Tubi AVOD Service Available on Cox

Tubi March 29 announced the launch its ad-supported VOD service on Cox Contour giving the pay-TV operator’s subscribers free access to more than 12,000 movies and television series.

Cox subs are able to watch movies such as Up in the Air starring George Clooney and Anna Kendrick and Rango starring Johnny Depp and Isla Fisher, as well as TV series such as “Xena: Warrior Princess,” “The A-Team,” “Major Dad,” “Dog the Bounty Hunter” and “Alf,” among others

In addition, starting April 1, Contour subs will be able to access first seasons of “The Bachelor” and “The Bachelorette,” “Trista and Ryan’s Wedding Special,” and the co-co nuts fifth season of “Bachelor in Paradise.”

“Our partnership with Cox expands upon our mission to make entertainment accessible to everyone,” Farhad Massoudi, CEO of Tubi, said in a statement. “With the addition of Cox Contour, Tubi will continue to have the widest distribution of any ad-supported streaming service.”

San Francisco-based Tubi claims to be one of the most-watched apps on the world’s largest platforms, including Amazon Fire TV, Roku, and Android, among others.

Tubi’s partnership with Cox Contour marks its second MVPD deal after Comcast Xfinity X1, and remains the only AVOD streaming service with distribution as a standalone app.

Cox Contour’s library of apps also includes Netflix, YouTube, YouTube Kids, iHeartRadio and NPR One, as well as a sports app that shows live stats and scores on the TV screen.

 

 

Sony Crackle Merges with Chicken Soup for New AVOD Service

Sony Pictures Television March 28 announced it has merged its Sony Crackle AVOD service with Chicken Soup for the Soul Entertainment Inc., a media company producing content for all screens, to form a new AVOD joint venture branded, “Crackle Plus.”

Under the agreement, CSS Entertainment will own the majority interest in the joint venture. Additionally, SPT will receive 4 million five-year warrants to purchase Class A common stock of CSS Entertainment at various prices.

The addition of the Crackle assets is expected to more than double CSS Entertainment’s overall revenue and add meaningful pre-tax earnings.

Eric Berger, chief digital officer at Sony Pictures Television, will reportedly depart the company upon closure of the deal.

Eric Berger

Sony and Chicken Soup will each contribute certain assets with plans to combine their 10 million viewers and content expertise. SPT’s contributions feature Crackle’s U.S. assets, including the Crackle brand, monthly active users and ad rep business.

SPT and the joint venture will also enter into a license agreement for rights to TV series and movies from the Sony Pictures Entertainment library. In addition, New Media Services, a subsidiary of Sony Electronics Inc., will provide the technology back-end services for Crackle Plus.

Ownership of Crackle’s original content library will be retained by SPT but be made available for licensing to the joint venture. CSS Entertainment plans to include six owned and operated AVOD networks (Popcornflix, Truli, Popcornflix Kids, Popcornflix Comedy, Frightpix, and Espanolflix) and SVOD platform Pivotshare.

Crackle Plus is expected to have more than 38,500 hours of programming, 90 content partnerships; 1.3 billion minutes streamed per month, and an offering of more than 100 networks, both ad-supported and subscription-based, including networks owned by Crackle Plus and third-party networks distributed via Pivotshare.

“Crackle is a valuable asset and we feel confident it will thrive and grow in this new environment with CSS Entertainment,” said Mike Hopkins, chairman of SPT, in a statement. “We were drawn to CSS Entertainment as our partner in this venture because of its aggressive, entrepreneurial approach.

Roku Partners with Adobe for Marketing Access to 27 Million Streaming Viewers

Subscription streaming media co-pioneer Roku is partnering with Adobe offering marketers access to the former’s 27 million subscribers. Roku operates The Roku Channel, one of the largest ad-supported streaming video platforms. The two companies announced the pact March 26 at the Adobe Summit in Las Vegas.

Marketers using Adobe software and analytics can now target their audiences on the Roku platform through targeted ad buying and access to Roku’s ad inventory.

