2019-09-01 Emmy Magazine

34 EMMY

mix

in the

Showtime, a benefit that used to be confined to

the pay-TV ecosystem.

“We are bullish on AVOD, both in terms of

its value to consumers and its importance in the

OTT business model,” Scott Rosenberg, general

manager of Roku’s platform business, said

during a recent Roku investor event. “We see

AVOD growing pretty nicely on our platform, and

clearly it has growing recognition in the industry.”

With success comes competition,

and platforms like Tubi, Pluto TV and

Roku Channel are seeing more of that

these days. In January, for example,

Amazon launched Freedive through

its Internet Movie Database (IMDB)

platform. The new AVOD offering in-

cluded around 130 movies to start,

such as A Few Good Men, Adaptation,

Memento, True Romance and Mid-

night in Paris. Its TV shows include

Hero es, Fringe, Gilligan’s Island and

Quantum Leap.

Comcast and NBCUniversal, meanwhile, are

prepping a new streaming platform that will be

offered to Comcast cable-TV subscribers at no

additional cost, but with ads.

For its part, Walmart has operated Vudu,

a site for selling and renting streaming movies

and TV shows, since 2010. For two years now,

however, the big box chain —which was the top

DVD seller back in the heyday of physical discs —

has been steadily growing its own AVOD platform

within Vudu, which it calls Vudu Movies on Us.

MoviesonUsoffersaround3,125oldermovie

titles,aswellas 262 fullseasonsofTVshows—

allfreebutwithadvertising.AccordingtoJulian

Franco,headof AVODforVudu, Walmarthas

conductedsurveysofthemillionsofcustomers

thatcomethroughitsstores.“They’vetoldus

they’llwatchadsinorder to savemoneyon

video,”hesays.

FranconotesthatmostU.S.homesdon’t

even have Netflix, and he’s right. The top

streaming platform has around 55 million

subscribersintheU.S.,acountrywith 117 million

TVhomes.

Headdsthattoday’sAVODviewershavetheir

limits—adshavetobeplacedstrategically,and

adloadsareusuallynomorethansixminutesfor

anhour-longshow,versustheroughlyfourteen

minutesserveduponlinearTV.

The AVOD model harkens back to the

formative, pre-cable era of televi-

sion, when consumers accepted free

TV in exchange for watching ads.

Commercials were supposed to be on

the way out, along with linear TV.

A few years ago, platforms like Hulu began

offering premium commercial-free versions,

targeted at millennials who were supposedly

unwilling to sit through any commercials at all.

But according to Hulu chief marketing officer Kelly

Campbell, her company has surveyed younger

consumers and found them perfectly content

with a manageable level of spots.

Hulu found that Generation Z consumers

are 39 percent more likely than the general

population to watch an ad, and 29 percent more

likely to pay attention to it.

“Generation Z-ers think differently about

TV,” Campbell said, speaking at CES. “They’re

more receptive to advertising. They’ve grown up

in this IP-powered universe, and they’re used to

targeted advertising.”

With that in mind, Hulu recently reversed

course and lowered the price of its base tier, which

is partly ad-supported, to $5.99 a month. Priced

at less than half of Netflix’s most popular tier

(now $13 a month), the entry-level Hulu offering

blends a reduced price with the requirement that

viewers sit through some ads.

Amid the AVOD gold rush, another major

streaming video operator, Google, has also

pivoted, backing away from its $11.99-a-month

YouTube Premium subscription platform.

Speaking alongside Campbell at CES,

YouTube’s top product manager, Neal Mohan,

conceded that his company is “primarily an

advertising-supported business.”

With so many streaming companies

moving to ad-supported models,

are we likely to see big new original

shows from AVOD suppliers, as we

have with Netflix and the rest of the

SVOD kingdom?

Walmart’s Movies On Us has begun commis-

sioning family-friendly originals, starting with a

remake of the 1983 Michael Keaton film Mr. Mom.

Tubi’s Massoudi, however, doesn’t believe

originals are a good bet for AVOD. “Strategically,

it doesn’t make sense for us to make original

content, with Netflix spending $13 billion or $14

billion on originals,” he explains. “That’s way

beyond what anyone in the AVOD ecosystem

could spend.”

As he sees it, AVOD is complementary to

SVOD services, which supply “1 percent or 2

percent” of total programming through sought-

after original shows. “We aggregate the other 99

percent,” he says.

If AVOD platforms did enter the competitive

originals race, Massoudi adds, at this point they’d

be bidding for shows that had already been

rejectedbyalltheSVODsuppliers.

With so much competition in the subscription

realm, he predicts churn will become an even

bigger factor for SVOD, with consumers signing

up for streaming services just to see a coveted

new show and then canceling soon after.

“That doesn’t pay for the price of the original

— in fact, it suffocates the show,” Massoudi says.

“It’s not a game the content companies can

continue to play.”

While AVOD platforms don’t want to follow

SVOD’s expensive originals playbook, they

do mimic their global ambitions. Pluto TV, for

instance, is eyeing regions including Europe and

Latin America. CEO Ryan sees his platform’s new

ownership as a giant step in the right direction.

“Viacom operates in about 180 countries,” he

says. “They have a global footprint, and that will

further our mission of being a global player that

much faster.” —Daniel Frankel