GLOBAL VIDEO INDEX -...

GLOBALVIDEOINDEXQ3 2017

2 OOYALA GLOBAL VIDEO INDEX Q3 2017

POINT OF VIEW ······································································································4

GLOBAL LIVE SPORTS CONTENT CONSUMPTION TRENDS ················8

TABLET AND SMARTPHONE VIDEO TRENDS ·········································· 12

GLOBAL MOBILE CONSUMPTION TRENDS ·············································· 15

ENGAGEMENT TRENDS ···················································································· 19

VIDEO ADVERTISING TRENDS ······································································ 22

ABOUT OOYALA’S GLOBAL VIDEO INDEX ··············································· 28

TABLE OF CONTENTS

OOYALA GLOBAL VIDEO INDEX Q3 2017 3

Christmas is coming and I don’t think I’m on Santa’s list for an iPhone X, as much as I’d like to be. But there are an awful lot of consumers out there who will be on the list for one — or for an iPhone 8, a Google Pixel, Samsung Galaxy, HTC One, Sony Xperia, etc. More than 366 million smartphones were shipped in the third quarter, and that was pretty much over before most of the new or updated phones hit the market in earnest. Now, with everyone’s best foot forward, the fourth quarter is shaping up to be a big one for smartphone sales. This, of course, is great for online video because online video is becoming more mobile-centric around the world.

In Q3 we saw more than 58% of all video starts occur on mobile devices, the highest number of mobile video plays we’ve seen, and most were on smartphones. There were even more mobile plays in Asia-Pac, to the tune of 64%, quickly establishing it as a pacesetter for mobile video consumption.

Consumers have been the leaders of this video evolution, this period of disruption, discovery and new directions. It was consumers who fueled the growth of the first “global television network,” Netflix, and it will be consumers who — eventually — make the bulk of video delivery wireless.

Not very long ago, conversations about online video often centered around prophecies like, “Putting the Super Bowl Online Would Break the Internet,” or, “There’s No Way That the Internet Can Support Live Linear (Especially Sports of Any Kind).”

And we know now that that’s just bunk.

Technology — and content owners — have responded to consumer demand. The industry is getting better at delivering live linear, live sports, and live anything. I stream two or three pro football games (classic naysayer rant: “They Will NEVER Stream NFL Football!”) to my 80-inch LED screen every Sunday and have no complaints about quality, although I do wish the Giants would play better. The picture quality is better than that from a couple of pay-TV operators I’ve dealt with in the past. Oh, and it’s way cheaper. And I can watch it on any device, anywhere, whenever I want to.

Verizon, early in November, said it’s testing and moving forward with millimeter-wave high-speed 5G wireless connections that will let it do away with digging up a customer’s yard to plant fiber to the home. Instead, they’ll stream a broadband connection from a hub to the home that, Verizon says, will be more than adequate for consumer broadband… including streaming.

POINT OF VIEWJIM O’NEILL, PRINCIPAL ANALYST & STRATEGIC MEDIA CONSULTANT


Again, a great example of a technology company responding to consumer demands. Because, really, who wants some sub-contractor tearing up your yard to bury a fiber line you don’t really want to pay a couple of hundred bucks for anyway? Wireless is coming.

AT&T knows. It’s also playing with 5G network tests in several cities. Even cablecos like Comcast and Charter are looking to hook up with partners who can give them wireless spectrum to stream over.

There always has been — and remains — a lot of talk about how online video is disrupting the industry. I was just a kid when cable was making a big push into my Long Island neighborhood in the ’70s and I can remember the signs on movie theaters urging consumers to “Stop pay TV!” Why? Because, just like over-the-air broadcasters in the 1940s and ’50s (who disrupted the movie industry), cable was going to disrupt the broadcast industry.

But what we all know is that it wasn’t a disruption as much as it was simply a change in the way content was delivered. Just like OTA and just like OTT.

And, it appealed to consumers. I may have been living on the pig’s back in East Northport, New York… I got seven, yep, seven channels… WABC, WCBS, WNBC, three independents and PBS (and on a clear day, two more networks channels from Connecticut). But cable delivered so much more.

