Research: OTT in 64% US homes

Market research and consulting company Parks Associates has released its updated list of the top 10 subscription over-the-top (OTT) video services in the US market, based on estimated number of subscribers. Netflix, Amazon, and Hulu continue to hold the top three slots, with HBO Now and Starz moving into the top five.

1. Netflix
2. Prime Video Users (Amazon Prime)
3. Hulu (SVoD)
4. HBO Now
5. Starz
6. MLB.TV
7. Showtime
8. CBS All Access
9. Sling TV
10. DirecTV Now

“Which company is the leading OTT video subscription service remains a topic of debate,” said Brett Sappington, Senior Director of Research, Parks Associates. “According to our estimates, Amazon has more Prime Members than Netflix has subscribers. However, when you consider only those Prime Members that use Prime Video, Netflix is the largest. Hulu remains the third largest but continues to grow its subscriber base.”

The firm notes the rise of a second tier of OTT video services from services with recognised brands, including several with high profile original content. Online pay-TV services Sling TV and DirecTV NOW round out the top ten, ahead of similar services Hulu with Live TV, YouTube TV, and PlayStation Vue. Online pay TV has been one of the fastest growing segments in the OTT video space, with aggressive marketing by all.

“HBO, Starz, Showtime, and CBS All Access demonstrate the powerful attractiveness of original content through series like Game of Thrones and Star Trek: Discovery,” Sappington said. “This pattern suggests new services such as WarnerMedia’s DC Universe and the forthcoming streaming service from Disney could achieve success quickly.”

The top subscription sports OTT video services are MLB.TV, WWE Network, and ESPN+. MLB.TV continues to lead the sports OTT subscription category, benefiting from its long tenure as a streaming service and popularity among dedicated baseball fans. WWE also has a dedicated fan base and publicly reported having over 1.2 million US subscribers at the end of Q3 2018. ESPN+ is a newcomer to the OTT video marketplace but recently announced that it had exceeded 1 million subscribers.

Additional data from Parks Associates’ OTT Video Market Tracker, which tracks the content offerings, business strategies, and subscription numbers for OTT services in North America:

– OTT video subscription penetration has reached 64 per cent of US broadband households. Over two-thirds subscribe only to one of the top three services, Netflix, Prime Video, or Hulu.
– The online pay-TV audience is similar to the OTT audience—they are younger and quicker to adopt new technologies when compared to traditional pay-TV households.
– Over the past three years, OTT churn rates have gradually fallen each year from 31 per cent of OTT subscriptions cancelled each year in 2015 to 28 per cent in 2018.

read more here: advanced-television.com

Netflix ‘on course’ to pass 10 million subscribers in UK

Netflix is on course to pass the 10 million-subscriber mark in the UK by the end of this year, according to research by MTM.

According to MTM, some 1.1 million consumers intend to subscribe to the service by the end of this year, taking the service’s total past the 10 million subscriber mark.

MTM says that Netflix subscribers are among the most satisfied users of SVOD services in the UK with 88% claiming to be satisfied, the highest rating for any subscription TV or video service. This means that churn levels for the service are a less significant challenge than for other SVOD offerings.

According to MTM, Netflix’s integration as part of the Sky Q offering could support further growth for the SVOD service, with 200,000 current Sky Q users looking to subscribe to Netflix by the end of 2018.

MTN says that the ability to easily access Netflix’s service on the primary TV screen will likely increase Netflix’s share of overall viewing within Sky Q homes, pointing out that 31% of all cable operator Virgin Media’s homes with Tivo advanced TV set-tops currently access Netflix via their set-top box.

According to MTM’s ScreenThink market research tracker, based on a survey of over 3,000 UK online users, almost 25% of internet users say that services such as Netflix and YouTube are the first services they turn to when looking for TV or video content, rising to 39% of 16-24 year-olds.

Conversely, 54% of UK pay TV subscribers now believe that their TV service is overpriced, and 1 in 4 are thinking about cancelling their subscription.

“The most recent ScreenThink study provides a fascinating snapshot of a market in transition, demonstrating the significant impact of Netflix and other OTT video services in the UK market,” said Jon Watts, managing partner at MTM.

read more here: digitaltveurope.com

The 30-Second Ad Makes a Comeback, Now 55% of All Video Ad Views

In Q3 2017, the 30-second ad was an endangered species. It made up just 27 percent of all video ad views as marketers attempted to cram their messages and branding into shorter ads that viewers would tolerate. That quarter, 67 percent of video ads were 15-seconds long.

What a difference a year makes. Now, people do most of their video streaming on their living room TV, and that’s a win-win-win for all parties. Viewers get true lean back viewing, publishers get a receptive audience, and marketers get high completion rates and lots of unskippable inventory.

