Comcast-owned video ad tech firm Freewheel has released the latest edition of its Video Monetization Report, for Q1 2016, with a message that ‘Content is no longer King’, but must now ‘share its throne’ with user experiences and viewer needs.
Freewheel’s argument for this is based on “an explosion of content acquisition efforts” in the past three years which has led, in effect, to a glut of premium content. (Interestingly, this bears out Strategy Analytics’ assertion (see previous story), that “the number of original series produced annually has doubled in the last five or so years, from a little over 200 to more than 400.”)
This means, argues Freewheel, that “there’s too much high-quality programming available at our fingertips for every program to be given the exposure and attention deserved.” Instead, what is ultimately determining success today is not just content on its own, but “how it intersects with a user experience, and building the two out to serve the needs of your viewers.”
Clearly, many players are getting this combination right: Freewheel’s figures show that both premium video views and ad views still continue to grow at similar rates as in the past, with Q1 2016 showing both metrics up 24% YOY.
However, the contribution of different lengths of premium video content to the increase in ad views differs significantly: ad-view growth for short-form on-demand content is just 14% YOY; while for long-form on-demand videos it is 33% YOY; and for live, 43% YOY.
For Freewheel, the implication is that “TV-style content is currently the driver catapulting the premium video economy to new heights,” with Programmers (publishers that generate the majority of their advertising revenue from linear TV services) the chief beneficiaries in terms of ad revenues. This contrasts with the ‘Digital Pure-Plays’ (DPPs, or publishers that generate the majority of their revenue from digital environments), who rely on the short-form market for monetisation.
However, there are significant differences in how this trend is playing out in the US and Europe, with US Programmers providing a much broader mix of content duration-types than European ones, who rely almost exclusively on ad revenues from long-form content – see Figure 1 below.
Figure 1: Ad view composition by content duration Q1 2016-06-21
| Short-form (0-5 mins) | Live | Long-form (20+ mins) | Mid-form (5-20 mins) |
|
| US Programmers | 26% | 17% | 53% | 4% |
| European Programmers | 7% | 1% | 90% | 2% |
| US DPPs | 80% | 1% | 11% | 8% |
Source: Freewheel VMR Q1 2016
Freewheel concludes that the European results show a “still emerging” market which has learned to “only rely on and monetize long-form content.” Future growth here will therefore depend on “better monetisation of short-form and live content, likely enabled by a more mature tech stack.”
European Programmers will be encouraged by the report’s separate finding that viewers are relaxed about consuming ads away from the traditional TV set, and watch them all the way to the end in 85% of cases. Freewheel found that OTT devices such as Apple TV and Roku demonstrated the highest ad completion-rates (93%), while entertainment was the best-performing completion genre (91%); and live content the optimal content-type (95%) – see Figure 2 below.
Figure 2: ad completion-rate by device, genre and content-type – Q1 2016
| Device | OTT | Tablet | Desktop | Smartphone | |
| 93% | 85% | 84% | 78% | ||
| Genre | Ent. | Kids | Sports | News | Music |
| 91% | 90% | 84% | 80% | 74% | |
| Content type | Live | Long-form | Mid-form | Short-form | |
| 95% | 94% | 80% | 71% | ||
Source: adapted from Freewheel VMR Q1 2016
As for which devices garner the most ad impressions, Freewheel found that in the US, two-thirds of ad impressions now occur outside desktop/laptop environments (compared with Q1 2015, when Freewheel found that this environment accounted for a 57% share). Here again, there are differences between the US and European markets – see Figure 3 below.
Figure 3: Ad view composition and growth by device, US v Europe (Q1 2015 v Q1 2016)
| Desktop/laptop | OTT device | Smartphone | STB VOD | Tablet | |
| US | 37% (-20% YOY) |
22% (+62% YOY) |
18% (+68% YOY) |
14%* | 9% (+33% YOY) |
| EU** | 49% | 13% | 24% | – | 14% |
* 23% of enabled Programmer Volume (FourFronts STB VOD and Canoe Phase III integrations)
** YOY ad view growth unavailable for European activity
Source: Freewheel VMR Q1 2016
In Europe, desktops, smartphones and tablets account for significantly higher shares of ad impressions, with OTT devices significantly less, reflecting the latter type of device’s lower penetration of European markets. Freewheel singles out the 24% figure for European smartphone share as particularly intriguing, in view of the previous finding that long-form content drives ad monetisation there, and suggests this relates to the differential pricing of data-plans between the two regions (US smartphone owners reportedly pay up to 20 times more than in Europe).