San Francisco-based Adobe says marketers incorporating the Roku platform can better scale their campaigns, manage frequency and more effectively measure success on over-the-top video.

With lines continuing to blur between advertising and marketing technologies, marketers want to understand advertising’s paid media paths and how they drive valuable site paths that use that data to better optimize campaigns.

“This partnership with Roku allows Adobe customers even more effectiveness while running campaigns on a leading TV streaming platform,” Keith Eadie, VP and GM, Adobe Advertising Cloud, said in a statement.

With ongoing consumer shifts toward OTT video, marketers are zeroing in on spots and campaigns relevant way on TV and the end-user, Scott Rosenberg, GM, platform business, Roku.

“This partnership gives Adobe clients a seamless way to activate their data and reach customers who’ve moved their TV viewing to Roku devices,” Rosenberg said.

Cinedigm Acquiring AVOD Platform ‘Future Today’ for $60 Million

Cinedigm March 15 announced it has entered into a definitive agreement to acquire Future Today, one of the largest ad-supported VOD networks, for $45 million in cash and $15 million in Cinedigm common stock.

The acquisition increases Cinedigm’s over-the-top video footprint to over 7.6 million monthly active users and 67 million total app installs.

The Los Angeles-based home entertainment distributor said Future Today, which owns and operates more than 700 content channels with more than 60 million app installs, and manages more than 200,000 film, television and digital content assets,generated about $23.9 million in revenue in 2018.

Future Today brands include Fawesome.tv, focused on general entertainment movies & television shows, and HappyKids.tv, providing age-specific edutainment in the connected TV market.

Alok Ranjan and Vikrant Mathur, co-founders of Future Today, will continue to lead the subsidiary as co-presidents, entering into long-term employment agreements with Cinedigm upon the deal closing.

“Building our stake in the rapidly surging AVOD business is a top priority for Cinedigm, and the acquisition instantaneously transforms our company into the world’s largest provider of premium [ad-supported] content,” Chris McGurk, chairman/CEO of Cinedigm said in a statement.

Future Today’s cloud-based technology and ad-based monetization platform manages OTT services for more than 350 content owners, producers, distributors and major media companies helping them launch and monetize connected TV channels across all devices.

“Alok and Vikrant have built Future Today into one of the most respected and fastest growing companies monetizing video content today,” said Erick Opeka, president of Cinedigm Digital Networks. “Their entrepreneurial spirit and deep knowledge of the video ad space, combined with Cinedigm’s content and relationships, will be a formidable and compelling combination in the rapidly growing AVOD segment.”

The transaction is expected to close in the second calendar quarter of 2019 and is subject to customary closing conditions.

AVOD Service Tubi Gets ‘The Bachelor’ Reality TV Franchise

Ad-supported VOD platform Tubi March 14 announced a content deal with Warner Bros. Domestic Television Distribution for select catalog seasons of “The Bachelor” reality TV dating show.

Launched in 2002, “The Bachelor” affords a lone male contestant the opportunity to be wooed by a pool of female romantic interests. The same concept with a lone female contestant – dubbed “The Bachelorette” – debuted in 2003. “Bachelor in Paradise” bowed in 2014 featuring cast rejections for the previous two shows. All three shows are hosted by Chris Harrison.

San Francisco-based Tubi will offer the first seasons of “The Bachelor” and “The Bachelorette,” “The Bachelorette: Trista & Ryan’s Wedding” as well as the fifth season of “Bachelor in Paradise,” beginningApril 1.

The series underscores Tubi’s ongoing expansion of its content library of more than 12,000 movies and television series.

“This massive franchise strengthens our larger content partnership with Warner Bros. and marks the first of many big reality series we’re bringing to the service,” chief content officer Adam Lewinson said in a statement.

 

Research: More Than 52% of Broadband Households Report Watching Internet Video on a Connected TV

A majority (52%) of U.S. broadband households are watching online video on a TV that is connected to the internet, according to research from Parks Associates.

The study, 360 View: Digital Media and Connected Consumers, also finds that watching TV or movies at home is the most popular leisure activity among U.S. broadband households, with 55% selecting this among their top two favorite leisure activities.

