CHENNAI : Content is a buzz among startups, advertisers and investors alike. While everyone is so amused about this industry, a constant debate keeps coming – whether it is important to keep control of content or should it be handed over to users. While both these have their own success stories and are interesting businesses, it is also important to see what are the advantages and disadvantages of both these formats. To own or not to own the intellectual properties? Let’s evaluate:
Evolution IP Content companies are typically multiple times bigger than non-IP companies. For example, the biggest global example of an IP company’s evolution is Disney while UGC’s is 9Gag (keeping social media aside). And we all know how big Disney is!
Revenue Opportunities UGC Content companies work mostly on advertisement-only revenue model. It is almost impossible to introduce subscription revenue model and also since there is no control on IP, licensing revenues are not possible. On the other hand, for an IP Company, all three revenue streams — subscriptions, ad and licensing are possible.
Higher Retention IP businesses have 40 per cent higher retention than UGC content businesses. A recent Morgan Stanley survey showed that Netflix was preferred over other streaming companies by around 40 per cent because of their original content. This is because people get attached to characters. And once you are hooked to a character, you wait for seasons and continue the series year after year.
Quality Control IP businesses usually have high quality content because the quality control is possible. UGC businesses are very difficult to control on quality and often have to keep tackling the issues of eliminating pornographic content/ adult content/ abusive language/ hatred/ politically motivated content etc. While IP businesses are carefully built and thus the content almost always aligns with the company’s vision and mission.
High Scalability In today’s digital era, IP businesses are very easily scalable because if the IP goes popular, it can cross boundaries and geographies. Take Game of Thrones or Suits for example. Almost all the countries across the world watch these shows.
Community Building IP businesses have potential for community building than UGC businesses. In fact UGC businesses typically end up serving as a platform to discuss and debate over IPs and forming communities. Overall, it seems that IP content businesses are much more beneficial than just UGC businesses. Hoping to see good businesses coming out in future! For any queries, please write to me on Rajeev@TBSPlanet.com