Boom In OTT Devices May Be Big Boost To Small Providers Like Popcornflix

Netflix gets enormous credit for popularizing the idea of online video content, but if you’re an advertiser that might like to have a little front-end commercial before an episode of “House of Cards” you’re out of luck. People pay for Netflix  Advertisers, head for YouTube.

Of course, there are other ad-supported video sites, but in a way, the online video business took a while to get that act together, and is defined by the two entities--one that doesn’t accept advertising and another one that accepts almost any level of content, however banal.

But now that OTT devices have really begun to enter the mass market, and Nielsen reports that even old people are turning toward digital devices for content, it is clearer than ever that something is happening here, and has been happening for a lot longer time than the ad biz has acknowledged it.



Nielsen said that in the third quarter, viewership via device by people over 55 increased 55% over the year before, while their viewership of traditional TV didn’t budge. Among 18-to-49s, the demographic most cherished by advertising execs (many of whom are over 55 by the way), traditional TV watching declined 3% while watching online went up 53%.

According to other, new data from Parks Associates, about one in 10 broadband homes bought streaming device so far this year. Then there’s this stunning assertion from Barbara Kraus, director of research for Parks:  “Nearly 50% of video content that U.S. consumers watch on a TV set is non-linear, up from 38% in 2010, and it is already the majority for people 18-44,  The market is changing rapidly to account for these new digital media habits. Roku now offers a streaming stick, and Amazon’s Fire TV streaming stick leaves Apple as the only top player without a stick product in the streaming media device category.”

I’m always amazed by Roku, which outsells Apple and Google and even Amazon, when it really ought to have been murdered by any one of them by now.  I mentioned that a while ago  to Rajeev Raman the CEO of digital platform 1Mainstream, who is one of Roku’s original architects and still a Roku partisan, and I wondered why Roku didn’t market itself more aggresively  to really distance itself from the pack. “Oh,” he laughed. “You think they could out-P.R. Apple? Or Amazon? Or Google?”

Kind of a good point.

On Roku, one of its better performers (and less known to the world) is little ad-supported Popcornflix, which has a library of 1,000 films or so.

I’m not anywhere as smart about movies as Roger Ebert ever was, but I think it’s fair to say Popcornflix has virtually none of the world’s greatest movies. But it does have some decent ones, and it costs nothing, except to endure some commercials.

Their channels, Popcornflix, Popcornflix Kids, and Frighflix, have now been downloaded on Roku 4.5 million times. They’re either on, or headed soon for Amazon Fire and Chromecast and Xbox and Playstation consoles.

For David Fannon, the executive vice president, all of those new potential places to be is, obviously, exciting, and so are the commercial possibilities of advertising supported video. “I do believe in AVOD. I think it’s the new frontier and it’s amazing more people haven’t seen the possibilities,” he said. The “riches and allure” of SVOD, he says, leaves possible competitors on the sidelines. After all, 30 million Netflix subscribers in the U.S. paying around $9 a month for starters, is not a bad pay day compared to the hard-to-achieve decent CPMs for ad supported fare. Though, someday, that will change.

Fannon, who in the past was an executive at A&E, talks the talk, for sure, noting that after a point even Netflix’s library gets a little meh. “When Netflix started, they loaded up on (acquiring) content,” he said, but that’s harder and far more expensive than it once was.

So for Netflix, a certain percentage of viewers are choosing what old NBC programmer Paul Klein once called “the least objectional program” available. (In that case, Klein was saying in a three network/no VCR  environment, viewers pick the program least likely to give them the dry heaves. At the time Klein got the job, unfortunately, NBC was very third place.)  

The difference between Netflix and and Popcornflix, on the bottom-line level, is that it has many of those kinds of those so-so titles, too, but for free. That’s  not an extremely high bar, but if you rummage around a lot, you can find some gems--early or not heralded films from actors and directors who are now more famous.

Fannon bristles, but he doesn’t hang up the phone, when you point out the low spark of some of these movies, but he also defends Popcornflix both on an artistic and economic level. “I don’t need 40 million subscribers,” Fannon says. “ I control most of the content I have” and in a growing market where substantially more people are going to be watching online video on TV screens, Fannon thinks he’s in a commercial sweetspot. Time and trends will tell.
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