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At the end of 2018, Business Insider Intelligence laid out five digital media predictions for 2019 — and we got most of them correct. We were right that tech platforms would face intensifying scrutiny, including around privacy and antitrust, and that Disney+ would take the lead among new-to-market SVOD, which we discussed here.
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But we also got a couple of things wrong — here’s a look at our 2019 predictions that missed the mark:
1) AVOD platforms will move mainstream as SVOD-saturated viewers seek out fresh content for free. We expected AVOD platforms like Tubi, PlutoTV, and Vudu to achieve greater mainstream appeal in 2019, with consumers increasingly supplementing their streaming video viewing with free, ad-supported platforms. We believed a retreat back to free content would be driven by two main forces: growing subscription fatigue combined with general consumer frustration over too many paid streaming video service options, and growing adoption of connected-TV devices.
But while AVOD has likely boosted viewership in terms of number of hours viewed, user growth has been sluggish. Compared with Netflix, which grew paid subs 21% in 2019 to 158 million, Tubi has about 20 million monthly active users, on par with year-end 2018, and Pluto TV has 20 million, up about 8 million versus year-end 2018.
Nevertheless, we did see some new movement and increased investment in the AVOD space in 2019. Amazon launched a new AVOD platform called Freedive in January, which it rebranded in June as IMDb TV, likely intended as a counterpart to Roku’s Roku Channel for device owners; Viacom purchased Pluto TV in March, has built out new channels with Viacom and CBS content, and is planning an international expansion; Tubi said it would spend nine figures on content acquisitions and struck a major licensing deal with NBCUniversal; and Comcast/NBCUniversal announced that its forthcoming streaming platform, Peacock, will be at least partially ad-supported.
We expect to see greater advertiser interest in ad-supported services in 2020, particularly as the connected-TV advertising opportunity becomes clearer. But most streaming viewership growth will likely still go to dominant SVOD like Netflix or new-to-market paid services like Disney+, HBO Max, and Apple TV+, particularly as the the market crowds further in the first half of 2020. That could mean that some AVOD platforms look for an exit: For its part, Walmart is reportedly looking to offload Vudu.
2) Amazon will buy Snapchat as the social app struggles to add users, compete with Instagram, and make money. We partly built this prediction based on comments by Stern marketing professor Scott Galloway, who argued that Snap would “not be an independent company by the end of 2019,” and would either get bought by Google or Amazon.
And while this may seem a little far afield now that Snap has effectively rebounded on the strength of buzzy AR lenses, games, and original shows, at the end of 2018, it faced significant hurdles amid an intensifying rivalry with Instagram and stagnating user growth in the aftermath of its frustrating app redesign earlier in the year. Given lingering problems, it seemed plausible that Snap would be open to a deep-pocketed buyer, despite notoriously having turned down Facebook CEO Mark Zuckerberg.
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Further, it made sense for Snap and Amazon to forge deeper ties, since the two had partnered earlier in the year in what looked like a positive step to turn Snapchat’s core asset — the camera — into a more functional tool: Snap tested a visual search feature that surfaced links to purchase products on Amazon’s site. We believed that test signaled the potential for more robust integrations: Amazon could’ve enabled merchants to purchase ads on Snapchat and manage their campaigns from its seller platform, driving mutual advertising sales on the app and conversions on the e-commerce platform.
In fact, that’s precisely the partnership that did materialize in April of this year with Snapchat and Shopify. Now that Snapchat has revived somewhat, we think Snap will remain independent and that the company’s dominant focus will be on AR creativity.
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