Just like OTT does now.

A quick note: This is the 25th edition of the Global Video Index, proving once again that time really does fly when you’re having fun. It has been a great run, and we hope you continue to enjoy it. Please keep that feedback coming.

Here are the highlights from Q3:

Live sports consumption trends:

♦ Smartphones are used most often to watch online sports

♦ PCs and connected TVs see significantly more engagement than mobile devices

♦ Tablets split the bill in terms of engagement, a convenient compromise between a smartphone and the largest screens

Mobile video trends:

♦ The engine driving mobile video consumption, after a brief sputter last quarter, is back. More than 58% of video plays occurred on mobile devices in Q3, a record.

♦ Video was played on smartphones 4X more than on tablets — setting a record high in July at 51.1% of all plays.

♦ Mobile plays were over 50% for the sixth consecutive quarter.

♦ Year-over-year growth was 11.9%.


http://go.ooyala.com/wf-video-index-q2-2017

http://go.ooyala.com/wf-video-index-q2-2017

♦ Since Q3 2011, mobile plays have grown a whopping 4,064%.

♦ Next step? More than 60% of video plays will be mobile within six months.

Regional mobile video trends:

♦ APAC led the world with mobile plays for the second quarter in a row at 64.4%.

♦ APAC smartphone plays tallied 52% of all video plays.

♦ EMEA’s mobile video plays grew 15% over Q2 to reach 56%.

♦ EMEA’s tablet plays reached nearly 14%, up 25% from a year ago.

♦ North America is slightly behind the rest of the world when it comes to mobile video plays, at just 54.2%.

♦ North America saw nearly 20% of mobile video plays coming on tablets, with tablet plays increasing 20% from a year ago.

♦ Latin America is typical of the rest of the world with 57% of video plays on mobile devices.

♦ Latin America has the lowest percent of plays on tablets (4.7%), but the highest percentage of plays on smartphones, 52.3%, just ahead of APAC’s 52.1%.

Time watched by device and video lengths:

♦ Smartphones, tablets and connected TVs all saw long-form content time watched exceed 50% for the third consecutive quarter.

♦ Long-form time watched was up nearly 77% for smartphones from a year ago and up nearly 70% for tablets.

♦ Year-over-year time watched for medium-form content was down on every device.

♦ PCs saw the largest share of short-form content time watched (41%), topping smartphones (36%) and tablets (21%).

Video advertising trends:

♦ PCs (41%) edged smartphones (39%) for the percentage of pre-roll ad impressions on broadcaster platforms.

♦ PCs (52%) also edged smartphones (37%) on publisher platforms.

♦ Broadcaster pre-roll ad completions generally were higher on all devices than were those on publisher platforms.

♦ Mid-roll ads saw the highest percentage of completions for broadcasters and publisher platforms.

POINT OF VIEW


There’s no doubt that sports — especially major sports — with international appeal are big business. Broadcasters are willing to spend millions, even billions, of dollars for rights to a season even now, in an era of seemingly waning fan interest and even further fragmented viewing habits.

But there obviously is still money to be made and broadcasters, tech companies and the leagues themselves are looking for ways to bolster sagging event attendance numbers. Increasingly, they’re looking online to stream live events to a potentially global audience. The National Football League in the United States is a quick example of just how ready leagues are to seed the Internet with games, hoping to harvest viewers from around the world — especially China and its vast store of video consumers. England’s Premier League football (soccer) is another league that has gone all in, signing an array of digital deals to take games online globally. Formula One racing, World Cup soccer and the granddaddy of them all, the Olympic Games, obviously are the headliners with the most to gain.

But streaming live online isn’t just for the behemoths of sports. There are plenty of small college sports getting play in the U.S., regional sports clubs elsewhere and a variety of niche sports that also have their content online, and live, in an SVOD or AVOD format.

But who’s watching?

We took a look at a selection from each of those categories to get a better idea, breaking a selection of customers into what we defined as:

♦ Major sports with an international following;

♦ Major sports with a regional following; and,

♦ Niche sports with a niche following.