“While the total number of hours consuming videos has declined, consumers are watching more internet video on the largest screen available,” said Billy Nayden, research analyst with Parks Associates, in a statement. “The number of hours consumers report watching video on a TV increased for the first time since 2014, with connected devices enabling internet video services on TV and shifting consumers away from PC and mobile viewing. As OTT competition becomes a battle for the living room, the challenge for device makers and content producers is finding the correct product mix to maximize both profit and utility.”

The study found subscriptions are the dominant business model for OTT services.

As more services emerge, many stakeholders fear an impending subscription overload in U.S. households, according to Parks.

“As consumers’ taste for OTT experimentation wanes, they will start to resist the push to add another monthly subscription to their households,” Nayden said in a statement. “Many providers are starting to lead with freemium and ad-based models, in anticipation of this pushback.”

Other findings were:

  • 19% of consumers subscribe to either Netflix, Hulu or Amazon Prime Video and another OTT service, compared to 13% in 2017;
  • Consumers watched 25.7 hours of video per week in 2018, down from 29.5 hours per week in 2016;
  • Local broadcast/channels and programs are the most enjoyed type of programming.

Viacom Completes Pluto TV Acquisition

Viacom March 4 announced the completion of the acquisition of AVOD service Pluto TV.

The acquisition, for $340 million in cash, will advance Viacom’s strategic priorities while solidifying Pluto TV’s leadership in the domestic free streaming video market and accelerating its growth globally, according to a Viacom press release.

Pluto TV will operate as an independent subsidiary of Viacom, led by President and CEO Tom Ryan.

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“The completion of this deal marks an exciting next step in Viacom’s evolution and a powerful opportunity for us to extend our consumer reach and broaden our ability to add value across the industry as the media landscape continues to segment,” said Bob Bakish, Viacom president and CEO, in a statement. “Together with Pluto TV, we look forward to becoming a stronger partner to distributors, advertisers, content providers and audiences around the world.”

Founded in 2013, Pluto TV streams more than 100 channels and thousands of hours of on-demand content spanning television and movies, sports, news, lifestyle, comedy, cartoons, gaming and trending digital series. It has more than 12 million monthly active users across devices, including smart TVs, streaming players, mobile devices, desktops and gaming consoles, according to the release.

“Pluto TV will have a crucial role in expanding Viacom’s presence across next-generation distribution platforms as a standalone free over-the-top (“OTT”) product, a direct-to-consumer cornerstone, and a partnership solution for wired, mobile and OTT distributors to serve their broadband only and video bundle subscribers on a zero incremental cost basis,” stated the release.

Pluto TV also benefits Viacom’s advanced marketing solutions (“AMS”) business, serving as a source of targeted inventory — particularly for younger demographics — thereby strengthening Viacom’s ability to serve advertising customers and their associated agencies, the release stated.

Tubi Inks NBC Universal Catalog Deal

Ad-supported streaming video service Tubi Feb. 28 announced a content deal with NBC Universal, adding nearly 400 television episodes and movies. The deal is part of a strategy to invest over nine figures into content acquisitions in 2019.

Tubi users will have free access to catalog series, “Xena: Warrior Princess,” “Hercules: The Legendary Journeys,” “The A-Team,” “Punky Brewster,” “The Incredible Hulk,” “Quantum Leap” and the original versions of “Magnum, P.I.,” “Battlestar Galactica,” “Bionic Woman” and “She-Ra: Princess of Power,” among others.

“We’re excited to be a home to this robust library of content … that appeals across generations,” chief content officer Adam Lewinson said in a statement. “We are aggressively working to expand our library, and this is one of many deals to come for Tubi.”

Tubi’s content library contains more than 12,000 movies and TV series –  claiming to double Netflix’s at 40,000 hours. The service’s app ranks as one of the most watched on Amazon Fire TV, Roku iOS, Android, and Xfinity X1, among others.

