Summit ’19: What we learned about AVOD

NEW ORLEANS – While the practice of cord cutting is widespread, the conventional wisdom has tended toward subscription-based streaming services as the way forward, with streaming giant Netflix setting the standards. But ...
January 31, 2019

NEW ORLEANS – While the practice of cord cutting is widespread, the conventional wisdom has tended toward subscription-based streaming services as the way forward, with streaming giant Netflix setting the standards.

But there’s still an audience for ad-supported, free content, and that audience is growing, not shrinking. That was one of many takeaways from Wednesday’s (Jan. 30) panel “Streamer Wars: AVOD Strikes Back” at the 2019 Realscreen Summit in Louisiana.

Melissa Grego (pictured, left) served as moderator of the panel. She is CEO of the Hollywood Radio & Television Society, a television and media networking, education and career development association.

Panelists were Adam Lewinson (second from left), chief content officer of Tubi; Caitlin Meek-O’Connor (center left), head of acquisitions at Little Dot Studios; Sarah North (center right), VP, head of TV and long-form content at SoulPancake; Ben Relles (second from right), head of unscripted programming at YouTube Originals; and Jeff Shultz (right), chief business officer at Pluto TV.

The panel came as the industry shifts in palpable ways. NBCUniversal recently announced that its own streaming service would be ad-supported, and YouTube has shifted its previously paid, premium content to its free, ad-supported service. And just last week, Viacom acquired Pluto TV, suggesting trust in the streamer’s viability.

So if ad-based video on demand (AVOD) is a feasible way forward for content producers and distributors, what might that look like in practice? Here are some of the things we learned about AVODs:

AVOD is catching up to SVOD

Free streaming site Tubi recently announced that it has become profitable after four years in existence.

“Netflix has done such a good job of reversing the business model of television, and basically AVOD is just the future of linear television,” said Lewinson, who doesn’t think Tubi will replace Netflix, but rather that the two will likely thrive alongside one another.

“Two years from now, AVOD and SVOD are probably going to have parity,” he added referring to both revenue and audience.

“Linear” streaming works

Viewers also, in many ways, are turning to more traditional viewing practices.

“The point of entry for AVOD was a lot of mobile and tablet viewing, and now we’re seeing increasing amounts on the TV,” said Meek-O’Connor. “Last year, our TV viewing doubled on YouTube.”

And in some cases, viewers are also seeking a linear experience, as Shultz explained of Pluto TV users. Pluto aims to recreate a cable TV viewing experience online by programming shows and movies together as well as creating clusters or “channels” of related content.

“Less than 10% of our viewing is in video on demand,” he said. “To put it another way, that Batman Begins is on minute 22, and people watch there through the end rather than starting on minute one, second one.”

That means opportunities to advertize are bolstered by viewing habits that reject the all-you-can eat buffet model in favor of a curated program that doesn’t offer the chance to skip ahead.

Subscription fatigue might already be here

Then there’s the reality that we’re no longer just looking at Netflix and a small handful of SVODs. The field is getting crowded, and consumers aren’t necessarily going to put up with ever-increasing streaming bills.

“My stepdaughter is 14, and she is outraged if she has to pay for something, so it’s a solve for that,” said North. “You’ve got an older generation who grew up with the broadcast model, so they got used to something piping in for free, and I think this is a way for them, once they’ve adapted, to have that same experience, but then for my 14-year-old stepdaughter, she grew up going, ‘give me Liza [Koshy on YouTube],’ and this is an experience that’s natural for her as well.”

Lewinson also suggested viewers are already gaming the system by sharing passwords, using free trials, and finding other ways to bypass subscription fees. “Consumers are really finding a way to get it for free anyway,” he said.

That doesn’t mean AVOD will likely replace SVOD, but rather that both models have their limits and will more likely find a balance, with viewers giving their time to advertisers on some platforms, and their money on others.

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