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Does AVOD News Reveal a New Phase of SVOD?

Hot on the heels of Nielsen’s announcement that its Total Ad Ratings product now includes OTT and mobile viewingcomes NBC Universal’s announcement that it will be launching a new ad-supported OTT (AVOD) servicein 2020. Other reports this past week cover entry into the AVOD market of Amazon’s IMDb (through a new service called Freedive) and Sinclair Broadcasting’s STIRR. On top of all this, there are reports of negotiations between Viacom and potential AVOD acquisition targets Tubi TV and Pluto TV.

What’s causing this mini-land rush on AVOD? First, there is clearly an audience for AVOD products, despite the recent industry passion for ad-free subscription services. The VAB, Roku, and others report increasing levels of AVOD viewing. From the consumer side, this viewing is enabled by new smart TVs and connected TV devices, and improved apps.

Second, the expansion of Nielsen’s measures to OTT and mobile are a big step. Nielsen is often condemned for a lack of urgency, and what some see as solutions with gaps. But, as we often hear in the sales research world, “if it can’t be measured, it can’t be sold". Agencies and advertisers still want independent third-party measures to verify delivery and performance; and Nielsen is still the most important currency in the marketplace.

Lastly, Netflix is helping AVOD advocates with its just-announced price increase. This increase will bring its standard subscription to $13 a month. As noted in several studies over a number of years by GfK, $12 a month was a “line in the sand” for Netflix subscribers. Will consumers follow through on what these surveys said and start to think twice about their Netflix subscription costs?

Phases of SVOD? 

Other research projects I’ve done over many years have always showed consumers are willing to trade ads for free content. While Netflix has successfully pushed against that concept, it could be that the consumer mindset is beginning to change. An initial phase of the SVOD market was marked by a few key, well-defined products: Netflix, Hulu, and Amazon Prime. You subscribed to a couple and that was that; easy to manage.

The current phase of SVOD is marked by many entrants into the SVOD space, each with their own monthly subscription fee. We know consumers are starting to feel a level of confusion and angst at having to manage numerous SVOD services, not to mention keeping track of content or content discovery.

Could it be that consumers are entering a new SVOD phase? One where they accept AVOD services, despite the ads, because it’s an easier situation to manage? They can just dip in and out of an AVOD service when they need to. There would be no worries about managing multiple subscriptions month-to-month. This is also a similar argument that is in favor of emerging aggregators in the streaming space. 

Getting in Synch with Consumers 

The overall growth of streaming to TV sets – whether SVOD or otherwise – was at first limited to early adopters due to technical reasons. Hard to use interfaces, device connections that were not always easy, and low levels of home WiFi made things difficult for the average household. Today, setting up smart TVs and connected devices, and viewing apps, is very easy. The increasing difficulty for consumers is now managing their streaming services rather than the access. In the near future, the industry must work to now make the content/subscription side just as easy as the technical side has become.

“IOD” (Insights on Demand) at MIE Los Angeles 

Learn more from the experts about AVOD, SVOD, TVOD, and more of the “alphabet soup” of media at the 2019 Media Insights and Engagement Conference which starts January 29.

About the Author: David is an award-winning media research expert and author of “The Genius Box,” a new book about the evolution of the television-audience relationship. He is principal of TiceVision LLC, a media consultancy, and can be reached at david@ticevision.com.

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