San Francisco-based Tubi ended 2018 with more than four-times the content on the service over the previous year. Viewers last December streamed nearly as much content as was consumed in all of 2017.

 

AVOD: Hollywood’s Rising Star

Hollywood’s VOD invasion is dominated by subscription video-on-demand (SVOD), or streaming, thanks to Netflix and Amazon Prime. But while studios try to hammer out ways to make transactional VOD (TVOD) more appealing, so they can keep a bigger slice of the revenue pie, a third player is beginning to make a lot of noise in the online entertainment business.

Advertising-supported video-on-demand, or AVOD, is rapidly coming out of the shadows, gaining traction among subscription-weary consumers as mega-media companies Comcast, Viacom and Amazon enter the market.

“I think AVOD content has been a big theme to start out this year,” said Eric Berman, of online entertainment company Ellation, during the February Digital Entertainment World conference in Marina del Rey, Calif.

As 2019 dawned, AVOD announcements proliferated.

In January, Amazon’s IMDb.com website launched an ad-supported video streaming platform, IMDb Freedive. The service enables users to watch TV shows, including “Fringe,” “Heroes,” “The Bachelor” and “Without a Trace,” as well as movies such as Awakenings, Foxcatcher, Memento, Monster, Run Lola Run, The Illusionist, The Last Samurai and True Romance, among others, without purchasing a subscription. IMDb has long been the go-to industry resource for information on actors, production companies, TV shows, movies and behind-the-scenes information. Through last October, the platform had about 5.3 million titles (including episodes) and 9.3 million personalities in its database, as well as 83 million registered users. Subscription-based IMDb Pro is considered a must-have “Rolodex” for the business-side of Hollywood.

“Consumers already rely on IMDb,” said founder and CEO Col Needham. “With Freedive, they can also watch full-length movies and TV shows for free.”

Also in January, Comcast-owned NBCUniversal announced a shakeup in the executive ranks as it plans to roll out an ad-supported streaming video service in 2020. The media company, which until recently eschewed OTT video, pulling the plug on short-lived comedy streaming service Seeso, named Bonnie Hammer chairman of direct-to-consumer and digital enterprises — a position that oversees NBC Universal’s stakes in digital media outlets, including Vox, Snap and BuzzFeed. The ad-supported streaming service will be available free to Comcast Cable pay-TV subscribers in the United States and major international markets. Comcast and U.K. satellite TV subsidiary Sky will offer the service to their 52 million combined subscribers. An ad-free version also will be available for a fee. Non-Comcast Cable subs also can purchase a subscription to the service.

“Our service will be different than those presently in the market and it will be built on the company’s strengths, with NBC Universal’s content and the technology expertise, broad scale and the wide distribution of Comcast Cable and Sky,” said NBCUniversal CEO Steve Burke.

In another January bombshell, less than two weeks after Amazon’s Freedive announcement, Viacom Inc., which had been on the sidelines while fellow media giants Walt Disney Co. and WarnerMedia rolled out plans for SVOD services, made its own direct-to-consumer move — in AVOD.

Viacom announced the acquisition of Los Angeles-based AVOD service Pluto TV for $340 million in cash. Pluto TV, which launched in 2013, features about 100 channels via an app that operates on 14 platforms, including Apple TV, Android TV, Amazon Fire TV, Chromecast, Roku and PlayStation consoles.

“Pluto TV’s unique product, combined with Viacom’s brands, content, advanced advertising capabilities and global scale, creates a great opportunity for consumers, partners and Viacom,” said Viacom CEO Bob Bakish in announcing the move.

AVOD represents an opportunity in a fragmented video marketplace by offering a free alternative to subscription services, he said.

“We’ve been focused on developing a differentiated direct-to-consumer streaming service that would exploit our considerable content library and leverage our unique advertiser capabilities and relationships,” Bakish said on a Viacom fiscal call. “Pluto TV fits squarely into that strategy.”

