The future of digitally delivered premium video depends on who controls OTT video advertising revenues.
Do Google or Facebook have the inside track or traditional big
media owners? Some analysts point to Roku, the rapidly growing OTT provider of apps/networks.
Jeff Johnston, media analyst of Arthur Wood, told The Street:
“Not only will Roku benefit from a general shift toward connected TV ad spending, it is in the
catbird seat to serve up ads for OTT providers that battle for subscriber growth. We remain bullish on Roku."
Roku says its active accounts grew 46% to 22 million as of the
second quarter, with revenue spiking 57%
to $156.8 million. Historically, advertising has accounted for two-thirds of all Roku’s revenues.
At least initially, Roku seems in a good position, due to its distribution platform -- those OTT set-top boxes have hundreds of video apps/platforms, while Roku software's connected
TV interface is available on TV set manufacturers.
By many estimates, Roku is a leading OTT distributor vs. Google Chromecast, Apple TV, or Amazon Fire TV.
Aggregation of video impressions will be key -- and that won’t necessarily mean big traditional media companies having control. Growing TV advertising share arrangements -- or financial
compensation -- with Roku or others will be critical to advertising OTT control.
Roku’s bigger gain might be in amassing hundreds of smaller OTT video providers -- and
taking a share of those ad dollars.
Some should also consider virtual pay TV providers, such as Dish Network’s Sling TV or AT&T’s DirecTV Now, as possible big
movers of OTT video ad inventory. In addition, there are outside OTT ad sales organizations -- like Tegna, the TV station group that owns Premion, selling OTT inventory.
All this is why some traditional media companies, like CBS, are looking to their own OTT platform, CBS All Access.
Similarly, there is Hulu and its ad-supported digital
video service — as opposed to its ad-free service more in direct competition with Netflix. Hulu is co-owned by Walt Disney, which now has a 60% stake because of its deal with 21st Century Fox,
NBCUniversal (30%) and Time Warner (10%).
Connected TV ad spend is estimated to hit $8.2 billion in 2018, according to Tru Optik, the video/data management company -- rising
to $20.1 billion in 2020.