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Commoditisation is killing the OTT Agency. Are we all doomed?

By Published On: October 11, 2022 - Categories: Blog Industry Insights Opinion

There has been a lot of chat lately about the commoditisation of OTT (sorry D2C).  Smart people making very sensible points that today it’s easier than ever to do OTT.  It’s a solid argument and the theory I get; It is easier than ever to stream video.  Get a player, hook it up to a CDN, support with a CMS and wrap some tech infrastructure and support services around it, and hey presto.

For an OTT business (sorry again, D2C) like us, it’s the sort of thing that can keep you awake at night.  And for me, it has!  The 3am thinking ‘we’re all doomed’.

Because the instinctive reaction to being told your industry is being commoditised is that it’s bad news.

‘Commoditisation occurs as a goods or services market loses differentiation across its supply base…’ (source).  So, OTT is heading the way of milk and eggs where buyers main decisive factor in purchasing is price.

Taking this a step further, I take commoditisation of OTT to mean;

…All services are the same and all suppliers start to sound the same… in other words OTT services SO EASY that any supplier can offer them… more suppliers equals greater competition… which makes value more equitable, driving value down… customers start to differentiate only on price, driving prices down … and before you know it we may as well quit and start a dairy farm.

A race to the bottom is another way of putting it.

But two questions keep returning; Is OTT really becoming commoditised? And if it is, is that such a bad thing?

I actually only agree with the superficial argument that OTT is commoditised.  Because as something evolves, and innovation occurs (and innovation is on fire in our world), then yes bits of the chain are commoditised.  But wrap it all up, and the end result certainly isn’t.  Put it this way, in our business we provide over 50 services to our customers.  That’s 50 things that we either charge or don’t charge for, but that we do.  Where I think we – and D2C Sports industry as a whole has further to go – is to add more value.  Services that drive greater return on investment, greater monetization, that build greater reach and greater engagement with audiences.  Because none of that is a commodity.

Anyway, even if I’m wrong, and it IS all becoming commoditised.  Is that such a bad thing?

Well, if it is, then someone has still got to do it, and do it well!  And by focussing on those 50 things and making them the best they can possibly be, then value will remain, and market differentiation will be maintained.

But as I say, I think talk of commoditisation is premature and I’m not buying it.


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