Pros and Cons of Mixing AVOD and SVOD
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Read the complete transcript of this video:
Mike Gamboa: What's interesting is that digital distribution really provides content partners with multiple options to enable access to content. And then the choice in how to monetize that content. I think there are definitely pros and cons to each model. One key thing for me is, while using multiple monetization models really opens up opportunities, you have AVOD and SVOD combos like Hulu or CBS All-Access. Having an AVOD tier enables you to have a lower entry point for the, a squad service. But I think having multiple business models presents a ton of challenges and the expertise in each is really key for success. If you look at someone like a Netflix, they're extremely successful because they do one thing and one thing only, and they're best-in-class in all aspects with respect to SVOD, from customer acquisition to billing conversion rates, to managing churn.
And so I think success in both an SVOD and AVOD hybrid model requires different technical and monetization capabilities. And you really can't downplay how hard it is to execute in each business model and properly to do it well. From my standpoint, while having a multiple AVOD/SVOD combo can really lower the entry point for SVOD services, you widen the potential audience and you can drive additional ad revenue per engagement. It is difficult to execute and and it does potentially introduce customer confusion. So there are definitely pros and cons to having a multiple business models.
Mark Young: We look at our cohorts as consumers that consume content across different business models and lifecycles. AVOD has a role for driving more time spent within an overall ecosystem that we operate. And we think that whether it's longform or shortform content in AVOD, it has an opportunity to entertain consumers. And in some cases, if you look at our movie clips content, it's actually shortform content for engagement, but also to drive people into consideration for purchase and rental. And so we think of that as easy, snackable content, but also an opportunity, a low barrier to get into the ecosystem. The differences are really just making sure that you're very sophisticated in the way you look at your first-party data, both browsing and consumption data, and have a good CRM system, because ultimately, how those consumers want to be messaged to, how will they want to pay and what they want to pay with, whether it's Venmo or PayPal or other traditional forms of type of banking, we have to be very sophisticated in understanding each consumer's need.
From that perspective, when we get that right, we think we have more choice for consumers as they come into our network. And again, we have an advertising model to complement that time spent. So we have a multi-revenue stream that has allowed us to fortunately be a very profitable, sustainable business.
Third-party data is going away, so OTT services need to explore new ways to leverage first-party data and innovative monetization strategies.
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