In Q3 2018, 55 percent of all video ad views were 30-seconds long, 41 percent were 15-seconds long, and 2 percent were 6-seconds long.

This data comes from the Q3 2018 Video Advertising Benchmarks report released by cross-platform advertising solutions specialist Extreme Reach. Its data comes from major brand advertising served by Extreme Reach.

“The CTV opportunity is one that advertisers are increasingly leveraging, and the impact that’s having on ad length, while unexpected, makes complete sense,” said Mary Vestewig, senior director of video account management at Extreme Reach. “I expect we’ll see even more exciting changes driven by CTV as consumer adoption grows and technology for targeting and measurement evolve.”

Not that everything is good news for the 30-second ad: The report finds click-through rates for 15-second ads were much higher (although rates for both lengths were lower than last quarter): The CTR for 15-seconds ads is 0.30 percent, while the CTR for 30-second ads is 0.14 percent.

read more here: onlinevideo.net

Facebook sees video growth but admits it is still ‘well behind YouTube’

Facebook CEO Mark Zuckerberg said the company is seeing video expand dramatically across its ecosystem, but admitted that while its dedicated Watch service is growing quickly it is still “well behind YouTube”.

Speaking on the company’s third quarter earnings call, Zuckerberg reiterated that video is one of Facebook’s key priorities for its core app along with a much bigger focus on communities and groups.

However, he said that Facebook has had “challenges” reconciling passive video consumption with “what people uniquely want from us, which is meaningful social interactions.”

“Video has grown a lot on our services, but we hit a dynamic where when it grows in Feeds and Facebook and Instagram, it displaces some social interactions and people tell us it makes the experience less valuable even though they’re spending more time on it.”

The company’s solution to this has been to build separate video experiences with the launch of Facebook Watch and Instagram’s IGTV – a strategy that seem to be paying off, even though these services still trail their established rivals.

“What we found is that when people seek out video experiences intentionally, they don’t displace social interactions as much and the quality of the experience is generally higher,” said Zukerberg.

“Watch has really hit its stride and it’s growing incredibly quickly, about three-times in the last few months in the US alone. IGTV is still earlier in its development, but I think we have a good sense of how to make it work as well.

“To be clear, these services are still well behind YouTube, which is our primary competitor in this space, but they’re growing very quickly.”

Another issue flagged by Zuckerberg on the call was that video monetises “significantly less well per-minute than people interacting in feeds” – a factor that means as video grows it will displace services that would probably be greater revenue generators for the company.

This is just one of the major shifts Facebook predicted for its business over time, as it noted that the way people are connecting is also moving more to private messaging and Stories.

“People feel more comfortable being themselves when they know their content will only be seen by a smaller group and when their content won’t stick around forever,” said Zuckerberg. “Messaging and Stories make up the vast majority of growth in the sharing that we are seeing.”

Last quarter, Facebook shared for the first time the number of people who use at least one of its apps each month – a metric that Zuckerberg said is a “better way to measure our community over time” as so many people use more than one of Facebook’s apps.

Facebook said it now estimates that more than 2.6 billion people use Facebook, WhatsApp, Instagram, or Messenger each month, and more than 2 billion people use at least one of its family of services every day on average.

read more here: digitaltveurope.com

Programmatic Is 25% Of Spotify’s Revenue, Growing Twice As Fast As Direct

If Spotify’s third quarter earnings are any indicator, programmatic audio is taking off with buyers.

The digital audio platform told investors on Thursday that 20%-25% of its revenue comes from its self-serve programmatic platform and other automated buying features. That’s up from 18% in February, when the company went public.

The market is moving aggressively toward programmatic solutions, especially in Europe and the United Kingdom, said CEO Daniel Ek.

“We’ve made it a point of tactical emphasis from a product development standpoint,” he said. “The market is heading there and we’re driving there as fast as we can.”

Spotify rolled out a self-serve programmatic platform in September 2017 and will continue to see benefits from the shift toward that buying model for “many years,” Ek added.

Ad supported revenue at Spotify was up 30% in Q3 to $162 million, while ad-supported monthly active users grew 20% to 109 million. Overall revenue grew 31% year over year to $1.54 billion, and monthly active listeners were up 28% year over year to 191 million.

Average revenue per user (ARPU), however, declined in Q3 by 6% to $5.39.

CFO Barry McCarthy predicted that the rate of decline in ARPU “will continue to decelerate” as Spotify generates more growth through its student and family plans.

