How AI Can Help AVOD Platforms and Distributors
BLOGNov 17, 2021
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 the digital sphere continues to gain prominence, 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 revenues will increase significantly over the next few years, totaling $56 billion by 2024, content owners are seeking insight into which AVOD platforms are most lucrative and what shows should be placed where.
What AVOD Platforms are Most Profitable for Your Business?
As content owners look for answers to big questions, artificial intelligence (AI) is set to become an essential tool for the media and entertainment industry at large. 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.
With different data naming conventions, reporting cadences, and varying degrees of outputs from AVOD platforms, it is increasingly difficult for content owners to extrapolate quality insights that drive their business strategies forward. It’s important to note that these problems aren’t going away. As the media and entertainment industry becomes more agile, embracing digital innovation and leveraging alternative content monetization strategies, these challenges are likely to continue to grow.
The Role of AVOD Platforms in Growing Revenue
Fortunately, artificial intelligence offers a solution for companies evaluating and deploying strategies for AVOD platforms.
Artificial intelligence forecasting 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 the advanced data intelligence offered by cutting-edge AI software, media and entertainment companies risk seeing diminished revenues and less than optimal content monetization.
Understanding the Users of The Top AVOD Platforms
The M&E industry has entered the age of digital disruption. Digital studios are on the rise and with them exciting new business models that require teams to pivot to embrace alternative workflows, data needs, and agreement terms. Given the continued change and fragmentation in the video industry, AVOD platforms are 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.
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? What would a sudden drop in ad spend or household spend mean for earnings?
Artificial intelligence forecasting software can assist with complex financial analysis and scenario planning to ensure content providers quickly understand the revenue impact of business decisions and changing economics. AI tools also offers distributors the ability to slash workflow times. With seamless data ingest and the power to compile and produce complex reporting in minutes, M&E teams that leverage artificial intelligence software significantly reduce time-costs while optimizing revenues across business models.
As consumers flock to AVOD platforms, content providers that are 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.
Identifying Viewers Who are Ready to Upgrade
The rise of AVOD streaming platforms has resulted in more choice for consumers. 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.
Increase Viewer Retention and Session Duration
Once 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.
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.
AI software can also help determine effective pricing strategies and reveal how to personalize these offers per viewer for maximum retention. By analyzing the data that supports ad personalization, content providers have the power to increase viewer retention and session duration – delivering the best ad content to unique viewer segments based on their specific user 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 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.