AI Applications for AVOD Distributors

BLOGJun 03, 2021

Andrew Thompson

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Television industry leaders joined Symphony MediaAI and the IABM for a comprehensive discussion of how artificial intelligence (AI) and machine learning (ML) applications can maximize video revenues. In this blog post, we explore how providers are leveraging these emerging technologies to succeed with AVOD. View the full webinar on demand here.

The ad-supported video on demand (AVOD) market has grown exponentially in the last few years. It now comprises 30% of the global OTT market, with AVOD content sales up 200-300% in the United States. Content distributors are increasingly licensing shows to specialized ad-funded platforms like Pluto TV, Roku, and Samsung TV Plus, as well as broadcaster adjacent digital services. With predictions that global AVOD revenue will reach $87 billion by 2024, distributors are seeking insight into which platforms are most lucrative and what shows should be placed where.

AI will become an essential tool in answering these questions.

Distributors striving to optimize AVOD revenue must evolve their data strategies to retain a competitive edge. But the lack of data normalization, high data volume, and complexity of metadata across so many different platforms are some of the biggest challenges media and entertainment executives companies along the way. With different data naming conventions, reporting cadences, and varying degrees of outputs from AVOD platforms, it is increasingly difficult for distributors to extrapolate quality insights that drive their business strategies forward.

AI can standardize datasets from multiple sources and intelligently analyze large volumes of data to compare and contrast performance across all AVOD platforms. This enables distributors to make informed decisions such as determining the best AVOD platform for their content and what time of the day is best for a particular show.

With continued change and fragmentation in the video industry, AVOD is just one of many current and potential monetization strategies. It is therefore essential for distributors to have visibility into which licensing models will maximize revenues at any given moment. A true enterprise AI solution will offer robust data ingest capabilities to contextualize AVOD data within the overall financial picture – thereby allowing comparison of growth rate and profit among revenue models.

Consider AVOD as a freemium strategy: Is it cannibalizing subscription revenues? Is lifetime value higher for AVOD or SVOD viewers? What would a sudden drop in ad spend or household spend mean for earnings? AI software can assist with complex financial analysis and scenario planning to ensure distributors quickly understand the revenue impact of business decisions and changing economics.

As distributors flock to AVOD, those first to seize on new markets will sustain their competitive edge. AI can identify high-potential growth opportunities such as geographic expansion by combining distributor data with third-party market data. Instead of relying on labor-intensive manual modeling, AI software can automate the process of providing predictive analytics, accurately forecasting demand by region, title, genre, and audience segment. AI’s unmatched quality of insight helps distributors optimize their strategy, grow their audience, and power their AVOD revenue streams.

The rise of AVOD streaming platforms has resulted in more choice for consumers. Freemium AVOD models can help attract paying subscribers, which offers more predictable revenue for distributors and mitigates churn. Instead of customers cancelling their subscriptions, they can downgrade to an ad-supported tier (ensuring that distributors retain some revenue via ad sales and subscribers stay engaged). AI powered insights can assist with identifying viewers that are ready to upgrade, determine effective pricing strategies and reveal how to personalize these offers per viewer for maximum retention. AI can also assist with ad personalization to help increase viewer retention and session duration, by determining the best ad content to deliver based on user preferences.

Of course, none of this information is valuable if it requires an engineering degree or decades of experience as a financial analyst to understand. AVOD distributors seeking to generate real value from their AI investments should consider the needs of business users: How do non-technical team members access, interpret, and act on the wealth of insight AI can provide? Unless insight is easily accessible and immediately actionable, it’s going to be outdated by the time it’s available to stakeholders.

As AVOD TV continues to explode, AI and data analytics will quickly transform from competitive advantages to essential technologies. Distributors that deploy the right data strategies today will be first to understand where opportunities lie. Media and entertainment executives seeking a piece of the AVOD market must harness data to compete, and high-quality AI insights will determine who wins.