Netflix will eventually run ads, Walmart to launch its own OTT service and other news

Few key things that happened around the Ad Tech & Media Tech world this week

Netflix Will Eventually Run ADs, Industry Execs Predicts

Executives from Google and UM Worldwide said Monday they believe Netflix—like most platforms looking to grow—will ultimately serve ads. Netflix, with its nearly 150 million subscribers, has so far been ad-free and insists advertising is not necessary in a world built on direct relationships with viewers. But as Netflix evolves, things might change, several execs said at a panel during the IAB’s Digital Content NewFronts. Tara Walpert Levy, Google and YouTube’s VP of agency and media solutions, even implied that Netflix is already working toward a future with advertising. Whether those ads take traditional forms is up for debate. The company’s ad-free approach runs contrary to many other streaming services; Hulu, for example, has an ad-supported plan and an ad-free offering. And the competition is only increasing. When Netflix announced its quarterly earnings report this month, the service said it was not fazed by Apple or Disney’s new video services. Netflix reported first-quarter revenue of $4.5 billion, a 22 percent increase from the same quarter last year.

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Surprise burst in broadcaster VOD ad spend

The Advertising Association and Warc have turned much more bullish on the growth prospects for adspend around broadcaster video-on-demand. In their latest forecast of the extent of growth in the advertising market, issued today, the AA and Warc said BVOD expenditure was likely to rise by 26.3% in 2019 and admitted this part of the market was much bigger than it previously thought. As a result, Warc has changed its estimates for the historical size of the BVOD market from £211m to £302m for 2017 and from £236m to £391m for 2018. The bulk of the growth is predicted to come from internet advertising, which is now divided into the search, display and classified categories, in a change from the previous methodology of simply categorizing it all as “internet” and, within that, “mobile”.

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Walmart to launch its own OTT service

After conflicting reports earlier this year about whether retail giant Walmart was ready to push ahead into the original streaming content arena with its OTT service Vudu, the company is now reportedly sharing plans with advertisers to fund a handful of original family-oriented programs later this year in partnership with MGM. Walmart, the largest seller of TVs of any retail chain, acquired Vudu in 2010 in a far-sighted move to counter falling sales of physical DVDs with its own streaming service. But while Netflix, Amazon, Hulu, and others used their platforms to launch exclusive new content and lock viewers into a paid subscription model, Walmart retained an advertising-supported model for Vudu, using it primarily to distribute digital versions of DVD programs, movies, and other previously-released material.

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Data Confirms Accelerating Industry Growth

Conviva published the Q1’19 edition of its State of the Streaming TV Industry report today, revealing that, year-over-year viewership grew 72% and the rate of consumption growth increased by 49%. Virtual MVPDs such as DirecTV Now, Hulu, PlayStation Vue, and Sling saw viewership grow 108% year-over-year as compared to 60% growth for other services in the United States. Amazon Fire TV captured 18.6% share, up significantly from 11.4% share in Q1 2018, while Roku maintained its long-standing lead of 42.4% share. The College Football National Championship had the highest peak concurrent viewership, 37.6% higher than the Q1’18 peak event.  Buffering improved dramatically year-over-year, with fewer video start failures and picture quality increased significantly.

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IAB’s Transparency And Consent Framework Update Is In, And Hopefully Google Will Be Too

The IAB has announced version 2.0 of its Transparency and Consent Framework (TCF). It has more specific publisher controls for collecting consent and claiming legitimate interest. With respect to consent, there are now more specific options around purposes like personalization and measurement. For example, personalization purposes include reasons like creating ad profiles or creating content profiles. Specific measurement purposes, for example, include ad campaign performance, content performance, and audience insights. These changes were apparently preconditions for Google to join the framework. The specs for TCF v2 are open for public comment until May 24, with a final version slated for June or July. There is urgency to deploy TCF v2 by August or September so that publishers implement the new framework before Q4. Otherwise, publishers unwilling to take potential revenue risks during the busiest quarter of the year could delay adoption of the new framework until 2020.

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