OTT Take: WarnerMedia open to letting competitors sell ads on HBO Max
Updated: Nov 27, 2019
WarnerMedia is two years out from launching an ad-supported version of its streaming service, HBO Max, but it already seems to have plans to let competing media companies sell ads on the platform.
John Stankey, chief executive officer of WarnerMedia, said last week at Code Media in California that his company will never have “a monopoly on creativity,” so HBO Max will naturally host content from competing media companies, who in turn will likely be able to sell ads against their content.
“We fully expect that once the AVOD (ad-supported video on demand) environment goes up, it's not just going to be our content and our avails and inventory that's in that environment,” said Stankey. “We very much would love this platform over time to receive content from others, as well as inventory from others to go with that content.”
This resembles the current distributor-network relationship in traditional linear TV, where both sides control a portion of ad inventory. Streaming disrupted that relationship as networks started launching their own services where they have full control over inventory.
Source: The Drum
WarnerMedia and parent company AT&T have the leverage to negotiate with media titans like Disney and Comcast/NBCU to secure reciprocal arrangements for direct access to advertising inventory on each other’s platforms. What remains to be seen is whether these companies can sort out the kind of terms with each other that allows for “data portability” between these platforms to enable advertisers to understand how consumers are engaging with content across platforms. It also stands to reason that the ad infrastructures to segment, serve, and report on these ad campaigns that AT&T and its peers like NBCU are using will need to be harmonized in some way to ensure that advertisers are realizing equivalent functionality on every platform.
What may transpire eventually as these aggregators begin to resemble old-guard MVPD distributors is a sharing and pooling of inventory that is managed by a 3rd entity wherein the rights owners (e.g. HBO) and distributors (e.g. NBCU) are able to achieve higher revenue yields for the inventory than if they go it alone and try to sell, manage, report, and bill for their ad avails against different inventory types and platforms.
Ultimately the sticking point may well be just what kind of allocation each party is willing to give the other. As the consolidation trend accelerates with massive groups controlling content rights and distribution, and with the complexity of the rights and revenues also increasing, unless they can come to terms on how much inventory they are willing to allow frenemies to have and under what conditions, advertisers may find themselves scaling the very high and slippery walls of very well-fortified gardens.