PREMIUM VIDEO HEATS UP AS MORE STREAMING SERVICES ENTER THE FRAY - Q3 2019 - FreeWheel
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PREMIUM VIDEO HEATS UP AS MORE STREAMING SERVICES ENTER THE FRAY Q3 2019
Q3 2019 / FREEWHEEL VMR - U.S. / #FreeWheelVMR
A COMPETITIVE LANDSCAPE
The premium video streaming landscape continues to get more competitive as new direct-to-consumer offerings hit
viewer screens. In November 2019, Apple TV+ and Disney+ debuted with NBCU’s Peacock and Warner Media’s HBO Max
set to follow in 2020.
Companies have a range of objectives for their new streaming services, but at their core all desire to build direct
relationships with viewers. These relationships will allow them to cross-sell products like toys or theme parks and limit
the potential for disintermediation from aggregator platforms.
Their introduction is likely to shake up the competitive landscape, but the overall market trends in ad-supported
premium video observed in previous quarters look set to continue.
CHART 1 1. Distributor platforms represent
TOP LINE GROWTH AND BREAK-OUT OF AD VIEWS BY two-thirds of ad views versus publisher
SYNDICATION PLATFORM, U.S. owned-and-operated platforms, and are
Q3 2019
also growing faster.
MVPD (IP Platforms)
Distribution Type Distributor Platform
Breakdown
DISTRIBUTOR DIGITAL / IP STREAMING SERVICES 2. IP-based delivery platforms make up
AND vMVPDs almost 80% of the dynamically inserted
ads and are growing significantly faster
than traditional set-top-boxes as viewing
habits evolve.
65%
+78% YOY
OWNED & OPERATED
78% 3. The IP-enabled ‘TV Everywhere’ options
offered by traditional MVPDs represent a
+113% YOY
90% relatively small portion of IP-based delivery,
35% 22
STB
% with streaming services from virtual players
+9% YOY +13% YOY TRADITIONAL MVPD 10% taking the lion’s share of ad views.
2
Q3 2019 / FREEWHEEL VMR - U.S. / #FreeWheelVMR
THE IMPACT ON AD-SUPPORTED CONTENT
Subscription services offer video-on-demand content from various sources (including originally produced content), as well as live TV from
traditional networks. Netflix was the pioneer in the streaming services field and famously maintains an ad-free, subscription-only model. A
number of services are initially following suit (see chart 2).
CHART 2
OVERVIEW OF SELECT STREAMING SERVICES, U.S.
Service Average Monthly Cost* Advertising Content
Netflix $12.66 No Licensed shows and movies and Netflix originals
Ads for original content & some live Licensed content, Amazon originals and Thursday night
Amazon Prime $8.99
sports football
Hulu $8.99 Some ads on less expensive plans Live and on-demand content from multiple networks
Disney+ $6.99 No Movies and series from Disney brands
CBS All Access $7.99 Some ads on less expensive plans Live CBS channels and CBS originals catalog
HBO Now $14.99 No HBO series and movies
FuboTV $66.24 Yes Focus on live sporting events
Sling $30.00 Yes Live TV channels both national and local
PlutoTV Free Yes (no sign-up required) Live content and some back catalog on-demand content
TubiTV Free Yes (no sign-up required) Live content and some back catalog on-demand content
*Average of multiple packages where they exist. Based on publicly available data as of November 2019.
3Q3 2019 / FREEWHEEL VMR - U.S. / #FreeWheelVMR
CHART 3 However, despite the current popularity of subscription-only
U.S. VIDEO-ON-DEMAND (VOD) SERVICES VIEWERS models, a number of factors suggest advertising will play an
PERCENT OF TOTAL INTERNET USERS IN GIVEN DEMOGRAPHIC increasingly important role in premium video streaming.
H1 2018
1. The ‘freemium model’. Consumers appreciate
having a choice between less expensive, ad-supported
content and a higher fee-paying, subscription model.
This is similar to the pricing in other content domains
92%
88.2%
e.g., Spotify’s pricing for music streaming.
