OTT Monetization: What Hulu, Pongalo and VidaPrimo are Betting on for 2017
As video marketing takes over a very substantial part of the overall (digital) marketing space, we spoke with Stephen Brooks, EVP and GM, VidaPrimo; Rich Hull, Executive Chairman Pongalo and Peter Naylor, SVP Ad Sales at Hulu about both the OTT subscription and the ad-renetization market.
1. Where do you see monetization for online video properties evolving to mid and long-term?
2. What type of content are you particularly betting on in terms of monetization via...
b) End consumer subscription.
3. How do you acquire/produce your content?
4. In what areas will you be investing in 2017?
Stephen Brooks, EVP and GM, VidaPrimo
1. "I think in the intermediate term, online video monetization will continue to develop along twin tracks – advertising-supported (AVOD) and subscription (SVOD). AVOD is very much entrenched in our culture – there’s not much friction for the consumer, and while measurement is a persistent challenge, brands continue to behave in a way that suggests they feel they’re getting their money’s worth. The problem is it’s increasingly difficult for publishers to make a living, and I don’t know if advertising ultimately has an answer for that problem. SVOD has the answer, but search costs are high. Niche video publishers are demonstrating that you can make a living off subscribers, provided their consumers know where to find them. So I do think SVOD will take a higher share of the overall spend for online video properties over the near term. I also think these properties are set up nicely for the coming evolution of MVPDs – the over-the-top a-la-carte and “skinny bundle” offerings that will ultimately replace our standard cable and satellite packages for many households. I really think we are heading in that direction now, as online video properties command larger and larger audiences."
2. "The general rule is, the more niche the content, the more viable a subscription model is over advertising. It’s not a perfect balance, and this is not to suggest at all that you can’t have both - when VidaPrimo debuts on OTT this quarter, we are coming out of the gate with a hybrid AVOD/SVOD model. But we also have content that straddles the line between niche and mainstream. In fact, it’s really only “niche” in the sense that most of the lyrics in our videos are in Spanish - but that hasn’t hurt our popularity, just as it hasn’t hurt the popularity of K-POP, which is a worldwide phenomenon, even among people who don’t speak a word of Korean."
3. "VidaPrimo is not unlike a movie studio or television network, in that our content comes from multiple sources. Some we produce - and our plan is to produce a lot more in 2017. Some we acquire through our sister label. And some we license. I don’t think you can survive in the current environment relying solely on one acquisition model - there’s just too much good content out there."
4. " 2017 will be a year of expansion for VidaPrimo. Expansion into new musical genres, with new artists and new territories. Expansion of our footprint into over-the-top platforms and MVPDs. And expansion of our original content to include more artist-focused programs, behind the scenes exclusives, and for the first time our own awards."
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Rich Hull, Executive Chairman at Pongalo (Latin Everywhere) - Pongalo (Latin Everywhere)
- "Consumers are increasingly willing to pay a subscription fee to avoid laboring through commercials when they’re watch the film and TV content. The mainstream digital subscription platforms, like Netflix and Hulu, are focusing on serving the masses – think of them as 5,000 feet wide. But there’s a huge opportunity in creating subscription services for specific audiences – think of these as 5,000 feet deep. So, monetization in the mid and long-term will be about creating and expanding subscription services for specific audiences that feature robust offerings of relevant, professionally-produced film and TV content. With Pongalo, we’ve created a subscription service specifically for Latino audiences that has over 10,000 hours of telenovelas, movies from Latin America, Hollywood blockbuster films, TV series, kids programming, and documentaries."
2. "We focus on films and television series for both advertising and subscriptions. In the ad-supported world, we’re the largest player for Latino film and TV shows on YouTube; in the subscription world, we’re the only US-based digital subscription focused solely on Latinos."
3. "Our company was originally created two years ago by merging the digital rights to two large libraries of Spanish-language films and television shows – RCTV and Latin Anywhere. Beyond our existing library, we acquire content through licensing deals with third parties, which have recently provided us with brand new exclusive telenovelas such as Piel Salvaje and Corazon Traicionado. And we also produce certain content in-house, such as our animated series Isla Presidencial."
4. "In 2017, we will be investing in ways to convert our nearly 11 million YouTube subscribers into customers on our Pongalo subscription OTT platform."
Peter Naylor, SVP of Ad Sales at Hulu
1. "In 2017, we expect to see online video properties continue to heavily invest in their ad personalization capabilities, leveraging first and third-party data to serve targeted ads to consumers that are both relevant and engaging. In the long-term, video properties that put ad quality and viewer experience at the forefront will see continued gains. A viewer’s advertising experience whether in a desktop, mobile or living room environment should be about personalization and choice, the same way viewers see choice around what they watch and how they watch it."
2.a) Advertising: 2017 will be the year we see significant growth in the adoption of interactive ads among advertisers. Giving users the option to choose which ad they see has a tremendous impact on building both unaided recall and purchase intent. We’re no stranger to interactivity in the living room, with our own interactive capabilities we’ve seen a measurable impact on unaided recall and purchase intent – Hulu’s Ad Selector is 150% more impactful than linear TV at building unaided recall. As more brands include interactive ad solutions in their overall campaign, we expect to see continued favorability among viewers. Virtual reality is another piece of content providing advertisers with an incredible opportunity to reach their target audiences beyond conventional means.While virtual reality is still in it’s early days, there is an enormous opportunity for publishers to monetize virtual reality content and help advertisers to build unique, immersive brand experiences with consumers."
2.b) "End consumer subscription: TV is still about consuming all the shows and films you love, but within your own experience – one that’s tailor-made for you and makes it easy for you to enjoy your favorite content. Viewer habits will continue to shift to subscription models that enable them to consume the content they want, when they want, and on the device of their choice."
4. " In 2017 we’re focused on providing our advertisers with more opportunities to elevate their brand and drive better ROI, including: Investing in our interactive advertising capabilities and furthering our partnerships with BrightLine, Innovid and TruX to empower advertisers to make campaigns more engaging and effective on the big screen.It’s no secret that advertisers are generally concerned about issues like transparency and fraud, so we will continue to invest in third-party measurement initiatives that give marketers the proof of performance they need to invest in Hulu with confidence. We’ll also be investing in the Hulu experience for advertisers, one that is a personalized, singular lending itself to a seamless consumer experience with content and advertising."
Celeste Martorana @celesmartorana
Celeste joined Portada’s team in 2014. Since then, she has been working as an editor for Portada’s English-language website and compiling information for Portada’s Databases.