Apologies if this little formula is blindingly obvious, but a recent article posted via HuXiu on the online video sector, along with a handful of other high-profile deals that took place in November have really driven this home.
To summarise HuXiu’s article, Chen Tong (vice president of media content at Xiaomi) recently announced Xiaomi would enter into a content partnership with Youku Tudou. The tech enterprise is attempting to integrate with content suppliers, and will eventually stream Youku Tudou’s self-made shows across Xiaomi’s range of phones, tablets and TVs.
This kind of activity will continue to inspire increased efforts to lock content into silos, where exclusive deals function as a means of differentiating hardware and apps. The Xiaomi / Youku Tudou deal is only one such example in a long chain of partnerships that have fallen into place over the year.
There have been some very interesting moves as of November in both online video and music. Time Warner Inc’s HBO network is partnering with Tencent to exclusively stream its TV shows, which include “Game of Thrones”, “True Detective” and “Boardwalk Empire”. Shortly before this, Warner Music Group brokered a master distribution partnership with Tencent under which “Tencent will distribute WMG’s repertoire and manage new releases to all legitimate local Chinese audio services with the exception of Mainland China mobile carriers”. We’re reading this as if Tencent isn’t an exclusive distributor, but has the power to cherry-pick preferred services i.e. exclude Xiami. The deal is certainly a win for Tencent’s QQMusic and in future perhaps, WeChat too, as the social app continues to diversify its revenue streams.
Without content tech dies (Apple launched iTunes first, then the iPod, if you recall) and without access to a broad audience, content dies (well, it sits in the long tail awaiting discovery by an obscure Belgian DJ with a soft-spot for sampling the humble wobble board). It does seem that a concentration of power lies with the intermediaries, the platforms that shift the bits. Moving forward, we may witness an intensification in content licensing / outright rights acquisition (the HuXiu piece references a plan launched by iQiyi which will see the platform invest in self-made shows and copyright acquisition) which could be a win for creators where prices inflate.