81.5% 2. Cost pressure. There is evidence that cost pressure
to recoup content and service enablement fees will
66.9% continue to build. For example, last year Sling raised
its Orange package price by 25%1, and it has been
estimated that to break even Disney will need to
52.3% attract 60-90 million subscribers by 20242. Therefore
service providers will be under increasing pressure
to raise prices, or to generate revenues from other
mechanisms, such as advertising.
3. Advertisers seek access to younger audiences.
Younger generations consume TV digitally at higher
rates (see chart 3), and advertisers looking to tap into
these lucrative demographics may be willing to pay
a premium. This would offer a tantalizing revenue
opportunity for subscription service providers and
likely support adoption of ad-supported models.
16-24 25-34 35-44 45-54 55-64
Age Group
[1] Sling TV Raises Price of Live TV Streaming to $25 Per Month
cnet.com
Source: The Global Media Intelligence Report 2018 eMarketer [2] Disney+ Launches, Representing The Capstone Of Bob Iger’s Tenure
Forbes.com
4Q3 2019 / FREEWHEEL VMR - U.S. / #FreeWheelVMR
THE POWER OF PREMIUM VIDEO
Q3 2019
+46%
Advertiser demand for premium video will only increase as scale of audiences,
sophistication of targeting, and simplicity of access improve. Data from the Video
Marketplace Report for Q3 2019 demonstrates the value for advertisers:
1. Overall video ad views grew 46% for data-backed targeting Overall ad views grew 46% YOY
year-over-year, driven in large solutions which are enabled
part by connected TV (up 110% by companies like FreeWheel
YOY). This immersive viewing and industry consortiums like
platform constituted 56% of all OpenAP. Behavioral targeting
ad views. constitutes most of audience +78%-98%
targeted ads (69% share),
2. Premium video ad completion
showcasing advertisers’ appetite Ad completion rates were 78% to 98%
rates remained extremely high,
for more than just simple
between 78% to 98% across
demographic targeting.
content formats for both pre-roll
and mid-roll, showcasing the value
+69%
4. Direct deals continue to
of premium video to advertisers.
comprise the majority of
3. Audience targeted ad views transactions with a share of 79%.
grew 34%. Although this growth However programmatic ad views
69% of audience targeted ads focus on
comes from a small base, it is an grew 76% YOY, twice as fast as
behavioral segments
indication of advertisers’ demand direct deals.
In conclusion, we see a bright future for ad-supported premium video as more
direct-to-consumer products enter the market. The fundamentals of premium
video remain strong, and it is an engaging environment for advertisers to connect
with consumers. In addition publishers and distributors will need to recoup the
+76%
content and technology costs of their new services in a competitive market. This
bodes well for advertisers being able to access premium video to tell their stories. Programmatic ad views grew 76%
5Q3 2019 / FREEWHEEL VMR - U.S. / #FreeWheelVMR
CHART 4 CHART 5
VIDEO AD VIEW AND AD VIEW GROWTH, U.S. CONTENT COMPOSITION BY FORMAT, U.S.
Q3 2018 - Q3 2019 Q3 2018 - Q3 2019
Q3 2018 Q3 2019
7%
+46
11%
%
+4% YOY
57% +25% YOY
56%
AD VIEWS
+37%
VIDEO VIEWS
36% +100% YOY
33%
CLIPS (0-5MIN.) FULL-EPISODES (5+ MIN.) LIVE
6Q3 2019 / FREEWHEEL VMR - U.S. / #FreeWheelVMR
CHART 6 CHART 7
AUDIENCE SEGMENT TYPE TARGETED AD VIEW GROWTH, U.S.
SHARE OF TARGETED Q3 2019
CAMPAIGNS, U.S.
Q3 2019
+34%
31
Audience Segment Type* AUDIENCE
TARGETED
%
Demo
69 %
Behavioral
*‘Demo’ audience segment types are those that target based on
age and gender
‘Behavioral’ audience segment types are those that target more
advanced segments such as auto intenders, sports enthusiasts etc.
