nScreenMedia OTT multiscreen media analysis

2-in-5 ads fail to start in ad-supported streams

growth in viewing hours between Q3 2018 2019

Ad-supported video streaming is headed for a banner year of growth in 2019. However, the industry is dealing with an epidemic of ad-start failures that threatened to stymie its growth.

Video streamers watching much longer

The growth in penetration of SVOD services has slowed markedly over the last year. Leichtman Research says that the penetration of SVOD in U.S. households was 52% in 2015, and grew to 69% in 2018, and 74% in 2019. This data might suggest that interest in Internet TV might be cooling. Far from it, according to Conviva’s State of Streaming Q3 2019 report.

The Conviva data shows that the growth in the length of time people spend streaming continues to race ahead. In Q3 2019, total viewing hours increased 53% over the same quarter in 2018. Live streaming increased 42%, while on-demand viewing grew 61%. As well, connected TV viewing hours grew 58%, far faster than mobile (33%) and PC (36%.)

Ad-start failures are epidemic

Conviva says that an alarming 2-in-5 video ad starts result in a total failure to deliver any ad viewing time whatsoever. 35.7% of the ads fail to start due to some problem in the ad value chain of delivery. 3.9% of ad starts do not deliver any ad viewing because the streamer exits before the ad begins. On some days, the average ad failure rate reached almost 3-in-5, and in some extreme cases, failures reached 100%.

Ad quality metrics Q3 2019

How can such an alarming ad failure rate persist? In most cases, the streaming viewer is unaware that there is a problem. Some viewers may have seen a momentary glitch or black screen during playback, but in most cases there would have been no visual evidence anything untoward had happened. After all, streamers are unlikely to notice the absence of an ad.

One thing a viewer does notice is poor quality ad playback. The average ad rebuffering was 0.77% in Q3 2019, and the average ad startup time was 1.14 seconds.  On the worst days, ad rebuffering increased to 3.22%, and startup times to 3 seconds.

If video providers are to begin to capture some of the $70 billion TV ad market, they must address the appalling ad failure rate. Though traditional TV viewing continues to decline, traditional TV programmers can at least offer advertisers a guarantee that their ad will play!

Roku devices dominate connected TV viewing

The management at Roku will certainly not be pleased with the ad failure rate since they are increasingly dependent on ads for revenue growth. However, they will be heartened by the amount of viewing time delivered by Roku-powered devices. 56% of premium video viewing hours were delivered by connected TV devices in Q3 2019. Of that, Roku device share was 44% (nearly a quarter of all viewing time overall.)  Amazon Fire TV devices delivered 20% of connected TV viewing hours, and Apple TV and Xbox delivered 9% each.

Mobile devices delivered 22% of premium video viewing hours. Android devices carried 59%, down 4% over Q3 2018, and iOS 41%, and increase of 4%.

One interesting note Conviva makes about mobile viewing is regarding live NFL games. The company says the number of minutes spent watching NFL on mobile increased 41% over the last year. However, the minutes viewed per play requested remained the same at eight minutes. The data suggests that mobile viewers are using their device to check on a game’s progress, rather than watching the whole game. As well, they are checking in with more games than they were a year ago.

Why it matters

Though the growth in SVOD penetration is slowing, growth in hours consumed is not.

Ad-supported providers must address the large number of ad start failures if they are to be successful in competing with traditional TV for ad spending.

Roku dominates the delivery of premium video to the televisions in the U.S.

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