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11 February 2016

Comcast finally gets its own OTT service

By Charles Hall

M-GO, the joint venture between DreamWorks Animation and Technicolor that sells and rents movies and TV shows online. The connection is direct: Comcast is the 100% owner. Comcast owns all of NBCUniversal, which owns 100% of the ticket-selling website Fandango, which has acquired 100% of M-GO.

Neither the theater business nor the pay-to-see OTT businesses are booming. M-GO competes against tough and deep-pocketed competitors such as Apple’s iTunes, Walmart’s Vudu and Amazon’s Prime plus upstarts such as UltraFlix. The pay-to-see crowd is having a hard time competing against subscription services such as Netflix, Hulu and Amazon, which offer both types of OTT services. That’s shown by the percentages of online bandwidth that the various services use.

Fandango said users of M-GO will continue to buy and rent shows at the M-GO Web site or with the M-GO app that is on many smart TVs and mobile devices.

Fandango’s initial comment about the acquisition is that it would use M-GO as part of its “super ticket” marketing strategy such as one it recently did, which offered its purchasers of theater tickets to “The Divergent Series: Insurgent” a digital download of the original “Divergent.” The “SpongeBob Movie: Sponge Out of Water” super ticket included a pre-order of the film, plus a copy of the previous SpongeBob movie, for $15 more than the ticket price.

Comcast is fully aware of the OTT opportunity. Its video-on-demand catalog has 75,000 shows, 700 full seasons of different TV series and 98 live streaming channels that are available outside the home to its pay TV subscribers.

Although its Fandango subsidiary may be running M-GO, the fact is that Comcast now owns a fully-functioning OTT service that has a large library of popular content including many 4K titles. Comcast can do with it what it likes. Rename it. Add titles. Promote it on its other properties such as its pay TV service and TV channels. It could also add a subscription service so that M-GO could compete more fully against Amazon’s Prime service, which is also a dual transaction and a subscription site. After all the now Comcast-owned M-GO is a direct competitor against Apple, Amazon, Walmart and other transactional OTT services.

Fandango said it will eventually rename M-GO to reflect Fandango’s owner-ship. Financial terms of the acquisition weren’t announced. M-GO will eventually move its operations from its current site in Culver City to Fandango’s facilities in West Los Angeles. It said a small number of employees at M-GO were terminated and some were hired by Fandango.

Fandango is doing well selling tickets to theaters, which have recently shown little increased attendance. It said its revenue from ticketing increased 81% in 2015 over the prior year and that it added 1,600 new screens. Its total US screens is now more than 27,000.

Fandango president Paul Yanover said, “With the addition of M-GO, we’ll be able to accelerate the ticketing momentum achieved in a record-breaking 2015 by creating compelling new digital products that serve consumers throughout the movie lifecycle.”

Fandango is going to get a new competitor. Three major Hollywood studios — Fox, Disney and Lionsgate — are spearheading a $50 million investment in a ticketing app for mobile devices called Atom Tickets that’s expected to debut this summer. Ticket purchasers can share their selections with friends that can then pay as individuals or as a group. Users will be able to get refreshments without waiting in line. It is also said to be considering offering discounts on tickets to showings that are less than sold out. Fandango does not offer any of those – yet.

Perhaps, if Atom Tickets wants to add an OTT service as Fandango has done with M-GO, it can consider partnering with or even acquiring NanoTech, which owns the OTT service UltraFlix that specializes in 4K content – in fact has more 4K content than any other OTT service.

This first ran in Rider Research’s Online Reporter.