You down with OTT? (Yeah, DTC)

“2018 is the year that the biggest companies make their most meaningful moves into direct-to-consumer offerings. And as with most emerging media trends of the past 20 years, keep an eye on sports media for signals of how the rest of the industry will evolve.”

For the last few years, “OTT” media has been treated like an accessory, not unlike the way media companies talked about their “dot-coms” 20 years ago. Even the semantics (“over the top”) suggest that the real relationship is through traditional distribution channels and that navigating around those channels is simply an ancillary business.

In 2018, the landscape will dramatically change, starting with the way we talk about it. Out is “OTT,” in is “DTC”: “direct-to-consumer.”

It isn’t that direct subscription relationships haven’t been a part of media since newspapers started “bundling” the news with a paid service (and recurring charge) of right-to-you delivery. Or that everyone in the industry hasn’t seen the DTC impact of Netflix, Amazon Prime, Apple, Facebook, or MLBAM (and taken a hard look at their own relationships with their consumers). Or that DTC-native startups haven’t earned headlines (for better or worse).

2018 is the year that the biggest companies make their most meaningful moves into DTC offerings. And as with most emerging media trends of the past 20 years, keep an eye on sports media for signals of how the rest of the industry will evolve.

ESPN is poised to launch its widely anticipated “ESPN Plus” service. NBC Sports Group will continue to nurture its investment in regional DTC platforms like Monumental Sports Network. Turner Sports — widely hailed for its innovative distribution efforts on platforms like Instagram — will push to deepen its direct relationships with fans via its Bleacher Report app. Watch for a ripple effect from T-Mobile’s acquisition of Layer 3, a nascent DTC TV provider: Does a media incumbent increase its DTC footprint through the acquisition of a sports platform like Fubo or FloSports? (If you’re looking outside of sports, pay close attention to Cheddar, the “CNBC for millennials.”)

Why is a DTC relationship so important? An obvious answer is that for media companies, it creates new value that has previously been concentrated within the key distribution platforms, from Facebook to cable pipes. DTC is why fantasy sports is so powerful — and, looking ahead to another huge wave in 2018, why the anticipated domestic legalization of sports gambling portends a bigger inflection point for the media industry than any since the mid-’90s surge of AOL (a DTC media O.G.) or mid-aughts rise of Facebook. When that moment hits, if you don’t have meaningful direct relationships with your consumers, you will wish you did, whether or not your business is sports.

In the meantime, the key to your media business in 2018 will be your explanation to this simple question: “You down with DTC?”

Dan Shanoff most recently oversaw programming for Monumental Sports Network.

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