After years of steady declines, cord-cutting by subscribers to MVPDs may finally be flattening while viewing on free streaming services is on the rise, according to a new study from Horowitz Research.

More than half (52%) of the 2,200 adults surveyed in Horowitz’s State of Media, Entertainment and Tech: Subscriptions 2023 study said they subscribe to multichannel video programming distributors (MVPDs), matching last year’s survey percentage. Further, 80% of MVPD subscribers rate their satisfaction with their pay TV provider at 80%, slightly up from last year, according to the researcher. 

Also, 32% of cord-cutters say that they might return to cable if the cost of streaming services continue to increase. Consumers report spending more than $50 per month on subscription streaming services, with only 33% of cord-cutters reporting that they were saving “a really good amount” compared to the traditional MVPD bundle. Increasingly consumers are looking for managed services to help control costs, according to Horowitz. 

“Managed services — in which subscribers can see and manage all their streaming content in one place — would be an antidote to the challenges inherent to today’s highly fragmented streaming space, and consumers seem open to consolidating their services together,” Horowitz Research chief revenue officer and insights & strategy lead Adriana Waterston said. “It’s a matter of which companies will compete to be the managed services solution from the streaming age, between traditional MVPD’s and tech companies like Amazon, Samsung, Roku and Apple.” 

Meanwhile, consumers are spending more time accessing free ad-supported streaming TV [FAST] services. Nearly 70% of viewers use free streaming services like Pluto TV, Tubi, Peacock and YouTube at least monthly, up from 42% in 2019, according to the survey. 

“The adoption of AVOD/FAST services — and the concomitant increase in streaming ad revenue we can expect to see — will help offset revenue loss on the linear side, which is critical as programming costs continue to skyrocket,” Waterston said.

The survey was conducted in January and February of 2023, Horowitz said.

As streamers race to add commercials to their services, a new survey by Hub Entertainment Research finds that subscribers think the number of ads they’re seeing is much more reasonable than live TV or traditional on-demand programming.

In the study, 61% of subscribers to Warner Bros. Discovery’s Discovery Plus called the number of ads reasonable. Just 23% said the number of ads were unreasonable.

With HBO Max, also owned by Warner Bros. Discovery, 53% called the number of ads reasonable, with 25% labeling the number of commercials on the service unreasonable.

Among other services in the study, 46% of Peacock subscribers, 44% of Paramount Plus subscribers and 43% of Hulu subscribers called the number of ads they see reasonable.

Those are all still better than generic Free Ad-Supported Streaming Television (FAST) channels, with 37% of FAST viewers calling the ad load reasonable and 12% describing it as unreasonable.

Only 22% of respondents said the number of ads on live TV was reasonable, with 45% calling that ad load unreasonable.

The survey didn’t include the two newest major entries into the AVOD sweepstakes, Netflix and Disney Plus, both of which are promising light ad loads.

The light ad loads are not just a benefit for viewers. They also help advertisers, according to the study. The services with the most “reasonable” number of ads also scored highest when subscribers were asked how much attention they paid to ads during shows. For Discovery Plus and HBO Max, 37% of viewers said they paid complete attention to the ads, followed by Hulu, Paramount Plus, on demand programming and Peacock. Scoring lowest in terms of attention were live TV, with 42% of viewers saying they paid no attention to the commercials they see, and FAST channels.

“A better ad experience makes for stronger ad engagement,” Hub said. “Overall viewing enjoyment is closely linked with ad attention, and ads and ad breaks that are shorter are more likely to keep viewers engaged.”

Shorter ad breaks were the top thing subscribers said would get them to pay attention to ads, followed closely by earning rewards for watching, shorter ad lengths and running single ads in a break.

“The industry seems to have finally solved the mystery of how to get consumers to accept ads in TV — and it was as simple as offering a less onerous ad experience and paired with a price break to boot,” Hub principal Peter Fondulas said. “Now that Netflix and Disney Plus have jumped on the ad-supported bandwagon, the question is whether and when the remaining ad-free only holdouts will join in.”

Hub surveyed 3,001 U.S. consumers aged 14 to 74 who watch at least one hour of TV per week. The survey was conducted in November. ■

While buyers point out that there are numerous challenges to advertising on streaming TV, Krishan Bhatia, president and chief business officer at NBCUniversal Advertising and Partnerships, insists real solutions to those issues exist today.

Reacting to a story in The Wall Street Journal quoting prominent media-agency executives in a note being sent to about 50,000 brands, agencies, ad tech vendors and measurement companies, Bhatia said "the gloom and doom about AVOD is overhyped" and that "those of us doing business in today's modern digital marketplace are embracing modern, digital tools."

For several years, NBCU has been outspoken about improving advertising for both advertisers and viewers. It promised to cut ad loads in shows like Saturday Night Live, held "developer meetings" to tout its ad tech, invited data and research companies to find better ways to count viewers and evaluate campaigns, and worked with marketers to determine what streaming service Peacock would do for them.

To be sure, there are issues with streaming advertising including transparency, measurement, repetitive ads, even fraud. "Fortunately, across every corner of this industry, we are working with partners committed to accelerating our industry's transformation," Bhatia said.

Bhatia insists the evolution of TV to streaming is going better than when cable TV changed the industry. TV advertising got worse in the cable era with more clutter, antiquated viewer measurement and stalled innovation, he said.

Instead, "this shift to digital and streaming has introduced new technologies, new data, and new capabilities that offer fixes for old problems and the creation of new experiences and capabilities," he said.

He pointed to technology that enables streaming media platforms and advertisers to cap frequency, ensuring that viewers aren't annoyed by seeing the same commercial over and over.

"Frequency management tools coupled with Ad IDs, which allow marketers and programmers to track and manage which ads deliver how often across different platforms, and prevent wasted exposures, are ready to use today," he said. "And as targeting has gotten more sophisticated, audience attributes have rendered traditional age and gender proxies less relevant, making the advertising viewers see in streaming only more relevant."

Strides are also being made in measurement, with NBCU's request-for-proposal process uncovering more than 150 measurement companies that can help reflect consumer behavior and measure advertising impact.

While complaints and challenges may be sexier to write about, Bhatia said a lot of progress is being made, specifically on four fronts:

• NBCU has "created a superior experience for viewers and advertisers by sitting marketers next to engineers."
• It has built interoperable systems that work seamlessly for advertisers
• It has invested in data and identity.
• It has accelerated new measurement.

"To realize the full potential of this transformation, we must recognize and adopt the innovation that already exists and seek out more partners building for the future. When we do, we will accelerate the progress we've already made — but we must all see it, own it and push it forward, together," Bhatia said. ■

Linear TV ad revenue and pricing — until now largely immune to cord-cutting and the shift of viewers to streaming — is getting close to a tipping point with Netflix and Disney Plus entering the ad-supported video business, Wells Fargo Securities media analyst Steven Cahall said in a new report.

The report — provocatively titled “Advertising: Death of the Linear TV CPM” — notes that as linear ratings have declined, advertising prices on a cost-per-thousand viewers (CPM) basis have risen annually by double digits. That gravy train is about to end, maybe as soon as next year’s scatter market, Cahall contends.

Cahall forecasts that digital TV revenue will rise to $19 billion in 2023 from $4 billion in 2019. A chunk of that will come from linear TV, which has been holding fairly steady at about $70 billion for the past few years.

Of the $72 billion Cahall expects to be spent on linear TV in 2023, just $18.5 billion goes to live sports, which he said is the most secure content for traditional broadcast and cable networks. Upfront deals will also be slow to change in 2023, leaving the $10.5 billion in non-sports, non-new ad inventory sold in scatter as the "low-hanging fruit" that could shift to spending on streaming.

By 2024, even the upfront will shift towards ad-supported video-on-demand (AVOD), he said.

"The way we see this playing out is that the 2023 upfronts will proceed similar to history as AVOD will still be a trickle, but by H2 2023 we could see much softer linear scatter demand due to AVOD that pressures linear CPMs," Cahall's report said. "Over time, this is likely to negatively impact all linear TV pricing and by 2024 the upfronts could be much different."

At this point, Wells Fargo estimates that broadcast sports generates TV's highest CPMs at $70, followed by what it describes as "super-premium AVOD" such as Netflix and Disney Plus at about $55. Premium AVOD like Hulu draws CPMs in the $35 range while cable news and other prestige cable programming attracts CPMs of about $40. Average cable advertising is sold at a $25 CPM, according to Wells Fargo.

"The emergence of AVOD is set to provide a growing alternative for large format advertising, and we believe linear TV will increasingly be at risk to shifting budgets," Cahall said.

From an investing point of view, Cahall said the risk to linear TV revenue represents "material earnings downside to AMC Networks and Paramount, though all media and broadcast stocks will need to grapple with the pressure over time." ■

With streaming video companies looking for ways to stem the slowdown in subscriber growth, a panel of experts at the Next TV Summit said using an old cable tenet — bundling — could help attract more price-conscious consumers into the fold. 

At the “Recession Realities” panel at the gathering Tuesday, part of NYC TV Week, Weather Group senior VP and chief marketing officer Fred Bucher said the same economic forces and price sensitivity that killed the cable bundle are apparently making a comeback with streaming. Already streamers like Disney, with its Hulu, ESPN Plus and Disney Plus bundle, and others are repackaging services to make them more attractive to consumers. 

“Economic forces and price sensitivity is what killed the cable bundle, and that’s continuing,” Bucher said, adding that price sensitivity and churn are driving the creation of different tiers of pricing and services like ad-supported video-on-demand (AVOD) and free ad-supported streaming television (FAST) services.

Weather Group launched its own streaming service — Local Now — to address cord-cutters who missed local news and entertainment content.

“A lot of the answers for the future are in the past,” Bucher said, adding that what built the cable business — aggregation, better pricing and bundling — will likely be cornerstones of SVOD and AVOD models in a few years. 

Panel moderator Jon Geigengack, founder and principal of Hub Entertainment Research, said that as the bundle grows, consumers will crave a way to make finding content easier, and aggregation is one way to satisfy that need. 

DirecTV Advertising Group VP, client success, programmatic and ad operations Rose McGovern agreed, adding that aggregation is what DirecTV does best. Citing recent Nielsen research, she said about 64% of customers wish to have a bundle that includes as much or as little content as they want. 

That includes live and local programming as well, McGovern added, with about 67% of people nationally watching live content every day. 

As content streaming choices grow, Bucher said it is imperative that content companies get the word out, and that means marketing becomes more important than ever. 

“The biggest threat is underinvestment in marketing,” Bucher said. “It starts with great content, great product experience, and great marketing. If you don’t have those three things, you’re not going to win.” 

Bucher added that critical to the marketing effort is that streamers really know their consumers. 

“You have to understand who your consumers are, understand who your hard core users are too  and make them happy,” Bucher said.

And once you’ve hooked a viewer, the trick is keeping them. At AMC Networks, executive VP of performance marketing Sylvia George said engagement is a critical part of the equation. 

“What is so critical is your audience,” George said. “The relationship with the audience, super-serving the audience, making sure that you’re segmenting your audience based on data, based on what is your audience engaging with once they come in — not just the first thing they watch, what’s the second and third thing they watch. Getting people engaged within a specific time period is critical to ensuring retention. If you don’t get your subscriber engaged within a few weeks, you’re at risk of losing them. You can’t get complacent.”

The panel also was encouraged by Netflix’s plan to launch an ad-supported version of the service soon. The company has already partnered with Microsoft to provide the tech infrastructure for the AVOD service. 

“In some ways, they could help re-energize the advertising business,” Bucher said, adding that Netflix doesn’t have the “institutional inertia” of some other companies that have long been in the ad business. “It’s kind of cool to take a fresh look.”

Bucher was especially encouraged by the vast amount of data in Netflix's arsenal, adding that the ad business may never get this chance again. 

McGovern also was encouraged by the potential for more innovation that a Netflix AVOD product could bring. For example, a departure from the traditional 15-second to 30-second ad spot.

But Bucher warned that whatever comes out of the Netflix AVOD experiment will depend on outside pressures. 

“There’s a lot of stuff they could do that could be an enormous amount of fun… but what it’s going to come down to will be how much pressure they’re under to deliver a number of revenue,” Bucher said. “If there are huge revenue expectations, that’s going to diminish innovation, because they are going to default to what they know, and agencies will say, ‘Just make it easy for me.’ That, to me, will be a shame. 

“The irony is that Reed Hastings, who was so dogmatic for so long about advertising, can actually become the person to really reinvent the space,” Bucher continued. “I hope they’re given the time to do that. “ ■ 

As streaming video tightens its grip on the way consumers view and engage with content, advertisers need to find ways to effectively measure audiences in the new paradigm, while at the same time remain flexible in how they sell ads beyond traditional pods and shows, Group M executive director, U.S. investment strategy Adam Gerber said at the Advanced Advertising Summit, leading off NYC TV Week. 

Measurement has been a major concern for advertisers, networks and buyers for years as streaming has further fragmented viewership. Gerber, who kicked off his speech by comparing the current ad environment to the Doomsday Glacier — the massive sheet of arctic ice that is expected to play havoc with world sea levels — said fragmentation is much different today, promoting the need for the industry to work together to find effective solutions.

Also: More Coverage from the 10th Anniversary NYC TV Week

Gerber, in a fireside chat with B+C Multichannel News business editor Jon Lafayette, said that in the past, fragmentation meant more distribution choices — hundreds of cable channels versus four broadcasters — but could still be measured via passive panels. With impression-based advertising, measurement becomes dependent on publishers implementing tags or conducting server-to-server integration with measurement companies, which most publishers choose to avoid.  

Also: AVOD a Growing Part of Streaming: Nielsen 

“That’s the growing problem, as measurement is dependent on a publisher or a media company deploying either an SDK, server-to-server integration or a tag, as soon as one of the big ones decides not to participate in that, you don’t have a view of the marketplace,” Gerber said.

But the answer isn’t necessarily having a new measurement currency for the industry, Gerber said, adding that every advertiser will have a different way to evaluate the marketplace and do deals with publishers. Whether that is through attention metrics, audience based metrics or something else depends on the size of the advertiser. But he does believe that the industry needs a common way to size the overall market.

As streaming becomes more prevalent — Nielsen reported that streaming video share surpassed cable and broadcast for the first time ever during the month of July — Gerber said questions around ad capacity and valuation become more important. That gap could widen as Netflix and Disney Plus unveil the ad-supported versions of their respective services. Gerber said while streaming’s dominance may be a little questionable on the ad-supported side — he said about half of streaming subs are in non-ad-supported services — those that do air ads do so with less frequency. 

The typical linear network airs 16 minutes to 18 minutes of ads every hour, Gerber estimated. For streamers, that ad load drops to between three minutes and seven minutes each hour. That works out to a 60% decline in ad capacity, meaning that every streaming ad impression has to work harder. 

Also: What If They Launched an Ad-Supported Streaming Service and No One Came? 

The solution, he said, isn’t in returning to the old model — something that will never happen, he believes — but in finding new ways to squeeze money out of ad impressions.

“The challenge for streaming companies is to find the right balance,” Gerber said. “It might not be pods and shows. It might be much more tied to some of the things tied to the streaming space, things like voice navigation, things like commerce, things like sponsor-based models in delivery of programming. I think we have to have a creative renaissance in the streaming space to find new ways to engage consumers in ways that don’t tick them off. I think we’re just getting around to it.” ■

Free ad-supported streaming television (FAST) services are all the rage as content providers and distributors look for any way to squeeze profits from streaming video, and though there is a danger that too much of a good thing could once again saturate the market, Barclays Group believes the segment could end up taking share away from more traditional streamers.

The number of FAST services has grown significantly over the past two to three years with services from traditional media giants (Peacock, Tubi, Pluto, Xumo, Vudu and Crackle), hardware vendors — (Freevee, Roku Channel, Samsung TV Plus and LG Channels) and independents (Plex, Kanopy, Hoopla) and more are on the way. Warner Bros. Discovery has said that it plans to launch a FAST service at some point in the future as has Android TV.

Also: More Scripps Channels Go FAST in Deal with Vizio

Low barriers to entry and lower costs for content — most of the services offer classic TV series and older movies — make FASTs attractive to content creators and distributors alike. But in a research note, Barclays Group media analyst Kannan Venkateshwar asked, despite those plusses, is FAST sustainable?

One drawback is the lack of differentiation of content between the services. In his report, Venkateshwar noted that content overlap for FAST services is more than 80%, compared to 3.9% for Disney Plus and 9% for HBO Max.

Also: FAST Usage Was Up 9 points in the First Five Months of 2022

What FAST services lack in content differentiation they apparently more than make up for in availability. In his report, Venkateshwar noted that FAST services may have higher penetration than any single premium subscription service because of the breadth of their distribution, through smart or connected TVs and other means. Smart/connected TV penetration is 87% in the U.S. and 40% globally, and every connected TV has access to the full suite of FAST services as well as streaming offerings like YouTube and TikTok.

Availability is Key

“Access to premium services on the other hand is based on penetration of SVOD services and consumer propensity to pay for multiple services,” Venkateshwar wrote. Although the average U.S. household subscribes to 4.7 streaming services, he added, the one with the highest penetration (Netflix) is at 56% while overall streaming penetration is 85%. 

“This implies that the mix within this SVOD basket consumed by the average household is not constant and there is a lot of switching based on content release schedules,” he continued, adding that it also accounts for the high churn levels of most SVOD services. 

While engagement for individual FAST services is below that of their SVOD counterparts, combined they account for more minutes than subscription offerings. Barclays, citing Nielsen research for one week this year (July 25), noted that together Tubi (4.4 billion minutes), Roku Channel (3.5 billion minutes), Pluto (5.1 billion minutes) and Peacock (3.5 billion minutes), edged out Amazon Prime Video (15.1 billion minutes) and was nearly twice that of Disney Plus (9.6 billion minutes) and almost three times that of HBO Max (6 billion minutes). That gap could narrow further as awareness for FAST offerings increases. That’s also where aggregation services like Android TV, Roku, and Comcast’s Flex offering could become a factor, Venkateshwar wrote. 

Also: David Zaslav and the [Streaming] Deathly Hallows  

“With television viewership increasingly determined by aggregation services and the still growing clutter of thousands of titles across streaming services, we believe content choices are likely to be increasingly determined by the recommendation engines that can look across streaming services,” Venkateshwar wrote. “However, with every major recommendation engine having its own affiliated free ad supported streaming service (Comcast Flex-Peacock, Xumo, Vudu, Android TV — new Channels service, YouTube, Amazon Fire — Freevee, Roku — Roku Channel etc.), content on these services is likely to feature as prominently on TV screens as premium content for SVOD services.”

