TBI Weekly: How AVOD is starting to pull out the big guns

Most Dangerous Game

If it hadn’t been for the double-barrel effect of a global pandemic and the launch of streamers direct from US studios, then 2020 would likely have been seen as a major trigger point in AVOD’s evolution.   

As it is, these services have surged in popularity over the past 12 months but there are soon to be yet more fundamental changes in the way the streaming market works, as AVOD after AVOD moves into exclusive content of one form or another.

Recent weeks have seen a flurry of activity on this front, with streamers that were once seen as the underdogs of the OTT world looking to join their illustrious subscription-based partners with shows of their own.

Explaining the Cypher

Roku is making some of the biggest moves on this front, with the device manufacturer and owner of AVOD streamer The Roku Channel preparing to launch a raft of exclusive programming – although that content is not of its own making, of course, and it is keen to point out its shows are not ‘originals’.

Cypher

Nevertheless, today marks the launch of Cypher on The Roku Channel, which will be made available for free to viewers in the US and Canada. The drama is one of the bigger budget programmes it acquired from Quibi, as part of a canny 75-show package struck with the now defunct shortform service – and that potentially toe-dipping exercise now looks likely to lead to more original immersion in the coming months.

The company advertised for a lawyer to oversee an “expanding slate of original content” earlier this year and more recently added former Quibi exec Brian Tannebaum to oversee its alternative slate, as reported by US trade Deadline. With a package of Quibi’s shows under its belt as well, the shift from library to exclusive content on Roku Channel is already well underway.

There are similar moves in the works at ViacomCBS-owned Pluto TV, which has recently been expanding its exploration of originals having dabbled in exclusive content in 2019 with Bajillion Dollar Propertie$ from NBCUniversal’s now-closed streamer Seeso. 

Horizon busters

It’s not just the US-based AVOD’s commissioning original content either. Just this week, Barcelona-based Rakuten TV unveiled its documentary Ona Carbonell: Starting Over, which focuses on the Spanish double Olympic medalist as she juggles her career following the birth of her son.

Again, it will be made available via the ad-support Rakuten TV for free this autumn in a bid to tap into cost-savvy viewers – who are also the target of companies such as ITV. Last year, CEO Carolyn McCall was clear that the UK commercial broadcaster would start to commission original programming for its AVOD service ITV Hub, after she outlined the uptick in audience viewing on the service during the early days of the pandemic.

Des

She pointed to the success of ITV drama Des, which was produced by All3Media’s New Pictures, adding that it had claimed a series average of 12 million consolidated viewers, two million of whom watched on demand via the ITV Hub streamer.

And it is that type of stat that clearly points to a watershed moment for AVOD – we are seeing viewers migrating en masse around the world from ad-supported linear networks to ad-supported on demand services.

Wily young Fox

No one seems to know that better than the new-look Fox and its streamer Tubi. We learned of the Murdoch family’s ambitions for its AVOD offering during an earnings call last month, in which CEO Lachlan Murdoch said he expected Tubi would soon become “a $1 billion business” in terms of annual revenues.

To date, Fox has been among the most proactive in pushing its AVOD service alongside its broadcast network. Tubi, which was acquired by Fox for $440m in April 2020, was quick to offer hit shows from its linear sibling such as The Masked Singer alongside international versions of MasterChef and Lego Masters from companies including Banijay.

But it is now also moving into original programming, with a Bloomberg report suggesting that up to $4m per episode could be available.

Fox’s CFO Steve Tomsic was less giving on the budget front – he recently suggested Tubi would be focused on “cheap and cheerful” shows rather than attempting to copycat the types of premium fare on SVOD’s – but he was as bullish as Murdoch on long-term prospects, as the streamer becomes the go-to destination for viewers.

The Masked Singer

For now, Murdoch sees Tubi and the Fox Network working in tandem, but the thinking is clear.

“Tubi is an exciting growth engine for the company and a key strategic platform for not only our digital expansion, but also our broader reimagining of Fox’s broadcast model for the future,” Murdoch said in February. “In fact, I believe Tubi is an investment in what we internally call the broadening of broadcast, meaning the Fox Network and Tubi combining seamlessly to create a modern network-inspired business.”

Also worth noting is Murdoch’s disdain for the subscription side of the streaming marketing. “We see the SVOD competitive set as the potential to lose very many billions of dollars,” he said, adding that the “very crowded” landscape means differentiation is tough.

“And that’s why we’ve really chosen to embrace AVOD as our direct-to-consumer strategy, and we think we can do this for really two reasons. We expect to win in AVOD and be the leading AVOD player in this country [the US]. And secondly, we expect to be able to do it by reinvesting our profits, but not by losing billions of dollars in programming costs or other costs in the time it takes to breakeven.”

That swipe at the SVOD fraternity is to be expected given the Murdoch’s sale of old Fox to Disney, but it also underlines how new-Fox, ITV, ViacomCBS, Rakuten and numerous others expect the content landscape to change as linear appeal continues to wane. With HBO Max, Peacock and Paramount+ also set to unveil ad-supported versions in the near future, it seems the current expansion into exclusive and original programming is only the first shot in the battle for AVOD dominance.