Advertising Stokes OTT’s Fire

Vudu’s move into ad-based premium content is a sign that the sector is hot

The over-the-top video market is already inundated with subscription-based services, but Vudu’s recent entry into the world of free, ad-based premium VOD content adds another big player to an arena that has been dominated by a select group including Tubi TV and Sony-owned Crackle.

Vudu, the Walmart-owned transactional VOD and electronic sell-through specialist, branched into the free, ad-based world of OTT earlier this month with the launch of Vudu Movies on Us. The new option features “thousands” of movies and TV shows in 1080p and in Dolby Digital sound (when available), Vudu said.

Examples of Vudu’s free, ad-supported titles include Mad Max, True Grit (2010), School of Rock, Searching for Bobby Fischer, Star Trek: Nemesis, Out of Time, Sliding Doors and The Phantom of the Opera.

FREE, AND IN HD

Vudu said the new service, which uses Ooyala’s “Pulse” ad platform to monitor campaigns, is its first move into free HD streaming and follows recent upgrades to its traditional EST service, including support for titles in 4K/UHD with Dolby Vision HDR and Dolby Atmos Audio. The ad-based version is supported on Vudu’s various streaming platforms, including certain smart TVs and Blu-ray players, Roku devices, Chromecast adapters, iOS and Android mobile devices, Xbox One and Xbox 360 consoles, PS4 and PS3 consoles and the new Android TV-powered, 4K-capable Mi Box.

Vudu’s move into AVOD is a shrewd one because it opens up a growth market while also clearing a new path into its transactional VOD service, Colin Dixon, analyst and co-founder of nScreen Media, said.

“I’m pretty upbeat about what Vudu is doing,” Dixon said. “I think this is good for the whole category.”

Adding an AVOD component will help to lure more consumers to the Vudu site and help to boost the service’s TVOD revenue for both rentals and outright purchases, he predicted. “The freemium model is just so strong,” Dixon said.

He also noted that Vudu is moving in as Hulu backs away from its free, ad-supported offering. Hulu shut down that offering in August, moving that content to a new service called Yahoo View that offers a handful of episodes from TV series from ABC, NBC and Fox, but not until eight days their original run, alongside a mix of other content.

Vudu shoud be able to develop a “decent audience” for the AVOD offering if it does a good job managing that catalog and keeping it fresh with a constantly rotating mix of TV shows and movies, Dixon said.

“Sometimes [consumers] just want some casual viewing, he said”

And the interest in free, ad-based OTT video isn’t just limited to VOD. Pluto TV, the company behind a free, linear-style OTT-TV service with dozens of “channels,” just landed a $30 million B round that included participation from Scripps Networks Interactive. That service, which launched in 2014, now claims to have more than 5 million monthly active users, up from about 500,000 in Q2 2015.

Tubi TV, an AVOD service that launched in April 2014, is receptive to a new competitive entrant, especially from one as well-heeled as Vudu.

“We entered [the AVOD category] knowing that it was going to grow into a multibillion-dollar sector,” Farhad Massoudi, Tubi TV’s founder and CEO, said. “I think a giant like Walmart moving into this space has shined a headlight on it, which is, from a selfish perspective, very welcoming.”

Tubi TV hasn’t released usage figures but has reported a “big jump” in viewership since its debut. Thanks to deals with more than 200 partners, including Starz Digital, Paramount Pictures, Lionsgate, Metro-Goldwyn-Mayer and VIZ Media, its library has grown to more than 40,000 titles. Revenue is also growing, as Tubi TV’s ad inventory (typically a two-minute ad load every 12 minutes) is currently sold out, Massoudi said.

BRAND APPEAL

Advertiser demand is a big reason why Walmart jumped into the mix, Massoudi said. Major brands such as Visa and BMW are looking to scaled AVOD services to put their messages in front of cord-cutters, cord-shavers and other consumers that might not subscribe to the full pay TV bundle.

“I think the big story for OTT is AVOD,” he said, believing that niche SVOD players will have a difficult time sustaining their content libraries and growing their base.

While Crackle has tried to differentiate its AVOD service with originals, such as The Art of More, Tubi TV will stick to its knitting by focusing on licensing of high-quality TV shows and movies.