AVOD on the Rise
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Read the complete transcript of this video:
Eric Schumacher-Rasmussen: What about the AVOD side of things, in terms of the sustainability of AVOD models, free-to-air models that are ad-supported? Michelle, what do you see? How is AVOD doing overall? And do you think the fact that there are more streamers watching TV means that AVOD services are getting an advantage that they might not have had prior to the pandemic?
Michelle Abraham: Definitely. The market in general seems to have shifted focus somewhat from a monetization aspect that, in order to be successful, you had to be subscription-based to seeing how a number of these advertising-supported services have been successful. In some cases, they've been bought by major media companies, but definitely the number of hours of streaming that people are doing now has only helped them. If the hours viewed on an AVOD service goes up, then they're making more money because they are showing more ads. They have more ad impressions to sell the more hours that are streamed on their platform. Unlike a subscription service, where it's usually a flat fee per month, so the revenues are more variable, but they can do very well. There was somewhat of a blip in the second quarter as advertisers themselves pulled back their spending in general across all sorts of channels of advertising in some cases, because they didn't have the right creative message for the times. Certainly travel is one segment that is mentioned over and over again for pulling back a lot of its advertising spend.
But one of the areas that has done very well in advertising is the connected TV segment, because it's the streaming that's viewed on the big screen, as opposed to in a mobile or desktop environment. And that is one area where the advertising spend increased during lockdowns and has continued because it's following the streaming dollars. And we're now seeing, with the media companies owning some of these large advertising services, that during the upfronts, where the large advertisers commit some of their advertising money for the next year, that the media companies are selling both their linear TV advertising with their streaming capacity together bundled together. So again, it goes back to what I said earlier that the streaming services aren't an afterthought anymore. They're becoming a bigger and bigger portion of an overall delivery strategy.
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