This week: The “Big Bigger Biggest” trend driving media mergers + the increasing interest in AVOD
21 August 2019
21 August 2019
Viacom and CBS announced a merger last week. The companies, that split in 2005, reunites under the ViacomCBS flag. The merger is considered a strategical move, in order to stay relevant on an increasingly competitive OTT-market. The new entity, despite the merger, remains a relatively small player. To compare, AT&T has an enterprise value nine times higher, Amazon approximately 18 times higher.
With the upcoming launch of the new SVOD-services Disney+ and HBO Max, the VOD-market is becoming increasingly saturated. It remains to be seen how ViacomCBS will tackle the fierce competition. One strategic advantage of the merger is the wide range of streaming services the new entity ViacomCBS possesses – ranging from CBS´ SVOD-services Showtime and CBS All Access, to Viacoms AVOD service Pluto TV. The latter was acquired earlier this year in a $340 million deal and now boasts 18 million monthly active users. Viacom’s explicit strategy has been to focus on the AVOD segment. As Viacom’s prior and newly appointed CEO of ViacomCBS Bob Bakish put it; Viacom lacked the “capital horsepower” to enter the already saturated SVOD-market and instead opted to acquire the already existing AVOD service Pluto TV. Bakish described the acquisition as an effort to move into what he considered “a significant white space” on the OTT-market.
However, Pluto TV does not operate without competition. Earlier this year, the Amazon-owned movie website IMDb announced the launch of its own AVOD-service IMDb TV, which includes titles such as The Bachelor, Fringe, Heroes and Awakenings, to name a few. Furthermore, the independent AVOD-service Tubi, which boasts over 20 million monthly active users, earlier this year revealed an unspecified nine-figure dollar investment in content, with the explicit purpose to eventually aggregate 99% of the content that is non-exclusive to SVOD-services. In March it was announced that Sony Pictures and CSS Entertainment will launch the joint AVOD venture dubbed Crackle Plus, that will bundle content from Sony’s Crackle with content from CSS-owned services Popcornflix and Truli. Add to that Roku, that offers an AVOD-service to its approximately 27 million registered users, and Walmart-owned Vudu, with more than 8000 titles to stream for free with ads. In early 2019 Comcast-owned NBCUniversal revealed that an AVOD-service for NBCUniversal’s pay TV subscribers will be launched in 2020.
Zooming in on the streaming-heavy Swedish market for comparison, AVOD services attained a 40 percent share of total online viewing in the population (15-74 y/o) during the first quarter of 2019. SVOD services attained a 49 percent share of viewing while public service captured the remaining 11 percent. While global services such as Youtube and Facebook control a sizeable market share across the Nordic region, local players such as TV4 Play, Viafree and Dplay are all prominent players in the AVOD segment. The rapid growth and fierce competition we’re currently witnessing isn’t likely to die down anytime soon, new actors are eyeing the market and investments are increasing. For instance, IMDB’s AVOD service IMDb TV looks to make an European expansion. Furthermore, in 2018 the ad spend on the Swedish AVOD market grew by 20 percent compared to the year prior.
There are reasons to believe that the development of addressable advertising can help increase investments in AVOD. A recent study, performed by British Sky, revealed how addressable advertising tends to decrease channel switching by 48% and at the same time increase recall by 10%. In Denmark, three of the country’s largest commercial broadcasters; NENT, Discovery and TV2, have decided upon a mutual agreement on how to measure the advertising on streaming services. The purpose of the agreement is to make it easier for media agencies and advertisers to compare addressable advertising across streaming platforms. On the U.S. market the above mentioned Walmart-owned AVOD-service Vudu is developing shoppable ads, that will allow viewers to purchase the featured items while binge-watching their favorite tv-series.
Who will win the Nordic streaming war?
Competition on the Nordic streaming market is ramping up with several new services about to launch. Content investments are escalating and only partly offset by price increases. In the US, Netflix recently announced +13-18% on subscription fees.
Mediavision press releases:
10 million streaming subscriptions in the Nordics
Streaming video continues to grow rapidly in the Nordics, Mediavision concludes in its recently published analysis on the Nordic TV and video market. An increasing number of consumers subscribe […].
Mediavision in the news:
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