News Analysis: AVOD Upping Content Game

As subscription streaming services HBO Max and Paramount+ prep lower-cost, ad-supported consumer options, free ad-supported platforms are entering the original content arena and targeting a growing audience that eschews pay-TV and is not interested in substituting the cable bill with multiplying SVOD fees.

Pluto TV, the AVOD unit owned by Paramount’s corporate parent ViacomCBS, is eyeing a cross-pollination of original content migrating between its 22 million average monthly viewers and SVOD Paramount+. Fox Corp.’s Tubi is eyeing funding lower-budget original movies and TV shows. The platform saw viewership jump 58% in 2020, including 33 million average monthly viewers throughout the fourth quarter. More importantly, viewers consumed 750 million hours of content in the second quarter, which was 70% higher than the previous corresponding period.

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CFO Steve Tomsic told a recent Wall Street investor group Tubi represents the “broadening of the future” for network television, and said he would consider original programing in an attempt to increase ad revenue, which is expected to reach $300 million this year and $1 billion annually in the near term.

“It’s often these really cost-effective titles that a lot of the viewership resides in,” Tomsic said, adding that Fox content assets such as “The Masked Singer” are being co-distributed on Tubi to give the platform an “extra special” edge, and the platform more “breadth” in terms of content.

“Don’t expect us to invest in really meaningful ways in terms of scripted entertainment dramas that come with huge price tags and are really difficult to make work out of the economics of broadcast television,” Tomsic said.

Meanwhile, Roku, which helped co-launch the SVOD market in 2008 with Netflix, is eyeing original content for The Roku Channel, the company’s branded AVOD platform. As of the fourth quarter of 2020, Roku reported 51.2 million monthly active users in the U.S. This figure is the company’s highest-ever active quarterly user total.

To keep those eyeballs returning, Roku is beginning to dip its toes in original programming. The platform March 19 launches “Cypher,” an FBI series featuring seven, one-hour episodes and available free to viewers of The Roku Channel. The AVOD will also become the exclusive destination for more than 75 premium shows and documentaries acquired from short-lived SVOD platform Quibi.

March 18, Roku announced it would kickoff the IAB’s official 2021 NewFronts Lineup on May 3 as the week’s first presenter to media buyers.

“We’ve seen first-hand the role that TV streaming has played in consumers and marketers lives in the last year,” Alison Levin, VP of global ad revenue and marketing solutions at Roku, said in a statement. “Roku is thrilled to kick-off the first presentation at IAB NewFronts once again this year and looks forward to sharing how marketers can buy TV like you watch TV.”

In February, AVOD service Crackle Plus announced that production had begun on season two of its original series “Going From Broke,” the unscripted show spotlighting the financial epidemic of student loan debt executive produced by Ashton Kutcher and hosted by Chegg CEO Dan Rosensweig.

Crackle corporate parent Chicken Soup for the Soul Entertainment operates several ad-supported streaming services (PopcornFlix, Frightpix, faith-based Truli, Espannolflix), with an eye on streaming original and under-the-radar programming to a growing user base.

Michael Pachter, media analyst with Wedbush Securities in Los Angeles, says the AVOD market offers programmers and advertisers two options: lower-priced subscription plans such as $5.99 Hulu and pending HBO Max and Paramount+. These AVOD editions are typically limited to delivering no more than three to four minutes of ads per hour. By comparison, completely free platforms such as Tubi, Pluto TV, Amazon’s IMDb TV and Crackle can advertise as much as 10 to 12 minutes per hour.

“There’s room for both business models,” Pachter said in an email. “[Crackle buys] produced content for exclusive streaming windows. Really innovative.”

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