Managing More Than 80 Rights Is Very Costly

Administering and keeping track of rights management is a nightmare for content distributors, especially the studios. It was simple when there were only a few rights to sell and windowing was easy (sales were often made by handshakes), but now the film and television industry is dealing with more than 80 rights for a good number of programs.

Companies with deep pockets often use accounting firms to devise some sort of rights management program, but it doesn’t guarantee that they’ll succeed. In fact, there are horror stories in which, after spending $10 million or so, content companies had to engage some experts to revise the programs or scrap them altogether and start anew.

In the past, the accounting departments took care of rights management. And still nowadays accounting commissions outside firms to devise software to keep track of various rights before sales contracts go to the legal departments.

At this point, sales, accounting and legal wrangle about various rights definitions with the buyers. It can get so complex that, at times, studios’ regional sales offices create their own systems just for their territories.

According to Paul Mardling, VP Strategy at York, England-based Piksel, “The definition of each right is reasonably clear at the high level, however there is far too much complexity and variation on the detailed rights contained in each contract. Much of this is driven by the re-packaging of rights to different providers in the same territory for different distribution use cases (e.g., ultraviolet-based streaming versus OTT rights).”

One simple way to contract sales would be for the buyers to send their standard agreements, but this solution is not practical for large distributors and studios.

According to experts, the logical way to create and administer a rights management system would have the following departmental order: Sales, Legal, Business Affairs and, finally, Accounting. In between those departments, large studios would include Shipping, IT and a Specialized Rights unit. In smaller companies, a few people take care of several of those jobs.

There are six basic windows (Cinematic, Video, Digital, Pay-TV, Basic Cable and Free TV) and 14 sub-windows. For example, the cinematic window contains three main rights: Theatrical, Public Video and Non-Theatrical. On the other hand, Digital can consist of various rights: SVoD Affiliated and SSVoD OTT, NVoD, FVoD / Catch Up, TVoD, PPV, Electronic Rental, AVoD, Electronic Sell-Thru (EST) and IPTV.

A good rights management system would capture: Products, Rights, Media, Avails, Proposals, Sales Orders, Windowing, Conflict Checking, Contracts, Amendments, Asset Management, Materials, Shipping, Delivery, Invoices, Accounts Receivable, Finance/Accounting, Reports, Security.

According to Ryan Friscia, director of Finance at Boom Media, “Some industry professionals label EST and Electronic Rental as a video rights. An example would be buying or renting a movie on iTunes. Others (including myself) consider this a Digital right. To me, Video is only the sale or rental of hard goods.”

“But,” added Friscia, “the window order is changing. Studios are now making a push to condense the windows by releasing films on digital platforms while still in the Cinematic window, i.e., launch on a premium VoD platform during the customary theatrical window. Plus, all windows are shortening and crossing each other. The catch up rights (basically the ability to re-watch a TV broadcast at a later date) can now apply to Pay, Basic and Free TV windows. Also, Netflix completely ignores windows and launches digital only or, at times, digital and cinematic simultaneously. However, Netflix’s cinematic exploitation is very limited; mainly just for the purposes of qualifying for the various awards, such as the Oscars.”

Friscia also pointed out that “the most difficult window to keep track of is probably digital since there are so many different variations. This is now one of the main windows and a huge revenue force. It also allows for high levels of piracy. In fact, many entertainment companies now use digital piracy data in order to evaluate the marketplace. Companies can use various services to access the illegal download data to see who and where films and TV are most illegally downloaded.”

To Piksel’s Mardling, “One of the issues we see is that many online rights contracts require reporting of the actual volumes of content delivered [i.e., the number of episodes]. At present there are no standards for how to get this data back from the delivery systems back to the rights management and finance systems. This means that we have to do something different for each customer often involving exporting to some sort of flat file for manual processing.”

There is also confusion about streaming TV services. For some U.S. studios, in terms of TV rights, streaming means “replicating a linear live event authenticated through a MVPD” and it cannot be downloaded. As for services like Netflix, they’re considered SVoD rights. Typical examples are HBO Now (SVoD) and HBO Go (streaming).

HBO NOW is a paid streaming service that offers instant and unlimited access to HBO programs and movies. Unlike HBO Go, HBO NOW does not require a cable or satellite TV subscription. HBO NOW is only available in the U.S. HBO Go is an authenticated SVoD service because it’s only available with a cable subscription or through a cable operator.

For Sasha Zivanovic, CEO of Nextologies in Toronto, “There are really two types of streaming: the first is streaming content over an IPTV network, which is defined as a closed network delivery mechanism not touching the Internet. Or, content can be streamed over the Internet and referred to as OTT.”

“Many people confuse IPTV as any Internet television. This is not the case,” explained Zivanovic. “If the originating data stream comes from a private IP (Internet Protocol) address that is not registered as a public IP address from the governing bodies that manage IP addressing, it’s safe to say that ‘stream’ is going over a private network and is IPTV. If the originating stream is coming from a public IP address then it is OTT streaming,” he concluded.

(By Dom Serafini)