It’s All About Engagement

Ad revenue for FAST services is still low. According to Barclays, the top three services ad-revenue-wise are Pluto TV ($1.2 billion), Peacock ($1.16 billion) and Tubi ($653 million). And though upcoming AVOD products from Netflix and Disney Plus could further cut into that ad revenue pie, Venkateshwar wrote that it may all come down to overall engagement. 

Also: Is Engagement More Valuable Than Subscribers? 

“One of the most important drivers of engagement however may be the recommendation engine sitting outside these services,” the analyst wrote. “This in turn could turn streaming advertising workflow to a process not that dissimilar to search where the recommendation engine ultimately determines how GRPs are allocated across services, potentially in return for a share of ad revenues.” 

Walled Gardens and Open Spaces

Venkateshwar continued that this could lead to a split in the overall streaming ad ecosystem, similar to what has happened in the digital advertising arena. He estimated that today about 34% of time spent online is with so-called “walled gardens” like Facebook, Twitter, Snap and Pinterest, while the remainder is spent on the open Web, which also accounts for about 40% of ad revenue.

Over time, FAST could act more like the open Web, Venkateshwar wrote, while SVOD is more like a walled garden. 

“This process may result in advertising on these free streaming services being lower-priced fungible programmatic inventory, with CPMs being more comparable to services like YouTube and TikTok,” Venkateshwar wrote. 

According to the analyst, walled gardens are more likely to have CPMs that resemble television because they would have more control over ad delivery and measurement. But he added that across both segments the availability of inventory will most likely be determined by recommendation engines, which could result in lower ad margins. 

Still, Venkateshwar believes FAST services will become a larger category, albeit more fragmented than SVOD or AVOD spaces, making their success more dependent on aggregators. And though the same holds true for traditional SVOD and AVOD offerings like Netflix and Disney Plus, they have considerably more brand awareness as well as their own content franchises that should help drive engagement.  

“With Android TV launching its own free streaming service, Comcast already having Xumo/Vudu/Peacock, Amazon having Freevee and Roku having Roku Channel, we wouldn’t be surprised if independent free ad-supported streaming services like Pluto and Tubi, which have among the highest engagement today, end up declining in importance and consumption skews towards services owned by aggregators,” Venkateshwar wrote. “Therefore, we may see a significant skew in revenues across ad-supported streaming services over time, focused on a small set of services despite broader fragmentation in free service availability.” ■

Netflix said it will work with Microsoft as its global advertising technology partner as the company rolls out an advertising-supported version of its industry-leading streaming service.

“Microsoft has the proven ability to support all our advertising needs as we work together to build a new ad-supported offering,“ Netflix chief operating officer and chief product officer Greg Peters said. “More importantly, Microsoft offered the flexibility to innovate over time on both the technology and sales side, as well as strong privacy protections for our members.”

Financial terms of the deal were not disclosed.

“At launch, consumers will have more options to access Netflix’s award-winning content,“ Microsoft president, web experiences Mikhail Parakhin said. “Marketers looking to Microsoft for their advertising needs will have access to the Netflix audience and premium connected TV inventory.

”All ads served on Netflix will be exclusively available through the Microsoft platform,“ Parakhin said. “Today’s announcement also endorses Microsoft’s approach to privacy, which is built on protecting customers’ information.“

After announcing it had lost 200,000 subscribers in the first quarter, sending its stock — and shares in other media companies turning to streaming — tumbling, Netflix looked to assuage Wall Street and reignite its growth with plans to cut down on password-sharing and explore an ad-supported version of its service.

Netflix later indicated it was aiming to start the ad tier by the end of the year.

While it is a leader in streaming technology, building an ad-tech stack from scratch would be an expensive, time-consuming enterprise for Netflix, which instead reached out to partner with companies in the industry. Reports circulated that Netflix was talking to companies including Comcast and Google. 

Not known as a TV ad-industry player, Microsoft recently acquired Xandr, which was AT&T's advanced advertising company when it owned WarnerMedia.

Part of Netflix’s popularity comes from not having ads. But its subscription price has climbed and, as viewers subscribe to more services, they're looking for cheaper alternatives, including ad-supported VOD. 

“It’s very early days and we have much to work through, but our long-term goal is clear: More choice for consumers and a premium, better-than-linear TV brand experience for advertisers,“ Netflix’s Peters said. “We’re excited to work with Microsoft as we bring this new service to life.” 

 Analyst Steven Cahall estimated that Netflix could generate ad revenues of $889 million in 2023, $1.975 billion in 2024 and $2.9 billion in 2025. 

“Netflix  has scale and power: Netflix will eventually deliver more ads than any other company, maybe except for Google and Amazon (and possibly Meta combining Instagram and Facebook),” he said in a report in June.

Creating a lower-priced ad supported tier will also help Netflix rekindle subscriber growth.will be able to increase its subscriber count to 272 million by 2025. Cahall calculates that AVOD will account for 30% of Netflix subscribers at that point. 

Cahall thought Netflix could charge $9.99 a month for the AVOD service, compared to $14.49 for its current ad-free standard tier.

In addition to tech issues, Netflix is reportedly in the process of renegotiating the deals it made for acquired content, giving it rights to sell advertising in the series it dosn’t own. It will also have an issue finding appropriate place to put ads in its originals because they weren’t formatted for commercials.

Tim Vanderhook, CEO of Viant Technology, one of the ad tech companies that had discussions with Netflix, said  Putting its own ad stack would have been difficult for Netflix to do quickly.

Vanderhook, who also co-founded Xumo, one of the first ad supported streaming service (now owned by Comcast) said Netflix needs to ad insertion technology to make sure ads run in the proper place without disruption the program stream and, more importantly, reportng on the back end that tells advertisers where and when their ads ran, who the ads reached and what impact it had. 

“They first need to decide what is the ad format? Are they going to offer 30-second spots or 15-second spots? What are the rules going to be on ad loads,” he said. “They’ree going to be so good at that because they're a product lead consumer-driven company and they're going to be focused on the consumer experience.”

Vanderhook is also bullish that the ad supported version of Netflix will generate substantial subscriber growth, as well as strong levels of revenue per subscriber.

Netflix will be jumping into an ad market showing signs of slowing down. The market will also be getting more crowded with Disney also planning to launch an ad supported version of Disney Plus.

But demand for streaming advertising to connected TVs has been the strongest sector of the market, commanding strong pricing because of the superior addressability offered by streaming ads

“I don't think it's a heavy lift that all marketers want to reach the consumer audience that Netflix has,” Vanderhook said. Especially if its able to put the right ad in front of the right viewer.

Vikrant Mathur, Co-Founder of AVOD publisher Future Today, reacted to the news that Netflix was working with Microsoft by wondering if MIcrosoft would buy Netflix.

“I think it is a huge win for Microsoft. They already have a $10 billion-plusadvertising business and most recently with the acquisition of Xandr they now have a significant presence in the CTV space. Netflix inventory will be the icing on that cake,” Mathur said.

“Assuming this is exclusive, ownership of the Netflix inventory puts Microsoft clearly above any other competitor in the space and very well in control of the $60 billion television advertising market. It would be interesting to see if, over the long term, Netflix builds its own ad stack and capabilities in parallel or simply outsources the job to Microsoft. Is this the first step towards a Microsoft acquisition of Netflix?" ■

Future Today said that its HappyKids free, ad-supported streaming service has added new parental control features.

The company said the new controls help make HappyKids one of the most brand-safe and brand-suitable AVOD services for kids, families and advertisers. They are first available to viewers using Roku devices but will be rolled out to other distributors in the coming weeks.

Parents previously were able to choose what programming their families can access based on designated age groups. Now, parents can restrict content based on specific topics, interests and themes, as well as block individual programs. 

For example, parents using the new controls can block content featuring video game characters they feel their child may not be ready for yet. 

Also: Future Today Adds Content From Mattel, Nelvana, 9 Story

“These controls enable end users to filter their programming and optimize the contextual advertisements they receive, enhancing brand suitability,” said David Di Lorenzo, senior VP of Kids & Family at Future Today. “Our entire library of HappyKids content is family-friendly and kids safe, but many parents want even greater control over what their children watch and have access to. The latest enhancements empower parents to curate suitable and tailored content experiences that reflect their individual preferences. This has a material benefit for our contextual advertisers, as well, who can engage only the most interested viewers.”

For advertisers and brands, allowing families to granularly curate their viewing experience ensures more appropriate and suitable alignment between content and campaigns, eliminating irrelevant ads from being served and reducing waste. In turn, this increases engagement, helps drive brand retention and maximizes streaming and OTT spend.

HappyKids viewers were already shielded by Future Today’s in-house Brand Safety team. The group curates, manages and audits all content featured on the HappyKids app by hand, with every piece of content being vetted by a person. 

“While Future Today has built proprietary technology for creative review, we don’t overly rely on algorithmic content moderation for HappyKids,” said Vikrant Mathur, co-founder of Future Today. “Ultimately, a robust and comprehensive manual review process ensures a safe and suitable viewing experience for our viewers and advertisers.” 

Also: Future Today Rode Streaming Wave in 2020, Looks To Add Channels

Last year, HappyKids increased viewership by more than 160% and continues to introduce new content. The app is available across numerous streaming platforms and devices, including Roku, Apple TV, Android TV, Amazon Fire TV, Comcast Xfinity, Cox Contour, and most recently, as a linear channel on Vizio Smart TVs.  ■

Here in the opening days of the Upfronts, that annual exercise in self-promotion from an industry all about self- (and client-) promotion, it’s a good time to ask one simple question: Now that even Netflix, Disney Plus and Apple TV Plus are adding ad-based programming or even full service tiers, are there enough dollars out there for everybody?  

Timing for this question is particularly pointed, what with inflation pinching discretionary spending, work from home and free time fading, and a potential recession looming. Oh, and the easy money fueling 13 years of tech boom seems to be drying up faster than Lake Powell. 

So, let’s all watch ads! 

The good news: There’s plenty of cash here. The Interactive Advertising Bureau, admittedly no disinterested third party, said in its wrap-up of 2021 digital ad revenues that digital video generated an estimated $39.5 billion in ad revenues last year, up almost 51% from the pandemic-transformed 2020. 

That’s yet more evidence that brands are flowing their spending plans from legacy platforms to connected TVs and other digital distribution channels. And it can’t happen soon enough for all those streaming executives hoping to get a really mammoth bonus next Christmas. 

But it won’t be so easy as waiting for the checks to roll in. 

For one thing, media companies with legacy broadcast and cable operations are having a moment of intense reconsideration in their plans to denude those platforms of any worthwhile content as fast as possible, and shove it onto their subscription streaming services. It might be prudent to keep squeezing those still-relatively-golden geese just a bit longer.

That’s because we now know we can’t count on SVOD to attract 1 billion paying customers by, say, 2025 or so. 

Netflix’s difficult first half of 2022, where it had the temerity to lose a tiny fraction of its 222 million subscribers, has pushed it to suddenly reconsider seemingly every one of its basic tenets of operation, from issuing a lump-it-or-leave-it “culture” document for grumpy employees to considering live-streamed reality competitions to, yes, getting ready to launch an ad-supported tier by year’s end. 

The trade organization Digital Entertainment Group estimated on Monday that Q1 subscription streaming was up 17% year over year, “as direct- to-consumer services including AMC Plus, Disney Plus, HBO Max, Paramount Plus, Peacock and others continued to add subscribers at a healthy rate.”

Healthy is good. But subscriptions can be so complicated, what with no long-term contracts, churn nearing 40% and all those pricey, attention-grabbing originals to produce. Netflix’s stumble suggests “healthy” is a good, not automatically attainable, goal for the sector now.

Add to that other complications. 

Accenture’s “Streaming’s Next Act” report a couple of months back predicted declining consumer willingness to spend on video, exacerbated by poorly constructed bundles, difficult-to-navigate interfaces, and recommendation engines that can’t track everything you watched, or find it anywhere. 

And if those Accenture-delineated issues are a problem among paid services, imagine what it’s like on the lower-rent ad-supported side. Customers there are already annoyed about cheaper-but-not-free services that constantly serve up irrelevant, repetitive and excessive commercials, creating experiences that feel like the basic-cable services they just cut. 

It’s tempting to expect that the IAB’s $39.5 billion pie of online video advertising will keep growing at a hefty 51% clip this year and thereafter. But let’s consider that halcyon vision. 

First, we’re adding three formidable new players to the scrum: Disney Plus, whose parent has been selling ads for more than six decades around lots of yummy show; Apple TV Plus, whose parent already is generating billions annually from advertising elsewhere in its vast operations and is now adding live sports; and Netflix, which has boundless customer data and an interface and recommendation engine that are very good. 

Oh, and for good measure, throw in Amazon. It hasn’t shown any particular interest in putting ads on Prime Video, but the e-commerce giant does keep buying rights to ad-supported live sports such as Thursday night NFL games that will attract lots of national ad dollars. Amazon also operates one of the fastest growing AVOD platforms, Freevee.

Last year, Amazon made $31 billion in online advertising, third on the Interwebz behind only Alphabet/Google/YouTube and Meta/Facebook/Instagram, both of which also know something about digital video advertising. 

And there’s that whole messy, eroding economy thing, which might just affect not only how many SVOD channels we pay for, but also how much brands will spend on advertising in coming months. We’re still in a bit of economic free fall, so it’s too soon to know where this plays out, but it doesn’t look promising for optimists. 

So, you there, second-tier streaming service making some nice change from your FAST/AVOD operations and your Goldilocks-style ad-subsidized subscription tier. What are your real chances of continuing to see those revenues grow?  

Ad-supported services promise a substantial overall market opportunity. But it won’t be an endlessly growing opportunity. For now, it’s likely growth is going to be considerably more modest for a while. 

That means Hollywood companies will need to pursue a rigorous process of triangulation to thrive in this suddenly very complex new ecosystem: 

>They’ll need to preserve their vestigial legacy outlets, milking shows there for revenue as long as possible. 

> They’ll need to keep growing (and especially, improving!) their subscription services. That means spending on distinctive programming, but also improving those buggy, unreliable interfaces. 

> And finally, they’ll need to expand the pie, both of viewers and revenue, with ad-based digital services. They’ll also need to more effectively turn those ad-supported outlets into more effective downstream distribution windows for all the pricey content they’re still making. 

All this will happen just as the ad-based watering hole is about to get a lot more crowded. Hope everyone’s figured out how to get enough to drink. 

Netflix stock fell again Friday (April 22), ending the day at $215.52 (down 1.2%) and capping a three-day decline that saw the company shed 38% of its share price, more than $55 billion in market capitalization and the unofficial title of Streaming Champion of the World. Now with expectations low for Q2, the company is faced with a dilemma: what to do to regain its crown. 

The last time Netflix stock fell like a stone -- remember January 21? -- there was a quick response from hedge fund managers who saw the drop off as an opportunity to take advantage of the panic, to snap up a good stock for a bargain price and rake in the money later. Now, three months later, during Netflix’s latest share cratering, those earlier white knights have left the castle, and there doesn’t seem to be any replacements at the drawbridge, at least anytime soon.

Back in January, hedge fund Pershing Square and its chief Bill Ackman said they had bought 3.1 million shares of Netflix for about $1 billion, claiming he was “all in” on the streaming space and was ready to reap the profits once Netflix turned itself around, probably in the first quarter. At the time, Netflix predicted that it would add about 2.5 million global subscribers in Q1, substantially lower than in past Q1’s -- typically one of the strongest growth periods for the company -- but strong enough. A few days later, Netflix founder and co-CEO Reed Hastings said he bought $200 million of Netflix stock personally, showing his commitment to the company and the stock. 

Also: Netflix Comeback Could Take a While 

Fast-forward to earlier this week and Ackman sold his Netflix stake for a $450 million loss on April 19, and Netflix didn’t add 2.5 million global customers, it lost 200,000 of them. Adding insult to injury, the company said it would lose another 2 million subscribers in Q2. 

In a note to shareholders on April 19, Ackman said that while he and the Pershing team believe in Netflix’s management, its “enormous operating leverage” means that any fluctuation in the company’s future subscriber growth can impact value. 

“In our original analysis, we viewed this operating leverage favorably due to our long-term growth expectations for the company,” Ackman wrote.

“While Netflix’s business is fundamentally simple to understand, in light of recent events, we have lost confidence in our ability to predict the company’s future prospects with a sufficient degree of certainty,” he continued, adding that given its management’s track record, Netflix can still be a successful company and a good investment. “That said, we believe the dispersion of outcomes has widened to a sufficiently large extent that it is challenging for the company to meet our requirements for a core holding.”

In other words, Ackman and Pershing, like just about every other fund that invested in Netflix, believed that the subscriber growth train would never stop. Only a few years ago, analysts were predicting Netflix would have 300 million global subscribers by 2023. Now, analysts like Needham & Co. 's Laura Martin are wondering if 222 million (its current global tally) is the peak.  

Despite the irrational exuberance that fueled a lot of Netflix’s unprecedented run in the past few years -- its stock price more than doubled from $302.60 on November 18, 2019 to $700.99 on November 17, 2021 -- investors had to think, at least in the very back of their minds, that it couldn’t last forever. Like the booms and busts of past stock market bubbles -- tech in the 2000s, real estate in the mid-2000s, everything in the late 1990s -- it eventually has to come to an end. In the past week, Netflix stock has fallen 38%. Shares are down 63% since the beginning of the year. The ride, it seems, is over.

Who or What is to Blame?

To some analysts, the pandemic is partly to blame -- Netflix added nearly 55 million subscribers globally between 2019 and 2021, the height of stay-at-home orders that forced people indoors and in front of their TV sets. Broadband experienced the same slowdown after a booming two years -- Comcast and Charter alone added a combined 7 million high-speed data customers between 2019 and 2020 and just 2.5 million in 2021. Netflix was different because it kept spending money on content -- $15 billion last year, by some estimates -- had some of its most-watched shows ever during the pandemic and even though the North America market was pretty saturated (about 60% of pay TV households have a Netflix subscription), they were going to make it up in spades internationally.

But COVID was a global problem, and even international customers had more streaming choices in the last couple of years -- Disney Plus, for example, has about 46 million subscribers in India alone, a market that Netflix is just-now taking seriously. In the U.S., Netflix was becoming a victim of its own success. Couple that with very aggressive competitors and international instability -- Netflix suspended its Russian operation in March after that country’s invasion of Ukraine -- and it's no wonder that Netflix has had a tough go finding new customers. 

“In hindsight, COVID pulled forward Netflix to maturity in its oldest markets (North and Latin America and Western Europe),” wrote Evercore ISI Group analyst Mark Mahaney in a note to clients, adding that Netflix has about 60% penetration of North American broadband households, 80% when password sharing is counted. “It’s not easy to raise penetration beyond that level.” 

