Amazon Job Posting Hints at Ad-Supported TV Ambitions

Amazon has dropped a huge hint that it’s working on an ad-supported TV service, releasing a job posting looking for a ‘head of Prime Video channels, free to air TV and advertising TV partner channels’. The job description, spotted by Facebook’s director of gaming Damian Burns, gives us some initial clues of how an ad-supported TV service on Amazon might look.

The post describes one of the main responsibilities of the roles as developing Prime Video’s European strategy for free-to-air and advertising funded channels. It says whoever us hired will be required to work with broadcasters across Europe, translating their requirements into Amazon capabilities, and to act as an “internal champion” for free-to-air and ad funded content.

There are two possibilities for what exactly this could be referring to, but both would be a significant step into the video ad world for the e-commerce giant.

Amazon may be looking to develop an ad-supported, free-to-air version of Amazon Prime Video, with subscribers able to avoid the monthly subscription fee by watching ads instead. Currently, Prime Video only runs ads for other Amazon shows as pre-rolls or post-rolls, but the company runs targeted video ads elsewhere, meaning opening up ads on Prime Video to other brands shouldn’t be too difficult tech-wise.

Ad Age reported rumours that Amazon was developing this kind of service last November, though a company spokesman denied that this was the case.

Such a move would mark an acceleration of Amazon’s TV strategy, where premium content isn’t used primarily to make an Amazon Prime subscription (which includes free delivery and a variety of other benefits) more attractive to consumers.

Currently the vast majority of VOD services available through Amazon Prime Channels only offer ad-free, paid subscriptions, even when that service has a cheaper or free ad-supported subscription tier on its native platform. A few broadcasters have made live streams of their linear channels available through Prime Video in Europe, but these still come as part of paid memberships.

The introduction of free to air channels would suggest that at the very least some of these channels would be made available without paying an extra fee, and possibly without a Prime Video subscription too.

Regardless of the end product, it will be another big step into ad land for Amazon and in the UK market it will provide additional competition for the likes of Freeview, YouView and FreeSat, as well as to paid services like Sky and Virgin Media.

read more here: videoadnews.com

Cordless TV streamers prefer Amazon Prime Video to Netflix

New comScore data shows one-third of TV streamers are cordless. It also shows that cordless Amazon Video users watch 13% more than Netflix users. The difference is all in their content strategies.

Cord-cutter and cord-never differences

According to comScore, one-third of households streaming to the television are cordless. The other two-thirds have either cable, satellite, or telco pay TV services. The cordless group is broken into two broad categories: those that had pay TV and got rid of it (18%) and those that have never had pay TV (14%.)

The cord-cutter group primarily skews older than the cord-never group. The largest group of cord-cutters comes from the 35-44-year-olds, with 23%. 21% of cord-cutters are millennials (18-34-year-olds). Millennials dominate the cord-nevers. 24% of 18-34-year-old TV streamers have never had pay TV, versus 15% of 35-44-year-olds.

Cordless favor Hulu, YouTube

Hulu has the highest percentage of cordless subscribers of the top four online video services. Hulu subscribers make up almost half of those without pay TV. 41% of YouTube users are cordless, and 37% of Netflix and Amazon Prime Video are cordless.

Cordless Hulu users also watch a lot more online video on their televisions. They watch, on average, 86 hours per month and stream to the TV 21.6 days per month. Cordless YouTube users watch 78 hours per month and stream to the TV 19.8 days a month. Surprisingly, Amazon Prime Video users best Netflix in engagement among the cordless users. Amazon users watch 70 hours and 19.8 days per month, Netflix users watch 62 hours and 18.6 days per month.

The comScore data could suggest that, though the cordless group rejects pay TV, they are not rejecting traditional television. They will continue to hear about great TV shows through the social and traditional media and around the water cooler. Moreover, when they hear about a great show, the place they are most likely to find it online is Hulu.

Why cordless Amazon users watch more than Netflix
Another interesting question is why those cordless TV streamers using Amazon watch significantly more (12%) than those using Netflix. This fact is particularly interesting given there is a large overlap between the two groups.

