M+E Daily

by Terence Keegan

The deal announced Wednesday between Amazon’s Lovefilm and NBCUniversal — securing exclusive streaming rights in the UK of movies including “Battleship” and “Bridesmaids” for the subscription video service — shows how competition for premium content is ratcheting up in the digital entertainment space.

But what do Lovefilm and NBCUniversal mean when they note that their deal extends to streaming of movies “during the second pay window”?

Until recently, few consumers may have perceived that a rival subscription service could have an exclusive on the “first run” of those same movies for weeks before Lovefilm offers access.

But content owners see the “windowing” of streaming rights as critical to building robust digital revenues (i.e., offsetting declines in packaged media sales). And although subscription streaming companies may have disrupted the traditional business models of television broadcasting and home entertainment, streaming service providers appear willing to accept content owners’ windowing schemes.

Government regulators in the UK called attention to windowing last week, when they revised their findings on whether the country’s Sky service was pursuing anticompetitive practices in sewing up rights to movies from all six major studios in the “first subscription pay-TV window.” (The UK’s Competition Commission helpfully abbreviates this term to “FSPTVW.”)

In determining that Sky’s practices are not monopolistic, the Commission observed that the likes of Lovefilm and Netflix now vie with Sky for first-run movie rights — and the streaming newcomers have won out with certain studios (such as Netflix with Lionsgate UK for first-run streaming rights of “The Hunger Games” and other titles).

The very existence of “subsequent” pay windows, the Commission added, also has led to consumers having greater choice of services. However, “[d]espite these developments, which are good for competition and good for consumers, we still believe that competition in the pay-TV retail market overall is ineffective,” said Laura Carstensen, who chaired the Commission’s investigation into the market for movies on the pay TV platform.

So while windows evidently mean something to streaming service providers and content owners, how much do they matter to subscribers? According to the Competition Commission, for consumers, “the range of content offered and the price are as, if not more, important than recency.”

It begs the question of what windows ultimately will be worth to streaming services if they hold little such value (or even recognition) among end users. For now, services will likely continue to tout windows of exclusivity. But for content owners, bragging rights may not necessarily translate into a long-term market for premium licensing rights.