Netflix says it is going to crack down on password sharing and will introduce an ad-supported tier, but there are questions about how soon either of those can be implemented and whether it will make much of a difference. Wedbush Securities analyst Michael Pachter, a long-time bear on Netflix stock, told CNBC in March, when talk began to circulate that Netflix, like other streamers, would consider an ad tier, that it likely wouldn’t be big enough or fast enough to make that much of a difference. He added that Hulu has an ad tier that brings in about $10 per month per subscriber in advertising revenue. 

“The question is do they make more money at $10 per month for advertising or do they make more money charging $15.49 [for service]?” Pachter told CNBC. “I think it’s a push. …Five bucks, six bucks per month plus $10 advertising, that’s a push. What’s the point?”

Needham & Co.’s Martin believes that the ad-tier will help Netflix, but advertising alone won’t solve its problems. In an April 20 research note, Martin wrote that in addition to a lower-priced ad-supported version, Netflix needs to add sports and news content, bundle the service with other products and/or purchase a large film or TV content library. 

“Every streaming competitor does one or more of these things, which puts Netflix at a structural competitive disadvantage, we believe,” Martin wrote. “Another alternative is for Netflix to acquire other companies that provide one or more of these attributes, as it has done for video games.”

Borrowing For Growth 

Pachter has been a harsh critic of Netflix's seemingly endless habit of continually increasing its content spend -- $17 billion last year, according to some estimates, compared to $4 billion for Disney Plus -- by borrowing. Increasing leverage was OK'd by Wall Street as long as the subscriber growth was strong. When it started to trail off, then investors began to worry.

Netflix still has a junk-bond rating on its debt, but it was expected to move into investment grade territory soon. Moody’s Investors Service raised Netflix’s debt rating two notches to Ba1 in April 2021, based on revenue and subscriber growth, and the belief that as that continued, Netflix would begin to report positive, sustained free cash flow soon. Having steady, sustainable free cash flow would allow Netflix to take its leverage ratio below 2.5 times, consistent with its current rating.    

Moody’s is still optimistic that Netflix will be able to pull itself out of the hole. 

“We still see the company continuing to build on its significant scale to penetrate the world's 800 million pay TV homes and the global addressable homes of over 1.5 billion (both excluding China), sustaining competitively low cost per viewing hour leadership, growing average revenue for member, and reinvesting in even more content as it benefits from this virtuous cycle,” Moody’s SVP Neil Begley wrote. 

But that confidence does not come without caveats. In his Friday note, Begley warned that the causes of the Q1 losses and the “potentially sharp” first half declines in subscribers are still there: price increases; competition; and customers that are taking a break from in-home binge-watching as COVID restrictions are lifted. Moody’s said it will continue to monitor those conditions. 

Not Such a Big Surprise 

Pachter had warned that this day would come for years. In a 2019 article by then-Bloomberg columnist Joe Nocera, the analyst remembered being asked to justify his $183 price target on Netflix shares when the stock was already trading at $368 each. He said to justify his price target, Netflix would have to show a $2 billion improvement in free cash flow and have around 300 million subscribers paying $20 per month. Pachter believed Netflix could get there in a competition-free environment, but that wasn’t the case.

“What will happen if competitors are charging $7?” Pachter asked.

Well, that day is here. Hulu raised the price of its ad-supported service to $6.99 monthly in October, Disney Plus raised its price to $7.99 per month earlier this year and Apple TV Plus and Peacock’s premium tier are still at $4.99 per month. Netflix upped the monthly charge for its standard service to $15.49 per month in January.

Back in 2016, Nocera wondered in an article he wrote for the New York Times what would happen if the Netflix hamster wheel of constantly escalating spending to fuel subscriber growth ever slowed down. In his mind, it would lead to a lower stock price, which would increase the cost of debt, forcing Netflix to increase prices or cut back on costs or both. In a New York Times article at the time, he wrote that it would turn the “virtuous circle” of increased spending fueling increased subscriber growth, into a “vicious circle.” 

For years, Netflix was the bratty younger brother in the media business, making fun of its slower, older and less stylish cousins, while spending the equivalent of dad’s money like it was going out of style. That behavior was tolerated, even encouraged by lenders and Wall Street as long as it kept up its blistering growth pace. Now that growth has appeared to stop, or at least slowed considerably, Netflix’s hijinks just aren’t so cute anymore. 

But probably more important is that despite the ups and downs of the streaming market, Netflix was always a pretty predictable company. Sure, subscriber growth would fluctuate, but in the end it would always be higher than before. Today, a hedge fund that three months ago thought it was a good move to take a $1 billion plunge in buying Netflix stock, now thinks it’s better to take a $450 million bath just to get out of the water. ■

Americans increased the time they spent streaming video by 18% in February to 169.4 billion minutes from a year ago, according to Nielsen.

In its new State of Play report, Nielsen says streaming will continue to grow. It found that 93% of Americans said they will increase their paid streaming services or make no changes to their current subscription portfolio over the next year. The number of Americans paying for more than four streaming services grew to 18% from 7% in 2019.

Over the last three years, there has been an 18% increase in available video content, and not surprisingly, a lot of viewers are overwhelmed. With a 20% increase in unique program titles to a whopping 817,000, 46% of respondents said the growing number of shows, services and platforms has made it difficult to find the content they’re looking for. 

When asked if bundled streaming services might make it easier for consumers to find the content they are seeking, 64% of respondents indicated they wish there was a bundled video streaming service that would allow them to choose as few or as many video streaming services as they wanted.

Despite the difficulty, subscription video-on-demand now accounts for 53% of minutes streamed. Of the four hours, 49 minutes per day that the average American spends watching content, 1:22 of that is through connected TV.

At the same time, ad-supported VOD (AVOD) and virtual multichannel video programming distributors (MVPDs) account for 35% of consumption. YouTube TV, which Nielsen said is the vMVPD with the highest household penetration, has grown in percentage of homes by 160% since 2020. 

"The inaugural State of Play really underscores the fact that we’ve entered the next phase of streaming, based on the trends we have been detailing about streaming over the past few years," said Brian Fuhrer, senior VP, product strategy, Nielsen. "We’ve moved from infancy into adolescence, and all the complexities that one would expect at that point. It’s not just that streaming is increasing year over year. Now consumers want access simplified and the explosion of services has renewed discussions around bundling and aggregation. Ultimately, these challenges signal an opportunity as the industry harnesses streaming for long-term business growth.”

The State of Play report leverages Nielsen TV measurement and streaming data, insights from Gracenote, a Nielsen subsidiary, and findings from an online custom survey of U.S. video streamers. ■

Streaming video is here to stay, according to a top executive at one of the largest traditional media companies.

“When we look at the total video business, streaming has exploded in the last few years, and people are not going back,” Linda Yaccarino, chairman for global advertising sales and partnerships at Comcast’s NBCUniversal unit, said.

NBCU launched Peacock, its streaming service, in 2020, joining a race started by Netflix, Amazon Prime Video and Disney Plus.

Also: NBCU Recognizes More Measurement Companies as Nielsen Alternatives

From the beginning a key difference between Peacock and other direct-to-consumer video products was that Peacock would be ad-supported, carrying a light load of commercials in formats that would be targeted and innovative to make the consumer experience better than the cluttered view they get from traditional TV. 

Other streaming services, including HBO Max, Discovery Plus and Paramount Plus now tout ad-supported tiers, and ad-supported video-on-demand (AVOD) services like Fox’s Tubi and Paramount’s Pluto TV are growing fact.

“As consumer prices have gone up — be it your gas, your groceries or your subscription services — it’s no surprise that ad-supported streaming has exceeded subscription streaming in the number of hours watched in the U.S.,” Yaccarino said Tuesday (March 22), speaking at NBCU’s One22 presentation of the company’s latest ad-tech developments.

To monetize Peacock and help NBCU sell ad campaigns that work across platforms, NBCU has been investing millions of dollars in data and ad tech. 

Also: NBCU Expands Programmatic Buying on Peacock Via DSPs

“Last year at One21, we introduced you to our vision of the future — across broadband, content aggregation and streaming,“ she said. “We showed you the One Platform we built to get us there, a completely new model for our industry that combines premium content and unified technology. This year, we’re going to show you what we’ve built since then.” ■

Netflix stock, which enjoyed a brief respite from its January 20 decline after two big investors snapped up a large amount of shares, is down again this week, a combination of fear, looming price increases and analyst reports.

Netflix stock took a double-digit nosedive after it released Q4 earnings after hours on Jan. 20. The next day, shares in the SVOD pioneer dropped 25% to $397.50 each and pundits were claiming that the tide was shifting away from the company that basically invented the subscription streaming video business. 

A few days later, on January 27, Netflix shares rose 10% after it was revealed that hedge fund guru William Ackman’s Pershing Square Capital Management said his fund purchased $1 billion in Netflix stock on January 21, boosting confidence in the company once again. Later, on January 31, Netflix founder and co-CEO Reed Hastings said in an Securities and Exchange Commission filing that he bought about $20 million in Netflix stock, which drove the shares up another 11.1% to $427.14 each. The thought was that Netflix stock had weathered the storm, that investors saw the intrinsic value in the company and its business and the stock would return to normal. Netflix shares closed at $457.13 on February 1, up 7% each. 

But it didn’t last long. Netflix shares began to slide and by February 2  fell 6% to $429.48 each. By February 4, the stock was down to $410.17, amid growing fears that Netflix had run its course, that despite spending $19 billion on content, releasing some of the most talked-about programming last year -- Squid Games, anyone? --  no one wanted to watch it anymore.

Also: What $19 Billion Gets You: Netflix Previews Entire 2022 Film Slate 

Those fears were somewhat founded in reality -- subscriber growth was down despite the release of popular programming -- but what got lost in the panic was that every streaming service was experiencing a growth slowdown. Disney Plus, HBO Max and Peacock all added fewer customers in Q4 than in the past. But Netflix was singled out because it spends the most on content and had been considered to be the unstoppable force of streaming TV. 

Shares were down again Monday to $402.10 after Needham & Co. media analyst Laura Martin issued a report claiming that only half of Netflix subscribers were satisfied with the service despite having its strongest content year ever, and 41% say they are more likely to jettison the service this year. Martin surveyed 504 Netflix subscribers in the U.S. (the service has more than 75 million domestic customers) and concluded if the SVOD pioneer wants to stop the bleeding, it has to add an advertising tier, buy an old media library to improve its content ROICs and/or sell out. 

“Netflix can NOT win the ‘streaming wars’ given its current strategy, we believe,” Martin wrote.

Shares have slowly inched back up in the past two days -- they closed at $403.53 on February, 8 and were priced at $404.09 on Wednesday afternoon, but they’re still far short of the $508.22 per share benchmark of about two weeks ago. 

This could truly be another example of the roller coaster ride that comes with being a Netflix shareholder. The stock has historically had big ups and big downs, usually around subscriber news, and maybe this is no different. But something just feels a little more off this time.

For one, there is a lot more competition on the streaming side than there was just a few years ago. Secondly, everybody is experiencing some kind of subscriber slowdown. Thirdly, all indications are that people are watching more video than they ever have, but if they aren’t watching streamers and are increasingly cutting the pay TV cord, what are they watching, video games? 

Or maybe the other explanation is that they are moving toward free ad-supported services like Pluto TV, Tubi and the like. Tubi already predicted that AVOD subscribers will surpass SVOD subscribers later this year. Maybe pricing really is becoming more and more important. 

But whatever it is, providers should take notice, because investors are. Disney Plus parent The Walt Disney Co.’s  stock was down about 5% between January 20 and February 9 and HBO Max parent AT&T fell 12% in the same timeframe, partly because of the fears around streaming.

While Disney seemed to reverse the slowdown in fiscal Q1 -- adding about 11.8 million Disney Plus subscribers, well ahead of consensus and driving its stock up 5.5% early February 10 -- some analysts pointed to possible weakness ahead.  

Fiscal Q1 was helped by new content releases, including the three-part Beatles documentary Get Back, and new programming could help accelerate subscriber growth beyond Q1 levels. But Barclays media analyst Kannan Venkateshwar worried that it may not be enough to get the service back on track to its previous guidance levels. Disney reiterated its guidance of 230 million to 250 million Disney Plus subscribers by 2024. 

“Next quarter may be a trough both seasonally as well as in terms of footprint expansion and content releases,” Venkateshwar wrote. “Q3 will see launches in 40 new territories in addition to tailwind from the IPL [Indian Premier League cricket] in India, which should add to growth, but Q4 will likely bear the bulk of the growth load due to release calendar. Given this cadence, the company may not be able to fully get back to its guidance trendline this year despite strong fiscal Q1.”  

Attracting the most attention from Martin’s survey is that 41% of respondents said they were “more likely to churn” from Netflix in 2022 because of the price increases. Take that with however big a grain of salt you want -- there’s a huge difference between “I probably will cancel”  and “I just cancelled.” But it does cast some shadow on what in the past has been the gold standard for streaming. Martin’s survey also suggests that 70% of respondents say they won’t pay for additional streaming services in 2022, which doesn’t bode well for the remainder of the streamer-verse. 

In her report, Martin wrote the “clear learnings” from the survey were: (1) That consumers believe they’ve watched “everything” Netflix had to offer during the pandemic of 2020 and 2021, and there was “nothing” on rival services like Discovery  Plus and Peacock. “Better to pay for new services than old,” she wrote; and  (2) Netflix still doesn’t offer a lower priced ad-supported tier like most of its competitors, meaning that “consumers that disconnect Netflix can replace it with 2 or 3 different streaming services for an identical monthly fee.”

Martin has been a sharp critic of Netflix in the past, and has called for a lower cost, ad-supported tier ever since Disney Plus came on the scene in 2019 at a $6.99 monthly price point.

Netflix management has been adamant in its resistance to including ads in programming in the past. And maybe all it will take is another popular movie or show or series or whatever to bring people back to the fold. But the fold is a lot different than it was in the past, and most of Netflix’s competition has either raised prices, included an ad-supported tier or both as a result. (FYI, I am leaving Amazon Prime Video, which said it will raise its annual charges by about 32% this year, out of the mix  because the vast majority of subscribers pay for the free shipping, not the video.)  

HBO Max launched in 2020 at $14.99 per month and last year introduced an ad-supported version at $9.99 per month. NBCUniversal launched Peacock nationwide in July 2020; Paramount Plus launched in 2021 with limited ads for $5 per month; and Discovery Plus launched in 2021 at $4.99 per month with ads.

Netflix has raised prices about 6 times since it launched its streaming video version in 2011 -- in 2014, 2015, 2017, 2019, 2020 and 2022. Each time there was a fear of a massive subscriber exodus that never came. But this time may be different. There are a lot more choices for consumers on the streaming video front. 

Netflix co-CEO Reed Hastings has said that he believes Netflix will weather this storm as it always has -- by providing more compelling content. Netflix spends more than any other service on streaming content -- $19 billion this year -- and last week previewed its entire movie slate for 2022. But more shows may not be the answer. Netflix had its most watched show ever -- Squid Games -- in September and still managed to disappoint regarding subscriber growth. And this year it said it expects Q1 subscriber additions to be about 2.5 million, its lowest growth in years. And Q1 is usually one of the company’s biggest growth quarters. 

By their very nature surveys are worded in a way to find out what people are going to do, not what they’ve done. And when those questions are put to people while the wounds of a price increase are still fresh, or shortly after they've binge-watched a show and don’t think they’ll ever be anything else to watch, the answers are usually pretty harsh. Wait a week and cooler heads usually prevail. 

That could very well be the case here. People are ticked off about another price increase, there are a lot of other lower cost choices around and none of them require long-term contracts, so people can drop them and sign up with abandon. But it does raise questions about streaming, which is turning out to be a lot like its predecessors in the video entertainment business, just trying to figure out the most convenient, cost-efficient way to deliver content to people who want it. Only time will tell who will come up with the formula that satisfies everyone's needs best. ■

The number of users for free, ad-supported "AVOD" services will close a 5% gap with subscription streaming "SVOD" platforms sometime later this year and then leave them in the dust. 

That's the conclusion of "The Stream," an annual research report put out by Fox and its AVOD platform, Tubi. 

According to Tubi's report, which was researched by market cast in Q4 and involved 6,003 adult consumers spanning unspecified geography, AVOD audiences grew twice as fast as SVOD in 2021, expanding by 16% vs. 8%. 

Notable: Tubi seems to make no distinction between "AVOD" and free ad-supported streaming (FAST) in its research report -- it appears it's using the term "AVOD" to monolithically bucket all types of ad-supported streaming, even that which is packaged into "live linear" channels. 

Tubi, of course, used the report to tout its own growth metrics, noting that streaming hours on its platform were up over 40% year over year to 3.6 billion in 2021. 

Tubi said that most of its growth came from "affluent" households with $100,000 a more of annual income. 

The company also looked to define its service as essential to advertisers, noting that 27% of Tubi users can’t be reached on any other major AVOD service. The company said that 78% of its users aren’t on Peacock and 62% aren’t on Hulu. (However, 71% of Tubi users subscribe to Netflix.)

Almost two years into the global pandemic, TV executives are finding there are many things that have changed permanently as a result of viewers’ altered habits and the need to do business differently. And some of those things are actually good for the overall business of television.

One thing the pandemic has changed, at least for now, is the ability to hold live events. In January, just as CES, NATPE Miami, the Sundance Film Festival and the Grammy Awards were preparing to go forward, omicron had other plans. CES was still held in Las Vegas, with 75% less attendance than before COVID, but Sundance went virtual, the Grammys were postponed to April and moved to Las Vegas and NATPE was canceled at nearly the last minute. In lieu of being able to attend the programming conference in Miami, Next TV talked to several executives who had planned to go about how the pandemic has affected their businesses. 

The main throughline is that the pandemic exponentially accelerated many trends that were already percolating pre-COVID. 

Chief among those is viewers’ whole-hearted conversion to streaming. While streaming was already coming on strong, with Disney Plus launching in the pre-pandemic month of November 2019, other services have launched in the past two years, rounding out the competitive environment. HBO Max, which got off to a rocky start in May 2020, now has a total of 73.8  million subscribers worldwide — up 13.1 million viewers year to year — when included with HBO. NBCUniversal debuted its streamer, Peacock, in April 2020 and just said last week that it had 9 million paid subscribers and a total of 24.5 million monthly active accounts. Discovery Plus finally launched domestically in January 2021 and had grown to 18.1 million subscribers as of July 2021. All of these services join pre-existing streaming offerings: Netflix, Amazon Prime Video and Apple TV Plus. 

Concurrent to the switch to subscription video-on-demand (SVOD) services is the rise of advertising-supported VOD (AVOD) and free ad-supported streaming television (FAST). 