We looked at total viewing time and at the devices used to consume the events.

GLOBAL LIVE SPORTS CONTENT CONSUMPTION TRENDS


MAJOR SPORTS WITH AN INTERNATIONAL FOLLOWING

Major sports are a significant draw for consumers, especially when they are played at an elite level by athletes who — in their home countries — are household names; and, who — think David Beckham, Peyton Manning, LeBron James, Roger Federer and the like — also have an international fan base, or at least name recognition.

In our sample, we first looked at what devices events were available on. Not surprisingly, mobile devices dominated, capturing 58% of users. Smartphones drew the largest segment, more than 46%, while tablet users attracted more than 11%.

About 40% of viewers watched the events on PCs — either desktop or laptop computers — with a very small segment watching on connected TVs. Viewership was available in every region, and the bulk of viewers watched at a time when they likely were at work or school, which accounts for the limited CTV use.

Tablets actually kept viewers most engaged, with the average viewing time exceeding 66.7% of the streamed event action. Desktops were just off that mark, at 65.7%, with connected TVs next at 61%. Smartphones proved to be least

effective at engaging viewers, despite being the device most often used to access the action. Viewers watched just 44.2% of event action on smartphones.

… And, with Geo Blocking

We also took a look what happened when a major sport with an international following was geo-blocked, where viewers outside a specific region or country were denied access to the event.

Interestingly, mobile still rules, attracting nearly two-thirds of users (64%); smartphones remained the device of choice to access the event, attracting more than 51% of users. PCs followed at more than 35%, tablet users made up more than 12% of the audience and connected TV users less than 1%.

Viewing time for geo-blocked events also was of a similar mix, albeit with significantly smaller percentages. Tablets again engaged viewers most, 53.0%, PCs were next at 47.1% and smartphones trailed at 30.3%. Connected TV engagement — primarily because of the low number of users — was insignificant.

PC PHONE TABLET CTV46.4%

40.0%

11.3%2.2%

SHARE OF VIEWERS BY DEVICEMAJOR SPORTS WITH ANINTERNATIONAL FOLLOWING Q3 2017


MAJOR SPORTS WITH A REGIONAL FOLLOWING

Major sports with regional appeal often still draw a rabid fan base, and might have a measure of worldwide appeal, but they just don’t generate the worldwide following that the upper tier of sports do. And, they generate a significant differential in how engaged their fans are. A game between fierce rivals or the leaders in a particular division, for example, is likely to keep fans involved far longer than a game with less on the line.

Still, device usage veered toward mobile, with mobile users making up 65% of viewers for major games; smartphones came in at 52%, tablets at nearly 13%. PC users made up nearly 33% of the audience and connected TV users nearly 3%.

PC users stayed engaged for nearly the entire game, nearly 97%, with connected TV users close behind at nearly 87%. Tablet users watched more than 61% of game action, and smartphone users just more than 28%.

For games that were deemed less important, or ones that generated less interest overall, mobile remained most popular at 62%, with smartphone share at nearly 50% and tablets at 12%. PCs made up 34% of the audience and connected TV users nearly 4%.

As for engagement, no surprise: it was shorter, but still were a reflection of more popular events. PC viewers were most engaged, at 70%. Connected TV users at 57% were more engaged than tablet users, who watched just more than 43% of the action. Smartphone users were least involved at just less than 20%.

NICHE SPORTS WITH A NICHE FOLLOWING

Niche sports with a niche following could be anything from badminton to fencing to quarter horse racing to, well, just about anything. But these sports may still have a cadre of fans internationally, as well as rabid followers who are close to the sport.


GLOBAL LIVE SPORTS

CONTENT CONSUMPTION

TRENDS


32.6%

12.5%2.9%

SHARE OF VIEWERS BY DEVICE,MAJOR SPORTS WITH AREGIONAL FOLLOWING Q3 2017

These events took place at a time when the bulk of viewers were working or at school, so it’s no surprise that mobile devices were used most, more than 69% of the time. Smartphones were used to catch the action nearly 20 times as often as tablets, accounting for 66% of the audience, compared to just more than 3% for tablet users. About 28% of users watched on PCs and another 2% watched on connected TVs.