The viewing difference stems from the different content business models used by both companies. Amazon provides a far greater variety of content than Netflix because it resells other SVOD services through its Channels program. It also rents and sells movies through the Prime Video app. According to Ampere Analysis, consumers could access 26,000 distinct movie and TV show titles through Amazon Prime Video as of February 2017.*

read more here: nscreenmedia.com

New Amazon Channels Data Shows Why Apple Wants to Copy It

Amazon has quietly become a major player in the subscription video sales business: Amazon Channels, the company’s platform for reselling subscription services like HBO and Showtime, now accounts for 55 percent of all a la carte direct-to-consumer video subscriptions, according to new data from The Diffusion Group (TDG).

53 percent of all consumers who don’t get HBO through their pay TV provider are purchasing it via Amazon channels, TDG estimated in a new report titled The Future of Direct-to-Consumer Video Services. Those numbers are apparently even higher for some of the other TV networks: 72 percent of Showtime subscribers get the network’s direct-to-consumer offering via Amazon Channels, and 70 percent of Starz a la carte subscribers receive it from Amazon.

The Diffusion Group arrived at these estimates by surveying a nationally representative sample of 2,000 adult broadband users. “We used an online panel comprised of several million double opt-in respondents, one of the largest in the country, and added multiple quality checks to best ensure accurate outcomes,” explained the company’s president and director of research Michael Greeson.

However, it’s worth noting that the relative size of these subscription services inevitably leads to small sample sizes, which can result in significant variation. HBO’s online service surpassed 5 million subscribers this year, while Showtime has more 5 million subscribers together with CBS ALL Access.

A Showtime spokesperson told Variety after the initial publication of this story that the percentage reflected in this survey for Showtime was significantly off, but declined to comment on Amazon’s actual share.

Amazon launched Channels as an add-on program for Prime Video subscribers at the end of 2015, and has since continuously grown the number of video services available through channels. The company also briefly experimented with selling its own niche video services through Channels, but gave up on that strategy earlier this year.

Sources at participating video providers have long told Variety that Amazon has become a massive reseller, easily outpacing Google’s and Apple’s app stores. The success of Amazon’s program also hasn’t been lost on Apple, which is reportedly looking to resell standalone video subscription services via its TV app on Apple TV and mobile devices. However, those plans may not materialize until next year, according to a recent Bloomberg report.

read more here: variety.com

How an Hit TV Program Contributes to Amazon’s Profitability

Last week Reuters reported data from internal Amazon documents that for the first time provided insights into viewership of the company’s original TV programs and their contribution to creating new Prime subscriptions. Below I’ve done some additonal math using separately reported information to calculate how profitable at least one of Amazon’s original programs could be.

Last October, Fortune reported research from Consumer Intelligence Research Partners indicating that Amazon Prime subscribers spend an average of $1,300 per year compared to an average of $700 per year that non-Prime subscribers spend. (Note, back in Fall, 2016, Morgan Stanley said that according to its survey, Prime subscribers spend nearly $2,500 per year, vs. $544 for non-subscribers). For the purpose of my calculations, I just used the CIRP estimate of $600 incremental spending per year by subscribers.

The Reuters article notes that the Amazon program “The Man in the High Castle” delivered 1.15 million new Prime subscribers worldwide. So, multiplying this by the incremental annual spend of $600 yields $690 million in incremental revenue from these new subscribers. Amazon’s North American e-commerce operating margin in 2017 was approximately 2.7%, so the operating profit on the incremental revenue would have been around $18.6 million (this is rough, because some of the incremental subscriber spend came from international where it is undoubtedly lower and also where Amazon actually still loses money on an operating basis).

In addition to the annual incremental spending benefit, those 1.15 million new subscribers also spent $99 to belong to Prime, which would be another $114 million in annual revenue. The operating profitability of the membership fee is hard to calculate given all the different benefits and their costs, but assume it’s 50%, so the profit would be around $57 million. In total that would mean “The Man in the High Castle” delivered year one profits of $75.6 million vs. its cost of $72 million, or $3.6 million net profit, a 5% margin. But keep in mind this is only year one; as long as Amazon retains these 1.15 million subscribers, the profitability multiplies. In addition, there are further revenue streams derived from Prime members such as add-on subscriptions to video services through Amazon Channels.