Subscription Fatigue Sets In

“Specific to Tubi and to AVOD in general, obviously the pandemic has incurred a huge medical, health and safety cost,“ Tubi chief content officer Adam Lewinson said. “There are so many families who have been hurting throughout this pandemic and looking for ways to cut back. Subscription fatigue was already a trend pre-COVID. Cord-cutters were looking for ways to not subscribe to four, five, six SVODs that cost the same as cable. When you are in COVID, you’re home with more time to spend streaming. If you are also looking to cut back, you do a cost-benefit analysis. Tubi is 100% free, and that makes it more desirable than ever.”

To that end, year over year Fox-owned Tubi has seen triple-digit growth in revenue and in terms of viewership, Lewinson said. 

Even pre-pandemic, viewers were cutting the cord to pay-TV services, putting a digital antenna on their roofs and keeping their broadband subscriptions to assemble their own, largely free, television services. Tubi and other FAST channels, such as Pluto TV and the Roku Channel, are part of that solution, as are so-called diginets, such as the Scripps-owned Katz networks — Bounce, Court TV, Court TV Mystery, Grit and Laff — that viewers can receive for free, via antenna, on TV stations’ digital subchannels. 

“If you look at the history of television, it’s always been 85-90% free and ad-supported with 10-15% being the pay tier,” Lewinson said. “As trends have settled and AVOD has risen, companies like Tubi have built our businesses. The trend line has really reverted to the norm — people really prefer the free with advertising model. There’s a subset of viewers who look to bypass commercials at any cost and they will pay for it. But the vast majority of viewers prefer the ad-supported experience.” 

Another advantage of these types of channels, which rely highly on studios’ library content, is that they are serving up nostalgia. Tubi alone has 35,000 titles in its library.

“Comfort TV has always been a part of TV viewing, and that had a profound impact during the pandemic,” Lewinson said. “If you are escaping pretty harsh reality, you don’t necessarily want to curl up with the next big SVOD show. People are turning to their own version of nostalgia. We’ve seen a tremendous spike in comfort-TV viewing.”

Along those lines, viewers find they don’t have to pay as much attention to comfort TV as they do to prestige SVOD shows, and many sometimes prefer that. 

“Because AVOD is free, it’s guilt-free casual viewing,” said Kevin Beggs, chairman, Lionsgate Television. “It’s different from watching HBO Max or Netflix where you feel you don’t want to miss a beat because you are paying for it. It’s a fundamentally different viewing experience — lean in versus lean out.” 

Concurrent to the trend of comfort TV is the trend of casual TV. In the first days of the pandemic, broadcasters, journalists and late-night hosts quickly had to pivot to broadcasting from their homes — whether that was Stephen Colbert doing shows from his bathtub or Jimmy Fallon hosting The Tonight Show from his kids’ attic playroom with his wife running the camera. Viewers got used to seeing local news anchors in their living rooms, and guests phoning in on Zoom with AirPods awkwardly sticking out of their ears.

While shows have been back in their studios since fall 2020, viewers’ expectation that they see all anchors sitting behind their desks in suits and ties or dresses has faded. If Rachel Maddow occasionally does a show from her cabin, no one is shocked. 

“Consumers are used to it now,” Tegna VP, marketing Meredith Conte said. “I think the fourth wall has been permanently broken.”

Part of that is also the rise of social media, where everyone is building their personal brands on their own time, giving viewers the sense that they know their local anchors and favorite celebrities personally. When those same people return to the studio, viewers want to feel that same level of intimacy with them. 

Remote Working: A New Normal

Remote working, a trend that had been evolving pre-pandemic and was suddenly everybody’s new norm in mid-March 2020, is also a trend that is here to stay. In television, that means far less business travel. Gone are the days when 50 people might fly in to watch a day of production, snacking on catered sandwiches while watching dailies on set. Now, all of that takes place on Zoom and nobody leaves their homes. 

“That type of video village won’t come back,” Beggs said. “There was definitely a compulsion and pressure to travel to sets, but I think all of that is going to be drastically cut, never to be seen again. It’s all working without the obligatory set visits from studio or network executives and all the tech has met the moment.” 

Like set visits, pitch meetings also have gone remote, Beggs said, and while that’s more efficient, it’s also less interesting. 

“You really have to tap into some creativity to make them not boring, plus everyone’s attention span has shortened,” he said. “You can’t hold the attention of a room remotely in the same way you can in the room. And people are precisely on time, there’s very little small talk. People have these presentations booked back to back.”

The flip side of this is the money and time saved by people not having to commute or travel for work. 

For example, the syndication sales team at Byron Allen’s Allen Media Group/Entertainment Studios cleared two shows without ever getting on a plane. “We cleared a two-hour weekend block in 99% of the country via Zoom,” Allen said.

Even with all of the changes, Allen is ultimately optimistic about where the business is going.

Like other disruptive times in history, “the pandemic has created new businesses, such as Zoom or home-test kits. It will ultimately balance itself out. People will return to travel and to the movies. People need to get out of their houses and have social communal experiences.” 

And the business was already headed in these directions, it just forced the conversion to new technologies and new ways of working that much quicker.

“The trend lines that started pre-pandemic, that’s really what we are facing now,” Lewinson said. “The face of television has permanently changed, the landscape is different than it was 10 years ago and that won’t change.” ■ 

Hulu is the leader in ad-supported video-on-demand, generating 60% of the $3.5 billion in annual revenue yielded by the U.S. AVOD sector, according to Kantar.

Kantar's findings, published Tuesday morning, were followed by a tweet from another research company, Parks Associates, revealing Pluto TV -- which isn't even in Kantar's ranking -- as the most viewed AVOD platform in the U.S over the last 30 days. 

So who's No. 1 in AVOD? It's really hard to tell.

Parks ranks Tubi second in usage, followed by Roku Channel, Peacock, IMDb TV and Crackle, with all contenders controlling less than 15% of overall usage. 

Kantar ranks Paramount Plus second behind Hulu in ad revenue at $822 million from October 1, 2020 through September 30 2021, followed by Peacock ($279 million) and Tubi ($250 million). 

Granted, the two research companies are comparing apples (i.e. ad revenue) to oranges (usage). And their timing windows are different, too. But to a large extent, these metrics go hand in hand, and we see plenty of things to kick the tires on. 

For starters, Kantar -- which billed its report as an assessment of "the four leading ad-supported video-on-demand (AVOD) platforms" -- didn't include data for Pluto TV, which ViacomCBS recently said will generate more than $1 billion in ad revenue in 2021.

Kantar said, "Coverage of the AVOD market will expand in 2022 to include more than approximately $8 billion in reported AVOD spend, including Pluto TV, HBO Max, Discovery Plus and Prende TV." 

But until then, it seems misleading to include Paramount Plus over its corporate sibling Pluto TV in a ranking of "leading AVOD" platforms. Did the partially ad-supported "Essential" tier of Paramount Plus, which didn't debut until March 4, really generate more ad revenue than its ViacomCBS sibling, Pluto TV, over the 12-month span Kantar measured? Certainly not. 

And what about the Roku Channel? Roku reported $583 million in "platform" revenue just in the third quarter ending September 30. A giant portion of that sum had to be ads sold on Roku Channel, which would certainly seem to garner ranking on Kantar's list.

Conversely, Parks Associates ranks the "ad supported" side of Peacock fourth in usage. But the far-larger Hulu platform, which is driven by the $6.99 ad-supported basic tier, is nowhere on Parks' list.

Ad supported streaming has become a big business. 

According to a new AVOD ad tracking service launched by Kantar, four of the leading platforms generated $3.5 billion in ad revenue in the 12 months ended in September.

Hulu was the leader with $1 billion, followed by Paramount Plus with $822 million, Peacock with $279 million and Tubi with $250 million. 

Kantar plans to expand its coverage of the AVOD market in 2022 to include more than approximately $8 billion in reported AVOD spend from platforms including Pluto TV, HBO Max, Discovery Plus and Prende TV. Pluto TV alone is expected to generate $1 billion in ad revenue in 2021, according to parent company ViacomCBS.

Looking at September 2021, Kantar said the top AVOD platforms garnered $302 million in ad revenue, up 46% from $239 million in September 2020. Ad revenue peaked in August 2021 at $305 million.

“AVOD is one of the fastest growing platforms for ad investment due to its ability to deliver targeted, incremental reach,” said Stephen Davis, global product leader for advertising intelligence at Kantar. “We are bringing this new service to market as it is essential for the industry to have insight into ad spend trends in the category in order to make better, informed decisions for both buying and selling. Kantar is now uniquely positioned to provide insight into how brands are managing video strategies across media from linear TV, online video, YouTube, and now AVOD.”

The top streaming ad category was media and advertising at $573 million over the 12 months. Other big categories including retail, communications, pharmaceuticals and automotive.

Among the top individual advertisers spending on AVOD are Capital One at $74 million, Verizon, at $57 million and Geico at $50 million. ■

As more people stream their television programming, the use of ad-supported video has surpassed the use of the higher profile subscription video services.

Time spent on AVOD increased 9.3% from the first quarter of 2021 to a 38% share for  the third quarter of 2021. During the same time period, SVOD’s share of viewing decreased by 8.6% to a 32% share, according to a new The State of CTV report from TVision Insights.

TVision said this is important to advertisers and media buyers, who have been concerned about being able to reach consumers if they cut the cord and shift to ad-free services like Netflix and Disney Plus.

“Questions of whether consumers would embrace ad-supported streaming television largely dissipated as viewers now spend more time with AVOD than SVOD, and dMVPD providers also represent a growing share of streaming viewing time,” the TVision report said. “It became clear during the Upfronts in Spring that advertisers and media sellers were ready to move on CTV in a big way - as CTV advertising became a real component of both advertisers media strategies and media sellers inventory offerings.”

Unfortunately for advertisers, attention rates are lower on CTV than on linear TV at this point in time. But TVision said there are remedies for those who want to reach streaming viewers.

“Our data suggests that as advertisers make increasing investments in CTV, they can work to optimize their media plans to increase attention. Overall, CTV ad attention rates are lower than linear TV advertising norms. Advertisers can find more engaged viewers by optimizing for frequency, ad length, content alignment and more,” the report said.

As more streaming services enter the field, Netflix’s share of viewing fell to 22% in the first half of 2021 from 27% in the first half of 2020, TVision said. While Netflix is still No. 1, YouTube is getting closer.

Among the streaming apps, Amazon Prime Video moved up to No. 4 (behind Hulu) from No. 5 and Sling jumped to No. 5 from No. 8. Disney Plus moved up to No. 6 while YouTube TV fell back to No. 7 and HBO Max fell from sixth to eighth. Peacock jumped three spots to No. 11 and Apple TV Plus moved up nine slots into the top 20 at No. 19.

Ranked in terms of attention, HBO Max was No. 1, followed by YouTube TV, Discovery Plus, Peacock and Prime Video.

“Streaming-only viewers are more likely to be younger, but seniors are cutting the cord as well now, too. Advertisers should embrace CTV to reach these viewers,” the report said.

TVision measures TV and CTV engagement for every second of programming and advertising. The data for this report was collected from Jan. 1, 2020, to Sept. 30, 2021, from 5,000 homes across the United States. All data is weighted to represent the country. ■

Media buyer Magna Global forecasts that total U.S long-form video ad revenue will rise 7% in 2022 after a 6% gain in 2021 to $65.6 billion.

For long-form video in 2022, Magna sees the biggest gains coming in AVOD, OTT and CTV revenue at 29%. Growth in 2021 was 26% in 2021 and accounted for a 2% share of the overall ad spending.

National broadcast and cable are expected to decline 5% in 2022 with local TV growing 13%, including political and Olympic spending. Without those cyclical events, local video revenue is seen declining 3%.

 Also: Magna Sees U.S. Long-Form Video Ad Revenue Rising 4% in 2022 

Short form video is seen rising 27% in 2022 after a 47% increase to $16.3 billion in 2021.

All U.S. media ad revenues are expected to be up 13%, with digital up 17%. That follows a 24% rebound to $284.3 billion in 2021, according to Magna.

 Also: U.S. TV Ad Spending To Rise By 4% in 2022, Zenith Forecasts

Global ad revenues are expected to grow 12% in 2022, with TV up 3.4% and digital up 16%. 

“The global ad market recovered above and beyond the economic recovery in 2021. Mature linear ad formats recovered to 90% of the pre-COVID level, just as the economy did. Digital ad formats, by contrast, grew much faster than expected, driven by multiple organic growth factors, e-commerce boom being the most significant,” said Vincent Létang, executive VP, global market research at Magna. 

“Traditional, brand- and privacy-safe media remain crucial to building consumer brands, as shown by the strong demand boosting TV costs in 2021, but marketers are increasingly diversifying into digital formats to reach hard-to-reach audiences, improve ROI  and connect more seamlessly to e-commerce. This once-in-a-lifetime planet alignment of growth factors led to the unprecedented market  growth we experienced in 2021,” Létang said. ■

Investors in streaming pioneer Roku have had to weather some pretty extreme price swings over the past four years, but they have managed to come out on top. But even though the stock reached a new all-time high over the summer, as SVOD and other streaming services begin to see take rates slow as their services begin to mature, Roku shareholders may have to take a step back and evaluate if the ride, up until now a very profitable one, is worth the risk.

Roku shares have had their ups and downs over the past few weeks, rising as high as $350.60 per share on Oct. 19 to as low as $233.86 earlier today (Nov. 22). Driving much of that nearly $120 per share swing has been anticipation leading up to the release of its Q3 results on Oct. 20, and the aftermath of a downgrade to “sell” by MoffettNathanson media analyst Michael Nathanson. Nathanson lowered his 12-month price target on Roku shares from $330 to $220. The stock fell about 11% on Nov. 17, closing at $245.11 each and has been inching toward that low target price ever since, closing at $234.10 on Nov. 19 and $230.98 on Nov. 22.

As detailed in this May 2020 Next TV feature, Roku has long charted a jagged line graph on the Nasdaq.

Roku went public on Sept. 28, 2017 and rose sharply in its first two days of trading, nearly doubling its price in its second day of trading to $29.80 each before closing at $26.54 per share, up about  68% from its opening day on the market. The next two trading days -- Oct. 2 and Oct. 3 -- Roku stock fell a collective 21% to $20.81 each. It was as if the company was telling the market early on that this ride was going to be a bumpy one.

Since then Roku has established itself as one of the more volatile stocks in the entertainment sector -- it has lost or gained 10% or more of its share price in a single day 45 times since its IPO. While so far the gains have outweighed the declines --  Roku stock has been up 10% or more for 29 of those days, and declined more than 10% for 16 of those days -- most of the volatility in the stock has been event-driven.

Despite those dramatic ups and downs, in the past two years Roku stock always managed to recover, finishing 2019 up 337% and 2020 up $148%. But this year, despite hitting its all-time high price of $490.76 on July 27, Roku stock is down 30% for the full year. 

Like cable stocks, Roku shares tend to sink or swim around earnings -- its biggest one-day gain in the past four years was a 54% rise on Nov. 9, 2017 after it released quarterly results for the first time as a public company, soundly beating estimates. Its worst single-day performance was a 22.3% dip on Nov. 8, 2018 after it missed platform revenue expectations in the third quarter. In between there have been peaks and valleys around product launches, discount offerings, and competitive fears. Kind of the same thing that drives other cable stocks.

Also: Roku Plans to Produce More Than 50 Basic Cable-Level Original Shows in the Next Two Years 

But Roku is NOT a cable stock, and that is proven simply by looking at its price appreciation since Sept. 28, 2017 (1,381.6%), compared to Comcast (49.7%), Charter (90.7%), Altice USA (-39.5%) and Cable One (156.5%) in that same time frame. 

Roku is a streaming stock, and it has ridden that wave for nearly four years. But after nearly half a decade of Surf’s Up, Roku may be headed for calmer seas. 

In his research note, Nathanson wrote that companies that meet or beat quarterly expectations usually get a pass from intense scrutiny -- no one asks the tough questions if there isn’t anything to worry about. For Roku, the assumption has been that the strong ad-supported video-on-demand and connected-TV markets were the big catalysts for Roku’s revenue performance.

“The company’s lack of disclosure and consistent quarterly narratives didn’t provide many alternative views or clues,” Nathanson wrote. “However, over the past few months, we have started to question that thesis and the core assumptions in our model.”

Nathanson added that now he believes that a lot of Roku’s growth has been tied to new  SVOD service launches, which are headed for a slowdown.

“While there is no doubt that advertising was a significant driver of Roku’s revenue upside, a material part of the company’s growth has come from third-party SVOD-related revenue contributions, which are obviously set to slow,” Nathanson wrote.

It’s already happening. In Q3, Disney Plus added 2.1 million domestic subscribers, well below past performance.  Consolidation also is expected to play a role, as the pending Discovery/Warner Media combination and the potential sale of Starz is bound to have some effect on their respective streaming services.

Nathanson estimated that direct-to-consumer streaming services added about 7.8 million new customers in Q3, a “notable” slowdown from the double-digit increases of the past few years.

As a result, Nathanson lowered his ad revenue, total revenue and adjusted EBITDA  estimates for Roku through 2025. While he still believes the company will achieve $1.245 billion in video ad revenue in 2021, he now expects that to slow to $2 billion in 2022 (down from his prior estimate of $2.1 billion), and to $4.865 billion by 2025 (down from the prior mark of $6.375 billion). Total revenue estimates, unchanged at $2.798 billion in 2021, is expected to be $7.461 billion in 2025, instead of his previous prediction of $8.971 billion. And adjusted cash flow, at about $466 million in 2021, is now expected to be about $1.378 billion in 2025, instead of $1.827 billion.  

“Simply put, we think our and the Street’s long-term revenue and earnings estimates are just too damn high,” Nathanson wrote. Using a series of comparable data points and third party research, it appears that Roku will need to monetize an absurdly high portion of long-tail AVOD impressions to come even close to Street numbers, which we think will be a challenge given rising competitive pressures in TV OEMs and operating systems.”  

While Nathanson has taken the bear stance on Roku, not every analyst agrees. In a research note Nov. 3, Evercore ISI Group analyst Shweta Khajuria wrote that despite a rocky Q3, she believes there is still a lot of upside for the stock.

“We would be buyers on a dip,” Khajuria wrote, adding that while supply chain headwinds are likely to persist into the first half of next year, as the broader environment normalizes, Roku should benefit from linear TV ad revenue moving to connected TV, inline with viewing hours shifting to streaming. 

