The upcoming next wave of growth in the US ad-supported video on demand (AVOD) space

1. The upcoming next wave of growth in the US
ad supported video on demand (AVOD) space
June 2020
Abhi Das

2. MVPDs
Streaming
Devices
Smart TVs
Game
Consoles
Platforms and
Delivery
Ad Networks VMPDs Streaming Services
SVOD
AVOD
US streaming ecosystem
Source: IAB Video report; * Includes ad supported tier; ** Linear AVOD (Ad supported video on demand); SVOD - Subscription supported video on demand; TVOD - Transaction supported video on demand
Many more…
TVOD
*
**
**

3. AVOD continues to be the D2C growth story for large studios
§ In 2016, the SVOD market had 200% YoY
subscriber growth; In 2017 it was 119%, in
2018 it was 65%, and in 2019 it was 31%
§ The U.S. online video market is seeing a
renewed interest in AVOD this year due to
the maturing of the SVOD market
§ AVOD has already become the dominant
model of delivering streaming video to
consumers throughout Asia-Pacific region
§ With the launch of premium services like
Disney+, HBO Max and Apple TV+, AVOD
will continue to compliment to paid services
§ Developed online video market compared
to 10 yrs back: greater potential for digital
advertising revenue
§ Audience measurement across screens or
devices is becoming important
§ CTV Ad Benefits: Reach, Robust
measurement, data driven targeting,
premium inventory
§ Programmatic infrastructure for CTV is not as
advanced as display advertising i.e. issue
such as frequency, lag
§ While 30% of viewing is happening on OTT,
only 3% of ad spending is happening there
§ Majority of large studios and productions
houses gathering D2C capabilities
§ M&A will likely continue to provide another
avenue for media companies to strengthen
their content libraries
§ The increase in AVOD acquisitions is being
driven by the need to compete in a
transforming advertiser marketplace
Streaming Growth
AVOD M&A
Source: Deloitte Research, Statista, TradeDesk report, eMarketer; Ad Exchanger; Kubient.com, MarTech Series; * Excludes other AVOD market activity such as Flex, Vizio, CW Seed, Crackle and more
Targeted Advertising / AVOD buys
Acquired
(Feb 2020)
Acquired
(Feb 2020)
Announces
launch
(Jan 2020)
Acquired
(Feb 2020)
Acquired
(Jan 2019)
Begins testing
AVOD
(Feb 2020)
Announces
upcoming
AVOD tier
(Jun 2019)
Announces
upcoming
AVOD tier
(Oct 2019)
Acquired
(Apr 2019)
Announces entry
to live and linear
(Jun 2020)
*SVOD

4. US-based AVOD market dynamics
Company Name UsersFounded Geographies Libraries Distribution Channels
24M
MAU12013
US, LATAM, UK,
DACH
250+ Live
original
channels in
the US; 1000s
of on-demand
30+ distribution partners; OS mobile & tablet, Android mobile & tablet,
Android TV (various), Google Chromecast, Chrome Web App, Amazon
Kindle/Fire Tablets, Amazon Fire Tv + Fire Tv Stick, Roku Devices +
Roku TV, Apple TV (4th Generation), PlayStation, Xbox, TiVo etc.
25M
MAU22014
US, Canada, Australia,
Mexico
250+ content
partners; 20K
movies
Android and iOS mobile devices, Amazon Echo Show, Google Nest
Hub Max, Comcast Xfinity X1, Cox Contour, and on OTT devices such
as Amazon Fire TV, Vizio TVs, Sony TVs, Samsung TVs, Roku, Apple TV,
Chromecast, Android TV, Xbox One and PlayStation 4, Hisense TVs etc.
n.a.2019 US, and US territories n.a.
Prime Video app on smart TVs, mobile devices, Fire tablets, and other
tablets; IMDb app for Android and iOS, as well as Echo screen devices,
Apple TV, and many more devices
5.5M
MAU32011
US, Canada, France,
Germany, UK, Italy,
Spain, Brazil and
Mexico
190+ channels
OS mobile & tablet, Android mobile & tablet, Roku, Hisense,
Magnavox, Panasonic, Philips, Sanyo, Sharp, LG, VIZIO smart TVs etc.
25M
Registered
Users4
2004 US
20K+ titles
and 8K+
shows
Smart TVs, connected Blu-ray players, game consoles (Xbox One/S/X,
PlayStation 3 and 4), streaming devices (Apple TV, Roku, Chromecast,
etc.), Nvidia Shield, Android and iOS devices, Windows 10 devices, and
more
37M Roku
Platform
Active
Users5
2019
US, Canada, UK,
France, and LATAM
10K+ library
Roku Android and iOS, RokuChannel.com, Roku Players and TV,
Samsung Smart TV
n.a.2020 US
600 movies
and 400 series
Xfinity X1 box, Flex streaming box, Apple devices, Xbox One consoles
Source: CrunchBase; Company websites, 1TechCrunch Feb 2020; 2comScore Mar 2020; 3Verity Dec 2019; 4DigiDay Oct 2018; 5Roku Annual Report Dec 2019
Content partners
175+ content partners
250+ content partners
Warner Bros., Sony Pictures
Entertainment and MGM
Studios etc.
75+ content partners
Content licensing contracts
with all major movie studios
as well as over 50 smaller
and independent studios
Partners with premium video
service; 40+ content
partners in the UK
Comcast and NBCUniversal's
own 15,000-plus hours of
streaming content