The platform gives Viacom access to more than 12 million active monthly AVOD users and distribution on more than 30 million devices nationwide through the app. The free service will also serve as an important marketing engine to acquire and retain consumers for existing and new SVOD services such as Noggin, Comedy Central Now and newly launched Nick Hits, Bakish said, as well as offering a new space to enhance Viacom’s “addressable advertising market,” through millions of impressions per month, he said.

Bakish said Pluto TV currently sells less than 50% of this inventory.

“These are very high-quality impressions,” he said. “There’s plenty of upside here.”

The CEO said he believes AVOD will be able to extract greater margins from library content.

“We made the strategic decision two years ago to curtail the licensing of large library packages to SVOD with our streaming services in mind,” Bakish said.

Viacom plans to leverage its brand, infrastructure and capabilities to expand Pluto TV globally.

Tom Ryan, co-founder and CEO of Pluto TV, extolled the virtues of the Viacom deal, including its international reach, at the February DEW conference.

“They have world-class brands, well-known programming. They’ve got advanced advertising capabilities, and they are a global company,” he said.

Free AVOD fills an important need as “there has been a certain amount of subscription fatigue,” he said.

“The problem comes down to payment,” he said. “There are only so many services that people will pay for.”

He mentioned a survey by Ampere that found the average SVOD home subscribes to 2.8 streaming services.

“You have Netflix and Amazon Prime, and everybody else fighting for that 0.8,” he said.

A Market for Free VOD

Indeed, with a media landscape littered with SVOD leaders Netflix, Amazon and Hulu — as well as a proliferation of other subscription-based online TV services, such as Sling TV, DirecTV Now, PlayStation Vue and YouTube TV — consumers could be hitting subscription overload.

AVOD offers consumers (typically younger) an economical (i.e. free) alternative — and marketers a captive audience.

“Advertisers have a real opportunity [with AVOD] to make connections with a younger [demo] likely to have higher incomes,” said Anna Bager, EVP of industry initiatives at research firm IAB.

And marketers have taken note.

Since 2014, online video ad sales have increased nearly 20% annually, with the online video ad market projected to experience double-digit growth by 2020. More than 37 million U.S. households watched ad-supported shows on connected TVs in 2016, according to Modi Media. Meanwhile Nielsen reports 75% of AVOD’s targeted demographic doesn’t mind ads as long as the content is free.

“It became clear to us that there is a massive group of consumers migrating their viewing to mobile and OTT but finding themselves underserved by live-TV bundles and the universe of competing paid services,” said Yelena Shkolnik of Jump Capital, a venture group backing AVOD service Tubi TV.

IAB found the largest AVOD audience segment is 18- to 34-year-old adults, including households with kids, that skews male. Nearly three-quarters (73%) of those who regularly stream video say that they watch ad-supported OTT. Moreover, 45% of streamers report they watch ad-supported OTT the most. More than half (52%) of AVOD viewers are cord-cutters or cord-shavers, with 42% citing “convenience/flexibility” and 38% citing “better content” as reasons to watch. Additionally, AVOD viewers spend less time watching cable than SVOD viewers. AVOD viewers report watching more OTT video than they did a year ago.

“The findings suggest marketers navigate their way to valuable and receptive audiences by deploying an AVOD strategy,” said Bager.

Chicago-based research firm Lab42 says U.S. consumers on average use upwards of three paid streaming services, with one of them “almost always Netflix,” according to managing partner Jonathan Pirc.

When consumers use a variety of streaming platforms, they’re committing to a piecemeal collection of monthly fees — excluding high-speed Internet service — that quickly rival the traditional cable bundle in cost, said Colin Petrie-Norris, CEO of Xumo, an ad-supported live-TV/on-demand platform.

“Price-sensitive consumers are seeing [AVOD] as viable alternatives or complements to paid services — that’s probably the biggest factor about AVOD’s rising profile,” Petrie-Norris said.

AVOD and Aggregation

Many AVOD players have long been toiling in the background. Longtime AVOD pioneers Sony Crackle and Shout! TV have streamed free content to largely niche audiences for years. Aggregators, such as The Roku Channel, hope to bring new audiences to those niches through a channel format. The platform, which launched in 2017, emulates Amazon Channels, offering third-party OTT video services while upping the AVOD ante through wider content selection to a base of more than 27 million registered Roku users.