“Our long term thesis is intact – Roku has scale, with 56.4 million Active Accounts making it an essential ad platform for all major advertisers; superior measurement capabilities that should present a clear value proposition vs. linear TV; expanding TAM potential with Ad product innovations (OneView, etc.); early innings of international expansion; and better monetization of the Roku Channel,” Khajuria added. ■

Smart TV owners have higher-than-average incomes and spend more on subscription VOD, but also watch ad-supported streaming programming.

A study conducted by Vizio and Magid found that 55% of U.S. smart TV owners — age 18-64 — watch ad-supported video-on-demand (AVOD) programming weekly. Only 39% of viewers who use cheaper devices watch AVOD programming.

Free ad-supported television channels are watched by 53% of smart TV owners, compared to 43% of nonowners.

The smart TV owners also spend $64 a month on SVOD subscriptions, more than the $46 non-smart TV owners spend.

Vizio and Magid said the findings make AVOD a good way to reach those higher-income smart TV households.

“These viewers have chosen streaming as their entertainment format of choice, and the smart connected TV as their medium to do so,” the report said. ”They’re not at all resistant to ads even when they have paid options that would allow them to avoid ads completely. In fact, they’re highly receptive to ad supported content, given the right circumstances.”

The report also notes that AVOD technology enables better ad targeting.

“As AVOD services deliver more relevant ads, viewers find them less intrusive and are therefore more likely to accept them,” the report said.

Magid conducted a quantitative online survey of over 1,600 U.S. streaming TV users aged 18-64, supported by a two-day online community qualitative study of both smart TV and peripheral owners.

Xumo is taking the ads out of ad-supported video on demand.

The streaming platform, owned by Comcast, is offering a weekly series of movies that viewers can watch without commercial interruption--the way viewers watch most programming when they pay for subscription streaming services.

Xumo is one of many free, ad supported streaming video services (AVOD ) that are picking up users as consumers start to balk at paying rising fees for an increasing number of subscription VOD (SVOD) services.

Also Read: Channel-Flipping Makes a Comeback

Xumo is promoting its Ad-Free Movie of the Week by calling it a first for the AVOD industry.

The program raises its curtain Monday with the comedy Miss Stevens, starring Timothée Chalamet‎, Lily Rabe and Oscar Nunez. The 2016 film, which got a 91% Fresh rating from Rotten Tomatoes, is available free without commercials through Oct. 10. 

Not exactly the new Sopranos movie, but the price is right.

After Miss Stevens, the Ad-Free Movie of the Week is Hero, available Oct. 11-17.

To mark Halloween, Xumo is also making Marrowbone available without ads from Oct. 1 to Oct. 24 and We Need To Talk About Kevin will be commercial free Oct. 25-31. 

The November and December movies will be unveiled at a later date, Xumo said.

Also Read: Xumo Adds Game Show Channels With Game Show Network and Sony

Xumo said it tested the Ad-Free Movie of the week concept in August with viewers on Comcast’s Xfinity X1 devices. The offering drove increased sessions per user, frequency of use, and ultimately, a more enjoyable streaming experience, Xumo said.

Also Read: Documentary Plus Launches First Linear Channel on Comcast’s Xumo

The streaming platform is offering a weekly series of movies that viewers can watch without commercial interruption--the way viewers watch most programming when they pay for subscription streaming services.

"As an AVOD industry first, we’re excited to bring Xumo’s Ad-Free Movie of the Week to millions of users across all of our Xumo owned and operated properties,” noted Fern Feistel, senior VP of content operations and marketing at Xumo. “Not only are we delighting our audience, this is already proven to be a significant driver of retention as we continue to test new experiences.”

Xumo offers more than 200 digital channels of free programming across 12 genres, including sports, news, kids and family entertainment, live events, comedy and movies. 

It reaches 24 million unique monthly users. 

Today’s entertainment consumer has more choice — and more power — than ever before. 

Customers are jumping from one service to another, from AVOD (ad-supported video-on-demand) to SVOD (subscription VOD) to TVOD (transactional VOD), depending on which offer best suits their needs at that particular time. Churn is an issue and minimizing and mitigating it is more realistic than eliminating it. An active approach to customer-relationship management can curtail it and keep the customer under a larger company umbrella. By quickly developing a number of flexible options — in terms of both product and monetization — content providers can keep customers in the fold and reduce foreboding churn rates.

How to Meet the Customer Where They Are

The days of the aggressive cable-TV representative are over. To improve customer retention, content providers must deploy a nuanced, personalized approach that aims to meet the customer where they are. Here are four strategies that can lead to decreased cancellation rates and improved customer loyalty:

• Constant offers and promotions: Sales events and unique offers, previously a seasonal occasion for content providers, should now take place on a routine basis. Content providers must take advantage of the data and digital tools at their disposal, designing campaigns and experimenting with A/B testing to determine which promotions are most effective in boosting retention. 

• Flexible monetization strategies: Not every customer will want to maintain a video subscription indefinitely. Rather than lose that customer to a competitor, one content provider should offer multiple monetization strategies, allowing a subscriber to switch seamlessly to AVOD or TVOD without losing their business entirely. 

• Expanded payment options: A successful content provider will make it as easy as possible for a customer to pay for their service. In today’s sales environment, that means accommodating as many payment options as possible. Beyond standard credit and debit cards, content providers should consider adding online services such as PayPal, or even emerging payment methods like cryptocurrencies. 

• Innovative events and opportunities: The streaming video service of tomorrow doesn’t have to look like the service of today. New event formats can engage customers with enticing content and keep them coming back in search of new experiences. Over the past year, some content providers have experimented with a festival format, offering one-show, one-day or multi-day tickets to a package of premium content. Devising creative bundles and one-time opportunities will cause the customer to view a specific service as more exclusive than others, a vital consideration when it comes time to trim down the number of subscriptions. 

The consumer video experience continues to evolve rapidly, and without agility and an appetite for change, content providers will risk falling further and further behind. Active customer management will maximize lifetime value, boost brand loyalty, and keep a popular service top of mind amid a sea of competitors.

More than half of U.S. consumers said they see ad supported video services as a good way to reduce or eliminate subscription fees, according to a new survey from Future Today.

The study found that 35.5% of consumers plan to decrease the number of services they pay to subscribe to. But 41% of those who took a free-trial offer in the past 12 months said they became subscribers when the trial ended.

The results come as streaming services slowly but surely racked up the price of subscriptions. On Tuesday, The Walt Disney Co.’s Hulu said it was rising its rate by $1 a month.

Consumers said the commercials they see on streaming services are twice as likely to be relevant than the ones they see on cable and broadcast TV.

The survey also found that 68% of consumers said they prefer to watch shows on demand, while just 12.5% prefer linear channels.

Consumer viewing preferences continue to evolve. Streaming has become the de facto source for watching TV shows and movies, but not all services, platforms and models will thrive in this shifting media landscape,” said Vikrant Mathur, CEO and co-founder of Future Today, who runs ad-supported streaming services including FilmRise, Fawesome and HappyKids.

“Despite some pundits’ expectations, we’re seeing AVOD adoption flourish, and expect this trend will continue to grow for years to come. Our research solidifies that with the right viewing experience, the ad-supported streaming model is ideal for content owners, brands and, most importantly, audiences,” Mathur said.

The study surveyed more than 1,000 consumers between June 15 and June 30.

Being everything for everybody sounds like a good idea, at least amid the streaming business’ mad cavalry charge for market share. But a Nielsen study suggests it may be time for AVOD and other streaming services to specialize, leveraging more inclusive and targeted programming to better serve the niche demographics that are their most loyal customers, and to grab more highly targeted advertising as a result. 

That sounds like a) a good idea, and b) an inevitable one. Aside from Disney (and possibly HBO/HBO Max), very few companies in Hollywood stand for much of anything, a branding vacuum reiterated in their respective streaming operations, too. But if you’re too much like everyone else, and pretty much everyone’s services and shows are available everywhere, why is anyone going to watch you? 

Also read: Redbox Gets Into the Kevin Hart Business

In response to the Differentiation Dilemma, subscription services have been creating loads of pricey new originals (pandemic permitting), backed by as big a library of older stuff of their own and other outlets as possible. That’s expensive and possibly unsustainable if market growth doesn’t follow the programming expenditures.  

And ad-supported services, historically addled with modest budgets and nothing for originals, have featured even more homogenized programming, including much the same shows and channels. Now that’s changing. It’s why you’re starting to see news like the Roku Channel buying the Quibi library for a reported $75 million, Amazon buying MGM in part to flesh out IMDb TV, Tubi and Redbox doing original production deals. 

Certain demographic affinities are already surfacing, Nielsen said. More than a third of the audiences for Tubi (39%) and Pluto (36%) are Black, more than double their share of the population. More than a fifth of YouTube viewers are LatinX. And the audiences of corporate siblings Disney Plus and Hulu are overwhelmingly white (68% and 69%, respectively). By comparison, only 57% of Netflix viewers are white. 

I know from previous conversations that Tubi has leaned hard into programming that appeals to Black audiences, and that it’s paid off for the largest of the ad-supported services. Netflix has made several splashy content deals with prominent Black creators such as Shonda Rhimes and Kenya Barris. And it’s not surprising Pluto might have particular appeal to Black audiences; owner ViacomCBS also owns BET and BET Plus, and has cross-programmed and -promoted heavily between the services. 

Across all AVOD services, Black viewers account for nearly a quarter of viewing (24%), compared to just 14.7% of the U.S. population. But most of that viewing is happening online. Black audiences watched just 17% of the minutes spent on traditional linear TV. 

That could be yet another reflection of legacy TV’s long and sorry history of lily-white programming, made worse as studios shift more spending to their online outlets. Regardless, Black, LatinX and other niche audiences have a far better chance regularly finding shows that appeal to them online than they ever had on legacy TV.  

At the same time, Nielsen suggest all’s not lost for more traditional “TV,” at least not yet. After all, those old folks on linear TV still like to watch it a lot: “Linear streaming TV programming has become a media mainstay that kept the attention of TV viewers for three hours per day” in June.  

To some extent, the study calls for a far more nuanced approach beyond the mega-service mentality that has shaped early days strategy for many big platforms. The mantra has been more, more, more, and grab the biggest possible set of eyeballs as you go. But that’s not enough to win the future. 

“…there is still a notable opportunity for publishers outside of the more traditional channels seeking to engage racially and ethnically diverse viewers with unique content that reflects their unique experiences,” the study says. “Amid the sea of growing choice, content becomes a key differentiator, especially when publishers identify needs that are not being met.”

The differences are about more than race, too. Disney Plus, no surprise given its children’s programming, is overwhelmingly watched by under-18 audiences (44%), but only 9% of people over 55. Compare that with traditional linear TV, where the numbers more than flip, with 60% of viewership over 55, and less than 10% under 18. 

It’s time that services lean hard into these opportunities. The real power of connected TVs and addressable, targeted advertising will be the ability to connect brands to very specific sets of viewers, especially those who are happily seeing more programming that’s relevant and meaningful to them, not merely time fillers among a handful of bad options. 

And where the eyeballs go, the money will follow. The past year has seen a game-changing shift in mindset among brands and media buyers. Now they’re putting far more of their ad dollars into CTV, at a rate that eMarketer forecasts will hit $13.4 billion this year. 

“Importantly, TV is no longer just a tool for mass reach,” the study says. “Consumers today would be hard-pressed to find a TV that is not internet-capable, and nearly 80% of U.S. homes now have at least one enabled device…That connectivity and growing options in the streaming video space provide advertisers and media buyers the ability to engage with viewers in live, linear, on-demand and streaming environments.”

Black and LatinX audiences have long over-indexed on entertainment, i.e., consumed an outsized amount compared to their share of the population. The Nielsen study suggests that audience has now shifted enthusiastically to streaming to get that entertainment. The services need to figure out how feed that audience.

Fox News Media has named Nicole Valdes, Steve Bender and Max Gorden as correspondents for its Fox Weather AVOD service set to launch this Fall.

Valdes, who joins the platform from KNXV-TV in Phoenix, will serve as a field correspondent based out of Nashville, while Bender -- formerly morning meteorologist at KRNV-TV in Reno, Nevada -- will serve as a Miami-based reporter, said Fox. Gorden will serve as a Los Angeles-based field correspondent covering the West Coast. Previously he served as  a reporter and multimedia journalist at CBS

Also Read: Fox News Names Meteorologists for New Streaming Weather Service

In addition, Fox Weather announced five multimedia journalists who will be reporting for the service, including Will Nunley, Robert Ray, Katie Byrne, Mitti Hicks and Hunter Davis, said Fox News.

“We are excited to welcome this group of first-rate journalists to the Fox Weather team,” said Fox Weather President Shari Sharri Berg in a statement. “Their specialized skills in meteorology, in-depth reporting and storm chasing will be an important component of our coverage as we launch and grow the platform.”  

Also Read: Weekly Cable Ratings: Fox News Continues Ratings Roll

When Black audiences stream, they’re picking ad-supported services like Tubi over subscription services like Disney Plus.

According to a new report from Nielsen, Black audiences accounted for 24% of all minutes viewed across all AVOD services in June. Nielsen said Black viewers account for 13% of the U.S. television universe and 16% of linear TV viewing.

Among the top AVOD services, Black viewers account for 39% of the hours consumed on Fox-owned Tubi, 36% of viewing on ViacomCBS’s Pluto TV and 22% of viewing on The Roku Channel. Black audiences consume 22% of YouTube viewing hours, Nielsen said.

When it comes to subscription video services, Black viewers represent mostly smaller shares.

Black viewers represent 10% of the hours consumed on Disney Plus, 15% of Netflix viewing, 17% of Hulu and 18% of Amazon Prime Video.

Nielsen said that streaming platforms have an opportunity to grow viewership by taking a more tailored approach to their content and marketing strategies.

“We know that streaming platforms are steadily evolving their user experiences to help connect audiences with content, but as competition rises, platforms will be more likely to target specific audiences—through marketing, content and ads—rather than hope for the best by trying to appeal to everyone,” Nielsen said in a blog post.

It adds that while Nielsen's Gracenote indicates shifts in representation of many diverse identity groups in content, “there is still a notable opportunity for publishers outside of the more traditional channels seeking to engage racially and ethnically diverse viewers with unique content that reflects their unique experiences.”

Hispanics account for 19% of the U.S. population and 18% of the U.S. TV universe, but they spend less time with traditional TV than with streaming services.

For example, Hispanics represented 21% of the viewing minutes on YouTube.

“Race and ethnicity, however, aren’t the only demographics that content publishers can hone in on,” Nielsen said.

“Unsurprisingly, Disney Plus attracts the biggest share of minutes viewed among people 2-17, given its extensive back catalogue of animated classics as well as content from across Disney’s associated brands and franchises, such as Pixar, Marvel and Star Wars," Nielsen said.

Meanwhile, persons 55 and older dominate linear TV viewing. But that doesn’t mean they’re not streaming too. “This audience accounts for a notable share of time with Amazon Prime Video and several of the newer AVOD and MVPD/vMVPD entrants,” Nielsen said.

Cinedigm said it will be launching a new free streaming channel built around the Real Madrid soccer team, one of the most popular sides in the world..

Real Madrid TV is expected to start up before the start of the 2021-2022 season and stream two or three matches per week (on delay) when the team is in action. The channel will also feature thousands of hours of fan-centric content for football fans.

The channel will be available in the U.S. and Canada on linear and ad-supported VOD platforms via connected TVs, digital set-top boxes, media streaming devices and web browsers.

Also Read: Cinedigm’s Streaming Strategy Starts to Pay Off

Cinedigm has been expanding its subscription and ad supported streaming channels, targeting partnerships with popular sports brands like Real Madrid and celebrities. The company recently announced plans to launch The Elvis Presley Channel. It also made a deal to aggressively up the tempo of The Country Network’s streaming distribution.

Also Read: YouTube TV Launches Cinedigm Channels as $4.99 Add-Ons

"Soccer is the most popular sport in the world with an extreme level of fandom,” said Erick Opeka, President of Cinedigm Digital Networks. “Partnering with Real Madrid and giving this global club an exclusive home to many of the biggest OTT distribution partners in North America, will allow viewers to experience never before released content in the United States. Fans will feel like they are part of all the action with interviews, matches and news they can’t get anywhere else, and content will be refreshed weekly to keep fans engaged.”

Founded in 1902, Real Madrid has won the Champions League a record 13 times

Programming on the channel will include live press conferences, interviews, live training sessions, classic matches, magazine shows, team new programming and other features.

The network of distributors that currency carry Cinedigm channels include The Roku Channel, Pluto TV, Samsung, TCL and Tubi. 

As more people stream more video they’re finding, technological glitches are becoming more annoying--and more costly.

A new survey by Penthera found that lengthy buffering and repetitive commercials can result in viewers abandoning programming, behavior that hurts streaming platforms and advertisers. More viewers are turning to downloading as a way to get better performance when watching videos.

Penthera’s fourth annual survey of streaming video viewers in the U.S. found that in 2021, the average adult will spend 2 hours and 29 minutes watching digital video, an increase of 6%.

At the same time, a higher percentage of viewers report experiencing frustrations when they stream—92% versus  2020. The frustration is also more frequent. Among those surveyed, 68% said they had a frustrating experience weekly, compared to 55% in 2020.

“It’s likely that as users watch content across more available services, they are less tolerant of interruptions, low quality, and other experiential issues,” the report said. 

Viewers’ reactions to those frustrations are also stronger. In the new survey, 57% of viewers said they will give up and try again later (compared to 39% in 2020) and 32% will leave to try a different video app (compared to 17% in 2020). 

Viewers are less patient than ever and will frequently abandon a video stream for other entertainment, the report noted.

To streamers, having a good experience has become more important than the availability of good content. Increasingly they said videos can’t be enjoyed when problems like low-quality and re-buffering occur.

Of those surveyed, 40% said re-buffering is the most common reason they abandon a stream, compared to 26% who said they leave most often because they don’t enjoy the content. When asked the top factor in deciding which streaming service to use, 51% said ease of use and 41% reported videos not buffering as the most important factor. Only 39% said having shows and movies they like was their biggest consideration.

The same pattern appears when it comes to ad-supported streaming video. In the survey, 43% said annoying or repetitive ads would make them stop using an AVOD service and 40% would stop using because of a poor experience like startup delays or buffering. 

Content was less of a priority, with 39% saying they’d stop using an AVOD service because the content isn’t good.

To find a better experience viewers are increasingly downloading content, even when they’re planning to watch at home. 

Last year’s survey found that 43% of viewers said they watched downloaded videos when on a trip and 35% did so at home. But in 2021, the script flipped with 45% saying they watch downloaded videos on mobile at home, while 32% watch them when on a trip.

