download episodes that would enable them to bypass both cable networks and affiliates to build their own libraries of shows. The fact that Amazon Unbox also enables access to their video content via TiVos also underscores NBC's desire to solve syndication revenues once and for all.

But in opting for the Unbox approach NBC has doomed their ability to reach growing mobile audiences with the latest and most appealing devices available. Unbox is locked into Microsoft's largely orphaned "Plays for Sure" DRM technology, which supports a dwindling pool of mostly also-ran mobile devices. Given Unbox's ability to support only two licensable devices per purchaser the chaotic environment for delivery platforms is not likely to enable audiences to ensure a smooth transition for their libraries from one platform to another - or to be able to switch to whatever device the rest of the family is not using at the moment to catch their favorite reruns.

As with other types of premium content Amazon is very happy to work with content producers who have long-established business models that they don't want to let go of in the rush for online profits. Video is a good target for these types of services as the delivery mechanism enables on-demand fulfillment with few in-between hassles with one of the most popular and well-managed online ecommerce services. And although Plays for Sure wound up being a good idea that few content and technology producers decided to support at least Amazon has a somewhat open mind to making cross-platform content access a reality. As Microsoft moves to a new generation of its DRM capabilities it could be that this deal is as much about moving to Microsoft as it is about moving to Unbox.

But while Amazon benefits by appealing to established content marketers and becoming a potential cross-platform haven for content producers the timidity of publishers and producers to move to new models will likely hamper Amazon's efforts to become a leader in new premium business models in the long run. The status quo on syndication revenues seems to be just fine for most traditional video content producers just now as they try to adjust to a rapidly shifting revenue mix, but hiding out in the Unbox is likely to create about as many problems as if they had tried to move to the platforms that consumers desire most. Other video producers more willing to work with those platforms will be likely to open up broader audiences for content syndication over time and have more access to market demand on the platforms that consumers want most.

At the end of the day this deal is a battle of the brands, with traditional content syndicators having a hard time adapting their brands to platform providers eager to create their own locks over premium content distribution. What's missing from this mix is a willingness from content producers to make some compromises that will enable them to adapt truly platform-agnostic content packaging that will allow them to meet today's revenue goals as well as tomorrow's as consumers shift rapidly from one type of technology to another. If content producers don't manage this well the value of their content in syndication is bound to diminish rapidly. For now consider NBC's move a noisy vote for here-and-now revenues - with the future of syndication left to other executives after the current batch has parachuted elsewhere.
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