“Free content is clearly important to our users,” founder and CEO Anthony Wood wrote in a recent fiscal newsletter. Citing internal surveys, Wood said 90% of respondents singled out free content as “very important.” A similar survey found The Roku Channel factored heavily (43%) upon consumers looking to purchase a Roku device for the first time.

AVOD has become a “material source” of ad impressions and monetization, he wrote.

“Our ability to monetize this content and share the economics with content partners has proved to be a winning solution for existing channels on the platform that have syndicated their content, and for studios that can publish directly into in The Roku Channel through direct licensing or revenue sharing arrangements,” Woods wrote.

AVOD in the Spotlight

With the increased focus on AVOD, new and old players in the market are suddenly in the spotlight.

WarnerMedia, which is launching a SVOD service in Q4, is considering distributing content via “two-sided” business models that include SVOD and AVOD. Speaking on an AT&T fiscal call, CEO Randall Stephenson said the acquisition of Xandr to help sell digital advertising to AT&T’s 170 million mobile and broadband subscribers underscored opportunities for AVOD that he said would help keep content pricing and consumer acquisition costs down, while also funding content purchasing.

Last August, Irvine, Calif.-based CE manufacturer Vizio rolled out WatchFree, a proprietary ad-supported streaming video platform for its line of televisions that partnered with Pluto TV to feature action movies, black cinema, news channels, NBC News, MSNBC, Fox Sports and related fare.

San Francisco-based Tubi TV, which bowed in 2014 as an ad-supported VOD platform with more than 9,000 movies and television shows from Warner Bros., Fox, MGM, Lionsgate and Paramount, among others, has boasted monthly audience growth of more than 1,000% since 2016, and recently announced availability on Comcast Xfinity X1, in addition to Android and iOS mobile devices, and on OTT devices such as Roku, Apple TV, Chromecast, Xbox 360, Xbox One, Sony, PlayStation 4, Samsung and Amazon Fire TV. Users can also watch online at TubiTV.com. The platform announced viewership increased 430% in 2018 from 2017, with December generating nearly as much content streamed as in all of 2017. It also announced it had turned a profit in the fourth quarter, with revenue up more than 180% in 2018. More than 1,000 advertisers ran spots on Tubi, including consumer products and automotive advertisers, according to the company. Tubi in January announced plans to spend more than $100 million on content in 2019. The service currently features a library of more than 12,000 movies and television series from more than 200 content partners, including most major studios.

“In 2018, Tubi saw tremendous growth as consumers, fatigued by SVOD subscriptions and services, sought alternative entertainment choices,” said founder and CEO Farhad Massoudi. “We will continue to use profits to make bigger bets on content, enhance the viewing experience, and continue to press ahead into new grounds in what is our core advantage: technology and data.”

Original Content

While AVOD features largely catalog content, the market is eyeing original fare to compete with SVOD, but it remains to be seen if AVOD can compete with the enormous content funding its SVOD competitors have.

“There’s a big conundrum in the AVOD model,” said Popsugar Studios’ David Grant at the DEW conference in February. “Somehow the content has to be created.”

“When is the AVOD system going to be able to fund the creation of television-sized content?” he asked.

To help pay for original content, Sony is looking to sell a minority stake in its AVOD service Crackle. In a memo to staff last summer, Mike Hopkins, chairman of TV production at Sony, called the service a “tremendously valuable asset.”

“With the right partner — one that could bring additional content, users or leverage existing assets for advertising and promotion — we feel we can expand Crackle’s audience and significantly increase revenue,” Hopkins wrote.

Crackle has scored online hits with original series “The Art of More” and Jerry Seinfeld’s “Comedians in Cars Getting Coffee” — the latter now operating under the more-lucrative Netflix umbrella.

