While Disney and WarnerMedia have been grabbing the headlines, there’s another TV producer going all-in on digital: Viacom. However, while its rivals hang their hat on subscription video-on-demand, it is leaning into the world of linear free ad-supported TV (FAST) with the newly acquired Pluto TV.
Viacom’s traditional TV market declines
Viacom’s just-ended fiscal Q2 2019 tells a good-news-bad-news story for the company. The bad news is that US advertising revenue continued to fall, losing 2.5% to reach $820 million in the quarter. The good news is that the performance represents an improvement. Ad revenues fell by 4.3% and 3.2% in the previous two quarters. The company thinks it will move ad revenue back into positive growth territory before the end of the year.
Pluto TV holds the promise of ad revenue growth
Much of the optimism seems to hang on the continued growth and success of the company’s linear FAST service Pluto TV. Viacom purchased Pluto TV for $340 million in January, and the division is already estimated to be generating $150 million per year in ad revenue.
Part of Pluto’s success is its ability to do something traditional linear TV cannot: target individual viewers with ads. The addition of Pluto TV’s addressable ad inventory at the beginning of the company’s fiscal Q2 could already have provided Viacom with a quick boost. The company saw revenue from its advanced advertising unit grow 75% in the quarter, up from Q1’s 53% growth.
The ability to target ads is crucial to Pluto TV’s model. It allows the company to create a mass market advertising product from many niche channels. Ads can be targeted at any viewer, regardless of the channel they are watching.
Pluto TV is emerging as a core part of Viacom’s strategy. Viacom CEO Bob Bakish says the company would “lean into [Pluto TV] harder and invest some incremental money.” Mr. Bakish appears to be investing in Pluto TV to help it broaden its approach in both content and reach.
Viacom premium content on Pluto TV
At the beginning of May, Viacom channels BET, Comedy Central, MTV, Nickelodeon, Nick Jr, and Spike launched co-branded channels on Pluto TV. The channels will feature content from the sister TV channels. For example, Comedy Central on Pluto will have specials from The Daily Show with Trevor Noah and library episodes of Tosh.0, Another Period, and Ugly Americans.
Also, Pluto TV will launch signature and pop-up channels using Viacom content and branding. Signature channels will include Paramount Movie Channel and CMT Westerns. Pop-up channels will provide marathons of popular TV series. For example, a channel for The Hills will appear leading up to the launch of The Hills: New Beginnings on MTV on June 24th.
Pluto TV is also partnering with other content providers to expand its offerings. It has recently done deals with CNN, BBC Studios, and Major League Soccer to launch channels. As well, Pluto TV will also launch Pluto Latino, a Spanish version of the service, in the US in July 2019.
Viacom is also increasing its investment in social media. It has created a new morning show called Black Coffee from BET and will also deliver SpongeBob Smartypants Game Show from Nickelodeon.
Pluto TV expanding international presence
Pluto TV is already available in the UK, Germany, and Austria. According to Mr. Bakish, those services will expand. Also, it will soon launch in Switzerland and later in the year in Latin America. He said to expect launches in new territories in 2020.
Pluto TV is already helping Viacom reach 18-34-year-olds in the US. The addition of Viacom content to the service should help it deepen the relationship. Moreover, it should help pull in a sizable audience international.
Why it matters
The emerging opportunity for free ad-supported TV online is attracting the attention of TV brands in the US and around the world.
Expect more broadcasters and cable TV channels to step into the FAST opportunity.