Admittedly, the above math is a little rough, and it should also be noted that Reuters’s own reporting hasn’t been independently verified. Still, Amazon CEO Jeff Bezos has been extremely candid about the benefits of video to Prime. In an interview with Recode in mid-2016 (see 37:32 cue point), Bezos said that “When we win a Golden Globe, it helps us sell more shoes,” adding that both Prime’s free trial conversion and annual renewal rates increase when subscribers watch video. He actually cited “The Man in the High Castle” as an example of programming that works really well, no surprise.

read more here: www.videonuze.com

Amazon Prime Video By The Numbers

Prime Numbers

Reuters obtained audience numbers for Amazon’s Prime Video subscription service. According to the internals, by early 2017 Amazon Video had drawn more than 5 million people into the Prime loyalty program, and about 26 million people overall were watching content on the platform. Amazon now spends $5 billion per year on original content, as entertainment has proven a powerful on-boarding ramp to Prime membership and a virtuous cycle of consumer spending. Those video numbers also point to why Amazon keeps its most valuable content ad-free behind a subscription paywall, since it isn’t about recouping ad revenue for the studio investments. It’s about the lifetime value of a Prime subscriber compared to a mere logged-in Amazon shopper.

Fickle Friend

Facebook is offering to fund news publishers’ shows for its Watch video hub. But publishers, fed up with Facebook’s tendency to flip-flop on such offers, are proceeding with caution, WSJ reports. Facebook pulled a similar stunt with its Live section, spending $50 million to fund year-long projects for news pubs, and then failing to renew those deals the following season. Still, publishers are willing to take the risk if it means access to Facebook’s huge audience. “I think anytime Facebook is willing to pay, we’re more willing to play,” said a publishing exec. “The problem is that when these pilot programs expire, there is still no clear revenue channel. Then you’re stuck.” More. Related: The chairman of NBC News slammed Facebook, AdAge reports. “You can’t have a relationship with them.”

Asleep At The Wheel

Snapchat’s shares sank almost 5% Thursday after pop singer Rihanna called out the app for running a tasteless ad that asked users to decide whether they wanted to “slap Rihanna” or “punch Chris Brown.” Snapchat removed the ad, which ran inside a mobile game on the platform, and chalked it up to an error by its review team, which is supposed to block any content that violates its policy banning“shocking, sensational or disrespectful” content. “We are so sorry we made the terrible mistake of allowing it through our review process,” Snap said in a statement. “We are investigating how that happened so that we can make sure it never happens again.”

read more here: www.bloomberg.com

Amazon will soon distribute ad-supported streaming channels

Amazon’s Channels program has been a big hit for TV networks and digital publishers with subscription video streaming products. Soon, Amazon wants to open up advertising as another form of revenue for media partners that have ad-supported streaming apps.

Speaking at Digiday’s Future of TV Hot Topic last week, Rich Au, head of Amazon Channels in the U.S., said Amazon will start offering ad-supported streaming channels later this year. While he did not provide a specific timetable, Au pointed to how Amazon already supports ad-supported channels in Europe, including a partnership with Discovery that includes access to the company’s linear TV feeds in European markets. Amazon will open up similar possibilities in the U.S., he said. (Amazon stressed that this is a distinct offering from the existing Amazon Channels program, which focuses on subscription streaming channels.)

In the U.S., the Amazon Channels program offers subscriptions to top networks, including HBO, Showtime and CBS. Advertising could substantially benefit streaming networks such as CBS All Access that already offer ad-supported tiers on their own. Right now, anyone subscribing to CBS All Access through Amazon can only access the app’s $10 monthly ad-free tier. When Amazon opens up access to the app’s $6 ad-supported tier, CBS has a chance to create a second revenue stream from its Amazon partnership.

It’s hard to understate the impact the Amazon Channels program has had on the growth of subscription streaming services in the U.S. When NBCUniversal launched its now-defunct comedy streaming service Seeso in January 2016, Amazon accounted for upward of 60 to 70 percent of total subscribers, said Evan Shapiro, the former NBCU exec who launched Seeso. By the time Shapiro left NBCU in May 2017, Amazon Channels accounted for 40 percent of total subscribers, Shapiro said.

“That was because over time, we found organic [search] traffic migrating to the native platform,” Shapiro said. “But Amazon’s growth didn’t slow — and the best part of the Amazon Channels product was that the churn is substantially lower than others.”

