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“Over-the-Top” Future of Video Media?

October 10th, 2014

In a lot of ways, the explosive rise of YouTube in the last decade has turned the entertainment industry on its head. Where before getting discovered as an artist required mountains of expensive gear and (often) dumb-luck industry connections, the ability for anyone with an internet connection to upload their videos and music has meant a widespread democratization of the recording and publicizing processes. To facilitate the dissemination of their material, artists join YouTube production networks of content creators and brands to help establish distribution partnerships between media organizations and YouTube’s top content producers. The largest of these global YouTube networks, Fullscreen, works with over 50,000 filmmakers, comedians, and musicians to air content on the site, reigning in an impressive 4 billion views a month.

Fullscreen’s impressive stature has garnered the attention of some big players in the communication industry, resulting in some very good news: telecommunication giant AT&T has expressed serious interest in purchasing the YouTube production company. Although official financial figures have not been disclosed, The Wall Street Journal has estimated Fullscreen’s value at around $250 million. Not too shabby for a 3-year-old company who has found a lucrative niche within a site commonly characterized by innumerable cat videos and angsty teenager vlogs.

The move is part of AT&T’s recent joint venture with media mogul Peter Chernin, who, in April of this year, partnered with AT&T to form Otter Media. The creation of Otter Media, which unsuccessfully attempted a bid for video-streaming service Hulu, highlights AT&T’s apparent desire to penetrate the internet-media market.

Chernin has been quoted as stating, “We want to build a big company in the ‘over the top’ video space.” What does this industry jargon even mean? Essentially, Chernin and AT&T want to expand into media-markets where providers are not responsible for, or in control of, copyrights, consumption, or redistribution of the product. While many online video distribution networks demand payment in exchange for content access (see Hulu, Netflix, NowTV), “over the top” content (OTT) doesn’t contain any direct revenue streams. However, due to the overwhelmingly pervasive potential of the unrestricted content, advertising and marketing opportunities abound.

AT&T has its brand roots in the telecommunication industry, but as the company has developed, it has become increasingly committed to video, as evidenced by their vast expansion into TV with their satellite U-Verse program. By redefining their brand strategy to include video media in addition to communication, they have strived to craft a new identity for themselves in the market. The formation of Otter Media and acquisition of Fullscreen represent bold investments in the relatively unexplored media realm of OTT content, and while OTT content may not have the attention of all the mega-corporations in the communication industry, perhaps AT&T is ahead of the curve. Certainly, Fullscreen, with its immense network and 4 billion views per month, is not a bad place to start.

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