“During the pandemic when all travel and commuting stopped, we expected to see a decline in download activity across our customers globally,” said Penthera president and COO Daniel Taitz. “What we learned was actually the opposite. Download activity increased around the world as viewers wanted to ensure they had a perfect viewing experience without interruptions right inside their home. It's just a better way to watch.”

Overall people are downloading at higher rates in 2021, with 92% said they’ve downloaded from a streaming service, compared to 88% in 2020.

“Viewers no longer think of download as merely a feature to use when they travel on planes or commute—they think of it as a better way to watch," the report said. “They’re using it at home as well, even when they have a connection, so they can avoid frustrating delays and interruptions."

Viewers said they like watching ad-supported streaming videos, and half said it’s because viewing ads lets them watch content for free or at a reduced cost. But when the experience isn’t good, they won’t hesitate to stop using an ad-supported service. 

The top frustration is annoying or repetitive ads, and 43% of those surveyed said that would make them stop using a service. Unfortunately, this is a common issue.

The same ad repeating is seen as worse than too many ads. In the survey, 36% of viewers said ad repetition is their top frustration with ad-supported video, while 30% said it was too many ads.

More people are streaming their TV programming, but increasingly they are choosing ad supported services rather than opting to avoid commercials, according to a new survey from Piplsay.

Piplsay found that 83% of consumers said they’re watching content on streaming platforms, with 31% watching a mix of paid and free services. It said 19% had an ad-free premium subscription, 18% had a paid ad-supported subscription and 14% used a free-ad supported service.

This year, AT&T’s HBO Max and ViacomCBS’s Paramount Plus have introduced ad-supported versions of their services, which offer viewers a lower price point and give advertiser a chance to reach consumers who have cut the cord with traditional pay TV.

The survey found that 50% have switched from ad-free streaming services to ad supported streaming services, with 28% saying they’ve completely made the change.

Of those who have ad supported service, 49% said they were very satisfied, 41% said somewhat satisfied and 10% not satisfied.

Among the free ad supported streaming services, 23% said they preferred NBCUniversal’s Peacock. Next most preferred was The Roku Channel with 17%, followed by ViacomCBS’s Pluto TV, Fox’s Tubi and Amazon’s IMDbTV. 

The most preferred paid service with ads was Disney’s Hulu, selected by 34% of those surveyed. It was followed by AT&T’s HBO Max with 26%, followed by Peacock (which has a premium tier) and ViacomCBS’s Paramount Plus. 

Consumers appear to be still making up their minds about how to spend their streaming dollars. When asked if they plan to switch to or subscribe back to ad free streaming services, 54% said yes, with 26% saying they could do so in the next 2-3 months. Among the rest, 25% said they were not sure, with 21% saying no.

Piplsay's survey is based on 27,800 online responses on July 2 and July 3.

With the ad-supported version of its HBO Max product only a few days old, HBO Max executive VP and general manager Andy Forssell told an industry audience that the product and others like it could open up a whole new market for streaming, and eventually help to push the TV universe past 100 million homes. 

WarnerMedia launched its ad-supported version of HBO Max on June 2, priced at $9.99 per month and geared toward more cost-conscious consumers.  At the Barclays virtual Future of Media conference Thursday, Forssell said that the potential for ad-supported streaming is huge.   

“You’re going to get to a larger market. The total addressable market is larger,” Forssell said. “Netflix is probably defining the ceiling on what full penetration in the U.S. market is and they’re riding that up and in some cases they are propelling that wave. I think with ad supported, you add 20% to that."

Currently there are about 85 million pay TV customers in the U.S., but Forssell predicted ad-supported streaming could help push that total higher. 

“We should get back to [the] 100 million-plus homes that we served during the heyday of cable,” he continued. “I think SVOD and some ad-supported SVOD versions should get back to that.”

HBO Max said that it will keep ad loads low on the service -- a maximum of 4 minutes per hour -- and Forssell said that won’t change. 

“Our hypothesis there is message recall, brand recall will be higher the fewer ads you have,” Forssell said. “They’ll be worth more and we'll get to monetize that, ad partners will agree that they are worth more. That’s the experiment we have to prove out in the next year and make it reality and not flip back into what many providers have done in maybe starting with a similar thesis, but saying let’s add another ad to this break because that's the easiest way to increase revenue.”  

Forssell also talked about sports rights, adding that the old way of selling sports rights -- offering what he called “odd little slices” of rights to cable networks -- probably won’t work in a streaming world. 

“I don’t think that [sports] rights landscape is going to be nearly as successful in SVOD,” he said. 

He pointed to Turner Networks’ agreement with the National Hockey League, which also has an HBO Max component.

“Hockey primarily was a vote of confidence and investment in the Turner Networks,” Forssell said. “To add a major sport there was a statement we wanted to make. Will we experiment with that on HBO Max? Sure.” 

But he added that sports brings new challenges to streaming, especially on how they are presented. Providers should also be thinking about things like shoulder programming around games, and whether talent connected with that content should be different in the digital and linear worlds. 

For news operations like CNN, he said the linear relationship will continue as the company looks for streaming complements. 

CNN is said to be readying a streaming service called CNN Plus, according to a report in the Wall Street Journal. 

“We will look at what you can do direct-to-consumer,” Forssell said. “We don’t think it’s just repurposing all of that and putting it online in some IP directed format. We think it’s going to change, some of the content needs to change. There is a lot of work going on as to what that will look like.”

Still, Forssell said he was optimistic about the fit between streaming news and entertainment. “They [have] different needs, but I’m optimistic," he said. “Sports, I’m not pessimistic, but it’s going to take some experimentation on what works in SVOD, because what works in cable doesn’t necessarily translate.” 

As the recent NewFront presentations emphasized, Streaming Video will continue to shape the media economy and culture at large — making now a good time to evaluate its impact on both.

First came the cord-cutters. General dissatisfaction and belt-tightening drove their defection from traditional cable, and Roku and AppleTV devices made it feasible.  Cutters begat shavers, stackers, and nevers; millions of lost Cable and Satellite subscribers have permanently altered the industry.  

Within cord-cutters, however, there are substrata that don’t yet have a cool “cord” name.  Viewers who want to drop their cable companies, but not the cable experience.  Let’s call them cord-kindas.  

They can subscribe to all of the “Plus” services that keep emerging, but the individual monthly fees would quickly add up and having to switch between apps to go from Chopped to SportsCenter is inconvenient, especially for habitual channel-surfers.  

A solution: vMVPDs, or virtual multichannel video programming distributors.  They don’t get the attention that Peacock, Discovery Plus, et. al. do, but vMVPDs offer cable without the cable.  In a recent eMarketer survey of vMVPD subscribers, 49% of respondents cited “Access to live content through a guide” as a benefit — edging out cost and leaving “No contracts” and ease of cancellation in the dust.  Ultimately, kindas don’t want the end product to change.

Per Antenna Analytics, vMVPDs have grown 24% between Q4 2019 and Q4 2020 — driven largely by live sports, an offering of the more comprehensive (and pricier) providers.  Costs range from free to $65 per month, with the more expensive options more closely recreating “real” cable.  As you move toward free, things get less and less cable-like. Here’s how they all shake out:

Cable Without the Cable

Recreating the cable experience

Hulu Plus Live TV ($65/month); YouTube TV ($65/month); FuboTV ($65/month); AT&T TV ($65-$95/month) 

Hulu Plus Live TV offers 65-plus live channels, in addition to Hulu’s ad-supported streaming tier.  YouTube TV has 85-plus channels, plus unlimited DVR (an upcharge on H+LTV). FuboTV began its life as a soccer-centric outlet (the name is short for “futbol”) but has evolved into a broader-based vMPVD with a strong sports offering amongst its 100+ live channels.  

AT&T TV offers three different tiers: Entertainment ($65 for 65-plus channels) Choice ($85 for 90-plus channels) and Ultimate ($95 for 130-plus channels), with corporate sibling HBO/HBO Max included free for one year at the two highest tiers.  As with traditional Cable and Satellite, premium channels are available for an additional fee on each of the services.

Still Pretty Cable-y

Live TV with Scalable Offerings

SlingTV (Starts at $35/month); Philo (Starts at $20/month) 

A service of Dish Network, SlingTV has two available packages: Blue, which focuses on news and entertainment programming, and Orange, with an emphasis on sports and family.  Additional channel clusters (add sports to Blue, add news to Orange, etc.) will run $6/month.  Premium selections and DVR services can also be added.  

Philo is a joint venture among ViacomCBS, A&E Networks, AMC Networks and Discovery Inc.  For its relatively low price tag, Philo has a nice basic network roster (with upcharges for premium channels).   It doesn’t hurt that Philo is owned by a consortium of four media giants, however as each establishes its own streaming brand they may start selling off their stakes in the company.  How that would affect programming is yet to be seen.

It’s Good, But It Ain’t Cable 

No-Cost Options

PlutoTV (Free); Tubi (Free) 

Each of these services offers a lot of content. It’s just that most of it isn’t live Cable.  Pluto has taken a lot from its owner, ViacomCBS, but it’s all on specialty—“BET Pluto,” “Smithsonian Channel Selects,” etc.  The rest are channels devoted to one show (i.e. Family Ties) or genre (i.e. “Black Cinema”).

Tubi is even less like linear Cable and almost entirely VOD.  A wide array of movies and television episodes is available, with some top networks (Tubi has been owned by Fox since 2020) and most movie studios represented.  It’s not a reasonable facsimile of Cable in its offerings or interface.  

Cord Kindas Are High-Value Impressions

Together, these vMVPDs reach 11.5 million subscribers (paid providers) and 61 million monthly users (free services).

Hulu notwithstanding, they may not benefit from the attention or marketing budgets of shiny new AVODs, but advertisers should not ignore these providers.  True, they may already see the national spots that each network airs, but they can additionally be reached through addressable advertising.

Bottom Line

With strong numbers and the potential for granular targeting, cord-kindas are an audience that won’t get lost in the shuffle by attentive marketers.

Carl Mayer is director, integrated media/Active Entertainment at Active International.

Advertisers should take advantage of the large audiences flocking to ad-supported streaming services, a new study from Verizon Media and Publicis Media said.

The study, called  capitalizing on the CTV Opportunity," said that while more people are streaming overall, frustration with subscription based services, many of which are ad free, is likely to drive viewers to AVOD and that advertisers should be ready to adjust their spending accordingly.

Streaming subscriptions grew 48% in the fourth quarter of 2020, compared to the third quarter, according to internal data from Verizon Media, which is in the process of being sold by Verizon to Apollo Global.

But while 71% of consumers point to premium SVOD as their current “go to” service. The Verizon-Publicis survey said subscription fatigue and overload is pushing cost-conscious consumers from SVOD to AVOD.

Read Also: Addressable TV a Key Priority for Brands and Buyers: Study

Streamers are using an average of five streaming services, but they’re not necessarily happy because watching TV has become complicated. In a survey 76% of consumers said no one streaming service has it all, 45% said they were using too many services for TV content and 48% of streamers worry about how much they’re spending on these services and are sharing passwords to help manage expenses.

The frustration with SVOD is making AVOD a more attractive option for viewers.

The Verizon-Publicis survey found that three in five TV viewers were more aware of AVOD than they were a few years ago. More than half said they were interested in ad supported services. Among those using paid ad free streaming services 83% said they were willing to try an ad-supported service to save money.

When asked why they’re looking at AVOD, 45% of viewers said the service is free, so why not try it and 43% said the AVOD they tried was good quality for a free service. Content was a smaller factor than avoiding more fees. Just 23% said the AVOD services they looked at feature really high quality shows and movies.

Bottom line for Verizon and Publicis is that consumers are turning to myriad streaming connected TV options and the best way o take advantage of that is through an integrated platform that can drive performance and integration for advertisers and deliver a better ad experience for customers and viewers.

After COVID-19 pushed last year’s negotiations into September, the 2021 upfront television market reflects the new normal of the media world.  

There is an eroding supply of broadcast and cable ratings points and a post-quarantine economy that’s heating up. Both trends point to higher prices and more ad dollars flowing to digital video, trends that have been accelerating for years.

Like last year, the networks’ elaborate upfront presentations will be held via Zoom instead of in venues like Carnegie Hall or Radio City Music Hall. 

Matt Sweeney, chief investment officer at GroupM, said that in last year’s upfront there was a spirit of empathy that got people to work together to get through a difficult time. This year, he’s concerned about “the accelerated degradation in traditional ratings” that will make it more difficult for clients to reach consumers via television.

If the dwindling supply of ratings points sends prices up, “I think there’s a point at which the value of a unit or an impression gets beyond being an effective investment vehicle,” he warned.

Also Read: NewFronts Speakers See Advertisers Changing Channels from Traditional TV

“What it does is it forces marketers and their media agents to find those audiences beyond just traditional TV,” Sweeney said. 

The big media companies know that, and instead of competing with streaming as it grows, they’ve bought or built their own streaming services, like Disney’s Hulu, Comcast’s Peacock, Fox’s Tubi and ViacomCBS’s Pluto TV and Paramount Plus (see related story, page 16).

“We’re really excited about all of those platforms,” Sweeney said, adding, “We’re watching very closely to see what the consumer uptake is with those services. At some point, how many is too many.”

When the smoke cleared for last year’s upfront, commercial time worth $18.6 billion was bought, including $8.7 billion on the broadcast networks and $9.9 billion on cable networks, according to Media Dynamics. 

The total was down 14.8% from the 2019-20 upfronts, but down 2% when the upfront buys canceled because of the pandemic are taken into account.

John Nitti, chief media officer at Verizon Communications, a big advertiser, said double-digit price increases will lead to money moving where there’s better returns. 

“If money is going to move, money is going to move,” Nitti, a former agency media buyer, said. “Marketers have become more and more comfortable with digital streaming platforms. If we continue to see the degradation of linear ratings but growth within digital platforms, I think you’ll see the merger of the upfront and NewFronts into one time frame.”

Nitti wants the flexibility that was a hallmark of the 2020 upfront to continue into 2021. 

“Why should you not be able to make optimizations and changes?” he asked. “As a retailer at heart, we need to be looking at our numbers daily. We need to drive those optimizations and have flexibility, so that will continue to persist.” 

In some cases, he noted, traditional media vendors were actually able to switch schedules faster than their digital counterparts.

Planting a Flag in Streaming

Media companies will be offering their own streaming services as a way to restore their reach and expand the inventory they have to offer in the upfront.

Fox, for example, will be including its Tubi ad-supported streaming service (AVOD) during its entertainment programming upfront presentation, president of ad sales Marianne Gambelli said.

Gambelli anticipates a strong upfront market after several good quarters in the scatter market.

With sports back and production of scripted shows back in gear, Gambelli hopes ratings will make a comeback. “But I think demand will probably outstrip that supply to some degree,” she said. 

That could mean higher prices.

“But then, there’s an explosion in AVOD [ad-supported video-on-demand],” she said. “I think a lot of money will go there. We’re really excited about that space, so I think there will be ways to manage through it. Like there always is.” 

Another way to increase the supply of broadcast inventory is to include older viewers, instead of buying and selling based on the 18-49 and 25-54 demographics. A number of programmers, including A+E Networks, have proposed switching to adults 18-plus as the new television currency.

“It has to happen,” Gambelli said. “When you’re buying broadcast,  why wouldn’t you just count the entire audience, then do your narrowcasting in digital?”

Increasingly advertisers are buying based on targets other than age and sex, such as people likely to buy cars. “It has to evolve, she said. “That’s where we really unlock the value of broadcast.”

While traditional linear supply is tight, digital supply may be as well, warned Jon Steinlauf, chief U.S. advertising sales officer at Discovery.

Scatter a Leading Indicator

“The strongest indicator of how this market is going to go has been the strength of second-quarter scatter,” Steinlauf said. “The scatter market for us has been sizzling hot in second quarter, even better than first quarter.”

During its first-quarter earnings call, Discovery said it was seeing prices in scatter that were 50% higher than upfront.

“People are talking a lot about supply being tight,” Steinlauf said. “It’s clearly tight in linear and there are questions about how tight it is going to be in nonlinear. I’m of the camp that thinks nonlinear is going to be tighter than people think.”

Inventory will be tight because the streaming services are new and just ramping up in terms of adding subscribers. The ones that take ads at all are running as little as four minutes of commercials per hour, a fraction of the load on broadcast and cable. 

The digital and streaming inventory will be important this year because advertisers are looking to make up for the reach they’re losing in traditional broadcast and cable.

Discovery has built a $500-million-a-year digital business with its Go apps and this year added the Discovery Plus streaming service to the mix. Advertisers can reach cord-cutters with the digital product.

“They’re all on a mission for reach,” Steinlauf said. “If we wanted to sell out Discovery Plus on the first day of the upfront, we probably could,” he said. “We’re not going to because there’s too many other more lucrative markets for it down the road,” including programmatic markets where CPMs are at a premium.

Steinlauf recalled that a year ago, there was talk about moving the upfront to the end of the year and switching to a calendar that starts in January versus the broadcast year, which starts in October.

All that talk has gone by the wayside as categories largely shut down by the pandemic — travel, restaurants, movie studios, non-essential retail — are coming back to the ad market. 

Underdelivery Concerns

With traditional ratings down, media buyers and advertisers have complained about underdelivery. The shows they bought commercials in last upfront didn’t get the audiences they were promised, if they ran at all, as production delayed the start of many scripted series.

The CW told advertisers that its scripted shows wouldn’t premiere until the first quarter, said executive VP national sales Rob Tuck, and provided audience estimates based on the alternative schedule. “We got through the fourth quarter in great shape; our clients came out if it in great shape,” Tuck said.

Later on, The CW launched its scripted shows, including Superman & Lois, Walker and Kung Fu. As part of its upfront, The CW is providing each client with an individual report card that shows how the CW delivered on their 2020-21 upfront deals.

“We’ve heard the clients screaming about how the linear networks took their money, didn’t deliver and didn’t care,” Tuck said. “We took their money, we did care and we delivered on our promises.

“We really try,” he said. “We’re the little guys. Our service has to be good. If we’re causing a problem, it’s too easy to get rid of us. It just is.” 

That approach meant The CW had inventory to sell in scatter instead of having to give it to clients as make-goods. The CW feasted on high prices in scatter and should be able to take advantage of a strong upfront as well.

“I think there’s a lot of pent-up demand,” Tuck said. That will fuel business, the economy and the ad market. 

“There will be greater demand than a year ago,” he said. 

“Do I think more money will shift to digital? Sure, because the agencies and clients always follow where the audience goes,” Tuck added. “The great thing about us is we’re on all these platforms. We were the first network to be multiplatform, so we play in that world.”  

Spanish-language programmer Estrella Media said it is launching a third free, ad supported streaming TV channel, Estrella Games.

