Are you ready for the new video economy?

The days of the current UK video economy and its associated trading mechanics are coming to an end, says Maxus UK's chief executive.

The future of video feels pretty assured at the moment. When asked to do some stargazing recently, Nicola Mendelsohn of Facebook said: "If I was having a bet I would say video, video, video." Pretty unequivocal stuff and hard to disagree with.

George Bernard Shaw on the other hand said: "success covers a multitude of blunders" and while the investment into video, both linear and digital, continues to increase, the future landscape could at best be described as fragmented and at worst a mess.

At the heart of the problem is the fact that marketing taxonomy has failed to keep pace with what consumers are actually doing. TV became AV became Video as we've evolved our buy-side and sell-side structures to meet a shifting landscape, where consumers don't share the same distinctions between platforms as we do.

While the investment into video, both linear and digital, continues to increase, the future landscape could at best be described as fragmented and at worst a mess.

At Maxus we call this period peak complexity as our industry endeavours to navigate and bridge the linear to digital transition.

This is fine for now. But fast forward five years into a post-CRR and wholly ad-served world and we need to consider how in a world of content creators and content distributors the video economy may actually work and harmonise.

Right now the major players in the digital video market can be broadly segmented into three types: platforms that have grown out of established broadcasters (ITV Hub, All 4), platforms that have evolved from UGC platforms (YouTube, Facebook) and finally those originate from Internet 1.0 retail businesses (Netflix, Amazon).

By 2020 all these businesses need to be able to monetise audiences on-platform and must continue to pursue diverse revenue models (subscription, ad-funded, government funded). Their common buy-side currency however will be content and the video content supply-chain will become fundamental to the global advertising and marketing economy.

The inevitable demise of the Electronic Programme Guide means that all programming will need to be appointment to view and therefore the requirement to invest more heavily into "walled garden" content will become ever more pronounced.

We are already witnessing the early audience land grabs through the likes of Netflix whose chief content officer, Ted Sandaros, said last year they were no longer interested in licensing TV shows that weren't exclusive to the Netflix platform.

In short, rights to content will become everything. We are used to seeing this already in the world of sport where the likes of Twitter and Google are already exploring different ways to monetise and license broadcast sports rights.

Increasingly however, entertainment programming will be subject to perpetual and vigorously-contested rights issues – the forthcoming Top Gear rival, The Grand Tour, is a particularly apposite UK example and will become the norm as content distributors seek to gain the only competitive advantage they can.

So what does this mean for agencies and advertisers in the UK? For a long time CRR and its mechanical forebears have maintained a broadly parochial broadcast economy. Broadcasters funded by this domestic advertising model are now arguably vulnerable in a global content economy and while ITV Studios for example has been an extraordinary global success story, its parent's ability to monetise that content through advertising in single market distribution is more limited.

Entertainment programming will be subject to perpetual and vigorously-contested rights issues.

Post the current customer subscription land grab, I believe it's inevitable that Amazon and Netflix will need to move to a blended ad model to sustain their current levels of growth. And alongside Google and Facebook, they will therefore be perfectly positioned to try and dominate a globalised video ad model.

Moving to speculative outcomes on this basis, I believe that post-CRR we will operate a number of trading mechanics but foremost among these will be a global system of "up-fronts sans frontieres" based on the current US model, where brands and agencies will need to forward invest into content rights across borders.

Content distributors will compete fiercely and continually for rights to video content and advertisers will need to provide surety of financial backing across markets to allow for the content to be developed.

Whatever the outcome, we can absolutely be guaranteed that the days of the current UK video economy and its associated trading mechanics are coming to an end. Those agencies and advertisers that are geared up for the new video economy, driven by rights, globally traded and fiercely competitive will be the ones to secure an immediate and lasting advantage.

Nick Baughan is the chief executive officer at Maxus UK

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