IMDb Jan. 16 announced the premiere of “UnMade,” an original series that follows comedians as they share plots, inspirations and stories for projects that are not listed on IMDb, because they were never produced. In each episode, celebrity comedians remember projects they penned before they were famous — and, spoiler alert — Hollywood missed out on some winners. These ambitious yet sometimes misguided scripts are given a second chance and brought to life via a team of actors and a professional production crew. The first three episodes feature Jay Chandrasekhar (Super Troopers), Kristen Schaal (“Last Man on Earth”) and Rainn Wilson (“The Office”) sharing ideas. Future guests include Nick Cannon, Bobby Moynihan, Tig Notaro, Paul Rust, Reggie Watts and “Weird Al” Yankovic.

“UnMade provides fans with a comedic new perspective on how the industry works, and why certain projects get made … or don’t,” said Steve Bernstein, GM of IMDb Video.

The series stays true to IMDb’s niche audience and follows previous original series, such as “The IMDb Show,” “So Far,” “No Small Parts” and “Casting Calls.”

“We offer even more original videos for our customers to dive deeper into the stories that shape the industry,” Bernstein said.

Shout! TV’s original programming includes “Backlot,” featuring trade show coverage, interviews with filmmakers and industry experts. “Why We Loved It” explores in-depth analysis on the cult appeal of a range of genres, including vampires, horror, superheroes, comedians and post-apocalyptic antiheroes (i.e. Mad Max).

Star or Supporting Player

While AVOD may be the newest star in the online entertainment landscape, it remains to be seen if it will be as big a draw as SVOD. Michael Pachter, digital media analyst with Wedbush Securities in Los Angeles, is unsure about the AVOD hype, saying he doubts it will threaten Netflix and supplant the SVOD ecosystem. He considers the distribution channel largely supplemental to SVOD.

“I’m sure that there are people who can’t afford Netflix who will watch AVOD, and there are a handful of subscribers who will defect from Netflix, but most subscribers appreciate the unique content available only on [SVOD] and will remain subscribers so long as there is fresh content,” Pachter said.

AT&T Eyeing HBO, Warner Content for AVOD Distribution

AT&T currently markets standalone over-the-top video services DirecTV Now and Watch TV — the latter offering mobile access to 30 pay-TV channels for $15 monthly and no long-term contract.

Watch TV has generated about 500,000 subscribers since its debut last June. DirecTV Now, which jettisoned more than 260,000 subs after ending promotional pricing late last year, has about 1.6 millions subs.

The telecom now appears to be considering ad-supported VOD — long a stepchild to subscription streaming VOD service such as Netflix, Amazon Prime Video and Hulu.

With Amazon subsidiary IMDb.com launching a free ad-supported VOD service, Hulu’s basic SVOD plan featuring commercials, and Comcast launching AVOD for Xfinity subscribers in 2020, AT&T is pondering ad-supported distribution for select content from subsidiary WarnerMedia.

Speaking on the Jan. 30 fiscal call, CEO Randall Stephenson reiterated that companies with “very strong” IP, “deep libraries” of IP are the ones that are going to succeed over time.

He said Warner Bros. CEO Kevin Tsujihara and WarnerMedia boss John Stankey have been analyzing optimal distribution channels and license opportunities for content.

Tsujihara helped craft the recent non-exclusive license extension with Netflix for “Friends,” a deal that lets WarnerMedia stream the venerable sitcom through its pending SVOD service launching later this year.

Stephenson said WarnerMedia content would be targeted toward what he called “two-sided” business models that include SVOD and AVOD.

“There’s a demand and the customers have become accustomed to advertising free subscription services,” he said. “And we think HBO and a lot of the Warner content [is] premium content will fit into that mold.”

While Stephenson didn’t reveal AVOD specifics, he said the recent acquisition of Xandr to help sell targeted digital advertising to AT&T’s 170 million mobile and broadband subscribers, underscored opportunities for advertising-supported models that help keep content (i.e. catalog) prices down, keep consumer costs down and help fund additional content acquisition and purchasing.

“Xandr is a big part of making that model work,” he said. “So, our model will be a two sided model, with a heavy subscription service, with some ad-supported elements to it as well.”