7Q3 2019 / FREEWHEEL VMR - U.S. / #FreeWheelVMR
CHART 8 CHART 9
AD VIEW COMPOSITION AND GROWTH, FORMAT COMPOSITION BY DEVICE, AD VIEWS, U.S.
BY DEVICE, U.S. Q3 2019
Q3 2019
Connected TV
56 %
3% 47% 50%
Mobile App
12% 58% 30%
Mobile Web
55% 27% 18%
14% 15% 15% STB VOD
100%
Desktop
CTV Mobile STB VOD Desktop 15% 43% 42%
+110% +16% +13% +7 %
YOY YOY YOY YOY CLIPS (0-5MIN.) FULL-EPISODES (5+ MIN.) LIVE
8Q3 2019 / FREEWHEEL VMR - U.S. / #FreeWheelVMR
CHART 10
SHARE AND GROWTH OF AD VIEWS BY
DISTRIBUTION PLATFORM, U.S.
Q3 2019
35
Total Volume of Ad Views, U.S. Distributor Platform
%
DIGITAL / IP
Publisher
Platforms
+9% YOY
65
78%
%
+113% YOY
STB
Distributor
Platforms 22%
+13% YOY
+78% YOY
9Q3 2019 / FREEWHEEL VMR - U.S. / #FreeWheelVMR
CHART 11
SHARE AND GROWTH OF DIRECT AND
INDIRECT DEALS, AD VIEWS, U.S.
Q3 2019
21
Total Volume of Ad Views, U.S.
%
Indirect
+76% YOY
79 %
Direct
+38% YOY
10Q3 2019 / FREEWHEEL VMR - U.S. / #FreeWheelVMR
CHART 12
AVERAGE NUMBER OF ADS PER MID-ROLL BREAK, FULL EPISODES, U.S.
Q3 2019
Q3 2018 vs. Q3 2019 Q3 2019 by Device Distribution of Ads per Mid-Roll Break
95s
BREAK
DURATION
107s 48%
BREAK
DURATION
3.8 4.0
3.7
3.4 3.2
27%
25%
Q3 2018 Q3 2019
AVERAGE AVERAGE MOBILE CONNECTED TV DESKTOP 1-2 ADS 3-4 ADS 5+ ADS
CHART 13
AD COMPLETION RATES BY AD UNIT AND CONTENT DURATION, U.S.
Q3 2019
Pre-Roll Mid-Roll
87% 98%
83% 97%
FULL-EPISODE
LIVE
CLIPS
78%
11Q3 2019 / FREEWHEEL VMR - U.S. / #FreeWheelVMR AUTHOR BIOS
AUTHOR BIOS
HASAN IQBAL HALEY GLAZER LAURA GAMBINO DAVID DWORIN
Senior Manager in FreeWheel’s Consultant in the Advisory Consultant in FreeWheel’s Leads FreeWheel’s Advisory
Advisory practice and helps Services team, and works Advisory practice. Her areas Services team, where he
clients generate insights with media clients to deliver of expertise include data helps clients navigate the
through data-backed analyses. industry benchmarking, network analytics, market research, and ever evolving premium video
His areas of expertise include optimization and reporting and advanced TV technology. Prior ecosystem. Prior to joining
market benchmarking and analytics enhancements. Prior to FreeWheel, Laura was a data FreeWheel, David spent a
analysis, revenue strategy, to FreeWheel, she worked in ad scientist at Omnicom Media decade leading growth strategy
and scaling of organizational sales research and corporate Group on the Advanced TV team initiatives at leading agencies,
capabilities. Prior to FreeWheel, analytics at Scripps Networks where her primary focus was consultancies, and professional
Hasan was a strategy Interactive and iHeartMedia, and smart TV data strategy. services firms.
consultant with PwC Strategy& is currently pursuing her Master’s
where he advised media and Degree in Data Science.
technology companies.
