There are some that worry that content will no longer be king as media distribution platforms continue their consolidation. With the FCC looking at both the planned merger of Comcast and Time Warner Cable and AT&T with DirecTv, analysts fear that the power will shift from content to distribution. The solution though is not content consolidation, according to Barclays Capital’s Kannan Venkateshwar. Given the fixed costs of content production, less synergies can be derived if content creators merge; their power will not be enhanced in negotiating with these potentially larger distributors.
While his insights ring true, I am not so sure that I agree that the merging of cable distributors will change the fact that content is and will continue to be king. Good content drives viewership and builds value. Netflix has emerged as a strong player with original content like "Orange Is The New Black" and other digital properties are doing the same, whether it is for subscription or ad revenue or both. Yes, cable has the strongest platform, but their high cost continues to hurt future growth. The younger generation continues to embrace broadband and digital streaming, uncovering new content like You Tube's PewDiePi.
As a result, content creators actually face a lower barrier to entry to getting their content produced and viewed. The challenge for digital content to better compete with cable consolidation requires an aggregator that can not only combine and present all the digital channels, but deliver a search and recommendation engine across these content properties to help the consumer best choose what to watch. Cable distributors have their interactive screen guide for linear and on demand, helping cable customers to find shows across all networks. The Apple TV device, Amazon Fire, Roku, and others certainly work to the first point of delivering digital content, but need that aggregated search app to aid in the content discovery.
So, I wouldn't worry that the threat of content distribution mergers will lessen the power of content. Disruption is already occurring and content will continue to remain king.
