July 8, 2021
Good morning, and welcome to Protocol Next Up. Everyone seems to be out this week (enjoy your break, if you're having one), so we are keeping things short with a brief look at the latest trends in ad-supported streaming.
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The Big Story
The fate of ad-supported video after the pandemic
Streaming video has been one of the big winners of the pandemic. Both paid and ad-supported streaming services have seen their usage increase by double digits over the past year. But what will happen to those gains now that people are traveling again and companies are making plans for their employees to return to the office?
- Ad-supported video (AVOD) services don't have to worry too much, according to new data from market research agency Piplsay. Sixty-three percent of consumers queried by the company said that they now use some kind of ad-supported streaming service, including paid services like Hulu that also run ads. Sixty percent of those users switched from ad-free streaming services, and close to 50% don't have any plans to go back.
- Among the biggest AVOD boosters: boomers. Viewers over the age of 55 have become some of the most engaged binge watchers, according to MIDiA Research analyst Tim Mulligan. And the good news for AVOD services is that these older audiences keep watching when the ad break starts. "They are far less likely to disengage from video advertising," Mulligan said.
- These "silver streamers" are essential to make ad-supported video mainstream, Mulligan argued. "AVOD is now poised to break out of its current niche status," he said.
Mulligan shared these observations during a MIDiA online panel Wednesday, which paired him up with executives from Pluto TV, XUMO and Rakuten TV. These industry insiders shared some interesting observations about the state of the ad-supported video market:
- Ad-supported video is an international opportunity. "The U.S. market is way more advanced than any other market internationally," said ViacomCBS and Pluto TV SVP Olivier Jollet. However, other countries are catching up. Europe is benefitting from a long tradition of free broadcast TV, and other markets are seeing massive growth as well. "India is a super strong AVOD market already," Jollet said.
- TV makers are fueling this growth. "Smart TV manufacturers have a huge role to play in this ecosystem," said XUMO CEO Colin Petrie-Norris. A few years back, XUMO helped LG to pioneer fusing over-the-air broadcast and free ad-supported streaming in the same program guide. Now, almost every TV maker has a similar guide, directing millions of eyeballs to free streaming channels. "It has grown this market very, very quickly," Petrie-Norris said.
- Next up: original content. Free streaming channels like those distributed by XUMO first launched with cheap online content. Over the past year or two, Hollywood embraced them as a way to monetize their catalogs. Now, XUMO, Pluto, Samsung TV Plus, the Roku Channel and others have to compete with each other for eyeballs — which will drive a move toward exclusive and original content. "Original content will be the next chapter in AVOD and [free, ad-supported streaming] channels as well," said Rakuten TV CEO Jacinto Roca.
"There is theatrical in our near future, there will be theatrical after the deal closes. There will always be theatrical at MGM." —MGM Motion Picture Group Chairman Michael De Luca on how things will change after the Amazon acquisition.
"* for some movies
** for some movies
*** for some movies" —Former IGN reporter Julia Alexander, providing the necessary asterisks to De Luca's statement.
A MESSAGE FROM ZOOM
A survey of 12,000 employees by Boston Consulting Group found 60% of respondents want flexibility as far as where and when they work. As the world plans to safely reopen businesses, educational institutions, health care facilities and government entities, we are focused on innovating across our platform to support their needs.
- Riot Games has made an album for streamers. Thirty-seven tracks of relaxed beats that won't get taken down from YouTube, to be precise.
- On Protocol: New Fire TV head sees cars as next big opportunity. A Q&A with Daniel Rausch, who took over the leadership of Amazon entertainment devices and services in February.
- TikTok is getting longer videos in the coming weeks. This should help the company as it is looking to expand its smart TV efforts.
- Amazon's Lumberyard becomes the Open 3D Engine. The company open-sourced its game engine, which is now being overseen by a new group spearheaded by the Linux Foundation.
- ByteDance is starting to resell TikTok's AI. A new company division called BytePlus will white-label TikTok's recommendation engine for other companies.
- Don't miss this smart take on why YouTube should launch free streaming channels. It's one of Google's biggest blind spots in streaming.
- Universal is cutting ties with HBO and is teaming up with Peacock. It was inevitable: Comcast-owned studios will send their movies exclusively to the Comcast-owned streaming service.
VR is good for you, according to a new study from two UCLA researchers. Used the right way, virtual worlds can boost brain rhythms that help with memory and learning, the researchers discovered. But here's the really interesting part: Their research wasn't done with humans, but rats, who got to stroll around in virtual mazes. "Our VR is so compelling that the rats love to jump in and happily play games," one of the researchers said in a story published by Medical Xpress. Now, someone just has to invent humane rat traps that double as rodent VR arcades …
Thanks for reading — see you next week!