Tubi Execs See Bright Future in AVOD

LAS VEGAS — The ad-supported video-on-demand streaming service Tubi touts itself as having the largest library in the space, at about 20,000 titles, four times that of Netflix, and Tubi executives see a bright future in the free alternative to subscription VOD.

“I think 2020 is going to be the year of AVOD,” said Tubi CEO Farhad Massoudi in an interview with Media Play News at CES. “I think there are going to be a lot of new players in the space, and I very much welcome it.”

Mark Rotblat

Tubi logged 20 million monthly active users as of June 2019, and 132 million hours a month as of September, noted chief revenue officer Mark Rotblat.

The service is on more than two dozen platforms, including Vizio, Samsung, Sony and Google; at CES, Tubi announced the addition of its service to Hisense’s Vidaa platform in spring 2020.

AVOD is gaining ground as cord cutting accelerates. In the third quarter of 2019, 2 million households cut the cord, up from a half million in the previous-year quarter, Massoudi noted.

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Also, the consumer is being inundated with existing and new SVOD platforms, with longtime players Netflix, Amazon Prime and Hulu joined by recent entrants Disney+ and Apple TV+ and upcoming services, such as WarnerMedia’s HBO Max.

“Subscription fatigue is a real problem,” Massoudi said. “The idea of subscribing to all these services is just crazy.”

SVOD services will increasingly focus on original content, he noted.

“The role of SVOD will be providing original content to justify the expense on your bill,” he said.

Meanwhile, AVOD services such as Tubi are mining catalog, and deep catalog at that.

“By definition AVOD is not a content forward property,” Massoudi said. “We will never get a shiny title like ‘Friends’ [for which WarnerMedia paid nearly half a billion dollars for streaming rights].”

In contrast, Tubi is judicious about spending on content.

“If I have $1, I can put it on one title or I can aggregate five titles for that dollar and have more viewership,” Massoudi said.

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While Tubi welcomes competitors, Massoudi said the service has a technological jump on new entrants.

“We’re well ahead of the market,” he said, adding studios or other companies looking to enter the AVOD space “would have to do a massive tech investment,” such as the investment Tubi has made in its recommendation engine.

“Content isn’t enough,” he said.

Tubi’s machine learning helps viewers personalize their content and wade through the thousands of available titles.

Massoudi and Rotblat would not reveal any revenue numbers for the independent company. They noted that over the past nine years, the company has raised a mere $35 million, meaning ad revenues are a key driver of the business.

“We are doing financially very well,” said the CEO, noting the staff has doubled to more than 220 in the past year.

While Viacom snapped up AVOD player Pluto TV, Massoudi said Tubi isn’t interested in being acquired.

“We’re focused on being independent,” he said. “We want to take this public.”

Hulu Launching ‘Pause Ads’ into Programming

Hulu will soon begin placing on-screen ad images when programming is put on hold.

Dubbed “pause ads,” Hulu, beginning in the second quarter, will insert “non-intrusive” images of Coke and Charmin products on select test screens after a user has paused programming for at least three seconds. The image disappears when viewing commences.

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“Our research found that consumers generally preferred ads that were subtle … and that extensive audio and video [spots] when pausing was considered disruptive,” Jeremy Hefland, VP, head of advertising platforms, wrote in a Jan. 31 blog post.

Paused Hulu programming with Charmin image/ad.

Hulu, which currently runs ads on its $5.99 subscription plan, is looking to increase margins from its 25 million subscribers. The platform co-owned by Disney, Fox, Comcast and WarnerMedia continues to generate hundreds of millions of dollars in equity losses for its corporate partners.

Hefland said the pause ad takes advantage of the “natural behavior” exhibited by viewers streaming TV. He said the ads consists of two elements: a creative image supported by contextually “relevant” messaging along with a background gradient to distinguish the ad from the content scene.

“The research so far has shown a positive response from viewers,” he wrote.

 

 

 

YouTube Streaming Ad-Supported Hollywood Movies

YouTube has quietly begun offering catalog studio movies for free on its website, including titles such as Legally Blonde, Rocky IV, Zookeeper and The Terminator, among others.

The ad-supported streams appeared last month alongside new releases promoted to buy or rent on YouTube.com (i.e. Google Play).

“We saw this opportunity based on user demand, beyond just offering paid movies. Can we do ad-supported movies, free to the user?” Rohit Dhawan, director of product management at YouTube, told AdAge. “It also presents a nice opportunity for advertisers.”

Indeed, with most of the titles already cycled through retail channels, including DVD, Blu-ray Disc, transactional VOD and SVOD, marketing the IP through the broadcast TV model online to more than 1 billion users offers incremental revenue opportunities for all parties involved.

With targeted advertising seen as a new way for marketers to reach select demographics, eMarketer estimates YouTube could generate billions in revenue annually from ad-supported movies.

“This is a huge business opportunity,” said Farhad Massoudi, CEO of ad-supported Tubi TV. “There’s a lot of consumer traction and I expect all the major companies will jump in at some point.”

Indeed, to help market the Feb. 9, 2019, theatrical release of The Lego Movie 2: The Second Part, Warner Bros. Pictures and YouTube offered free streaming access to the original Lego Movie on Black Friday embedded in an online ad.

The promotion marked the first time YouTube rolled out a full-length movie within an ad.

 

Ad Group Plugs Ad-Supported OTT Video

The Interactive Advertising Bureau (IAB) Oct. 10 released new data it claims underscores the value of marketing through ad-supported over-the-top video.

In its study based on a Sept. 25-26 survey of 1,223 consumers ages 18+ in the U.S., results found that the largest audience segment of OTT video is 18-34-year-old adults with household incomes above $75,000.

The audience includes households with kids and skews more male. Nearly 73% of respondents who regularly stream video say that they have watched ad-supported OTT. Moreover, 45% of streamers report that they watch ad-supported OTT the most.

“Advertisers have a real opportunity to make connections with younger consumers, who are likely to have higher-income, through ad-supported video delivered over-the-top,” Anna Bager, EVP, industry initiatives, IAB, said in a statement. “The findings from this study can help marketers navigate their way to valuable and receptive audiences by deploying an OTT strategy.”

Indeed, the report claims respondents are not easily reached through broadcast TV or subscription-based video on demand (SVOD). More than half (52%) of ad-supported OTT viewers are cord-cutters or cord-shavers, largely due to cost (77%), while 42% cite ‘convenience/flexibility’ and 38% cite ‘better content on streaming services’ as a reason. Additionally, they spend less time watching cable than SVOD viewers.

The report found that a higher percentage of respondents also enjoy interacting with ads in comparison to SVOD viewers, providing opportunities to engage and develop one-to one-relationships with these households and consumers.

Ad-supported OTT video viewers are more likely to try new brands, with 36% stating they learn about new brands/products/services from video ads. In fact, respondents said they spend more on online subscription purchases ($119 monthly vs. $89 for SVOD viewers).

“This study showcases the high value that brands should place with increased investment in ad-supported OTT video,” said Sue Hogan, SVP, research and measurement, IAB.