Apr 08, 2019

The trade publication on Pluto TV's rise and why AVOD audiences and ad revenues will surge in the year ahead.

Free TV "has emerged as a lucrative and essential component of the industry’s streaming future," writes Jason Lynch in this week's Adweek cover story.

Hinging on Viacom's acquisition of Pluto TV, the article outlines why the current state of television has created a moment of opportunity for the advertising video on demand (AVOD) service. For one, there's a "glut" of subscription-based services—and more to come with Apple, Disney, and AT&T entering the fray over the next year. As well, as the article points out, these services are culling their catalogs of legacy content to make room for original series and films.

What does that mean for consumers? As Lynch points out:

And with cord-cutters and cord-nevers only able to afford subscriptions to a small number of SVOD services, like Netflix and Amazon Prime, AVOD outlets—which now enjoy prominent placement on smart TVs and connected TV devices—have established themselves as a frictionless and free way to expand their viewing options.


'Marketers are starting to sit up and take notice.'

Another winner in the rise of AVOD: marketers. As David Cohen, president, North America, Magna Global, points out in Adweek, “marketers are starting to sit up and take notice. These are not tiny endeavors. These are large-scale, full-sight, sound and motion opportunities with good targeting and good measurement.”

AVOD offers the scale and premium inventory of traditional television, with the sophistication and targeting of addressable advertising, and the measurement capabilities for which the industry's been hankering. This was a big reason for the $340 million Pluto acquisition, which will enable Viacom's addressable inventory to triple in the next year and which gives the company's head of sales, Sean Moran, a "shiny, new tool in his upfront arsenal."

The rise of free-streaming television has not always been an easy sell. According to Tom Ryan, CEO of Pluto TV, the idea of an ad-supported alternative to the streaming subscription services was viewed with skepticism. "Across all categories—content, distribution, advertising and fundraising—we were pursuing something that looked at first glance like traditional TV,”  Ryan told Adweek. “Silicon Valley investors are notorious for looking for the shiny new object, and in many ways what we were creating was born of the idea that traditional TV has done so many things right over the years.”


'This is going to be the biggest year for AVOD to date.'

The next 12 months will be a telling time for the entire free TV ecosystem. As Viacom CEO Bob Bakish told Adweek, the timing of the deal was important, as he wanted to "take advantage of 'a very significant white space' in OTT before his rivals beat him to the punch. 'We thought we were at the place where usage was approaching an inflection point. The time was right.'”

Overall, OTT ad spending increased 54% to $2.7 billion, according to Magna Global, outpacing its original projection by more than a third. Magna predicts that OTT ad revenues will double by 2020.

Lynch agrees, asserting that "AVOD's audiences and ad revenue will continue to surge." Or, in the words of Tubi CEO Farhad Massoudi, "This is going to be the biggest year for AVOD to date."

Read the full story in Adweek here (requires digital subscription) or download a pdf of the full article here.


Cover image courtesy of Adweek. Illustration: Matthew Billington; Photography: Patrick James Miller.

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