12Q3 2019 / FREEWHEEL VMR - U.S. / #FreeWheelVMR GLOSSARY
GLOSSARY
Ad Completion Rate: Measures the Dynamic Ad Insertion (DAI): Process of New Living Room: The same high-quality Publisher: Producers or syndicators of
percentage of ads that were completed dynamically inserting ads into a content TV content that was traditionally consumed content. This can be programmers or
once started stream, such that different ads can be in the living room is experienced today by digital pure- plays
inserted into the same ad break the same audience through a multitude of
Ad View: An impression that is accrued screens and locations
Server Side Ad Insertion (SSAI):
after the first frame of an ad is displayed FreeWheel Council for Premium Video
Technology that enables the stitching
(FWC): Serves the interests of those in Operator: Provides pay TV services in
together of video and ad content prior to
the premium video industry through the EU, functioning similarly to MVPDs
Aggregator: A high-traffic content delivery to the player.
leadership positions, research, and in the U.S. Examples include Sky UK, Sky
aggregator, for example AOL or MSN advocacy to promote the premium video Germany and SFR
economy Set-top Box Video On Demand (STB VOD):
AVOD: Advertising video on demand Over-the-top (OTT): Viewing content Accompanies a cable/broadcast/satellite
business model Hybrid broadcast broadband TV delivered over an internet connection. setup. Contains a cable input and outputs
(HbbTV): Global initiative aimed at Typically seen as OTT Device, which to a TV. Integrations via FourFronts STB
Connected TV (CTV): A television set harmonizing the broadcast and broadband includes devices like Roku, Apple TV, VOD and Canoe Phase III
that is connected to the Internet via OTT delivery of entertainment services to Connected TVs, etc.
devices, Blu-ray players, streaming box or consumers through connected TVs, set-
Simulcast: A digital stream of a live event
stick, and gaming consoles, or has built-in top boxes and multiscreen devices Over-the-top Device (OTT Device): that is simultaneously broadcast on
internet capabilities (i.e., a Smart TV) and Viewing content delivered over an internet
linear T V
is able to access a variety of long-form and Impression: Occurs each time an ad is connection on a TV streaming device,
short-form web-based content displayed. Synonymous with “ad view” including devices like Roku, Apple TV,
Connected TVs, etc. Syndication: Viewing that occurs outside
Inventory: An ad opportunity. A piece of of a publisher’s Owned and Operated
Content vertical: Content genre, e.g.
inventory is filled by an ad impression Pre-roll: An ad break that occurs before properties or primary platforms
news, entertainment, sports
content starts
Linear: Traditional broadcast, cable, or TV Everywhere (TVE): Apps that allow
Deal ID: Unique deal identifier of a
satellite television Premium Video: Video content that is viewers to access content over the internet
programmatic transaction that can be
professionally produced, rights managed, by logging in with their MVPD subscription
used to match advertisers and publishers
Long-tail: Small scale/niche content and limited in supply credentials
directly
aggregators
Programmatic: The use of automation Video Start: Accrued after the first frame
Direct-sold: Advertising deals made software or managed services to execute
Mid-roll: An ad break that occurs in the
directly between a publisher and an of video content is displayed. Formerly
middle of content an advertising deal
advertiser referred to as video view
Multichannel Video Programming Programmer: U.S. publishers that
Distributor: A party other than the Distributor (MVPD): Provides pay generate the majority of their advertising Virtual MVPD (vMVPD): Digital-only cable
content rights owner that manages TV services delivered either through revenue from linear TV services and alternatives that offer access to both live
the platform upon which content and broadcast satellite or cable TV. Examples offer a diverse content mix in digital and on demand premium video content
advertisements are delivered include Comcast and Verizon environments as well for a subscription fee
13THE FREEWHEEL VIDEO MARKETPLACE REPORT highlights the ways in which advertisers, publishers and distributors are using premium video content to drive advertising outcomes. The data set used for this report is one of the largest available on the usage of professional, rights-managed video content worldwide, and is based off of census-level advertising data collected through the FreeWheel platform.
Q3 2019 FreeWheel.com @FreeWheel @TeamFreeWheel MORE INFORMATION MEDIA INQUIRIES David Dworin Dan Friedman VP, Advisory Services VP, Communications ddworin@freewheel.com daniel_friedman@comcast.com #FreeWheelVMR ©2019 FreeWheel. All Rights Reserved.
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