As Spotify pushes for more programmatic sales, the company is also ramping up its podcasting efforts, which it sees as a major opportunity. The majority of radio listening has not yet shifted online and it’s still early days for the podcast market overall. Spotify is experimenting with both fixed and variable deals with publishers.

“Our opportunity is gigantic,” Ek said. There aren’t too many companies in the world focused on that opportunity to bring audio online.”

Improving the user experience for podcasting is one way to help Spotify increase its share of podcasts, Ek said, including by fixing podcast discovery as well as adding functionality, such as the ability to fast forward through content.

Spotify, which spends a significant portion of its budget on negotiating deals with music labels, is also looking to podcasts as a way to diversify its revenue.

“If podcasts become a significant portion of the business, that will add its own margin structure and revenue stream separate from the music business,” McCarthy said.

read more here: adexchanger.com

Strategy Analytics: TV to account for 80% of video ad spend in five years

Even though digital video is the fastest growing digital advertising category, TV will still account for the vast majority of video ad spend in 2023, according to Strategy Analytics.

The research firm predicted that TV will represent 80% of global video ad spend in 2023 while digital video will make up 20% of spend, with a breakdown of roughly US$210 billion and US$51 billion respectively.

This compares to an estimated global TV ad spend of US$195 billion and online ad spend of US$30 billion this year, with the US accounting for nearly 36% of global TV ad spend in 2018.

“With consumers increasingly watching video across platforms, including mobile devices and connected TV screens, audience measurement agencies are evolving their tools, however, cross-device measurement solutions are still geared towards reach-based metrics, and in a fragmented online world, no media can provide reach better than television,” said Michael Goodman, Strategy Analytics’ director of TV and media strategies.

read more here: digitaltveurope.com

Why Digital Native D2C Brands are Turning to TV

We’ve seen an explosion in the number of upstart direct to consumer brands – companies which build their audiences online and sell to their customers directly – over the past few years. When it comes to marketing, many of these disruptors have tended to use social platforms and podcast sponsorship to build direct relationships, and social video to communicate exactly what their product is and how it works.

While these digital natives eat up market share in established industries, it might initially look like bad news for TV advertising. However, the reality is that as these brands mature, many of them start to behave like “traditional” FMCG marketers and turn to TV advertising to help them scale further.

A report earlier this year from the Video Advertising Bureau (VAB) highlighted this growing investment in TV advertising by what they call “direct disruptors”. VAB analysis of Nielsen Ad Intel data found that TV spend by the fifty D2C brands it analysed grew from $322.8 million in 2015 to $1,313.6 million last year.

So what’s driving these brands to TV?

Advanced TV specialist Simulmedia has worked with several of these brands as they’ve branched out into TV, and CEO Dave Morgan says it’s a matter of scale and brand building.

“Everyone would expect that these digital first direct to consumer brands would build their full businesses on digital, but what happens in many cases is they perfect their product and customer segmentations online, but then they find they can’t really scale any further using digital only,” he said. This hasled them to turn to TV.

Julian Hearn, co-founder of meal replacement powder maker Huel, who raised an additional $26 million last week, agreed that TV’s huge reach made it an attractive medium to his company, which just this week launched its first TV campaign. “I’m not a fan of offline advertising,” he said. “It’s extremely hard to track performance and therefore difficult to optimise. However, TV is interesting, it has massive scale, and it’s an engaging medium.”

“Mattress in a box” company Casper meanwhile ran TV ads from the very beginning, again because it provided reach quickly and efficiently. “We decided to start running TV ads from day one as TV is THE mass media that provides a very large reach in a limited amount of time,” said Quentin Luce, who handles Casper’s European TV advertising. “TV is also, surprisingly enough for most advertiser, a very cheap medium when bought efficiently, which allows us to maximise repetition and therefore increase brand recognition.”

As these digital natives move onto TV, Morgan says they are more focussed on bottom of the funnel metrics than traditional TV advertisers. “None of them say I’ve bought my gross rating point so I’ve got my brand, I’m good,” he said. “They want to know exactly who they’ve reached. In every conversation we’ve had with these companies at Simulmedia, they have involved data scientists or people with deep knowledge of data analytics as part of the conversation.”

Luce agreed that while Casper looks to TV advertising for brand building, they also want to see direct results. “While at first our ultimate aim is of course to drive direct sales in order to cover the cost of a TV campaign, the halo effect of any campaign has a long lasting effect and definitely builds the brand,” he said.

The VAB’s data suggests this approach works very well. Its analysis found that emerging D2C brands (brands founded within the last five years) tended to see their revenues take off after launching a TV campaign or increasing investment. It also claimed that TV is very effective at driving greater audience engagement online – it found that as emerging brands increased online spend by an average of 93 percent, they saw 312 percent growth in search queries, 206 percent growth in social actions, and 177 percent growth in online video views.