5. 6.9
8.9
10.8
12.5
14.1
3.9%
2020
4.7%
2022
3.4%2.9%
2019 2021
4.3%
2023
% of total media ad spendingCTV ad spending in $B
§ With COVID-19, Connected TV available inventory has surged by 54 percent
in April 2020 versus April 2019
§ It is estimate that CTV ad spending in the US will reach $10.81 billion by 2021
§ In 2019, 50.6% of CTV ads was bought or fulfilled programmatically, and that
figure will increase to 59.4% in 2021, according to estimates
§ YouTube ads shown on CTV devices accounted for about 40% of US CTV ad
spending in 2019; Hulu & Roku together are next largest recipients with 30%
§ Biggest challenges advertisers face with CTV: The inventory is fragmented,
making it difficult to measure and plan; Ad fraud and frequency capping
§ OTT ad buyer: Must manage reach and frequency goals while finding
inventory across a fragmented TV landscape
Source: eMarketer; Digital TV Research; 1TechCrunch Feb 2020; 2comScore Mar 2020; 3Verity Dec 2019; 4DigiDay Oct 2018; 5Roku Annual Report Dec 2019
6.9
24.2
6.7
9.1
1.6
3.2
1.6
2.8
0.6
1.7
20252019
JapanChina UK IndiaUSA
US CTV Ad spending vs total US ad spending
Global top 5 countries AVOD expenditure and outlook
AVOD growth composition and outlook
AVOD Pie Composition
AVOD SVOD

6. Three ways advertisers access OTT inventory via addressable buying
Source: AppsFlyer

7. ADVERTISERS
PUBLISHERS/PLATFORMS
AGENCIES
SSP
DSP
TRADING
DESKS
AD
EXCHANGES
AD
NETWORDS
Source: Zype; Ad Exchanger
Industry is fragmented; Smaller players are finding difficult to compete due to lack of scale; Consolidation is underway
Programmatic ad tech ecosystem: Not fully mature yet for AVOD
Streaming
platforms
Games
apps
Comms
apps
Social
apps

