Pangs of Partner Payments for FAST/AVOD Content Providers

FAST/AVOD platforms are transforming the way content is delivered and consumed. Major studios, content providers, and distributors use consumption data to illuminate viewer content affinities, and help explain which program channels align best with the right mix of advertisers.

Jerry Inman

Yet, this is only half the battle.  Alongside this innovation come the challenges to track and manage all the complex financial relationships among revenue-sharing and viewership data from platform partners in order to efficiently manage and monetize FAST data.

Standardized data is crucial to optimize revenue performance at the title-level, and resolve primary reporting pain points around viewership for TV and film content rights on FAST platforms. In a world where advertising revenue is king, companies of all sizes must have an easy way to monitor revenue performance prior to, during, and after deals are finalized, as a means to success.

Challenges in Reporting
In this new landscape, content providers are generally paid through revenue-sharing agreements, and they face major hurdles in building payment processes that monitor, reconcile and report on financial operations, and key performance measurements, such as fixed and recoupable fees, inventory share and more.

Finance Infrastructure Development
The fast-paced nature of the media industry has forced FAST/AVOD platforms to hastily establish their finance infrastructures. Often, this process involves numerous spreadsheets and manual processes that are time-consuming and prone to errors. As the platform matures, however, it becomes crucial to streamline and automate payment processes in order to reduce the risk of inaccuracies, improve operational efficiency, and scale partnerships.

Auditability and Traceability Issues
Maintaining auditability and traceability is imperative for maintaining control over financial transactions. As platforms expand their revenue-sharing agreements with content providers, audits increasingly become an inevitable aspect of the business. Ensuring that these audits can be handled with ease requires a comprehensive system that accurately records all financial interactions among the platform and its content providers. This safeguards against discrepancies and fosters trust.

Reporting Intricacies
The intricacies of reporting within the FAST/AVOD landscape are manifold. Other prominent challenges include:

  • Adjustments for different supply and demand partners: FAST/AVOD platforms often collaborate with various supply and demand partners, each with unique financial terms and conditions. Ensuring accurate adjustments for these differences demands a meticulous approach.
  • Accounting for contract terms and recoupable expenses: Content providers are compensated through various financial terms, including minimum guarantees (MGs), recoupable fees, fixed fees, and inventory share.
  • Managing these variables requires precise tracking and calculation.
    Generating content provider statements: Generating accurate and comprehensive content provider statements on a regular basis is crucial for transparency and accountability.
  • Determining advertiser revenue and billing: Monthly tasks involve determining the revenue generated from advertisers, billing, and generating the required Journal Entries (JE) for accurate financial reporting.

How to Overcome Challenges
The challenges mentioned — rapid finance infrastructure development, auditability and traceability concerns, and reporting intricacies — highlight the need for a well-structured and single automated payment system.   Such a unified system provides for:

Streamlined Title-Level Revenue Reporting
Meet reporting obligations, improve accuracy and control, and streamline title-level revenue reporting to hundreds of content providers.

Control and Management of Content Cost
ASC 920 and direct-to-consumer are impacting the industry, forcing networks and streaming platforms to revisit the way they account for content costs. It is critical to automate and enforce policy into the way that content is accounted for and paid. Direct integrations to ERP systems increase cost savings and control.

Settlement Processing Acceleration
Having an automated workflow eliminates tedious manual work while ensuring control, accuracy and auditability for all pay TV, free to air and SVOD fees. Automated programmer settlements should directly consume subscriber billing data, calculate all fee types from residential to B2B, generate statements and invoicing, and provide analytics into costs.

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The ability to automate a VOD supply chain, and seamlessly connect to studios and content readiness partners, makes financial operations more efficient and provides an advantage and ability to drive growth.

Jerry Inman is the chief marketing officer of Whip Media, which helps the world’s leading entertainment companies connect content to consumers, and track content performance anywhere.

Time to Reinstall Windows

The entertainment business has finally smacked up against reality. It’s just not profitable to offer the bulk of a studio’s catalog (including the newest theatrical hits) at a subscription price around $10 a month. Who knew? 

Studio executives of yore. 

In the rush to cut costs to fill the profit hole left by the subscription streaming craze, perhaps entertainment chiefs should look to those past strategies. Maybe it’s time to reinstall some windows. 

Raising SVOD sub prices (as many have done), selling ads (as Netflix and others have done) and cutting costs by laying off 7,000 to save $5.5 billion (a la Disney) are only stop-gap measures. Windows are, and have always been, a way to extract the maximum revenue from content. 

Studios need to go back to basics. Offer content in the window (and successive windows) that will extract the best overall return. For some titles, that begins with a theatrical window; for others it starts in the home entertainment pipeline, including streaming. But it makes sense for some very desirable titles to open numerous windows between theatrical and streaming — including newer, higher-priced premium digital purchase (PEST) and rental (PVOD) windows. And let’s not forget regularly priced digital purchase and rental — and disc. 

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Streaming is only one stop in the entertainment pipeline. It doesn’t necessarily have to be the first or last. Services should get content when it’s the best time for that content to maximize revenue. Streaming — no longer the shiny new kid on the block — should earn its place in the window lineup.