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This week: The “Big Bigger Biggest” trend driving media mergers + the increasing interest in AVOD | Mediavision | Affärsutveckling och strategi för medieindustrin

This week: The “Big Bigger Biggest” trend driving media mergers + the increasing interest in AVOD

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.

Source: Vox.com, 2019-06-18; Cnbc.com, 2019-08-13

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.

Mediavision blogs:

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 […].

Industry news:

Disney has confirmed global launch dates for its SVOD service Disney+ which will begin rolling out on November 12th in the US, Canada and the Netherlands. The service launches in Australia and New Zealand on November 19th.
The Finnish state has given Telenor’s acquisition of a majority stake in Finnish telco DNA the green light. The deal was announced in April and approved by the European commission in July. The deal is expected to close this month.
Spotify’s new tool for podcast makers “Spotify for podcasters” was taken out of beta this august, marking another large step into the podcast market for the company. “Spotify for podcasters” is intended to provide podcast markers with more listener data than competitors.
After years of negotiation, the U.S. media giants CBS and Viacom are set to merge. The merger will combine assets such as Viacom’s MTC and Paramount Studios with CBS’ broadcast network and subscription service Showtime to a combined market value of 30bn$.
The U.S. ad-supported video on demand service Tubi has started marketing itself as a direct competitor to established subscription services such as Netflix and HBO Now, emphasizing that Tubi is free of charge. In July, Tubi announced it has over 20 mn monthly active users.

Viacom’s ad-supported video on demand service Pluto TV has reportedly enjoyed a 50% increase in monthly users since it was acquired by Viacom in January. Viacom CEO Bob Bakish expects further user growth as the content offering expands.
The Netflix powerhouse series The Crown is set to return to the streaming service for its third season on November 17, 2019. The trailer for the third season was released in august, along with details of the new cast.
Bonnier Broadcasting and C More have purchased the rights to show La Liga, Serie A and Major League Soccer (MLS) in Sweden from the independent subscription streaming service Strive. Matches from each league have already started to screen at C More.
According to Ofcom’s Media Nations report major shifts in Britain’s streaming habits are emerging. The number of households subscribed to the most popular streaming services increased from 11.2 million in 2018 to 13.3 million in 2019.

Mediavision in the news:

I dag fordeler de nordiske konsumentene sine seerminutter nesten likt (50/50) mellom online og tradisjonell tv og SVOD-penetrasjonen (abonnementsfinansiert video on demand, red. anm) har passert 50 prosent i alle nordiske markeder.

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