The TV landscape is rapidly changing and this means increasing levels of complexity when it comes to acquiring TV and film content. Today we talk about how to get the best terms when negotiating linear TV content deals.
When planning to launch a TV service, there are some important steps that need to be taken before negotiations with a Content Provider can begin. Some of the key questions you need to consider are:
What will the linear proposition be?
It is imperative that you create a competitive proposition for your service taking into account what is available in the market. To identify what is available, a market investigation needs to be completed - this is a service that we offer. This will really depends on the clients previous knowledge but we have had some requests for channels like “Sky Sports” in territories where they are not available, so it is important to ensure that the proposition requested is a realistic one.
What will your budget be?
Once you have decided on the proposition you need to plan the acquisition phase. At this point you should be thinking about what price your product should be charged at to make it competitive. You should then consider what a realistic subscriber projection could be for your service and taken together, a proportion of this will give you your acquisition budget.
What is the content acquisition process?
Once you have the above information agreed, then the content acquisition process begins.
Positioning the project to the Content Providers is essential. You should provide them with all the information they could usefully want in an easy to read presentation. This should include an overview of the technology, the timelines, the rights required and so on.
This process can very much depend on the timing and location of the project. Different content providers may have different strategic objectives in different locations and so what should be a straightforward process is sometimes far from that.
What are the top tips for negotiating with Content Providers?
Provide realistic subscriber numbers
Many time we have come into a project when the client has already spoken to the larger content providers. They have impressed them with the ambition of the project but the mistake that is often made is to give high subscriber projections in an attempt to convince the content provider that the project is an exciting one. These numbers will be used to generate Minimum Guarantees and if they are high, then the Minimum Guarantee will be high.
We advise clients to be cautious and pragmatic in the numbers they share. Think about what is the minimum number you will achieve to make the project viable. After all they are minimum guarantees not maximum guarantees.
Secure all rights available
It is essential to make sure you request all the rights you want from the outset such as Network PVR and 7Day Reverse EPG - whatever it is, ask for it upfront. If you try to add additional rights down the road you may be in for a shock when the price goes up.
It is also important to discover what restrictions there are around the rights you want, as this might impact which channels you contract with if some are unable to give you the specific full set of rights you want.
Tier cost-per-subscriber based on growth
There are normally precedents in the territory you are in, as you will not be the first TV service launching there. But even with these, you should ensure you include some simple things like structuring the minimum guarantee correctly and making sure you tier the cost-per-subscriber down as the platform grows.
Use Exclusivity
You can also look at trying for some exclusivity – this can be expensive but provides a good differentiation for your service.
Multiple options in a genre
It's good to get some competition going, so where you have multiple channel options available in a specific genre, you can use this to drive the price down. So for example if there's quite a lot of kids genre linear channels in a territory, you've got more channel options to play off against each other.
Start the process early
This is probably the most important content acquisition tip. Make sure you start you negotiations early - as early as possible. Ideally you need between 9 and 12 months to get the best deals for your platform.
It is not a strong negotiating position to be in a rush and there are always twists and turns along the way which will not be foreseeable. Additionally the legal departments in many of the channel groups, can take a long time to finalise paperwork. So although the commercials may be agreed, the long form contract needs to be reviewed and marked up multiple times before it is agreed - and that can take a long time.
Want to discuss content acquisition for your platform? Get in touch today
Watch the latest episodes in our Partner Insights Series:
The 3Vision Partner Insight Series is designed to deliver the latest in content acquisition licensing, providing you with key intel to support your client conversations around launching and improving video services.
Get in touch today to learn more about our Content Acquisition Services
.svg)
