Viacom "Gaining Real Traction" With Int'l Mobile Deals, Top Executive Says
International networks unit CEO David Lynn discusses the firm's 5 million subscribers and not copying peers' direct-to-consumer strategy, instead focusing on "deeper and more flexible" content partnerships.
Viacom, the company behind the likes of MTV, Nickelodeon, Comedy Central and Paramount Pictures, has been one of the most aggressive entertainment giants when it comes to striking carriage and licensing deals with mobile phone operators around the world.
In 2018, Viacom International Media Networks reached an agreement with mobile powerhouse Telefonica in Latin America that became its first in which a telecom company agreed to carry all of its international flagship TV networks, a selection of its mobile streaming apps and its VOD content. Under terms of the deal, Telefonica's Movistar Play service has been carrying live feeds of MTV, Nickelodeon, Nick Jr., Comedy Central and Paramount Channel TV channels in the region. In addition, a selection of Viacom’s mobile streaming apps, including for MTV, Nickelodeon and Comedy Central, are available to Movistar Play subscribers, along with on-demand content.
Last week, the company unveiled its first mobile distribution deal with a major player in a big European market. Under the agreement with telecom giant BT Group's mobile provider EE, MTV's recently launched first-ever direct-to-consumer subscription VOD streaming app, MTV Play, will become available to EE subscribers.
Beyond the two landmark agreements, the company last year also struck its first mobile distribution deal for the Paramount+ streaming service in Sweden with Scandinavian telecom giant Telenor.
The mobile push is part of Viacom president and CEO Bob Bakish's focus on positioning Viacom for the future by "accelerating our transition to next-generation platforms," as he has described it, to reach existing fans in new ways as well as "incremental audiences."
All in all, Viacom International Media Networks says it now has 21 mobile-only content deals with 17 operators across 30-plus countries. While the company doesn't disclose financial terms, industry watchers say they include a mix of deals, with some being monthly fee-per-sub arrangements, others using a revenue-share model with a minimum guarantee and others being fixed-price deals.
"Internationally, our flagship brands are actually getting real traction on mobile networks," David Lynn, president and CEO of Viacom International Media Networks, tells THR. "The financials in mobile are similar to, in some cases actually improved versus, what we see on the pay TV side."
While he admits that the company's total user base reached with the deals so far isn't huge yet, momentum is encouraging. "We already have 5 million subscribers paying to access our mobile video services," he tells THR. "I am very pleased with the progress we have made. And the growth is very strong, it is almost tripling year-on-year. And I still see huge opportunities. We have done a lot already, and I really believe that mobile represents a major market opportunity for us."
Lynn in that context mentioned that there are 3.7 billion 4G mobile subscribers outside the U.S. "You have a number of markets where mobile has the opportunity to leapfrog linear pay TV in markets like Indonesia where there is a 70:1 ratio between mobile subs and pay TV subs," he said. "India is another good example with the launch of Reliance's Jio [mobile network]." Plus, future rollouts of faster 5G mobile networks provides further opportunity worldwide for video, he said.
At Viacom International Media Networks digital already represents about 20 percent of distribution revenue, with mobile a growing portion of that digital pie. "I can see in the medium term mobile reaching a quarter of our digital distribution revenues," Lynn says.
Importantly, the international mobile deals provide an important test lab for the company as Viacom has also been working on bringing mobile deals to the U.S. where Wall Street has in recent years worried that Viacom's young audiences that have turned to other entertainment options could lead pay TV distributors to drop smaller Viacom networks. (The company is currently engaged in a carriage showdown with AT&T's DirecTV.)
So far, a major U.S. mobile deal has not materialized, but Bakish in February expressed optimism, saying: "We continue to talk to U.S. mobile providers about a range of opportunities."
Adds Lynn: "I've been focused on rolling out mobile services internationally, and we are really getting traction with operators, but Viacom believes that there are mobile opportunities across the world."
Viacom's strategy of licensing its content to mobile operators and making brand-specific apps available for mobile platforms differs from other entertainment giants' focus on launching their own direct-to-consumer streaming services offering up all, or much of, their content. "We do have a differentiated distribution strategy," Lynn tells THR. "We don't have any plans to launch a mass-market global direct-to-consumer service, which means we are freer to strike deeper and more flexible content partnerships with a wide range of distributors, including mobile."
This is where Viacom's recent $340 million acquisition of advertising-supported streaming service Pluto TV, which is available through apps on phones and smart TVs, plays into the mobile opportunity. "Our preferred model is to work business-to-business-to-consumer rather than direct-to-consumer, and Pluto fits into that. It has a young model-friendly audience, and we have plans to roll it out further international after the U.K. and Germany launches and the [upcoming] Latin America in the next 12 months."
Adds Lynn that "Pluto gives us a really strong offering" at a time when many mobile providers around the world are still deciding how to play in the content space, adding to the company's other offerings for the mobile space. "We got young-skewing entertainment brands, and mobile services are targeted at young audiences. We got deep libraries of mobile-friendly content, both long and shortform. And we have an increasing range of different products that will fit different operators' strategies."
Viacom is bullish on the broader benefits of its mobile push. "I see mobile as a way to bring new subscribers into the pay TV ecosystem via a mobile-only product," he says. "This is a game-changing opportunity for us and really important part of the transformation of our business model."