The U.S. Internet TV Market is Growing; Here’s How to Capitalize on it

Sep 30 2022

Read on TVTechnology here.

How FAST and AVOD are driving growth

The American Internet TV market is a booming landscape and is expected to grow by 60% within the next five years. In turn, OTT TV episode and movie revenues will reach $94 billion in 2026—almost double the $49 billion generated in 2020. Media companies are currently in the midst of an incredibly competitive, and fragmented, market.

There is a risk that media companies can be left behind if they are not quick enough to react to the changing landscape. However, this is also one of the most exciting periods for the industry, and its potential shows no signs of slowing, which makes this a great time to explore new avenues for growth and broaden horizons in this space.

Owned-and-operated (O&O) services alone are no longer enough for media companies to be successful in today’s streaming environment. To achieve growth, media companies must ensure that they integrate an effective business strategy that puts diversification at the heart of it. If executed correctly, these strategies will unlock greater audience reach and monetization that will empower them to thrive now and in the future.

In this article, I will outline how to execute a hybrid approach and the key areas of consideration for media companies looking to get a piece of the growing Internet TV market.

The Opportunities Available
Free ad-supported TV (FAST) linear services have increased in popularity in recent years. We are now seeing FAST integrated within television interfaces, and being made widely available on Connected TV (CTV) app stores.

FAST linear channels are a vital hub for distribution and monetization diversification. They retain the lean-back benefits of traditional linear TV, while enabling valuable new digital advertising opportunities. Through FAST, content providers can unleash the potential to program channels algorithmically, using AI to suit viewers’ tastes and leverage programmatic ad platforms to maximize the value of ad spots. Channels can also be launched quickly and the content fine-tuned in real-time to optimize viewership. When customer demand fluctuates, FAST channels can be scaled up and down. This is a crucial benefit to help keep content providers in control.

In addition, SVOD services should consider offering different payment options – perhaps lowering the fee in return for some form of advertising – to help cater to audiences across a range of needs. This is a hot topic in the industry, of course, enabling companies to generate new ad revenue that was previously not part of the business model. The price decrease helps cost-conscious customers have more choice, potentially attracting more subscribers over the long-term.

To support this, advertisement-based video on demand (AVOD) is also an enticing avenue. Like FAST, AVOD has also enjoyed significant growth. AVOD viewers in the U.S. are expected to reach 165 million in 2025(opens in new tab) and the format can be a great distribution tool for a media company’s content library. AVOD enables substantial ad revenue business, helps companies become more competitive in the market, and funnels O&O services. AVOD is helping fill the void between an ad-free experience provided by subscription services and linear TV giving it the best of both worlds.

AVOD is now a dominant player in the Internet TV market and brands are pouring money into these services for their user-specific focus: lower number of advertisements versus higher value of commercial awareness among viewers. AVOD’s ability to track user interactions can help make ads more trackable and easier to determine their success. These advanced targeting abilities are precisely what the market is looking for today – both the advertiser and the consumer.

If implemented successfully, ensuring that media companies focus on content and their technology stack, AVOD will certainly allow content to thrive in the streaming era.

Ensuring the Right Toolset
To help build and nurture thriving content communities in our industry, streaming providers should ensure they offer the flexibility to support multiple business models that reflect our market and its ever-fluctuating landscape. Solutions must boast capabilities including high-quality OTT application deployment and dynamic playlisting for VOD. There must also be consideration for including support for AVOD and SVOD, which are two services rapidly changing how video is consumed and monetized. However, SVOD requires one workflow, AVOD requires another, FAST channels require another, and the many potential syndication partners require more.

It is important to understand that, to stay ahead of the curve, media companies need the right cross-platform technology to support hybrid business models and multi-partner distribution to execute a successful distribution and monetization strategy.

With this in mind, streaming providers must ensure they assemble a broad technology stack of solutions to reach their full audience engagement and monetization potential. But at the same time, they need an efficient way of working that avoids the complications of having to deal with many vendors at once, making the workflow harder to manage.

But, if they achieve this, then there is a fantastic opportunity to reach new audiences, grow greater revenue streams, and pave a pathway for long-term success.

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