During the session “Monetising Content in the Digital Age” at the Cable Congress, we witnessed an interesting exchange of words between Parm Sandhu, CEO of Unitymedia and Rich Ross, president of Disney Channels worldwide. As it happens, their respective companies have not reached agreement for the distribution of Disney content on one of Germany’s largest cable operators.
“The cable industry has made enormous investments in the networks,” according to Sandhu. “Half of all digital customers take pay-tv. So we should leave arguing about MGs [minimum guarantees] way behind us.” This is of course not the view of Disney, who seems to be one of the few studios still insisting on such guarantees before they release any content to any distributor.
The studio’s reasoning is much the same as the operator’s – they have made huge investments in the products and must weigh which platform will give the best return on investment. And of all content, the Disney brand carries a very high value.
But the rules of the games are now changing and if consumers can’t get their hands on content they want, they will find ways to do it. With broadband connections in a majority of households, people will find the content – if it is not legally possible, they know a way around it. And the studios, Disney in particular, know all about it.
The best way to attack piracy is not by trying to stop it via legal means, but rather by making content easily and affordably available. The music industry learned this lesson the hard way and is still trying to recover from the serious blows it was dealt with. Somehow the vision is blurred or kept in tunnel vision of strict release windows. But there is a world out there with consumers who don’t care about MGs or windows – they just want to be enjoyed.
The situation in Germany reminds me of an example in the not so distant past, when Disney and Sony set up a premium movie channel in The Netherlands called CineNova as an alternative to (then) Canal+. Cable operators were convinced to buy the channel and had to pay MGs, which increased over a three-year period. As it happened, the operators were not able to recoup the monies they paid, so they did not renew the distribution contracts after the three year period ran out.
CineNova folded – and as a channel probably made money because of these payments. But both parties left the market with a sour taste in their mouth – a typical case of a battle won, but a lost war. And a perfect example of a lost-lost scenario.