Andrew Thompson of revenue optimisation firm Symphony MediaAI explains how rights holders should focus on data to unlock the AVOD market, which is expected to hit $14bn by 2025.
The Covid-19 pandemic has altered nearly everything about consumer behavior – including TV viewing habits. Cords were cut long before March 2020 and OTT streaming platforms are on a path to dominate the market. Extra time indoors coupled with a decrease in live events on linear TV hastened this migration.
As terrestrial linear ad revenues decline, content owners are adopting new distribution models to keep revenue on pace. Advertising-based video on demand (AVOD) stands out as a strong opportunity to compensate for this loss. Content owners betting on AVOD must quickly rethink data strategies to confer every possible advantage in this disruptive landscape.
Rise of AVOD
Over the past decade, SVOD pioneers Netflix and Amazon have been joined by an ever-expanding field of players; there are now more than 300 OTT streaming services in the US alone. But many of the new and existing platforms are finding they cannot survive on the SVOD model alone. A proliferation of AVOD services – PlutoTV, Tubi, Roku Channel, Peacock, Vudu, and Xumo – demonstrate this shift.
The numbers are astounding. The value of the AVOD market is expected to increase 34% in the next four years to total nearly $14bn – and the decline in traditional advertising during the pandemic shows why. For example, in the second quarter of 2020, revenues at Comcast’s NBCUniversal fell by a quarter due to a lack of live sporting and entertainment events. Meanwhile, Viacom-owned PlutoTV saw domestic monthly active users increase by almost 60% since 2019, reaching nearly 30 million in the third quarter of 2020.
Predicting market movements
Content owners seeking a piece of the exploding AVOD market must harness data to compete. Real-time insight is critical to accurate revenue recognition, tracking and forecasting. Predictive insight enables rapid adaptation as market conditions continue to shift.
Content owners that are negotiating AVOD agreements are constantly looking to maximise their revenue share, bounty, and other forms of revenue payments.
Transparent, accessible data on a platform-by-platform basis can help maximise partner negotiations and provide greater insights into content and subscriber behaviour. And analysing content data from a given partner allows content owners to compare how well their content is performing against multiple AVOD platforms.
Insights into subscriber and content trends can also drive strategic decisions for content owners that position them more favourably with their consumers.
Data holds great promise to optimise advertising revenue but as it proliferates, the path to insight is more complex than ever. No data standardisation, multiple content naming conventions, and access to varying degrees of data complicates matters.
Content owners employing AVOD distribution strategies need tools that can instantaneously and continuously pull in and normalise data from disparate platforms to capture subscribers’ behaviour, content popularity and consumption trends.
Once normalised, data must be analysed efficiently. The fewer tools, the better; relying on multiple vendors, manual process and multiple in-house systems is an expense that few content owners can spare. And while operational agility is the price of admission in the fast-moving AVOD game, quality of insight will determine who wins. Content owners need access to actionable, relevant findings to fully capture the value of the data they collect.
All of this gives content owners the chance to tweak their offerings, identify new audiences, and determine the best platform for their content.
With the pandemic still in full swing and the streaming revolution rapidly proceeding, AVOD, and the data that comes from it, is certain to continue to grow. Content owners that deploy the right strategies today will be the ones who best understand their subscribers, their content, and their opportunities to grow revenue.
Andrew Thompson is SVP of sales & business development at Symphony MediaAI.