Industry
Communications, Media and Information Services
Connect. Curate. Comprehend: Unlocking Value Beyond Boundaries
Highlights
In the last few years, subscription platforms with original premium content have eaten into the market share of the advertising-based video on-demand (AVOD) platform. But with subscription fatigue kicking in, AVOD players are now pulling out all the stops to dominate the business.
In this article
Rise of the digital ad-supported platform (AVOD)
It has been more than a decade since direct-to-consumer models were at the forefront of entertainment consumption.
Of the many models like video on demand (VOD), digital rentals, advertising video on demand (ADVOD), subscription video on demand (SVOD), the subscription model has been leading the charge in the last decade. Netflix led from the front by giving consumers relief from a high ad load on cable television to break free content viewing. New viewership patterns like binge-watching started defining the new consumption pattern.
All this led to a digital-first strategy both for new-generation entertainment companies and traditional studios, which triggered the initiation of several digital offerings. With the explosion of subscription platforms, consumers now must pay for multiple services. Led by concerns about individuals` appetite to spend for entertainment and lack of continuously fresh content eroding the value of the payments has created subscription fatigue.
Today, ad-supported digital platforms command over 50% of digital viewership across US households and have been steadily increasing over the last five years with close to 18% growth in 2021 alone. With the entry of news and live sports in this segment, ad-supported platforms capture the attention of younger and older demos alike, suggesting significant growth.
Taking the fight to the subscription model
There is no doubt that the challenge from subscription platforms with original premium content is stiff.
But with the potential of enhanced targeting, the digital ad-supported business attracts significant marketing dollars.It is also an exciting proposition for media companies with traditional linear ad-support channels. To continue attracting viewership, advertising-based video on demand (AVOD) platforms will need to invest in original content and leverage digital technologies to enhance end-user experience and provide more targeted advertising capabilities.
What AVOD players must do to better their game
Disruptors in this space have all focused on one key element―understanding individual consumer needs to chart out the right marketing strategy.
Here are eight things that AVOD platforms must do:
Drive intelligent content recommendations
Consumers today are increasingly looking at an intersection of gaming, short videos, and entertainment content and tend to consume similar types across various platforms. A robust analytics framework that mines data from various sources and develops a panoramic understanding of the consumer is imperative to providing relevant recommendations, thereby driving hyper-personalization.
Enrich content library through user-generated content
Platforms like TikTok and YouTube leverage user-generated content to satisfy the consumers' continuous need for fresh content. AVOD players need to replicate the same and keep their content library fresh. Digital players must create automated metadata extraction and tagging capabilities to understand the genre and audience’s interest areas
Enhance experience with the consumer at the core
Constant innovation in user experience and interaction with the platform will create the personalization needed for consumers to stay glued to the platform. A digital twin-based solution can be used to study customer experience interventions and their impact on churn. This will be crucial in retaining the customer base and driving revenue.
Forge strong alliances with other ecosystem players
However profitable the strategy of mining and leveraging content libraries for maximizing revenue and profit may be, it still runs the risk of saturation. It is also evident that not all companies would have the capability to create such direct-to-consumer platforms but would be ready to partner with media exclusively, to understand firsthand consumer behavior.
Consolidate digital assets
The ever-changing reality of the landscape and the constant shift in strategies over the last decade has resulted in entertainment companies creating multiple digital channels and platforms. It is now time to focus on consolidating brands with an eye on unique offerings and a one-stop shop for consumers.
Use intelligent packages and bundling to create innovative monetization models
The ad-free subscription revenue had led the charge in the past decade and disrupted the entire industry. Although that seems to be the primary monetization model, increasing landscape and reaching the priorities among other segments would also be diverse. As these companies are looking to expand across audience segments, they should focus on creating bundles and packages as per consumer needs and demands.
Drive intelligent audience measurement and integration with other channels
The strength of an AVOD platform lies in its ability to provide advanced targeting to advertisers. However, AVOD platforms are not the only investments that media houses have. These players must invest in cross-targeting consumers across platforms and manifest the ability to identify a consumer from one platform to another uniquely.
The winner takes it all
Although the digital-born disruptors have initially led the ad-supported digital model, there have been innovations and investments by traditional players.
Recent efforts are aimed at enhanced user experience, a light ad load with a minimal subscription charge, and better targeting for advertisers. The market is volatile, but leaders in the space invest in both content and technology to capture the right audience for their platforms.