Two other Amazon Channels partners at TV networks corroborated the program’s impact on their subscription apps, privately telling me that Amazon Channels contributes anywhere from 25 to 45 percent of total subscribers.

read more here: digiday.com

TiVo: 20% of time spent consuming video

According to findings from entertainment technology and audience insights specialist TiVo, the average global viewer spends 4.4 hours each day watching video. Coupled with the global average of 28 minutes spent each day searching for content to watch, that is nearly five hours per day of video engagement, which amounts to 20 per cent of daily life, building à la carte entertainment experiences that work best for them.

The company’s annual multi-country Global Consumer Trends study explores viewer engagement with the video content, services and devices that shape the evolving consumer entertainment experience.

The study also found that about 90 per cent of households are currently paying for traditional pay-TV service. However, more than 60 per cent are also subscribing to streaming video services such as Netflix, Amazon Prime and Hulu.

In the US, more than 50 per cent of pay-TV subscribers have been with their service for four years or more. Subscribers with the shortest tenure are also the least dependable: more than 10 per cent of those who have subscribed to cable for a year or less say they’re very likely to cut the cord in the next six months.

It’s not just the amount of content that has exploded in the last few years. People now have more screens than ever at their disposal to watch their favourite videos. Nowhere is this truer than in Latin America, where 50 per cent of all viewing now takes place on a digital device other than a television set, according to the study. By way of comparison, viewers in the US say that more than 75 per cent of their video consumption still occurs on their TV.

“Consumers today are acting as their own aggregator, piecing together what they need from a variety of video service and device combinations to suit their individual needs,” said Paul Stathacopoulos, vice president, Strategy, TiVo. “Success in this new environment will not be about a single content source monopolising the living room, instead it will be about adapting the business model to deliver value, integrated services and personalisation to meet the evolving consumer needs.”

read more here: advanced-television.com

Advertisers, Get Ready To Go Over The Top

by Bettina Hein

This will be the year the cable TV bundle dies a sudden death.

I know, the “TV is dying” cry has echoed time and again. But as audiences continue to consume content across online video, over-the-top (OTT) and TV, there will be increasing pressure for them to converge into a single integrated advertising buy – one that offers marketers an unparalleled combination of reach, targeting and audience data.

In the coming months, major online video and OTT providers, such as Google, Facebook, Amazon and Apple, will aggressively expand their streaming offerings to retain audiences and better serve advertisers. This will force at least one of the large cable TV providers to make a significant business model shift, such as developing an affordable streaming offering that is highly configurable to viewers’ tastes.

It’s been nearly a decade since Netflix and Hulu launched their initial OTT streaming services, just as many millennials were graduating from college and keen to avoid cable bills. This generation has led the way in the cord-cutting phenomenon; as of July 2016, nearly 40% of US millennial households relied solely on internet streaming and broadcast.

The OTT pioneers have continued to drive innovation, and as their market share grows, advertisers are taking serious notice. Roku’s recent partnership with media-buying behemoth Magna, which represents major brands such as BMW and MillerCoors, is a signal that mainstream advertisers are embracing the enhanced targeting offered by digital television, and they are driving those investments by shifting dollars away from linear TV.

Additionally, viewing options have proliferated: Amazon and Apple – neither of which have typically participated in the advertising supply side – are exploring ad-supported models for their robust streaming content offerings, Instant Video and iTunes. HBO Now has led cable networks in circumventing cable providers with direct OTT services, and traditional telecoms like Verizon have sought to bolster internet revenues through acquisition.

Of course, no one would expect the walled gardens to merely watch the OTT race stream by. Google, Facebook and Twitter have spurred shifts in viewing trends – as the distinctions between professionally produced and social content have eroded – and have built platforms designed to keep viewers consuming content within the walls for as long as possible.

The platforms spent much of 2016 addressing a key weakness in current OTT offerings: live viewing of popular events, ranging from presidential debates to Thursday Night Football and the Academy Awards. As the walled gardens’ live video capabilities become increasingly sophisticated, they’re creating more competition for linear networks by opening the distribution doors to brands and creators.

All indications point to social networks expanding heavily into OTT in 2017, with investments designed to appeal to consumers and advertisers alike. In the past few weeks, Google has revealed plans to improve YouTube ad performance by incorporating search history into targeting, while the financial community has openly speculated about an impending YouTube television service launch.