The new channel is part of the “Experience Estrella. Everywhere” strategy the company unveiled at its NewFront presentation on Wednesday and during virtual upfront meetings with advertisers and media buyers..

Estrella differentiate itself from other Spanish language programmers by focusing on news, sports, game shows and reality programming. 

“We amplify the voices of our fans and give them the content they want in an expanded digital and linear universe. It's time for our fans to Experience Estrella. Everywhere,” said Peter Markham, who became CEO after LBI Media emerged from bankruptcy last year and rebranded as Estrella Media.

Estrella Games, was planned as the first full-time Spanish-language game show channel, launched on Vizio’s SmartCast. On Wednesday Xumo, Game Show Network and Sony Picture Television also announced the launch of Sony Canal Competancias, a game show destination in Spanish.

Estrella Games will have multi-generational family and interactive programs including 100 Latinos Dijeron, La Mascara del Amor, Reto Famoso, Jugando co Patanito and Still Standing.

The channel joined EstrellaTV and Estrella News, which are on Pluto TV and other outlets. 

The company said the EstrellaTV AVOD app will be available on Roku this month and Apple iOS this summer, with other platforms coming soon The app gives user access to the three streaming channels and  20,000 of on=demand programming. 

EstrellaTV will continue to offer its programming on-demand through YouTube and has chosen Google Ad Manager for monetizing its live and on-demand streaming TV platforms.

Amazon’s IMDb TV ad-supported streaming service said that it has a group of original scripted projects in development.

The announcement came before Amazon’s presentation at the NewFronts, where digital video companies make their pitches to media buyers. Amazon hasn’t presented at the NewFront’s before.

Also Read: NewFront Speakers See Advertisers Changing Channels from Traditional TV

Free ad-supported streaming channels like IMDb have been growing fast, but are starting to see a need to develop and pay for original programming to attract and hold viewers.

Also Read: NFL Quick Kick: ‘Thursday Night Football’ to Amazon in 2022

A hour-hour drama from Dick Wolf, the prolific Law & Order producer, has been ordered by IMDb TV.

On Call follows a pair of police officers on patrol in Long Beach, Calif. Each episode tracks the partners--a rookie and a veteran--receiving a radio call and arriving on the scene of an incident.

The show is produced by by Universal Television and Wolf Entertainment and ATTN.

Other new IMDb TV projects include:

Blessed and Highly Favored, about a woman who returns to Dallas as a rookie pastor to keep her family’s church alive under the critical eye of her predecessor, who is also her father. Writer-creators Chris Marcil and Sam Johnson are the showrunners and executive producers. Emmy Award-winner Chris Godsick, Peri Gilpin, 3 Arts and Industry Entertainment also serve as executive producers.

Greek Candy is a single-camera comedy series inspired by the 100 year old chocolate factory Melina Kanakaredes and her family run in Akron. From Sony Pictures Television, Kanakaredes stars, executive produces and co-writes the series with Marc Firek. Also executive producing are Josh Berman and Jennifer Robinson in association with Osprey. 

Primo, from Shea Serrano and Michael Schur, is a compelling and highly entertaining coming-of-age story about a Mexican-American teenager balancing cultural norms, college aspirations, societal expectations and a big family. Based on his life, Serrano is the writer and an executive producer. Schur and David Miner also serve as executive producers. Primo is a Fremulon and 3 Arts production in association with Universal TV, a division of Universal Studio Group. 

The Fed is a drama set at the Federal Reserve featuring a group of young financial geniuses and their personal lives, which may derail their careers. Produced by Warner Bros. Television, The Fed is executive produced and written by Nkechi Okoro Carroll, who worked for the Federal Reserve prior to her TV career. Adesuwa McCalla, who has a first-look deal with Amazon Studios, will also serve as executive producer.

The Pradeeps of Pittsburgh, PA. is from Sony Pictures Television and  follows an Indian family and the tumultuous yet humorous events since they arrived in Pittsburgh two years ago. The series is written by Vijal Patel and inspired by his personal experiences, and directed by Michael Showalter. Patel and Showalter alongside Sara Gilbert, Tom Werner, Mandy Summers and Jordana Mollick serve as executive producers.

 The streamer has also greenlit High School, a new original series based on the book by recording artists Tegan and Sara. The scripted show follows the twin as they write their first song and have their first loves.

Tegan and Sara Quin and Clea DuVall will serve as executive producers alongside Plan B Entertainment. DuVall will also write and direct multiple episodes, including the pilot. Amazon Studios and Emmy and Plan B Entertainment produce the show.

“We are incredibly excited to be working with Lauren, Ryan, and the fantastic IMDb TV team to bring High School to life and apologize in advance to our mother for forcing her to relive this period of time with us again,” said executive producers Tegan and Sara Quin.  “We’ve made casting suggestions on her behalf to the incomparable Clea DuVall and our wonderful partners at Plan B.”

High School is part of an overall deal for television between Amazon Studios and Plan B Entertainment. 

Amazon OTT said it now reaches more than 120 million monthly viewers, up from 20 million viewers in January 2020.

IMDb TV’s viewership has grown 138% since a year ago. Now, 62% of IMDb TV viewers are age 18-49 and IMDb TV viewers spend 5.5 hours per week on average on the free streaming service.

Amazon OTT ads show up alongside content across IMDb TV, Twitch, live sports like Thursday Night Football, 3P network and broadcaster apps, and Amazon’s News app.

IMDb TV will launch its mobile app on Android and iOS devices.this summer, expanding its distribution. 

 IMDb TV has greenlit an order for Season 2 of the docuseries Top Class: the Life and Time of the Sierra Canyon Trailblazers. 

The show, from Uninterrupted, will pick up where Season 1 ended, with COVID-19 bringing their season to a halt just before the high school basketball team is supposed to play in the state championship game. The Trailblazers feature a roster of high-profile players including BJ Boston, Amari Bailey, Bronny James, Shy Odom, Zaire Wade and Ziaire Williams.

The show is executive produced by Bronny's dad LeBron James and Maverick Carter.

“Top Class captured the devotion, resilience, passion, and raw emotion experienced by the players and coaches during last year’s monumental season,” said  Lauren  Anderson  and  Ryan  Pirozzi, co-heads  of content and programming, IMDb TV. “We are thrilled to continue our partnership with Uninterrupted and deliver fans the next chapter of the awe-inspiring Sierra Canyon Trailblazers story."

IMBb TV said its reboot of Leverage, which appeared on TNT from 2008 to 2012, will have its debut on July 9.  Leverage: Redemption will stream eight new episodes this summer followed by an additional eight episodes in the fall.

Even with the pandemic receding, consumers said they plan to keep streaming, or even stream more TV, according to a new study by Tremor Video and Unruly.

The study found that 88% of respondents plan to watch the same or higher amounts of TV via paid streaming video on demand services (subscription VOD).

Increased engagement with both paid and free TV streaming will be most pronounced among younger age demos and higher income groups, Tremor Video said.

At the same time, 81% said they plan to watch the same or more TV over free, ad supported streaming services (AVOD).

The survey found that 61% of respondents said they were watching more TV than before the COVID-19 pandemic and 86% said the plan to watch live TV at the same or increased rates.

“After a long period of being homebound, consumers are feeling positive about the future, as they look to resume activities like dining out, traveling and in-store shopping, all of which should give advertisers a renewed sense of confidence in the months ahead,” said Terence Scroope, VP of Media Insights and Analytics, Tremor Video. “In parallel, our study suggests that consumers plan to increase their time with CTV content, reinforcing just how essential the medium will continue to be for advertisers as they look to fine-tune their 2021 media strategies.”

Tremor and Unruly surveyed 893 U.S. consumers in March.

The rise of internet-delivered TV has produced an explosion of new services in the United States, and we’re beginning to see the same in the United Kingdom. Acronyms like AVOD and FAST are now part of our daily jargon, but occasionally they seem interchangeable.  To some degree, that’s understandable as AVOD can also sometimes be offered alongside FAST, but that doesn’t mean they’re the same.  And for reasons I’ll explain, it’s important to understand the difference.

Crucial Differences  

Where AVOD (advertiser-supported video-on-demand) is a purely on-demand experience, FAST (free, ad-supported streaming TV) mimics the linear TV experience. What unites these two platforms is the means of delivery (internet) and that they are both free and ad-supported. To make matters more confusing, both can target niche audiences. But the critical difference is that one requires the viewer to take the lead and choose what they’re going to watch and when, while the other does not. AVOD invites the viewer to become an active participant, while FAST openly declares itself to be a “lean back” experience.

This distinction matters because one of the key reasons that digital video advertising has continued to grow in spite of the pandemic’s chilling effect is its ability to reach specific audiences in a way that traditional TV advertising cannot — that is, in a way that actively engages the viewer.  There is nothing new in the notion that advertisers want to reach engaged audiences and they’ll pay a premium for higher levels of engagement.  So when we turn our thoughts to the difference between AVOD and FAST, AVOD services clearly come out on top in terms of engagement. 

But let’s back up a bit. FAST channels were born largely out of Americans’ desire to cut the cord (and save a ton of money in doing so) while maintaining the feel and massive amount of choice that linear cable subscriptions provided. It wasn’t quite the same here in the U.K., however, as we never really reached the same level of cable penetration as seen in the U.S., and we already had a lot of free TV options.

But like the U.S., the U.K. has seen the uptake in OTT services explode. The volume of views on OTT services has risen nearly 50% year-over-year. Still, AVOD choices are few here and most free VOD is catch-up content provided by broadcasters and therefore limited. AVOD that offers a wider range of genres, or specific niche content, like IMDbTV, Fubo and Tubi in the U.S., are ripe to take off in the UK. A recent survey revealed that the majority of UK consumers (60%) say they would watch ads to be able to access content for free. And according to a Valassis study, 54% of consumers 25-54 said that ads on streaming services were more relevant than those on traditional networks. 

Customization Is Key

So while it’s likely that U.K. viewers will embrace FAST and AVOD, or hybrids therein, as audiences have in the U.S., the success of these platforms will come down to the ability to capture and keep viewers engaged and advertisers happy. When our team at YouLook.tv set out to build a better AVOD for the U.K., we recognized that quality content curated for the U.K.’s diverse audiences would be key to the advancement of ad-supported services here. Overall, the on-demand environment is better suited to provide viewers with a more customized experience while also providing advertisers with a way to reach those “lean forward” viewers in a credible, relevant way. 

David Smyth, a former 20th Century Fox and BSkyB exec, is founder and CEO of YouLook.tv, a new AVOD platform in the U.K. and Ireland.

Roku said it acquired TOH Holdings, the owner of the This Old House business, from TZP Group as its ad-supported streaming platform continues to grow.

The acquisition includes distribution rights and digital assets of This Old House and Ask This Old House and their television production studio. Financial terms were not disclosed.

The current seasons of This Old House and Ask This Old House will continue to stream on The Roku Channel after they air on PBS. The show will also continue to appear on cable with Discovery.

The moves follow Roku’s acquisition of programming from Quibi, the short-form mobile programming service that failed to attract subscribers last year. Roku also on Friday launched its first exclusive show, Cypher.

“We believe that the types of incremental content investments we have been making are commensurate with the scale and growth trajectory of The Roku Channel,” said Rob Holmes, VP of programming at Roku. 

Also Read: Roku CFO Louden: We Are Not Like A Cable Company

“While TV subscription services require exclusive content on an ongoing basis, we believe that ad-supported models like The Roku Channel thrive with content that is broadly distributed across multiple platforms and services. Furthermore, the more relevant the content becomes for a larger audience, the more appealing it is to advertising partners,” he said. 

This Old House has long been underwritten on PBS by The Home Depot.

This Old House and Ask this Old House were the two top-rated home improvement shows in America in 2020.

“This Old House created the television home improvement genre and is beloved by millions of fans. We are thrilled to welcome this incredible team, and we could not be more excited to help grow the brand for an entire new generation of home improvement enthusiasts,” said Holmes.

Holmes said he expected that future seasons of This Old House would follow the same distribution strategy. 

“The passion of the craftspeople on This Old House is matched only by its viewers, and we take great pride that over the past four decades we have helped them improve their most valuable asset — their home,” said Dan Suratt, CEO, This Old House Ventures. “Roku is not only the No. 1 TV streaming platform in America, it also represents the future of TV, and we could not think of a better home for This Old House to grow and to continue its leadership position in the home improvement genre.”

Suratt and the rest of the executive team working on This Old House will join Roku.

It looks like the original content glut is going to get even gluttier as the various FASTs (free ad-supported streaming TV services) jump on the bandwagon.

Amazon’s IMDb TV was first out of the gate in October 2020, when it announced that it would be rebooting the 2008 crime drama Leverage (which I never heard of). That was followed by a number of other announcements of series reboots including Judge Judy (heard of her), and the announcement last month that 98-year-old industry legend Norman Lear (you’d better have heard of him) would be producing a half-hour sitcom and an hour-long drama for the service. And Titus Welliver will reprise his role as hard-boiled Det. Harry Bosch in a spinoff of the Prime Video original series Bosch for IMDb TV in the coming months. 

IMDbTV is in an interesting position among these services, which are also sometimes referred to by the acronym AVODs (ad-supported video-on-demand), because Amazon often sticks IMDbTV results into the mix when people think they’re searching Prime Video, adding a “watch it with ads for free” tag that doesn’t exactly cue most viewers into the fact that they’re watching a service that isn’t Prime. Regardless, it’s a great way for Amazon to show off the power of its ad platform--think of all the data they have about what people actually buy.

It would seem that by introducing original programming to IMDbTV, they can showcase it on both the Fire TV and Prime homepages as a way of increasing viewership, having determined that people aren’t all that bothered by the fact that some Prime shows seem to have advertising. (This is not all that surprising given the way Amazon’s Prime catalog is structured, where most movies and shows are free and some cost just a few dollars to rent. It’s confusing enough that viewers are unlikely to be concerned about a few ad supported shows thrown into the mix.)

Roku was the next to announce originals, which was not all that surprising given that in many ways the Roku Channel goes head to head with IMDbTV.

Roku bought up Quibi’s leftover catalog in December, a move that got the company a decent amount of press given the way Quibi’s become such an easy punch line. The good news there is that Roku can group the short-form series together to make something like a long-ish movie or a two or three episode miniseries, and that given the number of talented people Quibi had signed up, there are likely some gems in there along with shows about blow-up dolls. (Not making that one up.)

The bad news is that there is all sorts of tangly legal language around who owns the series (Quibi didn’t) and for how long and what happens if they want to do a second season. 

Still, it was a smart move for Roku at a time when the network-owned FASTs like Pluto and Tubi were starting to differentiate themselves by gaining access to their parent companies’ back catalogs, something Roku could not lay claim to.

(Though they did, it seems, demand that networks setting up shop for their apps on Roku pay them tribute by granting them rights to a couple of library series. Thus Xena: Warrior Princess is now on the Roku Channel, courtesy of NBCU and Peacock.)

Roku has since announced even more originals are on the way, starting with a crime drama called Cypher, from Aroma, an independent Cairo-based studio. The show premiered on South African Netflix this summer but will have its exclusive U.S. release on Roku starting March 19.

This is likely to be the first of many originals on Roku and it will be interesting to see if they continue to go the international route to find what they consider hidden gems or if they’ll take a different tack. Notably, Roku placed a LinkedIn job posting last month seeking a “lead production attorney,” who will work on the company’s “expanding slate of original content.”  

The next FAST out of the originals gate, Tubi, is Fox’s sole investment in the streaming space, and so it’s no surprise that they are looking to produce originals as well. 

Last week, Fox CFO Steve Tomsic said the conglomerate would take a “cost-effective look” at original shows. 

CEO Lachlan Murdoch has promised that Tubi will be a big part of Fox’s plans moving forward, and according to a report in Bloomberg, the service is looking at both TV shows and movies, with the potential to spend as much as $4 million/episode on the former, which seems at odds with Tomsic’s earlier statement.

The likelihood here is that Fox has realized that it needs to have a bigger presence on streaming in order to compete with the other networks and that the shift to streaming is happening faster than they’d originally anticipated, thanks in no small part to the pandemic.

Notably, Tubi’s declared entry into the originals business comes two years after founder and CEO Farhad Massoudi told Next TV that the model “doesn’t make sense” for AVOD platforms.

Series with $4 million/episode budgets can easily compete with anything Netflix, Hulu, Disney Plus and the other subscription services have on offer, and so it’s easy enough to see Tubi rolling out a subscription version of the app to house the higher priced programming--if the value was there, there’s no reason to think consumers wouldn’t pay for it. 

On the other hand, they may decide that the ad revenue they can get from such premium programming more than makes up for an absence of subscription revenue and set themselves apart as the “Tiffany FAST.” 

Given that Tubi’s original programming strategy appears to be in the very early stages of development, however, it’s too soon to make a clear prediction on where they’ll end up.

The first FAST to be bought by a network group, ViacomCBS’s Pluto TV, has been dipping its toe into the original content game, showing the previously unaired fourth season of the series Bajillion Dollar Propertie$, which was originally created for NBCU’s Seeso. (To date, there has been no announcement of a fifth, Pluto-only season.) 

Pluto TV is also showing episodes of original series from CBS’ linear prime time lineup like Clarice and The Equalizer, which seems like a much smarter move as it helps create synergy between the various moving pieces of ViacomCBS’s streaming and linear offerings. VCBS could also tease episodes of its new Paramount Plus originals on Pluto, getting viewers hooked as a way to encourage subscriptions.

The final group of FASTs are the services run by the smart TV OEMs: LG, Samsung and Vizio. All three have sizable libraries, in-house data and analytics services and their own ad sales teams. All they seem to be missing is original programming.

What makes sense here is something the other FASTs have not gravitated to: non-fiction, reality and game show TV, genres with low production costs and with styles that blend in well with the library content available on the FASTs. 

Game shows and reality shows also present the opportunity to create live TV, getting viewers in the habit of tuning in at a specific time every evening (or even once a week) which creates an excellent ad environment, with millions of people all watching the same ads at the same time.

All in all, the launch of original content indicates that the FASTs have reached a new stage of growth, one that would seem to confirm that they are not just a fad but a permanent piece of the new TV landscape. It will be fascinating to see how they develop in the years to come.

Fox plans to invest in Tubi, its entry in the fast-growing over-the-top connected TV market, and those investments include original programming.

While most media companies are investing billions in original scripted content for their subscription streaming services, Fox bought ad-supported Tubi last year for $440 million and Fox CEO Lachlan Murdoch has predicted that it will be a billion-dollar business in a few years.