“We directly see from day one a TV effect on website visits, and sales coming from those direct visit usually happen quite fast afterwards,” said Luce.

Good News for TV?

This all sounds like good news for broadcasters, with new money flowing into linear TV. “I think that it is not unrealistic to expect that between five and ten percent of US TV advertising revenue in three or four years, certainly within five, will be coming from these direct to consumer brands,” said Dave Morgan.

He cautioned, however, that this won’t necessarily increase TV ad spend overall. “The big question is, does the Casper mattress dollar take away the Tempur-Pedic incumbent money, is it a net positive for TV? And as things stand, that’s far from certain,” said Morgan.

It should however alleviate broadcasters concerns that the rise of DTC brands will be bad news for TV advertising. So even if TV’s traditional big FMCG spenders see a decline, it appears there will be new advertisers ready to replace them.

But the industry needs to be set up to accommodate these upstart brands. “Very few of them use traditional ad and media agencies, and very few large TV companies have sales teams dedicated to selling to them,” said Morgan.

read more here: videoadnews.com

Streaming Video Services Attempt to Solve the Monetization Puzzle

“Direct-to-consumer” and “scale” might be the monetization buzzwords of 2018, but what actual strategies increase content services’ ability to generate revenue? Companies often won’t talk about their secret sauces, but we got Ellation, Xumo, FandangoNow, and other experts to chime in with insight and advice about how their monetization strategies are paying off.

According to Deloitte, streaming crossed the chasm last year, with 55 percent of U.S. households holding paid subscriptions, compared to 10 percent when the company first surveyed consumers about the topic in 2009. In another Deloitte report called “Digital Media: The Subscription Prescription” (2017), the company predicted that, by the end of 2018, 50 percent of adults in developed countries would have at least two online-only media subscriptions (this includes all media: TV, movies, music, news, and magazines), and this will double to four by the end of 2020. The report predicted that 20 percent of this same consumer group would have at least five paid subscriptions by the end of this year, and by the end of 2020, they’ll have 10 accounts, and their aggregate spend will be more than $100 per month.

There’s been lots of news about how Amazon and Netflix are spending their way to success with their investments in original content. However, not everyone has those kinds of budgets, so the companies we spoke to for this article have gone about things differently. What makes viewers stay tuned and keeps the lights on at media companies? Original niche offerings, easy access, 4K, exclusive live events, well-curated content, and of course, advertising. First, the T-shirt test.

Ellation: The T-Shirt Test
“[About 4 years ago] we had a strategy to build not just Crunchyroll but a ton of other different SVOD [subscription video-on-demand] properties focused on niche passion audiences; everything from arts and crafts to auto enthusiasts to Korean drama. While we were going through that strategy we realized that everybody was going and trying to do the same thing,” says Eric Berman, head of content partnerships and business development at Ellation, which owns anime SVOD service Crunchyroll.

Ellation decided consumers didn’t need more single-purpose apps. Instead, the company built VRV, a fan-focused aggregation platform where other complementary niche SVOD properties could reach their audiences without needing to hire large engineering or product teams to work on audience development. VRV works with traditional linear partners to deliver anime, gaming, tech, and cartoon content, and it continues to grow the breadth of its offerings. “At VRV we have something called the T-shirt test. For every brand that we bring on the service you should see someone walking around a mall proudly wearing that logo on their shirt, because it defines who they are as a person,” says Berman.

“Our users come for what we call appointment viewing,” says Berman. Each quarter, Ellation acquires 30 to 40 new series directly from Japan. Each season is 20-plus episodes, and each episode can range from 22 to 44 minutes in length. This binge-worthy content keeps viewers tuning in.

Behind the scenes, Ellation is using data-driven insight to shape everything on its platforms. “Establishing a data-driven decision platform is probably the single most important technology innovation that a streaming video business should work to take advantage of,” says Michael Dale, VP engineering, Ellation. “There have been several innovations that have facilitated better surfacing of actionable data, and leveraging these data points has helped our video streaming business succeed.” Those innovations include data normalization and server-side data integration via companies like Segment and Datazoom. Dale says Ellation was able to integrate with those platforms in a matter of weeks instead of “[what] would otherwise be a massive cross-platform integration project to build and maintain.”

These data platforms enable Ellation to measure the video experience against metrics such as the impact of video quality on churn or how the number of ads impacts minutes watched by viewers over time.

