Consumers are demanding more and more from their TV services and are increasingly seeking out TV on their terms through web TV and VOD services. To satisfy this demand, content provider agreements need to evolve to deliver the additional rights needed. Deals between broadcasters and pay TV operators are no exception and we are beginning to see some interesting developments take place here.

Traditionally a pay TV platform pays a channel a cost per subscriber (CPS) and potentially a minimum guarantee (MG) depending on their size. This would usually only grant them the linear carriage rights for the channel - i.e. allowing it to broadcast the channel in its entire form to the customer's TV set.

However, platforms are now looking to get more than just linear carriage rights - on demand and streaming rights to the PC and mobile devices; catch up VOD rights, as well as 'start-over' rights.

Why are these developments happening?
New media rights (i.e. VOD, catch-up, PC rights) are becoming more common along the value chain, which is largely being driven by consumer demand. Today's consumers want and expect more from all types of media services and pay TV is no exception. Platforms pass this demand on by pushing their channel partners for more than just linear rights. And the chain goes on as the channels then become more proactive in securing these rights from programme distributors where they can. So it is more commonplace for channels to have the rights that the platform needs to be able to offer more value adding services to the end customer. And ultimately that's what it should all be about - adding value to the subscriber - especially in down times where customers are looking to get the most out of everything they subscribe to.

Recession aside, it seems that most people have got onboard the 'TV on my terms' bandwagon, or at least are aware that it exists - thanks to cable VOD, public broadcaster catch-up services (e.g. BBC iPlayer) and download stores like iTunes. So customers expect more and these new types of channel deals give them that thanks to the developed partnership between the broadcaster and the platform.

This all sounds great for the platform (greater customer value, more subs, less churn etc), but what's in it for the channel? Increased brand exposure and also channel viewing are the two immediate rewards. Giving the platform these additional rights means that a channel's programmes can be found in more places than just the channel - VOD/catch-up sections, PCTV services etc.Which means more places to connect with the viewer and more options for the customer to watch the channel's content. For example, Sky recently saw 51,000 views of Lost on its Anytime VOD service and 18,000 views on the Sky Player PC service - on top of the 571,000 live views. A further 554,000 watched the show via the Sky+ showing the power that the PVR has on viewing habits.

Models and deal structures
The model and deal structure for these next generation channel deals vary and will ultimately depend on how the extra services are passed on to the customer. You would expect to see a higher CPS fee or some sort of revenue share in the deal if subscribers are charged an extra fee for watching the channel's content on the platform's VOD, catch-up or online services.

However, often these services are included in the customer's subscription fee and are purely seen as value-adders. If this is the case, and we believe that it should be for non-premium content, then you would expect the deal to look the same as before. The platform is offering the channel additional services to get their content and brand in front of the viewer - not only does it do this but will also manage the service and the content in line with any contractual obligations (i.e. 7 day time periods from live broadcast, streaming not download etc.) And in return, you would expect the channel to include more in the deal than when the platform would only broadcast the linear channel - especially where non-premium content is involved.

We believe that it should be about creating partnerships that offer more to the end customer, which results in a win-win situation for both channel and platform - as a more advanced pay TV service leads to subscriber growth, lower churn, greater platform revenues and therefore higher CPS totals for the channels.

Not just US cable
Unsurprisingly, the US cable companies were some of the first to enhance their channel deals. Time Warner's 'Start Over' service is an interesting one to look at where viewers can restart shows already in progress by simply pressing the select button - currently over 20,000 titles from over 500 channels have this feature.

The usual suspects over here in Europe are obviously getting on board - such as Sky in the UK and UPC in various of its territories. The Sky Player PC service for example is growing in terms of content and usage - 18 channels can now be viewed live online and thousands of hours of on demand content.

But it's not just US cable and European pay TV veterans that are getting on board. Invitel, Hungary, is a great success story of a new IPTV operator paving the way with these new forms of channel deals. The platform offers viewers a start-over service making use of network PVR technology. Some programmes can be watched up to 3 days later and over 20 channels have agreed to be a part of the service. The platform does not disclose its total subscriber numbers but they are suspected to be less than 50,000 - showing that you do not need to be an incumbent pay TV power house to get these kind of deals in place.

Watch this space
We see platform and channel relationships going from strength to strength in the near future and will be watching with interest. Over the next few months we will be interviewing a number of innovative platform execs to get their take on what is happening in this space and how they are making the most of time-shift services by working closely with their key channel partners. Stay tuned to our newsletters after the summer months to make sure you're in the know!