How AI Can Help AVOD Platforms and Distributors
BlogSep 20, 2022
The ad-supported video on demand (AVOD) market has grown exponentially in the last few years. In 2021, AVOD viewers comprised more than 50% of all digital video viewers, with AVOD content sales up 200-300% in the United States. As OTT streaming continues to gain prominence, content distributors are increasingly licensing shows to specialized ad-funded platforms like Roku, Peacock, and Hulu. Even Netflix and Disney+ are launching advertising-supported tiers.
With predictions that global AVOD revenues will increase significantly over the next few years, totaling $56 billion by 2024, it is clear that, as a whole, AVOD as a model will thrive. However, the only AVOD platforms, distributors, and content owners who will succeed in the coming years are those who effectively use the data at their fingertips.
Which AVOD Platforms are Most Lucrative for Content Owners?
Content owners experimenting with various OTT platforms want answers quickly. They need to extract quality insights from the platform reports and compare AVOD platform performance.
As content owners look for these insights, artificial intelligence (AI) is set to become an essential tool for the media and entertainment industry. New revenue models require thorough analysis, and AI software can deliver on those data intelligence needs, helping content owners identify the most profitable opportunities for their business.
Distributors striving to optimize AVOD revenue must evolve their data strategies to retain a competitive edge. But as companies prepare for these evolutions, many M&E teams find themselves lacking necessary tools to navigate the challenges of data normalization, high data volume, and the complexity of metadata across so many different platforms.
How to Normalize Data from Multiple AVOD Platforms
Comparing AVOD platforms becomes complicated when each one uses different data naming conventions, reporting cadences, and data formats.
Fortunately, artificial intelligence offers a solution for companies evaluating and deploying strategies for AVOD platforms.
AI-powered software 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. Without this advanced data intelligence, media and entertainment companies risk seeing diminished revenues and less than optimal OTT content monetization.
How to Automate the Process of Providing Predictive Analytics
Consider AVOD as a freemium strategy: Is it cannibalizing subscription revenues? Is lifetime value higher for AVOD or subscription video on demand (SVOD) viewers?
AI financial forecasting software can assist with complex financial analysis and scenario planning to ensure content providers quickly understand the long-term revenue impact of business decisions.
Such tools can also 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.
Identifying Viewers Who are Ready to Upgrade
Freemium AVOD models done right have the power to help attract paying subscribers. Users who become familiar with a freemium AVOD platform’s content offerings, UX design, and cadence are more likely to eventually make the leap to paid subscription in order to remove or reduce ads and improve their viewing experience.
While in the past it might have been difficult to identify viewers who are primed to upgrade to the subscription-tier viewing model, artificial intelligence powered insights now offer the actionable data to improve lifecycle marketing. By analyzing a complex network of viewer demographics, session durations, and content preferences, AI tools can pinpoint viewers who are ready and able to convert to subscription customers.
Of course, to convert AVOD viewers to paid subscribers, the content available needs to match with audience desires, which is where strategic planning and intelligent content valuation come into play.
If AVOD viewers make the leap to SVOD, they become more valuable customers for media and entertainment companies. Distributors are assured more predictable revenue and the ability to mitigate churn. Instead of customers cancelling their subscriptions, they can downgrade to an ad-supported tier. The flexibility of this option for viewers ensures that distributors retain some revenue via ad sales while subscribers stay engaged with their service.
Increase Viewer Retention and Session Duration
By analyzing the behavioral data (watch time, exit rate, etc.) and advertising data, AI-platforms can also increase viewer retention and session duration – delivering the best content to unique viewer segments based on their specific preferences.
Harness AVOD Platform Data with High-Quality AI Insights
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 artificial intelligence software can provide? Unless insight is easily accessible and immediately actionable, it’s going to be outdated by the time it’s available to stakeholders.
How can artificial intelligence data integrate seamlessly across teams? Because if one thing is clear, it’s that M&E teams with siloed strategies will lose in the battle for subscriber retention. To net the full benefits of AVOD platforms, media and entertainment companies need to be able to play as a team, leveraging lifecycle marketing, content valuation, financial analysis, and data operations to create holistic view of their business model.
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 using tools like Revedia Digital will be the first to understand where opportunities lie. Media and entertainment executives seeking a piece of the AVOD services market must harness data to compete, and high-quality AI insights will determine who wins.
*This blog was updated and republished in September 2022.