“We send most data into a central hub that lets us pipe video view events into several services for everything from targeted messages to user journey funnels that help us model our users into behavioral cohorts for further analysis,” says Dale. “[We can] connect the events into our marketing CRM similar to how we connect in our data analytics platform. This can enable triggering an email to users that experienced a streaming issue through the same system as other customer messages.”

VRV has a million monthly viewers, a good portion of whom are watching ad-supported content. Viewers can subscribe a la carte to individual channels or buy an unlimited, ad-free subscription called VRV Premium for $9.99. “It’s the only bundle that exists of all of these channels in one place,” says Berman. The pricing is fixed, so viewers get the benefit of new content without seeing the price go up each time Ellation adds new partners. That’s good news for viewers, especially Nickelodeon fans. This past summer, VRV launched an exclusive NickSplat channel from Nickelodeon featuring almost 300 episodes of nostalgic, animated content, and Dale says the company is beginning to partner with other linear cable channels.

read more here: streamingmedia.com

Snapchat Likes Its Programmatic Revenue In Q3, But Daily Users Dwindle

Snapchat saw promising gains for its advertising platform in earnings reported Thursday.
The company reported a record-high $298 million in revenue, with 43% year-over-year growth, and quarterly jumps in average revenue per user (ARPU) from $2.21 to $2.62 in North America and $0.66 to $0.85 in Europe.

But Snapchat is still bleeding daily active users (DAUs) since an app redesign early this year. Snap expects DAUs to drop again in the fourth quarter.

CEO Evan Spiegel insists the redesign was the right choice.

“It’s sort of like how the programmatic transition was difficult at first but the right thing in the long term,” Spiegel said, claiming content and inventory quality improved because of the redesign.

While Spiegel told employees in a letter that he expects DAUs to grow next year, he told investors that’s a “stretch goal” and not actual guidance.

Speaking of programmatic, the transition is paying off now and Spiegel said Snapchat’s self-serve ad business is up to 85% of revenue this quarter from 25% a year ago.

Global ARPUs surpassed the previous high of $1.53 recorded in the final quarter last year before Snapchat’s programmatic reset caused CPMs to plummet.

The company’s tracking pixel has also gained steam, which accelerates the advertising platform. Snapchat’s pixel tracked 230 million purchase events in Q3 after seeing only 70 million the quarter before, which leads to better lookalike audiences, measurement and CPMs.

Onboarding new advertisers and improving the ad platform performance will increase revenue for Snapchat even if users tail off. But to be sustainable long-term, the company needs user growth to return.

Snapchat has a two-pronged strategy to return to user growth, Spiegel said.

read more here: adexchanger.com

Deutsche Telekom Launches MagentaTV

Deutsche Telekom launched a new OTT service Wednesday as the German market heats up, with research suggesting that Netflix now has more subscribers than paybox Sky Deutschland. That finding comes after similar trends were reported in the Britain, meaning that streaming subscribers now surpass traditional pay-TV users in Europe’s two biggest markets.

The deep-pocketed incumbent telcos in Germany and the U.K. – Deutsche Telekom and BT, respectively – also want in on the action. Deutsche Telekom has revamped and re-branded its television offering to MagentaTV, which launched Wednesday.

MagentaTV will offer series and movies as well as programming from the catchup services of German pubcasters ARD and ZDF. In addition to a full-fat 300-channel service available through an IPTV settop box, there will be a skinnier over-the-top streaming equivalent for €7.95 ($9.07) a month. For that, subscribers will get about 75 channels.

“Telekom’s TV business is one of the key pillars of our growth strategy,” said Michael Hagspihl, MD, of the division that includes MagentaTV. “The combination of the best platform, strong partnerships and exclusive content remains our recipe for success for the future.”

The German telco has already inked a deal to allow its TV subscribers to access Netflix via its service.

The latest research underlines Netflix’s increasing sway in the German market. The streamer does not break out subscriber numbers by territory internationally, but Ampere Analysis estimates that it overtook Sky in the third quarter of last year, with 5.1 million customers compared with Sky’s 4.8 million. Amazon had 9.9 million subscribers at that point, with customers generally signing up to the wider Prime retail service, which includes Prime Video, instead of the TV offering as a standalone product.

Sky Deutschland’s latest subscribers count is 5.2 million, but it is safe to assume that Netflix and Amazon have also registered new customers. While the growth of the U.S. SVODs is a threat to the traditional pay-TV firms, it is not an either-or choice for many households, which take both. The research suggests that more than half of German broadband homes already take at least two SVOD services.

Aside from Netflix and Amazon, there is also room for more niche entrants. In transactional VOD, Pantaflix is a prime mover in Germany and has deals with major U.S. studios and local players.

read more here: variety.com