In the meantime, Google is partnering with broadcast networks seeking to get in on the streaming action and monetize their traditional TV content, like CBS’s forthcoming YouTube Unplugged live stream. While Facebook has kept its strategy closer to the vest, it’s reportedly building its own streaming TV app to encourage longer video viewing, and I expect moves from Facebook later this year – perhaps via an acquisition of an established OTT pure-play provider.

So what does this all mean? Viewers will increasingly take advantage of expanded live and traditional programming within their OTT platforms of choice, and cable providers will be forced to respond with a survival mechanism: the rollout of new streaming packages to counteract the drop-off in linear viewership and cable subscriptions.

read more here: adexchanger.com

Amazon to make more video revenue than Netflix in 2018

Amazon will overtake Netflix to generate more over-the-top (OTT) video revenue in 2018 thanks to its “growing array of ways to pay for video,” according to Ovum predictions.

The research firm said that Amazon’s combination of subscriptions, digital rentals, electronic sell-through and bundles of TV apps will see it generate US$5.8 billion in video-related revenue next year.

It expects Netflix, which led the pack in 2017, to generate US$5.3 billion in revenue through its subscription-only model.

“Arguably, the e-commerce giant is ‘cheating,’ as Ovum’s estimates count fees from Amazon’s ever-growing Prime bundle. But maybe that’s the point. Rules are meant to be broken and Amazon is the most daring offender,” said the Ovum report.

It also claimed that despite the hype, Netflix still won’t have a majority of OTT video subscribers in at least 19 countries by the end of 2018, with local providers to hold the top spot in various markets – such as Ipla in Poland, Showmax in South Africa and Iflix in Indonesia.

Among its other consumer and entertainment service predictions for 2018, Ovum tipped Apple to launch a new premium OTT video offering, initially in the US, as its share of US online video revenues via iTunes sales declines to less than 4% in 2018.

It also said it expects Facebook’s ad-supported Watch video platform to go international next year, but to have “minimal” global impact.

“While we expect Watch to roll out internationally next year, Facebook’s share of global AVOD revenue will remain negligible in 2018,” said the report.

“Facebook must attract compelling local content, refine its video ad experience, and offer more robust and reliable ad metrics before it can truly compete with YouTube and other premium AVOD platforms for consumer attention and advertiser spend.”

Overall, Ovum expects Netflix, Amazon, YouTube and other online-only services to account for 18% of total paid and ad-supported TV and video revenues next year and 60% of growth.

read more here: tbivision.com

Could 2018 Be The Year Of The OTT Breakthrough?

Consider, next year Netflix will spend as much as $8 billion on content, potentially more than any other media or technology company.

Amazon will continue its own investment in OTT, and will be given a signal boost thanks to its high-profile simulcasts of NFL “Thursday Night Football,” along with the Amazon Video app addition to Apple TV.

AT&T, in its latest earnings report, said streaming video subscribers jumped by 300,000 subscribers, while its traditional pay-TV customer base had a net loss of 90,000 subscribers.

Meanwhile, according to an FCC filing, AT&T is developing an Android-powered and DirecTV-branded OTT video hub that appears likely to be released in short order. Assuming AT&T’s acquisition of Time Warner is approved by regulators, the company will have a vast swath of content, including HBO, to entice new customers to start streaming.

If you’ve been watching the World Series over the last week, you’ve certainly noticed it was “presented by YouTube TV,” with a reminder that you could watch the games without a cable subscription through the service.

Hulu is also launching its bundled OTT video service.

CBS plans to significantly increase its content spend on original programming for its CBS All Access service, and will be rolling out a sports streaming service in the coming months. Disney will launch an ESPN streaming service sometime next year, though the details of what sports it will include remain under wraps for now.

2018 feels like a tipping point. Every major television company will have a dedicated streaming service by the end of next year, while the powerful technology trio of Google, Amazon and Netflix continue to invest and expand their subscription video offerings. And technology will make it easier than ever to watch OTT video on our TV sets, while mobile phones continue to feature screens well-suited to watching video.

For advertisers, these products present new opportunities: to advertise on sports events that may have a loyal following, but are not big enough to air on traditional TV. To advertise on new video bundles with a largely millennial consumer base. To use the scale of a company like Google or AT&T to reach key constituencies not served well by existing video products.

read more here:
https://www.mediapost.com/publications/article/309463/could-2018-be-the-year-of-the-ott-breakthrough.html?edition=105891