US Streaming Video How Ad Supported Will Reshape the Market
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The 20,000 Foot View: In the shift to streaming, advertising has been sidelined by the growth of streaming video on demand (SVOD) in the US video market. However, Hulu’s growth, along with increasing competition for consumers’ digital wallet, is helping to make the case that there is an opportunity to replicate traditional pay-TV’s subscription and advertising model. However, the market is now prepping itself for a big push at ad-supported video on demand (AVOD), as illustrated by Viacom’s acquisition of Pluto TV, Sinclair Broadcasting Group’s launch of STIRR, Amazon’s IMDbTV rebrand with European rollout, and NBCU’s Peacock set to move in 2020. However, with streaming consumers being tech-savvy and ad-resistant, AVOD players will have to execute with a supremely high degree of sophistication to fulfil their clear potential.
Key Insights
- The video market is maturing: multiple digital penetration was flat at in the same level as 2018
- Traditional TV has an accountability problem: of TV viewers stop paying attention TV ads come on (more the all-consumer average)
- Meanwhile, Netflix’s may be locked behind an paywall but are more responsive ads than overall consumers
- With rising costs and softening subscriber growth, question is how long Netflix afford not to mine its revenue opportunity
- With Netflix seven points more likely than consumers to pay attention to sponsors, smart brand integrations may the best first step of SVOD consumers do not skip relevant ads, compared to of overall consumers
- SVOD subscribers also more disposed to brand on shows than the average
- Streaming audiences sophisticated and respond best to targeting – Netflix paid subscribers for target ad responsiveness
- NBCU’s slated AVOD service looks well targeted, NBCU fans having the highest to engage with relevant ads
- Netflix and users are both receptive to ads while Hulu users are receptive
- Disney and fans both strongly over-index for sponsor receptivity, indicating clear sponsorship for Disney’s macro streaming strategy
- AVOD differentiation increasingly be defined around linear non-linear streaming
Companies and brands mentioned in this report: Amazon, Amazon Fire, Amazon Prime Video, Apple, AppleTV+, CBS, Cheddar, Comcast, Disney, Disney+, Distroscale, DistroTV, DUST, ESPN, Facebook, Google, Hulu, IMDb Freedive, IMDb TV, NBCU, NBCUniversal, Netflix, Nike, Peakcock, Pluto TV, Roku, Saveur, Shout Factory, Sinclair Broadcasting Group, Sky, Sportskool, STIRR, TheStreet.com, Vudu, Warner Media, YouTube, YouTube TV