Why Broadcasters Need a Swiss Army Knife to Fix Video Advertising
Achieving maximum monetization in streaming has become incredibly complex. With multiple workflows needed to reach and monetize audiences, broadcasters need a Swiss Army Knife of tools to power them all. Content is spread across so many distribution points and in different forms that a separate toolset is required for each. Still, building dedicated workflows for each endpoint takes valuable time and resources to develop and maintain.
So why is this? Many media companies are expanding from a single, owned-and-operated (O&O) strategy business to a multi-faceted distribution strategy in order to grow, and maximize, revenue. Some revenue diversification can be achieved in an O&O service, such as tiered pricing, but there are also fantastic opportunities beyond O&O to build a successful business model over the long term. Netflix’s recent adoption of an advertising-supported tier is making headlines, but Netflix is an outlier. Most companies must think beyond O&O alone.
According to data from Digital TV Research, the North American Internet TV market will grow 60% over the next five years, reaching $94 billion in 2026. SVOD will generate the most revenue, but it will be ad-supported services that lead growth. Broadcasters need to broaden their outlook to make the most of this, and other, opportunities. Let’s look at the main options for tapping into other areas of revenue generation and think about what’s needed to make them work.
Many content owners have cut back dramatically on licensing content to other streaming services to reserve the best content for their O&O services. But there are signs that this may not be the best approach. Cable companies have used bundles for years to help boost subscribers and reduce churn, and streaming service operators are beginning to apply the approach for the same benefits. The Disney bundle of Hulu basic, Disney+, and ESPN+ costs just $13.99 monthly, a dollar less than Hulu and Disney+ purchased separately. Audiences will look at that and see value for money and that will help drive long-term loyalty.
Top O&O SVOD services are starting to differentiate their customers with different service tiers. This creates complexity as suitable breaks must be found in the content and ad markers inserted. SVOD providers without an ad-based tier would be wise to prepare for this eventuality now. Even Netflix, which has a huge team reviewing its content library, has admitted that it won’t be able to do mid-roll ads on many of its shows for a while due to the need to manually identify suitable points for an ad break. So diversification away from O&O alone may bring extra revenues quicker.
The number of US AVOD viewers will reach 165 million in 2025, according to nScreen Media, and they will use popular platforms like Tubi and Roku. AVOD platforms are keen to partner with quality content providers, but each will have their own set of demands on how content is encoded, how ad markers are handled, and more. There may also be different approaches to ad insertion, some using server-side ad insertion (SSAI), others client-side (CSAI), resulting in a separate workflow for each.
Free Ad Supported TV (FAST)
nScreen Media also predicts the FAST market will double in the US to reach $4 billion in 2023. With CE manufacturers, independent app providers, and SVOD services all participating in the market, it is sure to continue as the fastest-growing segment in the industry.
There are two significant considerations for making FAST a success:
- Dynamic playlisting: making the most of the ability to personalize streams and ensure they’re relevant (in the case of breaking news, for example, where the latest big story must be prioritized).
- Syndication: the real value of FAST lies in the ability to distribute channels across multiple end-user platforms, including Smart TVs like Samsung, TCL, Vizio, and aggregator leaders like Roku, Tubi, and VideoElephant. This helps grow revenue and build the customer funnel, but streams must adhere to the requirements of the end-user platforms, and each will come with its own nuances. There’s no one-size-fits-all approach.
This model is particularly relevant for live events, early-access movies, and TV shows. Major live events have a higher value than other content, which brings complexity as supporting millions of dynamic live streams is very different from supporting high demand for VOD. When every viewer goes to an ad break simultaneously, it creates a huge number of ad calls, even more if you’re supporting programmatic, so workflows must be robust and reliable at scale.
This is unlikely to provide much direct revenue, but it is an important distribution channel for clips, trailers, teasers, and shoulder content. It helps build buzz, grows the new subscriber funnel, boosts engagement for your existing customers, and develops a community around your content and service. Doing social media well requires creating and distributing clips quickly, often within minutes of the action in the case of live.
Flexibility is key
Broadcasters have huge potential to reach new audiences, grow subscriptions, and increase monetization in streaming. But they need flexibility in their workflows to do it. This is why I talk about a Swiss Army Knife of tools to support the nuances and demands of each endpoint. I hear the term “vendor fatigue” quite a lot today. It refers to the messy holes between vendors that broadcasters find themselves falling into when errors occur, as operations teams are passed from one vendor to the next, trying to locate the source of the issue (not to mention trying to fix it!). But in today’s fast-changing landscape, where several video workflows are at play, they need the assurance that the multiple components are pre-integrated and pre-tested and that any issues can be located and fixed in good time.
This is not just a case of “change or die.” Where there is disruption, there is also opportunity. Broadcasters that embrace multi-partner distribution have a fantastic opportunity to take a larger share of an expanding pie.
Read more about hybrid business models in our white paper, available here.
[Editor's note: This is a contributed article from Bitcentral. Streaming Media accepts vendor bylines based solely on their value to our readers.]
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