8. Distribution channels for digital video content
Source: Zype report
Open
Curated
Simple Complex

9. Ad Tech Industry trends
§ Could be a busy year for ad tech consolidation in 2020; Market is ripe for M&A
§ There’s a need now to have end-to-end solutions: we are seeing most SSPs are
trying to build DSPs and DSPs are trying to have a presence on the media side
§ CTV advertisers gravitate to multi-DSP model as Amazon, Roku push their own
bidders (DSPs) primarily for buying ads on their respective CTV platforms
§ One of the biggest challenges that the OTT market faces, which will continue to
intensify into next year, is inventory fragmentation
§ 2019 saw most M&A activity by strategics with content acquisitions: 2020 will see
uptick with data and identity solutions acquisitions
§ Advertisers: OTT Advertising Must Have More Accountability and Transparency
§ Ad-Tech Teams and Mar-Tech Teams Are Finally Working Together
§ Full-funnel data: The combined data of DMPs, CDPs, CRMs, DSPs will fuel
advertisers’ efforts to boost ROAs with personalized targeting
§ Increased focus on measurement and the value of inventory
§ Some players are launching private video marketplaces (Tremor Video DSP)
§ Advertising in games will be a huge opportunity reach to key segments
Consolidation and M&A will continue to be big adtech trends in 2020.
Advertisers and media companies are beginning to understand that they
need a full stack solution to enable more efficient markets, combat ad
fraud, and clean up their supply path ad buying and selling process.
- Peter Bordes, CEO, Kubient
Source: eMarketer; Ad Exchanger; Kubient.com, MarTech Series
Key 2020 Outlook
The focus for 2020 will surround convergence for TV and digital, more
specifically, the implementation of true converged measurement,
planning and execution across all four screens: linear TV, connected TV,
digital video and social video. This will be a huge opportunity for
advertisers and broadcasters to bridge the gap between TV and digital
that will inevitably lead to increased TV budgets from advertisers across
verticals.
– Philip Smolin, Chief Strategy Officer, Amobee
Hulu is a $2 billion ad-revenue business, Roku is $600 million or $700
million. If you add Pluto, Xumo and others, you’re barely over a $3 billion
ad spend. If 6 million households a year continue leaving traditional
satellite and local cable providers, advertisers will have to go where the
viewers are. That $70 billion of TV advertising needs to go somewhere.
–Rich Greenfield, Media Analyst, LightShed Partners

10. AVOD: Key international markets
Avg weekly time
spent on OTT
(Hrs)
Avg per
household
subscription
Source: Limelight Networks survey; Statista, eMarketer, Marco data, Country specific webpages
Total OTT
revenue ($B) in
2019 incl. ad
spending
Current AVOD
players
8.4 7.1 n.a. 5.8 n.a. 5.0 5.4 5.9 8.5 5.18.7
1.7 1.6 n.a. 1.3 1.2 1.1 1.1 1.3 1.6 0.91.1
26.8 n.a. n.a. 3.8 n.a. 2.1 1.1 1.3 0.6 3.1n.a
PlutoTV,
Tubi, IMDb
TV, XUMO
and others
Tubi, Roku,
Kanopy
PlutoTV,
Tubi, Roku
PlutoTV, Roku,
XUMO, Sky Go,
Virgin TV Go,
Filmodo,
Discover.film
Kanopy, Tubi, SBS,
ABC View, Ten
Play, Nine Now, 7
Plus
PlutoTV, Sky,
Slingbox
Filmodo,
Fandir, Filmfra
RaiPlay
JioTV, Voot,
OZeeTV, TVF
Play, Youtube,
Hotstar
Comic Walker,
LINE Manga
iflix
% that would
stream live
sporting events:
delayed from TV
53.4% 52.2% n.a. 41.8% n.a. 47.4% 62.6% 69.4% 78.8% 44.4%70.8%
% viewers
accepting of
advertising
31.2% 29.3% n.a. 24.8% n.a. 23.0% 23.2% 22.2% 49.4% 19.2%54.8%
SEALATAM

11. AVOD: Key areas of growth
Growth
Content partnerships
Advertisers
Expansion in existing and
new markets
Product
§ Increase in the current base of
content partners
Distribution partnerships
§ Increase in the current base of
distribution partners
§ Attract high quality advertisers/
increase revenue
§ Roku and Amazon has their own
DSPs: Better targeting, monetizing
§ Expand to European markets
and parts of Asia at some
point
§ Key product strategies that
creates long term defensibilities
§ Increase unit economics
§ Data driven experiments with ad
length, types, positioning across
markets

12. Product Strategy: Case Study - Netflix
Strategy Delight customers
Hard to copy
defensibilities
Margin enhancing
Personalization
Streaming
Original content
Video and sound quality
Simple and easy
Price and plans
Next day DVDs
Device ecosystem
Social
Movie finding tools
Ads on DVD covers
Open APIs
Exclusive DVDs
Downloading for offline
Key defensibility: Netflix’s current 180M subscribers viewing data drives its content category and investment decisions
Source: Gibson Biddle blog