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The CTV Opportunity: FAST and AVOD in 2021

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Learn more about AVOD and FAST at Streaming Media West 2021.

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Some output here from a few recent studies that we've done on connected TV and on ad-supported advertising platforms in particular. This is a topic that we've been paying a lot of attention to and that we think is going to be really, really important over the next few years. And, you know, the goal that we wanted to look at is in the streaming video world where a lot of people would have you think that folks have become disabused of watching ads on TV, now that they have ad-free options.

What really is the role of ad-supported TV in this ecosystem? Just to set the stage, the environment into which some of these free-with-ads platforms have been launched. There's never been a time when people have been using more sources of TV than they are right now. Sources of TV were already going up. This slide shows the sources per viewer in a study that we do, the tracks that going back to 2018, when those were already going pretty rapidly. But then COVID really put that into overdrive.

And in 2021, the average person uses 5.7 different sources of television--online, offline, traditional Pay TV, even antennas. One of the biggest things that's happening, though, is that people are stacking multiple providers in tandem. So in 2021, 62% of people said they use two or more of the five biggest SVODs. So that's Netflix, Hulu, Amazon, HBO Max, and Disney+. And that's that's up from only 36 percent of people who were using that many back in 2018.

And when you consider that any one of those has enough content on it to fill up an average person's viewing time, you get a sense of the kind of the congestion, the competition that's going on, and also the amount of money that people are paying to stream these platforms. And this shows itself in one of the Catch-22s of this golden age of television. People are really excited about all of the options and all the content that they have to choose from. But managing that, managing all those platforms, making sure that they're getting the best use out of them all is becoming a challenge. And this is just one example of many that we have of what's happening.

This shows the importance of universal search, the ability to search across all your providers for particular shows and the green bars of the number of people who say that they're somewhat important or very important. And you can see that when we get up to four paid subscriptions or more, 97% of people say that that's at least somewhat important. More than half of people say that it's very important. So they're really, actively looking for something that will help them manage this battery of platforms that they're using every day.

And enter smart TVs, an area where we're really seeing a huge uptick in usage and the implications are going to kind of echo through how people choose platforms and especially ad-supported platforms in the future. So this is from some research that we just did about six weeks ago. Among the people who say they're watching Smart TV, 40 percent of those people said they bought at least one Smart TV during the pandemic itself. Another question we ask is, what's the first thing that you turn on when you want to watch TV? This just shows people who said they default to using on a TV screen. So it's roughly the same amount, 2020-2021 in total who default to watching on a TV set.

But you can see the number of people who say that they default to watching on an app built into a smart TV has almost doubled just in one year. So as people acquire those smart TVs, they're becoming more attuned to using6 he apps that are built in, and they're also becoming a lot more influenced by the operating system within the TV and even free-with-ads channels offered by the operating system like the Roku Channel, in terms of how they're spending their time and what they're watching. And when we look at that--how people choose these different platforms--a lot of conventional wisdom would tell us that the first thing they look at is which of these platforms are ad-free.

And in reality, that's really not the case. When we ask people, "What were the main reasons you signed up for a provider that you added in the past six months?", "ad-free" was up there, but there were other things that were more important. And the two things that matter more--a lot more-- than whether a platform is ad-free is content. So the most important thing is access to some show that I couldn't get from another platform. And the #3 most mentioned was access to a deep catalog of content-- Lots and lots of shows that I won't run out. And then the second most important is good value for the cost. So you can see that providers that offer a lot of content, especially exclusive content, have a leg up here and platforms that have good value, or are even free, have more advantages still.

And when we ask people "Which of these comes closer to how you feel about when it comes to choosing how to watch TV, are you on the side of 'I'd rather save money by watching ads and let me pay four to five dollars less than watching it free or choose that option?' Or would you say 'I'd rather avoid ads even if it's going to cost $4-5 more per month?'" There are significantly more people who say "I'd rather save money." And that includes some of the people who say that they dislike ads the most. Even those people will watch ad-supported TV if it's cheaper or if it gives them access to content they can't find elsewhere. And that means that even in the streaming world, ad-supported TV is still a central part of the TV ecosystem.

So, 95% of the people in our sample say they use at least one ad-supported platform. Only about 80% say they use at least one ad-free platform. And from June 2020-June 2021, the free ad-supported channels--Pluto TV, the Roku channel--platforms like that rose 25% in just one year. And we're already seeing that trajectory continue since June.

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