Ad-supported VOD rising as OTT grips TV market

OTTAWA — More competition in the over-the-top (OTT) space is driving a trend of more ad-supported video-on-demand (VOD) services, panelists told a media conference on Friday. The final day of the Prime Time conference in Ottawa hosted a panel about what’s going on in the OTT space, with multiple panelists agreeing that OTT services have been growing. That effect is also simultaneously happening as another form of VOD is creating a trend of its own. “I think we’re just at the tip of the iceberg with respect to ,” Janet Brown, executive vice-president of Los Angeles-based Gunpowder and Sky Distribution, said. The Canada Media Fund (CMF) lists traditional advertising VOD (AVOD) examples as including Alphabet Inc.’s YouTube, Hulu and Vivendi SA’s Dailymotion and emerging ones including Sony Corp.'s Crackle, Viewster AG, Screen Media Ventures LLC’s Popcornflix, and Snagfilms Inc. Those platforms can feature ads before, during and/or after the video plays and ad revenue is split between rightsholder and platform, according to the CMF website. Those kinds of services are partly driven by a ramping up of digital ad spending, said panelist and CEO of A Parent Media Co. Inc.’s Kidoodle.TV, Michael Lowe. Facebook Inc. and Alphabet continue to dominate those dollars, he added. With their skin in the game, Lowe said, you have more advertisers to appear in front of and potentially partner with. AVODs are defined in the CRTC’s communications monitoring report as an “Internet-based service model in which a client typically has free access to content but is exposed to advertisements.” The CMR noted two of the major AVODs are Alphabet’s YouTube and Facebook. The 2017 CMR shows a trend of rapid growth for both AVODs and SVODs over the past five years in Canada. From that period — between 2012 and 2016 — the compound annual growth rate of AVODs has been 33.6 per cent, compared with 47 per cent of SVODs. However, the former has seen comparatively noticeable growth in 2015-2016, with an increase of 25.1 per cent compared with 18.7 per cent for SVODs. Specifically, in 2015 and 2016, YouTube, which also makes its own content, took an estimated one-quarter of total AVOD revenues, at $98.1 million in 2015 (26 per cent) and $118.6 million in 2016 (25 per cent). While the video site saw a slight dip, Facebook saw an eight per cent increase of the AVOD revenue pie, from $23.9 million in 2015 (six per cent) to $65.9 million in 2016 (14 per cent). Both took approximately 40 per cent of the market in 2016. In total, revenues for AVODs in Canada in 2016 were $480 million, while SVODs saw about $1.1 billion in the same year, the CMR said. Lowe noted the bigger networks, such as Netflix Inc. and Amazon.com Inc., can back their projects with huge sums of money on riskier projects, resulting in premium content that viewers are willing to pay for. But not everyone has that luxury, meaning content providers also opt for the alternative of partnering with brands to help fund their products. Brown said she is seeing broadcasters and telecoms in other parts of the world, including Europe, getting into the AVOD space. She said she doesn’t expect that to be different in Canada. The trend comes as Alphabet's Google fights to keep advertisers on YouTube. It had previously seen companies from the United Kingdom pull ads. And in response to a recent controversy involving a video showing an alleged suicide, the company made more strict policies determining where it puts its ads. — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

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Ad-supported VOD rising as OTT grips TV market

Broadcast | February 2, 2018

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