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Innovations in the media industry. The Future of Content Distribution

The movie business starts with content. The script is written, the film is shot, produced, it's time to go out for commercial rental and show your creation to the audience, and here comes on the scene ... no, not your film, but distribution.
Вадим Бондарев

Vadim Bondarev, Commercial director of the Prologue company, an expert in the field of copyright accounting for media content and automation of media business companies.


The market is changing, but the distribution is not?


In recent years, the market has become more complex: there is more content, the content is becoming diverse. The video market itself has changed and continues to change: new trends have emerged, requests for UGC content are growing, animated videos are becoming in demand. And the distribution processes remain the same.


In the classic version, the picture passes sequentially through four distribution channels: showing in cinemas, selling CDs, showing on TV channels and Internet services such as OKKO, IVI, KION, etc.


And although 45% of total rental income comes from film distribution, not all films are successful in cinemas. According to Deloitte research, the type of content affects its distribution channel:


Multiple return of revenue on every dollar spent on marketing
Multiple return of revenue on every dollar spent on marketing

Unlike the majors, for independent studios and sales companies (sales-houses), the main platform for the sale of finished or not yet filmed films are the key film markets:

  • European Film Market (EFM)

  • Hong Kong International Film & TV Market (FILMART)

  • MIPTV

  • MIPCOM

  • Annecy International Animation Film Market

  • Кинорынок в рамках Toronto International Film Festival

  • MIPCOM

  • American Film Market

However, 2020 has greatly shaken the industry, forcing the industry to reconsider the usual channels of communication and content distribution. So the American film market lost 80% of fees for the pandemic, and the global market lost 70%. Due to the suspension of the activity of cinemas, the market drop in Russia amounted to 44.3%.


Since 2020, film markets around the world have been canceled, and the number of transactions in online format has decreased by various estimates from 25% to 45%.


The current situation has accelerated the process of digitalization of the film industry, the development of streaming and digital content distribution services. Increasingly, requests for optimization and automation of all stages of film production began to sound: from production to distribution.


Global digitalization of content distribution for the film industry.


The development of services for the purchase and sale of rights (licenses) for the public display of films and musical works in the digital environment is becoming a new channel for the distribution of content for the film and music industry.


Licensed marketplaces are entering the market. To date, they are able not only to put films, TV series, documentaries, music on a public showcase, where the buyer will find them, but also track the available rights, help conduct transactions, distribute royalties, transfer information to 1C and you will not have to worry about declaring income and collecting money.


This is a powerful additional sales channel covering new markets and audiences 24 hours a day, 7 days a week, where buyers can move from content search to a deal in a few days, not months.


Such platforms make it possible to launch sales from scratch without large investments, to get high-quality targeted traffic even for little-known companies. Regardless of the situation in the world: cancellation of film festivals, premiere screenings, closing of venues, the marketplace will allow businesses to stay afloat and even grow: license both fresh releases and catalog content, open new markets, effectively fill the broadcast grid with interesting titles, etc. without spending money on intermediaries.


For buyers, such services are most often free, for content sellers, monetization implies a percentage per transaction or subscription model.


We are already used to the marketplace in e-com and actively use Ozon, Wildberries, Amazon, Ebay, PANDA, etc. Why not start using the marketplace for movie distribution?


The comparative characteristics and functionality of the main licensed marketplaces presented on the market are given in the table below

From simple to more advanced solutions


Platforms take on a number of important routine tasks for bringing content to the market, promoting it and speeding up the communication process, coordinating titles, sales and directly conducting transactions. A big advantage of digital platforms is access to catalogs 24/7, regardless of the time zone of the seller and the buyer. Licensed content from hundreds of film and television distributors is presented on a single platform. Thus, it has become much easier to monetize the catalog and find qualified buyers around the world.


Numerous international researches confirm the growth of the digital distribution market in response to the multiple growth of content. It is important to note that the nature of transactions has become significantly more complicated in recent years. Therefore, one of the most important topics in the media industry is not only sales, but also optimization in the field of copyright management and accounting, since it directly affects the profitability of copyright holders and distributors.



If we consider the future of distribution and marketplaces as an integral part of them, it becomes obvious that services need to focus on embedded or integrated systems for accounting for license contracts and financial automation. In fact, they should become an ecosystem for film companies, which will focus not only distribution, but also management of licensing transactions, financial calculations of any complexity and reporting.

It is likely that in the next 5-7 years, a neural network will also appear in the functionality of such services, which will be able to give genre recommendations, predict popularity or select similar licensed content by input parameters.


When choosing a licensed marketplace, you should pay attention to the Russian Rightscreen service. The marketplace has serious functionality in comparison with competitors, having in its arsenal a powerful SaaS in the form of a built-in system for accounting rights and calculating payments. Thus, the service solves two important problems: frees up time to search for a licensee and check the content for legitimacy, on the other hand, provides real-time reports on the use of rights and calculates financial obligations between counterparties within the business process described by the company in relation to licensed content.



Is it possible to talk about a revolution in content distribution with the advent of such services?


The appearance of licensed marketplaces is really a breakthrough for the film content market. But will they be able to replace the usual distribution channels? Completely, no. The marketplace should be considered as an additional source of income for producers and distributors, as an integral part of the media industry ecosystem in the future. It should take some time, the media market is not ready yet and accepts digital with great difficulty, preferring to build long-term relationships through personal connections.

Nevertheless, licensed marketplaces unite media markets around the world, giving licensors the opportunity to meet with licensees on a convenient online platform, increase sales, spending less time on it.


The time will come when the whole world will start selling and buying licensed content in one click on similar platforms.


 

The article was published with the support of the editor-in-chief of the journal «Кабельщик.ру» Yana Belskikh.


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