At the start of 2020, video streaming giant Roku’s upfront deck predicted consumer time spent viewing streaming TV would surpass traditional linear over a period of five years.
Instead they did so in a year, fueled in large part by the COVID-19 pandemic.
“It is a fundamental shift in viewership,” said Alison Levin, Roku’s VP of global marketing solutions. “A lot of that is driven by the cord-cutting audience. We had been saying since we started that all TV will be streamed and all TV ads would be streamed, but it’s coming to life really quickly. This market is now a CMO level priority.”
While a shift to streaming had been expected over the past decade, 2020 was nothing short of transformational in the midst of the pandemic as well as social unrest and a divisive presidential election. Major media companies had to adapt more quickly during an ecommerce boom as brick-and-mortar shops closed their doors, travel came to a screeching halt and many consumers stayed indoors during the height of COVID.
The pandemic created huge problems from a content development and distribution standpoint across the board, including the elimination of sports, the shutdown of production and originals being pushed back, Gibbs Haljun, total investment lead at GroupM’s Mindshare, told AdExchanger.
“It created a new need to be flexible – buyers and sellers had to come up with solutions,” he said. ‘We’ve seen increased creativity and partnerships, which has been a huge benefit.”
Streaming for the win
On the heels of Disney Plus and Apple TV Plus in 2019, Comcast NBCUniversal formally launched its new Peacock streaming service in July, which was initially set to coincide with the 2020 Olympic Games.
“The Olympics, that all went up in the air, which made us a little nervous,” said Mark Marshall, NBCU’s president of Ad Sales and Partnerships. “Would we be able to get the message out on Peacock? It’s a competitive landscape.”
Still, the platform reached 26 million sign-ups by December – up 4 million from October – proving that there’s a viable market for a free, ad-supported streaming service. The platform will become the new home of “The Office” in January, as well as the Olympics in 2021, and is projected to have up to 35 million subscribers by the end of 2024.
According to a recent Harris Poll, the average American spends more time watching streaming than linear, while one in three households have cut the cord. And advertisers are following the eyeballs. In 2020, CTV ad spending in the United States will total $8.1 billion and increase to $11.4 billion in 2021, according to eMarketer.
“This year was a year of almost time travel, to try and operate two years ahead of everyone else’s schedule,” Marshall said.
Roku saw record revenues in Q3 and recently reached a deal with WarnerMedia for the distribution of HBO Max on its platform. The platform is on track to top 100 million US users in 2020 and touch nearly half the country’s CTV viewers.
“Streaming has been accelerating through the last few years – it just accelerated even quicker both on streaming hours and also on new accounts after COVID,” Levin said.
Adapt or die
Disney, NBCUniversal, Warner Media and ViacomCBS all announced major reorganizations – including their executive suites – that pivoted to streaming and ramped up adtech investment priorities.
Additionally, Warner Bros. said it would release its entire 2021 movie slate simultaneously in theaters and on HBO Max while Disney announced a massive push into the DTC market with Disney Plus, Hulu and ESPN Plus.
“This year really caused some strong strategic directional changes from the media companies,” said Jay Prasad, chief strategy officer of data connectivity platform LiveRamp. “It’s very clear that it’s related to the reorientation to streaming. You have all of these forces causing a much greater acceleration and change – change that may have been planned out and its natural inertia was going to take three years, seemed to happen in one year.”
The accelerated shift to streaming sets up a new paradigm for next year. Prasad says the upfronts will not be dominated by content on primetime linear, but will rather be based on a multi-platform experience.
“That’s where you might see more brand integrations and product placement and other types of strategies that will take place,” he said.
Ivan Markman, chief business officer at Verizon Media, said the streaming wars reached an “epic crescendo” this year with the emergence of a host of SVOD services emerging and the Warner Bros. announcement.
“Next year, we’ll see major brands radically alter their ad spend from the TV upfront in favor of more flexibility and greater investment in streaming and CTV,” he said.
Not all streaming platforms were winners in 2020, of course; in October, Quibi bit the dust a mere six months after its launch.
An appetite for AVOD
According to Zenith, demand for ad-funded video on demand was particularly strong this year. Between January and April, the reach of subscription VOD services in the United States rose by 5% while the reach of AVOD rose by 9% to 58.5 million households.
“By now it’s old news consumers are flocking to streaming,” Markman said. “With it, a plethora of SVOD services have emerged from Disney, Paramount, Comcast, Warner Media, Discovery and it seems many more to come. At the same time, individual household economic stress, as well as SVOD saturation, will be catalysts for more AVOD.”
In the pandemic's grip in March, Pluto TV – bought by ViacomCBS last year for $340 million – saw the number of monthly active users spike 55% from 2019. In November, it reached 28.4 million MAU, a 57% YOY jump. Fox Corp. plunked down $440 million in March to buy Tubi and as of August, Tubi’s MAU grew to 33 million, a 65% YOY increase.
With new services launching, Markman said, audiences will not want to keep paying for individual subscriptions. AVOD, which is predicted to grow by 17% globally in the next four years, he said, is set to benefit from “subscription-fatigue.”
“I wouldn’t be surprised to see premium services test a hybrid model with ads/subscriptions, too,” he said. “Wonder Woman isn’t cheap.”
Cathy Oh, global head of marketing and analytics at Samsung Ads, said that free ad-supported TV, a growing component of AVOD, is also having its moment and heating up the ad-supported streaming wars. Amazon, Roku, Samsung and Vizio added more 24/7 streaming channels to their respective FAST platforms.
Prasad said that more optionality in AVOD will create a more fragmented ecosystem of viewers, driving the need for more data.
“You’re going to have to find the audience,” he said. “That’s going to be a boon for those who are in our space where we have identity, interoperability, and connectivity between the buy and the sell side.”
NBCU launched its One Platform in February to let advertisers buy, measure and optimize their campaigns across NBCU’s linear and digital assets. It also deepened its partnership with video ad server FreeWheel to lay the groundwork for digital ad insertion and full linear and digital unification across the NBCU portfolio.
“In this age of needing transparency at the client level, we knew we had to invest in that area,” Marshall said.
Roku, meanwhile, rebranded dataxu – the DSP it acquired in 2019 – and introduced it as a programmatic ad-buying platform called OneView to combine programmatic performance measurement with streaming and OTT campaigns.
“From our perspective it’s been an incredible opportunity for brands to dive deeper and look at OTT as a full funnel capability, not just branding but also to drive ROI results,” Levin said.
Samsung Ads released an auto-focused TV measurement solution, while Disney merged all of its ad tech talent and products in June – including what came along with the Hulu acquisition – to make it easier for advertisers to transact across all of Disney’s properties.
Nielsen meanwhile recently announced it will replace its TV ratings system by 2024 with a new type of measurement that also incorporates streaming TV.
Oh and others said that data-driven TV will increasingly become the standard.
“Marketers are arming up on their measurement tools, including better cross media reach and frequency,” said Tal Chalozin, co-founder and CTO of ad-serving technology business Innovid.