Streaming is now ubiquitous, be it in video, music or interactive entertainment. Having transformed the sector with direct subscription business models, content platforms now face fresh challenges in 2022. In this briefing, our tech lawyers consider the key issues faced by content platforms and the commercial lawyers working for them.
1. AdTech and ad-assisted revenue
In an increasingly saturated market, many content platforms are beginning to see the initial phase of fast-growing subscription numbers come to an end. As a result, providers are swiftly moving to nurture other revenue streams from the user base they have already successfully attracted. AdTech and ad-assisted revenue will in many cases form a natural part of the horizon for digital content providers moving into this consolidation phase of their business.
AdTech broadly refers to the body of advertising technologies available, primarily online, to enable advertisers to expand their reach and better connect with their audience, using data available to ensure advertising is tailored and precise in its approach. Ensuring advertising tools are properly implemented requires an in depth consideration of the legal issues at play, including around intellectual property, data protection, content regulation and contractual risk.
In particular, in-house lawyers reviewing AdTech contracts should focus on understanding the overall ‘stack’ of suppliers which will sit between the platform (or ‘publisher’ in advertising terms) and the advertiser itself. Typically, there will be a supply side platform, marketplace and demand side platform in the mix – understanding how these all fit together is crucial when trying to close an AdTech deal.
2. Data monetisation
Many content providers have access to extensive data collected through their platforms, which represents significant potential for creating additional revenue from their existing user base rather than reliance on adding new subscriptions. Data can be monetised in a range of ways, both externally by way of licensing to third parties, and internally. The type of data a business might possess also varies, for instance between personal data relating to specific individuals and their habits, and non-personal analytics data relating to particular products or overall usage trends.
In all instances, data monetisation allows platforms to improve their offering whilst also generating additional revenue, typically by extracting insights about their subscribers and driving sales through increased personalisation and understanding of where and how particular content succeeds with the user base.
Any use of data also typically requires careful consideration from a legal standpoint, given the clear relationship with data protection (in the case of personal data) and security requirements. The trend of close scrutiny of businesses’ use of data looks set to continue so it is vital that content providers ensure they are able to leverage the valuable data they hold in an effective and protected manner.
3. Multi-user subscriptions
It has become commonplace for single subscription logins to be in shared use between multiple individuals, whether in the same household or not. While this use might represent a breach of the provider’s terms, it typically remains challenging to phase out the practice both from the perspective of public relations and as a business model.
In a market where penetration is often already high, finding effective ways to monetise existing multi-household subscription use is a key focus for many content providers. Options to address this range from implementing low-cost sub-user subscriptions to legitimise the practice, account transfers to encourage new subscriptions, and more robust sign-in verification to prevent unauthorised use. Of central importance to this, however, is striking a balance between robustly protecting access to content and maintaining a sense of value and fairness in the product. Failure to do this could have the unwanted effect of driving subscribers to competitors.
4. Evolving tech
For digital businesses where technology is at the core, maintaining a cutting edge technology product is paramount. This relies on an ongoing process of research and development, often involving third parties as suppliers or licensors to enable access to top tier development. Consequently, many content providers find themselves with a range of third party dependencies to keep their product offering running and state of the art. When this situation arises, the dependency must be carefully managed to ensure the business remains capable of independent continuity.
Licensing arrangements, intellectual property ownership, ongoing support and exit management are consequently very important elements in the lifecycle of a technology platform. Platforms will also need to consider the role of open source software and whether this has been used, as this can have a substantial effect on their ability to exploit and protect intellectual property.
5. UGC and content protection
In the era of social media and video sharing platforms, user-generated content (UGC) is increasingly widespread and may arise in various contexts for digital content providers. Some may wish to acquire and make use of UGC, in which case it is important to ensure that the correct IP rights have been acquired. Others may discover individuals using the content provider’s own protected material, and may need to consider what would be the most appropriate response.
Protection of content remains a central concern for digital content providers. This requires a well-orchestrated long-term strategy to protect content across digital channels, involving systematic monitoring for counterfeiting and piracy, maintaining intellectual property registrations and ensuring all licensing arrangements contain sufficiently robust protection against brand misuse.
6. Data breaches and cybersecurity
Concerns over hacking and data breaches have led to renewed focus on cybersecurity and good practice in relation to personal data. This is particularly true for digital content services where large user bases complete with financial information are a valuable target, as is the actual content itself. Given the potential risk both financially and to a brand in the event of any cyber incident, it is vital to ensure that up-to-date and robust security controls and data protection practices are worked into the supply chain for a digital content provider.
This need for caution will not stop at the network of the provider itself, but also includes any third parties which feed into the platform, since any weak link in the chain potentially exposes the whole network to risk. Nowadays, with the increasing level of online connectivity, cloud hosting and complex connected supply chains, this is even more the case and warrants consideration in each component of the business.
7. Global regulation
The world of streaming content has a global reach and consequently brings challenges in dealing with country-specific requirements. Where content is being provided across jurisdictions there is inevitably a wide range of often conflicting legal and regulatory regimes to comply with. There are likely to be substantial differences across jurisdictions in terms of the regulation and legislation governing telecommunications, content, advertising and Internet services generally. As such, entry into new territories has to be considered extensively from a risk perspective, while ongoing monitoring of changing legislation remains a key requirement for all providers.
Regulation of VoD and online harms are likely to remain at the forefront of developing regulation and are of high relevance to content providers. As the landscape shifts in relation to the obligations placed on providers to address harmful content, this will be an important area for content providers to prepare for, ensuring that their businesses keep pace with the changing regulatory regime.
M&A remains a well-established means of driving growth and sector expansion. Examples include the acquisition of smaller studios by larger players, either to increase the offering within the same field, or to add further capabilities to the existing business (such as spin-out products and preparing new content to launch on other media).
The legal requirements around M&A are not just in the completion of the deal itself, but also in the follow-up where integration becomes key. Post-completion, there is often an exercise in integration and ensuring that the combined businesses are able to function seamlessly together. This means an alignment of technology, governance, branding and contractual approach between the acquired business and the acquirer, which often demands high levels of collaboration between operational and legal teams.