Last week, Fox CFO Steve Tomsic, speaking at Deutsche Bank’s Media, Internet & Telecom Conference said that putting Fox hits like The Masked Singer have given Tubi a boost, the company is looking to put original programming on Tubi. He was quick to emphasize that he wasn’t talking about big-ticket scripted programming (although Wall Street is growing more comfortable with the notion of spending big on programming, so long as it boosts subscriber totals).

“Over time, as we look at genres that really work on Tubi, we will cost-effectively look at sort of originals, but I stress that it’s going to be cost effective,” Tomsic said.

Tubi has had success with some of the cost-effective titles it has licensed, Tomsic said.

Also Read: Ad-Supported HBO Max to Launch in June

Most ad supported streaming services have featured off-network and library content, but competition might be changing that. NBCU’s Peacock has originals including a new version of Saved by the Bell. And AT&T’s HBO Max and ViacomCBS’s Paramount Plus are close to launching ad supported versions of their streaming services, which would give consumers lower-priced access to original programming.

Roku’s ad-supported The Roku Channel on March 19 launches Cypher, a scripted dramatic it will be airing exclusively in the U.S., a move that could signal a desire to program more exclusive and original shows. 

Fox’s Tomsic also said that some sports programming could find its way to Tubi, which is primarily being promoted as a free service.

“I can see a world where you would experiment with sports to drive sampling of Tubi and drive the brand of Tubi, and maybe some of the second- and third-tier sports could find a home if the economics worked with Tubi to drive that,” he said. “But I think it’s a reasonable distance away before you’d see sort of the core home of any of our major sports on Tubi.”

Last week, The Walt Disney Co.’s ESPN made a deal with the National Hockey League that puts live games on its streaming platforms including ESPN Plus and Hulu.

Tomsic said Fox expects Tubi to generate $300 million of ad revenue this fiscal year. Tubi will be a part of Fox’s upfront presentation this year. 

Gotta be the shoes?

Executives in and around the business of ad-supported video-on-demand, aka “AVOD,” have struggled to put their finger on just what’s behind the sector’s explosive growth recently, which seems outsized even amid the incendiary overall TV viewing uptick of the pandemic era. 

“The pandemic really accelerated the AVOD market,” said Tubi’s VP of Global Business Development, Andrea Clarke-Hall, speaking at a virtual panel event Thursday. “Overnight, we were put on the map. Viewership surged. Brand-awareness surged. I know certainly in early days of the pandemic there was concern that ad dollars would dry up and that went away really quickly. We’ve seen record revenue, quarter after quarter. Numbers that just last year were a pie in the sky.”

For her part, however, Kristina Shepard, head of East Coast sales and agency partnerships for Roku, distilled the increased consumer demand to a more simple explanation: Streaming companies have improved their AVOD offerings. Roku’s aim to elevate customers' experience from an advertising perspective is in part why advertising based content viewing is growing, Shepard said.

“It's growing because the ad experience is getting better,” Shepard said, speaking alongside Clarke-Hall at the MediaRadar-produced event,  The Future of AVOD: What to Expect in 2021. 

“It's more relevant,” she added. “Hopefully we can solve for frequency because we know that's still a common objection we hear about the ecosystem.”

Shepard said Roku relies on advertising research to prove brand value via the company’s “unique ACR (automatic content recognition) data.”

The AVOD market is in part spearheaded by the Roku Channel. The Roku platform finished 2020 with 51.2 million active accounts— up 39% year to year. Roku "platform revenue"--which is, in large part, made up from money it makes selling ads on the Roku Channel--was up 71% to $1.268 billion in 2020

In terms of minimizing ad pods and instead developing contextual partnerships and relevant content integration, Clarke-Hall said that ads will become more and more dynamic especially when it comes to VOD content.

 “There will be more and more experimentation in terms of the types of ads and product placement,” she said. “The challenge has been thus far, not the technical ability, but the dollars. We've tried to make it look as similar as we can to live in your TV. To make that migration really easy. I think as more and more dollars come and people get more comfortable with that OTT ecosystem, you'll start to really see a lot more cool ad products that that provide a lot more direct response.”

 Shepard added that programmatic ad buying is the future.

“What clients are asking us for can simply only be done in a one-view platform environment,” she said. “They want that holistic reaching frequency. They want a decision in real time based on if they've over frequency of consumer. They want to then pivot to someone else. They want to pivot to different platforms. They want to drive business outcomes. All of that just is simply really done the best in programmatic environment.”

Tubi, the streaming service acquired last year by Fox for $440 million, will grow to be a billion dollar business, according to Fox CEO Lachlan Murdoch.

Speaking on Fox’s fiscal second-quarter earnings call Tuesday, Murdoch called Tubi “an exciting growth engine for the company and a key strategic platform not only for our digital expansion, but also our broader reimagining of Fox’s broadcast model for the future.”

Also Read: Fox Jumps Into Streaming By Agreeing to Buy Tubi

Tubi saw increases in key metrics that exceeded Fox’s expectations, Murdoch said. In the first half of the year, unique viewers more than tripled and total view time grow by nearly 70% and revenue more than doubled. 

Murdoch said that total view time was the key metric Fox looked at because it has a direct and proportional relationship to advertising inventor and revenue opportunities.

Fox expects Tubi revenues to double this year to $300 million. “As we look out a few years, we envision Tubi becoming a billion-dollar business and a core pillar of Fox,” Murdoch said.

Murdoch noted that while other media companies pour billions into subscription VOD streaming services, ad supported streaming is Fox’s direct-to-consumer strategy.

SVOD presents the potential to lose billions of dollars, he noted. “It is very crowded. We see it is very hard to stand apart and differentiate ourselves within SVOD and that’s why we’ve chosen to embrace AVOD.”

He said Fox has been able to grow Tubi by reinvesting its profits and not by losing billions. “The business will ultimately become a very profitable one for us."

Tubi has been neutral from a profit and loss perspective so far this year, said Fox CFO Steve Tomsic. The company will need to increase its investment in Tubi to grow it to be a billion-dollar business. “Over time as we take our foot off the gas in terms of investing for growth, you will see some pretty good conversion of revenue into bottom line margin as this business gets to scale,” he said.

In terms of programming, Fox has added shows like The Masked Singer to Tubi’s content library, which has added to view time and reach for advertisers.

Read Also: Tubi Adds Global Versions of 'MasterChef,' 'Lego Masters'

Advertisers also benefit from Tubi’s technology, which is being constantly upgraded to provide better data and results to digital advertisers, Murdoch said.

Murdoch cited a study with a major insurance brand that used Tubi’s Advanced Frequency Management to reduce ad repetition. Frequency was reduced by 360%.

“Rather than continuing to show the same ad to the same viewers, as is so often the case across other AVOD platforms, Tubi’s tool enabled this insurance company to advertise to nearly 100,000 more households within the same ad buy,” he said.

As a result of the test, the brand made a multi-billion-dollar ad commitment to Tubi. “The brand is also a Fox advertiser now as well,” Murdoch said.

AMC Networks said it launched five free ad-supported channels on Vizio’s SmartCast streaming platform.

Like other programmers, AMC Networks is increasingly emphasizing streaming as consumers cut the cord with cable, cutting into distribution and linear advertising revenues.

Also Read: AMC Launching Streaming Channels With Samsung

The new SmartCast channels feature mainly programming that has appeared on AMC’s cable networks.

AMC will sell ads on the channels through its AMC Digital ad sales operation. AMC also has ad supported streaming channels on Pluto TV, Sling TV, Amazon’s IMDb TV and Samsung platform.

Also Read:  AMC Plus Launches on Roku Channel

“We are thrilled to make these free, ad-supported channels available to millions of Vizio viewers on the SmartCast platform,” said Evan Adlman, senior VP of advanced advertising and digital ad sales for AMC Networks. “We set a goal last year of making our popular and critically acclaimed content as widely available as possible on emerging ad-supported platforms, which is great for the fans of our shows and for the advertising partners who reach fans through our AMCN Digital ad sales offering.”

The new channels on SmartCast are AMC Presents, with scripted and unscripted shows including The Walking Dead, Halt and Catch Fire, Rectify and Into the Badlands; Rush by AMC featuring action and thriller movies; Slightly Off by IFC with comedies including Comedy Bang Bang, Portlandia and Brockmire; Absolute Reality by WE TV with Bridezillas, Kendra on Top, LA Hair and Platinum Weddings and IFC Films Picks with movies for film buffs.

“Vizio is excited to offer AMC Networks’ award-winning series and films free to our millions of viewers,” said Katherine Pond, VP of business development at Vizio. “The addition of these channels provides SmartCast viewers even more variety as they tune into their favorite movies and shows on their Vizio Smart TVs.”

Vizio said viewing on Smartcast TVs rose to 1.1 trillion minutes in 2020, up 20% from the previous year.

Television continues to be a dominating force for healthcare and pharmaceutical advertising. But while linear TV is the number one way for advertisers to reach audiences at scale, it lacks broad demo-based spot buying and offers few ways to measure campaign impact.

Simultaneously, viewership is changing. Older audiences are now embracing connected TV (CTV), ad-supported video-on-demand (AVOD), and other over-the-top (OTT) options. Also, millennial cord-cutters viewing content on these platforms will increasingly become pharma consumers as they age. With cost-effective, precise, and transparent spot buys, marketers need to change their television advertising approach to gain a competitive advantage.

The Current Landscape

COVID-19 accelerated a shift in television consumption as consumers watched more shows while stuck at home. This massive viewing spike has held steady for months. However, only 7% of U.S. agency and marketing professionals maintained regular ad spending for linear broadcast and cable TV spots during the pandemic. The affected companies need to reallocate budgets thoughtfully as they will not grow their brands successfully unless they plan.

Healthcare marketers specifically should add technologies like CTV and AVOD to their advertising mix. CTV allows budget-conscious consumers to access free, ad-supported channels without a cable subscription. Contextual CTV campaigns offer improved performance, audience targeting, transparency, and visibility because buyers and sellers can vet inventory more closely using real-time attribution.

AVOD, by contrast, is like broadcast television because consumers need to watch commercials. But revenue for this free service rose 31% year-over-year once COVID hit, proving viewers will sit through ads if services cost less (or nothing). Adoption is snowballing, especially since many AVOD services boast libraries that rival subscription platforms.

Pharma brands have historically shied away from these technologies, but now is the time to capitalize on the opportunities they offer. By leveraging intelligent measurement strategies, brands (and the agencies representing them) can understand viewers in new ways, attract new audiences, and improve product awareness and understanding.

Measure Twice, Cut Once

In the past, many ad agencies believed pharma was not ready for primetime, so they did not shift resources to CTV or AVOD because they thought cable sufficed. However, these options offer accurate and consistent ways to measure advertising investment returns. Targeting is also more robust because marketers can analyze metadata, geographic information, and other factors to determine how their ads track with targeted households or adjust ads to be more effective.

One area that needs a long-awaited upgrade is measurement. Traditionally, pharma buyers and planners identified viewers by age or gender and evaluated programs through Nielsen ratings. They considered CTV and AVOD unproven even to consider.

But keeping measurement workflows siloed is like using diaries to track viewership (as Nielsen did in the 1950s). Customers recorded their viewing habits using paper and pencil, and the company compiled statistical models approximating the number of viewers. That approach doesn’t make sense in a digital world with more viewing options than ever.

TV ad buying and measurement now need to be as precise as digital, so healthcare marketers must adopt modern options more rapidly as part of their ad buys. CTV and AVOD are more cost-effective, with lower base rates. They allow pharma brands to avoid fraud, invalid traffic, or bad spending on open exchanges while remaining compliant with privacy laws. By accessing detailed and actionable insights, companies can also manage how often they run spots to ensure they do not over-target or waste money.

Making ad buys more cost-effective and transparent allows brands to measure outcomes more consistently. They can go beyond mere exposures, connecting numbers to real-world first-party data. This approach gives them valuable insights into clinical behaviors employing unified metrics to strengthen campaigns.

As TV continues to dominate in all its forms, pharma marketers need to take advantage of the advanced and connected tools at their disposal. By modernizing approaches and measuring more consistently, campaigns will deliver more impact with better performance.

DeepIntent is a leading healthcare marketing platform company purpose-built to influence positive health outcomes, connecting healthcare companies with patients and providers across every screen through unique data, premium media partnerships, and custom integrations.

Litton Entertainment is debuting free ad-supported streaming television (FAST) channel Xplore, which will offer a lineup of travel, lifestyle, nature, technology and sports programming.

Xplore is launching domestically with more than 2,500 hours of content to a potential reach of more than 50 million viewers. Xplore will be available to watch online as well as through such platforms as Samsung TV Plus, Vizio SmartCast, The Roku Channel and Plex, all of which are expected to launch the channel by the end of this month, and on Xumo, which will add it in the first quarter of next year.

“The launch of our first FAST channel is the next step in expanding Litton’s global distribution. The [ad-supported video on demand] market is quickly evolving, and with these incredible partners we see a strong opportunity not only for impactful distribution but for original co-productions and first-run programming as well. This is truly just the beginning,” said Andrew Tew, vice president of licensing and distribution and general manager of global channels, Litton Entertainment, in a statement. Tew will lead Xplore’s strategic direction and operations, including distribution, programming, marketing and communications.

Programs airing on the channel will include Jack Hanna’s Wild Countdown, The Henry Ford Innovation Nation with Mo Rocca, and Journey with Dylan Dreyer and others produced by Litton.

Litton has built a business taking over the programming of broadcast networks’ Saturday mornings, with blocks of educational and informational programming targeting teens and families airing on ABC, CBS, NBC and The CW.

Xplore is the latest step in Litton’s expansion to additional platforms. In June 2020, Litton and CuriosityStream announced an international distribution partnership for Mission Unstoppable, Litton’s popular series, produced in partnership with Lyda Hill Philanthropies’ IF/THEN Initiative, featuring women role models in science, technology, engineering & math (STEM). 

RELATED: Litton’s ‘Mission Impossible’ Joins CuriosityStream

In April 2020 Litton announced The Daily Splash, an online hub offering free access to hundreds of half-hours of Litton-produced programs. 

The new anime series Yu-Gi-Oh! VRAINS will go directly to Pluto TV and AVOD, skipping over other broadcast and digital platforms, content company Cinedigm said.

Pluto TV, part of ViacomCBS, will be setting up a special Yu-Gi-Oh branded anime channel that will be streaming VRAINS and hundreds of episodes from four of the five other Yu-Gi-Oh! series, first in the United States this month, followed by Latin America.

The exclusive deal covers multiple territories around the world and comes as over-the-top viewing grows, especially among young consumers.

The distribution strategy reflects Cinedigm’s “ability to pivot easily with marketplace changes and disruptions to meet viewers needs,” said Yolanda Macias, Cinedigm’s executive VP for acquisitions and digital sales.

Based on the Yu-Gi-Oh! trading card game, Yu-Gi-Oh! VRAINS features Playmaker, who must thwart a group of hackers aimed to destroy the cyber world. VRAINS stands for Virtual Reality, Artificial Intelligence and Network System.

The series was ranked No. 6 at the 2109 Tokyo Anime Award Festival.

“Yu-Gi-Oh!'s fandom is one of the most loyal and passionate in the world, and to be able to bring Yu-Gi-Oh! VRAINS to Pluto TV is both an incredible honor for us and a boon for viewers around the world, who can now stream this series for free,” said Amy Kuessner, senior VP of content strategy & global partnerships at Pluto TV. “We are excited to bring this single channel dedicated solely to Yu-Gi-Oh! and making it easier than ever for longtime and new fans alike to access this world.” 

Pluto TV will be streaming a dubbed version of the series. Its version will feature all original music and effects scored for Western markets.

“We are pleased to partner with Pluto TV to release Yu-Gi-Oh! VRAINS and the dedicated Yu-Gi-Oh! channel that will enable fans to enjoy many of the Yu-Gi-Oh! series,” said Mark Kirk, senior VP of digital operations at Konami Cross Media NY, Inc., the production company that dubs Japanese anime content, including Yu-Gi-Oh!   

Cinedigm said it agreed to acquire The Film Detective, a content company with two free ad supported streaming channels and a library with 10,000 films and TV episodes.

Financial Terms were not disclosed.

After the merger, Cinedigm said The Film Detective will continue to operate independently under founder and CEO Philip Hopkins, who will become president of The Film Detective. 

“We are very proud to welcome Phil and The Film Detective to the Cinedigm family and look forward to Phil’s continued strong leadership as we grow the business together,” said Cinedigm CEO Chris McGurk. “The Film Detective’s library is currently profitable, and with synergies and expanded distribution we believe we can quickly and significantly increase both revenues and profits from both the library and The Film Detective’s two streaming channels.”

The Film Detective’s channels are the eponymous The Film Detective, which was launched in 2018 and shows chassis movies, and Lone Star, which was launched earlier this year and shows classic westerns. Dish Network’s Sling TV, Sinclair Broadcast Group,s’ Stirr, Plex TV, Distro TV and Vizion carry The Film Detective channel.

Some of the titles in The Film Detective’s library are Dementia 13, Abbott and Costello in African Screams, Cary Grant and Rosalind Russell in His Girl Friday, Shirley Temple in The Little Princess, Bob Hope and Dorothy Lamour in My Favorite Brunette and Fred Astaire and June Powell in Royal Wedding.

Cinedigm said it expects to leverage its Matchpoint technology platform to accelerate The Film Detective’s distribution across Cinedigm’s network of more than 100 digital retail partners. It also plans to expand distribution of The Film Detectives two channels, and launch several new genre channels in the coming quarters.

“I am thrilled to reach this acquisition agreement with Cinedigm, which will give The Film Detective the firepower to grow our content library and streaming channels much faster than before,” said Hopkins. “Cinedigm has been a long-term independent leader in quality content distribution and streaming and I believe their capabilities will help take this business I have built over the years to an even higher level.”

The acquisition is subject to completion of definitive documents and any closing conditions to be agreed upon.

Seventeen percent of U.S. internet users viewed one or more AVOD services in the past month,  vs. just 13% in the third quarter of 2019, according to a survey conducted by UK research firm Ampere Analysis. 

The research company says Tubi, recently purchased by Fox for $440 million, is leading the usage surge, based in large part by its extra-large content library, which features more than 29,000 movies and TV show episodes. 

In fact, according to Ampere, Tubi’s library is only surpassed in the streaming world by Amazon Prime Video (see chart).

Tubi said its monthly active users in August reached 33 million, a 65% year-over-year increase. Usage for other AVODs, including Roku Channel, ViacomCBS-owned Pluto TV and Amazon-owned IMDb TV has also been surging. 

Also notable: AVOD users tend to be older and not as rich as SVOD viewers. Ampere found that 44% of AVOD users were aged 45-64 vs. 36% for AVOD. In the U.S half of AVOD users have household incomes of less than $30,000 compared to just a third of SVOD users