M+E Connections

As viewers increasingly suffer from “streaming fatigue” due to the huge and still growing number of subscription video on demand (SVOD) services, advertising-based video on demand (AVOD) is continuing to grow, according to Vince Muscarella, vice president of sales at Whip Media Group.

Kicking off the OTT.X Wednesday Webinar “Streaming Fatigue: The Rising Popularity of AVOD” on Jan. 12, Eric Hanson, EVP at OTT.X, said: “This year, AVOD viewers [are expected to] make up more than 50 percent of all digital video viewers in the U.S.”

“That’s a lot. At this point, AVOD has become just a regular thing,” according to Hanson, adding: “It’s not really even new anymore. It’s just another way that we distribute and consume content – something that everyone that’s in this space is expected to be a part of in some way.”

And, “that being the case, it’s no longer enough just to be doing AVOD to succeed,” Hanson told viewers. He explained: “We’re going to have to be effective at it. That includes a great many factors of course but none more important than overcoming challenges to become efficient when it comes to operations tracking and reporting, enabling businesses to scale and succeed in the ad-supported world.”

AVOD Growth

AVOD is growing significantly. Ad-supported streaming has emerged as a core strategy for content development, acquisition and distribution, according to Muscarella.

There are, however, some challenges because “with that growth comes growing pains – especially with the kind of velocity that we’re talking about today,” he said.

One factor that is driving ad-supported growth is subscription fatigue. But he said: “It’s not just streaming fatigue. I think it’s more subscription fatigue. There’s just so many options out there and they’re all demanding a share of wallet. And there’s just so many good premium options. You can’t subscribe to them all – or at least most people can’t subscribe to them all.”

In addition to subscriptions to movie/TV services, there are other subscriptions that consumers have, including console video game subscriptions, he noted.

“This is really about finding alternatives and really understanding the different choices that are out there,” he noted.

Also driving ad-supported growth are: greater awareness of it and other options outside of subscription, the need for deep content libraries and to be able to monetise it, content offering niche appeal, it becoming cheaper for platforms to acquire content, and ad dollars shifting away from traditional linear, he said.

“There’s still a long way to go – traditional linear is still a very big part of the business obviously… but there is a shift” happening, he noted.

The “number one-search term” on Roku is “free,” he said, quoting Colin Davis, director of scripted programming at Roku. Consumers are aware of the free options and they’re “searching for it,” Muscarella added.

He pointed to a quote from Steve Tomsic, CFO of Fox Corp., who said: “Over time, you’ll see the curves cross where advertising revenue we earn on Tubi (expected to be around $300 million) will exceed the advertising revenue we generate on the broadcast entertainment network.”

SVOD “Faces Headwinds”

Meanwhile, subscription video on demand (SVOD) remains “huge but faces headwinds,” according to Muscarella.

Citing Whip Media’s TV Time data, he said consumers don’t plan to add more than one service this year. The number one reason cited for that was “it is getting too expensive,” he said, noting that is true in the U.S. and other major media markets, including France, Italy, Spain and the U.K.

Meanwhile, almost 50% of free streaming users polled said they viewed a platform at least a few times each week, he noted. Also, a plurality of free streamers surveyed said they “sometimes” chose an AVOD or free ad-supported streaming TV service (FAST) as a first option, with 20% “always” choosing it first, according to Whip Media.

AVOD/FAST users are usually looking for a specific program, Muscarella said. Among viewers who used an AVOD/FAST service in the past month, a majority of them were looking to watch a specific programme or browse available content, according to Whip Media.

Movies and legacy TV shows are the most popular forms of video content on AVOD/FAST services, Muscarella also said. Although women tend to “drive” content viewing across all genres, men tend to favour science/tech, sports and news.. While older viewers view most categories, younger viewers tend to favour kids/family and game shows, according to Whip Media.

There is an opportunity to attract younger adults, Muscarella went on to say. After all, 30% of adults 18-34 polled said they hadn’t sampled any content due to “lack of awareness,” while the same amount of them sampled content but rejected the programming, according to Whip Media. The older the viewer, the higher the concern was about original programming.

Although 2021 was expected to be the year of free streaming adoption and awareness was indeed high, there is still room to grow with younger segments of the market, according to Muscarella.

But original programming is important to draw in new or reluctant AVOD/FAST viewers, he added.