In an era where the media landscape is rapidly evolving, content owners must rethink their strategies to remain competitive. Traditionally, many have relied on B2B licensing as their primary revenue stream, often overlooking the strategic value of direct audience relationships. But as first-party data emerges as a crucial asset for future growth, it becomes crucial to explore how organisations can build valuable data assets whilst maintaining existing revenue streams.
The Limitations of the Traditional Licensing Model
For decades, the traditional content licensing model has served media organisations well. By licensing their material to broadcasters and platforms, content owners and aggregators have generated substantial revenue. However, this approach creates a significant blind spot: whilst content owners may reach millions of viewers, they often lack direct relationships with their audience.
For instance, in the sports industry, a prominent football club with hundreds of millions of supporters worldwide may have minimal direct contact with fans, relying instead on social media platforms and broadcast partners to engage their audience. This means that these valuable relationships are in the hands of third parties, limiting the club’s ability to leverage its fan base fully. But that’s not all, given that the reliance on third parties creates several additional strategic challenges:
- Limited audience understanding: When content reaches viewers through intermediaries, owners receive minimal insight into audience engagement. With only 26% of global marketers expressing confidence in their audience data, there’s a clear gap in how well companies understand and utilize audience insights.
- Reduced monetization options: Direct audience relationships allow content owners to explore additional revenue streams such as merchandising, special events, or premium content offers. By leveraging first-party data, companies have seen an average 21.8% increase in revenue per session.
- Vulnerability to market changes: As distribution channels evolve, and platform preferences shift, content owners without direct audience relationships risk losing access to their viewers. For example, in the first half of 2024, U.S. households watched a record level of over-the-top (OTT) content, marking a 40% increase from 2023. This surge coincided with a 1% decline in linear TV consumption.
With shifting consumer preferences and the rise of new distribution channels, content owners must prioritize building direct relationships with their audiences to unlock new revenue streams to remain competitive.
Building First-Party Data Assets Whilst Maintaining Revenue Streams
Transitioning to a model that prioritizes first-party data does not mean abandoning your current business model. The key is to adopt parallel strategies that maintain existing revenue streams whilst developing direct audience relationships. To be successful in this endeavor, organisations must consider these important elements:
- Technology infrastructure: Collecting and managing first-party data requires robust systems for data handling, privacy protection, and audience engagement. Organisations need the technical capabilities to capture value from these relationships effectively. The payoff is clear: companies effectively using first-party data see, on average, an 8x return on investment, cut customer acquisition costs by 25%, and grow revenue nearly three times faster than their peers.
- Content strategy: Successful audience engagement hinges on offering clear value through owned channels without undermining existing licensing arrangements. This often means developing complementary content that enhances rather than replaces licensed material. For instance, content published through owned media channels drives, on average, a 13.7% increase in audience engagement and a 35.3% lift in sales, highlighting the impact of a well-executed content strategy.
- Organisational capabilities: Managing direct audience relationships requires different skills compared to B2B licensing. Organizations need expertise in customer relationship management, digital marketing, and data analytics. In fact, companies that leverage data-driven decision-making are 23 times more likely to acquire customers, six times more likely to retain them, and 19 times more likely to be profitable.
The value potential of first-party data becomes clear when examining specific examples. A content producer might start by offering exclusive behind-the-scenes material through owned channels, collecting audience data whilst maintaining their primary licensing business. Over time, this direct relationship enables them to better understand audience preferences, test new content concepts, and develop additional revenue streams.
Looking Ahead: The Future of First-Party Data
As audience behavior becomes more complex and distribution channels multiply, first-party data will likely become increasingly vital for content owners. Organisations with direct audience relationships will have significant advantages in understanding and serving their markets.
The solution may lie in a hybrid model, enhancing current operations while building future opportunities. By taking measured steps toward direct audience relationships and maintaining existing revenue streams, content owners can position themselves for sustainable growth in an evolving media landscape.
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