The State of Video Monetization 2022
Advertising is no longer about investing during a certain time slot or in a certain show just because of ratings or a show's perceived popularity. Instead, it's about reaching and engaging with the total TV audience—regardless of when, where, or how they watch TV. "The [industry] has evolved to a point where it requires new, future-proofed approaches that meet the current and future needs of an evolving, converged TV marketplace," concludes Marlessa Stivala, senior manager of content marketing at TVSquared in a post on industry trends for the company's blog. "In 2022, multiple currencies will be the reality, powered by cross-industry collaboration to find consistent ways to count and ascribe value for all forms of TV."
The Need for Accurate, Consistent Advertising Data
That the ad industry has a desire to work with one conceptual video format is clear, but there are still roadblocks. The limitations and rigidity of the traditional TV advertising industry and its legacy approaches to currencies and measurement are barriers to growing converged TV, according to TVSquared's "The State of Converged TV."
The report says that 43% of marketers in the U.S. cited "lack of accurate and scalable ad occurrence and viewership data" as a significant challenge. They also highly ranked issues regarding cross-platform targeting capabilities, shortcomings around standardization, and a lack of transparency. More than 90% of respondents noted that transparency of metrics across linear and streaming is important in order to allocate ad spend to converged TV.
"TV now encompasses both linear and streaming," the report concludes. "Balancing converged TV strategies requires consistent metrics across both linear and streaming campaigns. Only then can advertisers accurately achieve identity-enabled TV measurement and attribution and understand the incremental reach across channels."
"While Netflix maintains a massive lead in terms of household reach—it was in 67% of all households in Q3 2021—AVOD and dMVPD entries are cutting into Netflix's share of time spent," according to TVision's "The State of CTV." Netflix's share of viewer time spent decreased from 27% in the first half of 2020 to 22% in the first half of 2021.
Another way of dissecting consumption behavior is by attention levels, for which HBO Max is top dog in TVision's report. This is an important insight, as the streamer began showing ads in Q2 2021. Yet another metric is co-viewing—one that provides an important distinction between household and person-level viewing. Disney+ and other family viewing services usually top the co-viewing lists, and this was the case in Q3 2021.
SVODs Are Black Boxes
The secrecy with which the major streamers guard their content performance information is also hindering attempts to analyze which SVODs are leading the pack. Netflix, Disney+, HBO Max, Apple TV+, Amazon Prime Video, and Hulu collect huge amounts of granular data from their subscribers—and that's one chief reason why they keep it under lock and key. Why give a competitor an advantage when you are not obligated to?
There is obscurity about account-sharing. According to research from Kantar, Netflix has the highest proportion of subscribers who say that someone else pays for it (27.4%), compared to Disney+ (26.3%) and Hulu (23.1%). This suggests that a lot of account-sharing may be taking place. Churn adds confusion to reliance on subscriber numbers. A consumer can sign up for service then cancel it when a free trial, sports season, or specific show comes to an end. The same consumer may do this several times a year.
These trends complicate streamer standings, leading Rightsline to conclude that the average revenue per unit (ARPU) may be a more meaningful metric than the total number of subscribers. Another reason why streamers remain reluctant to release data is that it can create misleading comparisons. Box office figures or peak-time TV views are standardized indications of what particular programming, dayparts, or audiences are worth. But the metric that is most important now differs from streamer to streamer.
"The advantages of being direct-to-consumer [are] we get an immense amount of data," WarnerMedia CEO Jason Kilar tells The Hollywood Reporter. "You don't just see the viewing numbers, you see how they view it. What order do they view things in? How much do they watch? How much do they finish? How do they respond to various prompts to help us get better at helping them find something they love? I wouldn't expect us or other players to put numbers out just because it's really hard for people to understand apples-to-apples comparisons. So we labor over it. We know exactly how well these shows are doing."
Two conditions may make cross-platform metrics likely in future. One is that measurement bodies like Nielsen or Comscore become more accurate in their ability to count streaming views. (TV measurement body BARB released such a metric showing that in the U.K. in October 2021, Netflix's Squid Game was the most-watched show produced by a streaming service, but the 10th-most-watched show overall, behind programs from the BBC and ITV.) The second is that when the big streamers plateau in terms of subscription numbers, comparisons with competitors become more relevant.
"There's going to be a short list of folks that get to scale, and then I think you'll probably see a bit more transparency because we all know what we're dealing with," Kilar says.
NFTs Fuel the Creator Economy
The excitement about blockchain and related financial tech like non-fungible tokens (NFTs) is linked to the burgeoning creator economy and the nascent metaverse. The vast majority of online games derive revenue from players buying in-game assets (like skins for a character), but these assets remain locked inside the game platform. What an open source distributed database that uses cryptography (blockchain) does is enable consumers to buy, own, and trade unique tokens (akin to receipts) related to digital assets and to transfer those assets from platform to platform or from universe to universe in the persistent 3D internet.
Meanwhile, content producers can use the technologies to track royalties and content ownership as those assets are traded. Marketing teams can create communities around a piece of content by, for example, enabling fans and followers to own a slice of the action.
IEEE, among others, predicts that cryptocurrencies and blockchain will upend the banking sector over the next few years, and they are gaining serious traction as a foundational means of monetizing and tracking all forms of digital content. "Its impact is akin to when the internet passed from first-era web browsing to internet 2.0 and streaming became mainstream. It is that significant," said Michelle Munson, co-founder and CEO of Eluvio, speaking to film and TV producers at the FOCUS 2021 conference in London. Her company has developed a decentralized data storage and distribution network on the blockchain that targets media. Fox is one of the many studios that have set up blockchain divisions.
"NFTs are tip of the spear of how digital property owned by people will impact M&E," Munson said. "It offers a new way to look at digital media content with which we can have a direct creator-to-audience economy that radically changes the potential for everyone. It's just a matter of time."
This model has potentially big implications for services such as Amazon, Netflix, Roku, and Samsung. "It disintermediates the platforms that have been traditionally needed by content owners to get to their audience," Munson tells IBC365. "[NFT] is the ultimate control point for those who have a stake in content. That stake could be a creator, a producer, [or] the network that aggregates and curates it. The key here is who doesn't take a piece is the middle platform. In the media world these are the streaming platforms."
Munson is not alone in this view. A study by Deloitte Insights sketches a scenario of how the media landscape might look in 2030. It is one characterized by a fragmented ecosystem that includes a large number of local content providers that maintain a multitude of paid customer relationships. This is the creator economy gone wild.
"In this highly connected and hyper-digital world, … customers are used to micropayments and direct, blockchain-based payment methods," Munson said at FOCUS 2021. "Content is cheap and easy to consume in small doses, and subscriptions are easy to cancel instantly. Individual, pay-as-you-go transactions and subscriptions are the dominant revenue models."
If this plays out, it will mean big legacy players cannot leverage their global blockbuster content and instead must act as one of many distributors of platform-as-a-service solutions for smaller media companies. "In this scenario, local content producers and intellectual property owners are the winners, since they can use their direct access to media consumers in order to grow. They successfully implement ecommerce and in-app purchases as additional revenue models," said Munson.
[Editor's note: This article first appeared in the 2022 Streaming Media Industry Sourcebook.]
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