Why big screens are important to build successful SVOD/EST/TVOD business?
When it comes to the premium long-form video, the bigger screen, the better experience and engagement of the user. We see this across different markets when 10% of Connected TV users consume the same volume of video as the rest of the base on the smaller screens. That creates great stickiness to the services, having two times bigger than an average customer lifetime. That’s why for Netflix for the new members in 6 months the share of viewership on big screens grow from 25% to 70% across all devices (www.vox.com).
But not only the size of the screen matters here, but it is also a great opportunity for monetization, especially in the highly pirated emerging markets. All Connected TVs are close eco-systems where the regular users can’t find any free to watch pirated alternatives, that we couldn't say about mobile devices and computers.
Why it is not so exciting for AVOD?
Working with the freemium model on emerging markets, we came up with a very straightforward segmentation of the different types of devices by the best monetization model for each of them. Based on my experiences, we can rate all platforms by declining potential to convert your users into paying subscribers and the increasing potential for adv based revenue as following: Game consols -> Apple TV -> Smart TV -> Andriod TV -> iPad -> iPhone -> Andriod -> Web browser
Together with keeping the high probability of converting a user to pay for the video, those platforms have a significant limitation to drive your AVOD business: their audience is relatively small, no tools to drive the direct traffic and acquire the new users - only organic, technical limitations to re-use the same adv technologies that far ago became the standard for web and mobile. The issue with video mid-rolls on Smart TVs could be a good example here.
All platforms will develop towards better monetization for any king of business — SVOD, TVOD, AVOD. Connected TVs will continue their expansion to the mass market together with the improvement of the hardware performance, so the AVOD model and technologies on those platforms will continue to grow, making advertises and brands communications more interactive and attractive even for the e-commerce sector. So the opportunities could come from anywhere.
As for the VOD market in general, it becomes too fragmented and complicated for users. The new services are coming and coming. Everyone tends to lock their original and exclusive content on their own platform confusing viewers more and more, as they are nor ready to follow and keep in mind so many platforms.
The future is in aggregation. Bundling different services under a single payment. Simple interfaces for the cross-service content search and discovery — this what users want, and the market already started to reply to this demand. Android TV and Apple TV are good examples here. This could also be an excellent opportunity for Pay-TV providers that could lead this aggregation role for them.