Will OTT Tech Spearhead Media M&A As The Answer To Cord-Cutting?

This Story First Appeared On Mergers & Acquisitions, Original Reporting By Kamaron Leach.

Media conglomerates are shifting their attention and revenue dollars towards over-the-top (OTT) video resources. Due to cord-cutters ditching traditional television platforms, a lot of media M&A has been fueled by companies’ desire to be the first, to rush new products to the market, or to improve existing platforms in order to stay ahead. Disney-owned ESPN, Google and AT&T are among the buyers.

OTT, arguably the number one buzz word across the entertainment industry besides Kardashian, is a term used in the broadcast business for the delivery of film and television content using the Internet without requiring viewers to subscribe to a traditional cable or pay-TV service. How did we get this point in the media business, you ask? Simply because consumers want easier access to their favorite television shows, Netflix Inc.’s (NYSE: NFLX) disruptive introduction to the market by actually listening to consumers, and older media conglomerates scurrying to shift their business model in order to catch up.

Entertainment and sports media channel ESPN Inc., a subsidiary of The Walt Disney Co. (NYSE: DIS), has begun prioritizing its OTT technology efforts as the network has been plagued with mounting pay-TV subscriber losses over recent years. Disney paid $1 billion in January to acquire a 33 percent stake in video streaming company BAMTech in order to enhance its digital delivery capabilities and to support ESPN’s existing OTT platform WatchESPN. Disney is so optimistic about getting ahead of the OTT wave that they tapped former Amazon (Nasdaq: AMZN) video executive Michael Paull to lead BAMTech in February. ESPN, despite holding the largest market share among cable sports networks to date, has lost more than 12 million subscribers since 2011, according network ratings company Nielsen.

In June 2016, AT&T (NYSE: ATT) bought QuickPlay Media Inc., a cloud-based video streaming service provider that allows users to view content on mobile devices, from private equity firm Madison Dearborn Partners. AT&T had an existing relationship with QuickPlay prior to the deal, where the tech company powered AT&T’s U-verse TV Everywhere service. The QuickPlay acquisition brings a content-delivery platform for the buyer’s upgraded video distribution service – which now includes DirectTV Now, DirecTV Mobile and DirecTV Preview – previously slated to launch at the end of 2016. QuickPlay will continue to serve its other clients, such as Verizon (NYSE: VZ) and Samsung, under the ownership of AT&T. It’ll be interesting to see if other broadband providers step out to acquire streaming service providers in order to compete.

Because “OTT adoption [is] rapidly accelerating,” according to Google senior product manager Belwadi Srikanth, Google Inc. bought media streaming and monetization company Anvato Inc. in July 2016. Anvato’s technology, used to power live streams and cloud-based video editing tools, is used by the likes of NBC Universal, MSNBC, CBS, Univision, HGTV, Bravo and Fox Sports.

From Google’s latest OTT bundle, YouTube TV, to Hulu and Netflix, who will be the first to get OTT done right? Only time will tell.