Premium Digital Video Viewing Up 24% in Q2

Viewing of premium content on digital platforms continues to rise and with it digital ad views, according to a new report from FreeWheel.

In its second-quarter Video Monetization Report, FreeWheel, which provides ad-serving software for cable, satellite, and over-the-top video distributors, notes that digital consumption is shifting swiftly from desktops to mobile devices.

FreeWheel says video views were up 24% in the second quarter from a year ago. Content owners are doing a better job of monetizing that content because ad views were up 28%.

Ad views were up the most in long-form content, growing 37%. That outpaced short-form content and live streaming programmers.

“Viewers are increasingly engaging with content in lean-back environments that are well suited for full-episode consumption, including over-the-top and set-top-box video-on-demand,” the report said.

A year ago, the desktop was still the dominant device with 62% of ad views in the U.S. In the second quarter of 2016, desktop’s share is just over half that. Desktop views have been flat but have been overtaken by swift growth on OTT and smartphone platforms that are registering growth rates of 60% for the past two quarters.

Set-top box VOD now has 17% of ad views. “We expect that number to grow as more MVPDs light up Dynamic Ad Insertion on their platforms,” the FreeWheel report said.

Ad views in sports programming rose 44%, driven by a lot of short-form clips getting watched. Entertainment programming, which creates the majority of monetization, was up 26% in the U.S. market.

Entertainment programming generates 53% of the ad views in the U.S., followed by sports at 24%. Next is news at 10%, music at 10% and kids at 3%

Video on demand shows tend to have a lighter ad load than live streams, whose ad load mirrors linear TV. FreeWheel found that there are about 26% more ads on live programming than VOD.

“In live environments, the most impactful step Programmers can take is to fill the entire ad break and avoid backfilling with promo or slate as much as possible,” the report said. “On the other hand, on-demand content provides programmers with the opportunity to cater the ad experience to different scenarios, and potentially more selective viewers. This added control makes it all the more important to select the optimal monetization model for a particular piece of content.”

Most of the views of TV-like long-form premium content are being done by viewers who have authenticated as pay-TV customers. According to FreeWheel, 68% of TV-style viewing of live and on-demand content occurred after authentication, down slightly from 72% in the first quarter but well above the 60% seen a year ago.

FreeWheel notes in the report that during to 2014 Olympics, authenticated viewing jumped. “It will be interesting to see how the Rio Olympics will impact future quarters,” the report said.

FreeWheel also looked at ways content providers could optimize their audience and monetization. It did an analysis that identified three audience segments: Samplers (those who on average watch less than 50% of a given episode), Catch-Up Viewers (those who visit a particular viewing environment 1-2 times a month but usually complete the episode) and Digital Enthusiasts (returning 3+ times a month to complete episodes).

Exponential value can be realized from attracting and retaining engaged viewers, FreeWheel says. Catch-Up Viewers generate 1.7 times the impressions of a Sampler, while Digital Enthusiasts generate 7.3 times the impressions of a Sampler.

Catch-up viewers were least likely to drop off during ads, which FreeWheel said demonstrates their receptivity to advertising and commitment to content.

“In an increasingly crowded consumer media landscape, premium publishers must continue to focus on designing compelling experiences in order to drive user engagement," the report concludes. “Understanding the audience, their consumption patterns, and their receptivity to advertising will enable Publishers to be even more strategic about the ad experiences provided. Simply put — designing a good user experience starts with knowing your user and acting on those insights.”

Jon Lafayette

Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.