Next-gen user interfaces such as Comcast’s X1 video platform, as well as virtual MVPD services like Hulu’s new livestreaming platform, are further eroding network branding by pushing channels behind programming genres, Barclay’s analyst Kannan Venkateshwar said.
“Every OTT product is organizing its default user interface by the type of content and not by network,” Venkateshwar said in a note to investors. “So sports does not show up as ESPN or Yes Network. Instead, the default interface is organized by sport and/or teams. This is also becoming true with legacy user interfaces like X1. As a result, it is tough to see the brands of individual networks retaining any value in the coming years.”
In the traditional linear pay-TV world, viewers would see a guide full of branded channels every time they turned on their TV and woke up their set-top.
“But in every evolution of OTT, the number of clicks needed to get to a program guide or a network viewing option is actually increasing,” Venkateshwar added. “Given the importance of consumer inertia in usage patterns, this is not a trivial shift.”
Network branding is being further disrupted, Venkateshwar asserts, by the fact that distribution platforms like Netflix, Hulu—and soon, with its exclusive AMC output deal, Charter—are drowning out network brands with their own original content.
“Also, what is increasingly evident is that content exclusivity is becoming a competitive tool, which has never really been the case in video distribution in the U.S. since the beginning of the industry,” the analyst said. “Hulu and YouTube TV are bundling originals exclusive to their distribution platforms with their TV product. We believe vertically integrated companies like Comcast, which are vertically integrated are likely to try the same approach over time, given their ownership of content pipelines. Charter's recently announced deal with AMC Networks is an example of this process.”
Building distinctively branded channels is, of course, a basic goal of media companies, which suffer greatly when their shows are viewed in one-off isolation, cut off from their network affiliation. The impact on SVOD distribution of programs has already taken a significant toll on this branding effect.