Having rapidly grown from startup to dominant pay-TV operator, YouTube TV now appears to be looking to level up again by incorporating partners’ streaming programming directly into its user interface.
This drive to “ingest” content, as opposed to merely “integrating” third-party services as many operators already do, has become a point of contention in a carriage standoff with NBCUniversal. In the model preferred by YouTube, even streaming exclusives (like Premier League soccer on Peacock, for example) would be accessible directly via YouTube TV as opposed to having to leave the app. The result for the tech giant is better engagement and improved advertising and subscriber metrics, though media companies trying to goose direct-to-subscriptions would have a tougher time attracting and keeping subscribers.
The current NBCU deal, as well as one with TelevisaUnivision, are both set to expire Tuesday night at midnight ET.
NBCU last week claimed that YouTube TV “has refused the best rates and terms in the market, demanding preferential treatment and seeking an unfair advantage over competitors.” YouTube TV countered that NBCU is “asking us to pay more than what they charge consumers for the same content on Peacock.” Asked directly about the issue of ingesting content, a spokesperson said, “We’re all about user choice and finding simpler ways for consumers to access the content they love. That flexibility is a win-win: it’s better for consumers, and it presents more business opportunities for us and our partners.”
The NBCU and TelevisaUnivision disputes followed battles earlier this year pitting Paramount Global and Fox Corp. against YouTube TV, which has hit 10 million subscribers since its 2017 launch. Disney and ESPN, meanwhile, are just weeks away from a fall renewal deadline, with arguably even more at stake given the recent launch of ESPN’s comprehensive direct-to-consumer service.
“Legacy media companies have realized just how hard direct-to-consumer streaming is compared to the historic stickiness (friction) of physical hardware in a subscriber’s home tied to large bundles of programming,” wrote Lightshed Partners analyst Rich Greenfield in a recent blog post. With so much premium programming, even sports, now available outside of the large and onerous MVPD packages and subscriptions able to be canceled at a touch of a button, he added, “unsurprisingly, we have seen all the legacy media streaming platforms shift back toward wholesaling their streaming services” via third parties.
A reliance on Amazon Channels, which enables streaming services to gain scale based on the tech giant’s massive flywheel but denies them full ownership of those subscribers, was “the first shoe to fall,” Greenfield wrote.
NBCU and Amazon in August announced a comprehensive distribution deal including Peacock that likely got YouTube TV’s attention, multiple industry sources told Deadline.
Warner Bros. Discovery CEO David Zaslav, while he has long been a proponent of Amazon Channels as a driver of subscriptions, recently lamented the cluttered and disjointed state of the streaming marketplace. There are “too many players in the market,” he said during a Goldman Sachs conference this month. “When viewers put on their TV, it’s a terrible consumer experience. In almost every market in the world, there’s just way too many choices. And you’re googling, ‘Where is it? How do I get from one to the other? How do I get into that platform?’”
YouTube TV’s quest to streamline that experience, as with so much else in the industry, could come down to simple economics. “It’s about what they’re willing to pay for that incremental content,” one senior exec at a rival distributor tells Deadline of the NBCU impasse.
Many of the statements from NBCU and TelevisaUnivision have pointed to YouTube’s ownership by Google. On a larger level, the tech giant’s Gemini AI platform has been mobilized as a way of siphoning off search traffic and keeping users on Google. Many TV industry observers, even people outside of companies negotiating with YouTube TV, have drawn that parallel and they worry that it will confer unfair advantages on a tech giant whose main business has nothing to do with media or Hollywood.
And yet, Greenfield points out, “The irony is that while legacy media wants to build direct customer relationships and control the data, they are not very good at leveraging data nor building tech, implying that allowing YouTube TV to ingest and market the content within its platform would actually drive engagement for legacy media’s content.”
Ingestion has come up in several recent negotiations, the pay-TV exec added, with programmers often citing Amazon Channels deals. “They have such scale and they do provide access to select data,” the exec said. “People are making us offers that if we can match the data they’re getting from other companies like Amazon, then we can ingest their programming directly into our experience.”
Asked at an Axios conference in New York this month about YouTube TV, ESPN chairman Jimmy Pitaro took an upbeat tone. He pointed to recent deals with DirecTV and Fubo for their streamlined sports-centric packages, saying they bode well for talks with YouTube. The desire of distributors to offer price-sensitive consumers in a cord-cutting environment a menu of more targeted TV packages has prompted epic carriage disputes between Disney and both Charter and DirecTV given Disney’s array of channels.
“Our mission is to serve the sports fan,” Pitaro said. “And so we want to be present across price points and across content offerings. So, this idea of a skinny bundle or sports/broadcast offering made sense to us on the right terms. And so if you’re asking me specifically about YouTube TV, our deal is coming up this fall, we’re in discussions with them now. We are certainly open to a sports package or a genre-specific sports offering on the right business terms.” (Left unmentioned was a major poaching lawsuit filed last spring after 20-year Disney and ESPN distribution veteran Justin Connolly defected to YouTube TV.)
While Pitaro did not address the issue of ingestion vs. integration, the senior pay-TV exec said it is likely that Disney “is trying to force Disney+ and Hulu and ESPN Unlimited to be integrated, rather than ingested.” Especially given the value of sports rights, some programmers could also bifurcate their rights. “If YouTube is fighting for ingestion rights, Disney is likely pushing back.”
So-called “leaking” of premium programming, including sports, from linear TV to subscription streaming has exacerbated tensions between distribution partners. “A lot of the controversy here has been caused by the shell game of moving content around,” a distribution source tells Deadline. “There are certain SVODs connected to companies we have deals with, like WBD or AMC, we see a lot of overlap between the linear stuff we pay them for and what pops up on Discovery+ and AMC+. Creating a more centralized path to find that programming is something we are intent on doing.”
Source link
