US media players get on AVOD goldrush bandwagon | VOD | News | Rapid TV News
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Even though the industry is just about to get tested severely by the direct-to-consumer subscription giants, the US advertising video on-demand (AVOD) service have had a very strong 2019 according to research form IHS Markit | Technology.
tubi 14Oct2019
The AVOD Market Report - US – 2019 study noted that the US online video market is seeing a renewed interest in ad-supported services this year due to the maturing of the subscription video market, fears of overcrowding across over-the-top (OTT) services and limits to total consumer spending across online video platforms.

This says the analyst has spurred a surge in the uptake of AVOD by content owners that are increasingly opting to go directly to consumers. As a result, it says that companies aiming to monetise online video content through advertising now face an extra layer of complexity due to the requirements for solid ad-tech sales and data strategies, along with content and user acquisition.

The study said that compared with a decade ago, AVOD companies are now competing in a more developed online video market that offers greater potential for digital advertising revenue and a more advanced advertising infrastructure. For all that, the analysis calculated that new AVOD roll-outs and improved ad-tech are expected to drive US online video advertising revenue to $27 billion in 2023, growing at a CAGR of 11% during the period of 2018-2023.

“The AVOD goldrush is here, and it represents a prime opportunity for service providers, new AVOD entrants and content companies,” commented Sarah Henschel, senior research analyst, media, for IHS Markit | Technology. “Ultimately, the winners and losers in the AVOD industry will be determined not only by content, but also by data strategies and user acquisition.”

Indeed, those cited in the report as leader included Facebook and YouTube whose dominance is expected to continue through 2023, trailed by Hulu, Roku, and Tubi, which are set to increase their market share.

Interestingly, the analysis adds that despite the increasing number of competitors, there were still ‘copious’ opportunity for new entrants to claim a slice of the growing AVOD revenue pie. IHS Markit advised that as the competition intensifies, it was important for AVOD companies to sustain strong licensing partnerships with content owners and hone their data utilisation skills for ad monetisation.

“With the launch of premium services like Disney+, HBO Max and Apple TV+, AVOD services can continue to benefit from cord-cutting and act as a complement to paid services,” added Kia Ling Teoh, senior research analyst, advertising and television media, at IHS Markit | Technology. “Pure-play AVOD platforms also can expand customer penetration through B2B partnerships with device makers and online linear channels.”

IHS Markit concluded the report by saying that for studios, now was the time to test certain titles on AVOD platforms to gauge the monetisation potential of their catalogues across the AVOD space. For smaller content creators and brands, it said that the rebirth of AVOD provides an opportunity to build niche linear channels, which give them more control over how their content is programmed and viewed by consumers compared to licensing deals with streaming giants.