Connected TV users watched for 82.1 minutes, by far the most of any device. PC users were engaged for 58 minutes, tablet users 49.7 minutes and smartphone users 19.7.

SPORTS CONSUMPTION OVERVIEW

It should come as no surprise that mobile devices were the most popular for viewing sports events, especially since 18–49 year-old males tend to be the most enthusiastic sports fans as well as the most enthusiastic adopters of watching online video on smartphones. Rolling all the events up into a single ball, mobile accounted for nearly 63% of all plays, with smartphones at 50% and tablets at 12%. PCs made up 35% of plays and connected TVs just less than 3%.

PCs (60.9 minutes) and connected TVs (53.4 minutes) were the most engaging devices, together averaging 57.15 minutes of viewing. Not far behind were tablets at 48 minutes. Smartphones, by comparison, were significantly less engaging, with viewers watching for just 23.4 minutes.

THE BOTTOM LINE

For sports engagement, size does matter.

While smartphones saw the highest number of plays, by far, they also had the lowest engagement of any device by a large margin. Viewers likely found it convenient to check the action on a smartphone, particularly when away from a larger screen. But, if they wanted to be more involved, they “sized up,” making tablets, connected TVs and PCs the devices of choice.

That distinction should help content owners blaze a more defined path toward monetization.

Because smartphones are used — in these cases — multiple times to consume small pieces of content, it would make sense to use primarily pre-roll ads. For the other three devices, a combination of pre-roll and multiple mid-roll ads would make more sense.



28.4%

3.4% 2.3%

SHARE OF VIEWERS BY DEVICE,NICHE SPORTS WITH ANICHE FOLLOWING Q3 2017

TABLET AND SMARTPHONE VIDEO TRENDSThe global smartphone market continues to grow; researcher IHS says it was up more than 6% from a year ago and noted that some 366 million phones had shipped during the quarter, up from 345 million in 2016’s third quarter.

That may pale in comparison to Q4 of 2017, as most of the biggest smartphone manufacturers introduced new versions just in time for the holiday season.

Apple, for example, got a little help from its new iPhone 8 in Q3, but the iPhone X is going to land heavily in the fourth quarter. Samsung’s new Galaxy is out, as is Google’s new Pixel 2, along with a dozen other Android-based phones that will drive phone upgrades and new users into the market.

What will come with that, of course, is a new wave of OTT adopters and mobile OTT users.

The third quarter — for the sixth consecutive quarter — saw mobile video make up more than 50% of all online video starts. And, it was also a quarter that saw strong growth. Quarter-over-quarter, mobile video plays were up nearly three percentage points to a record 58.3%. Year-over-year, mobile video plays were up a very healthy 11.9%, for the second quarter in a row.

A reference point: In Q3 2011, when our first Global Video Index was launched, mobile video plays made up just 1.4% of all plays. Here’s what the Y/Y growth looks like:

♦ Q3 2011: 1.4%

♦ Q3 2012: 6.3%

♦ Q3 2013: 15.6%

♦ Q3 2014: 30.0%

♦ Q3 2015: 39.7%

♦ Q3 2016: 52.1%

♦ Q3 2017: 58.3%

From a percentage growth standpoint, that’s a whopping 4,064% in six years, a Compound Average Growth Rate (CAGR) of more than 86%.

And, we are far from being done with mobile growth. Users continue to watch any content anywhere. According to a study from Zenith, the amount of time consumers spend watching online video is expected to increase nearly 20% this year, with mobile video viewing growing by 35%. Desktops, laptops and connected TVs? Just 2%.

Frankly, those numbers seem pretty tame, at least according to the continuing growth we’ve observed. We think that more than 60% of all video starts will happen on mobile devices within the next six months.


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accumsan orci ornare consequat. Nullam luctus faucibus egestas.

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SHARE OF PHONE VIDEO PLAYSSHARE OF TABLET VIDEO PLAYS

SUM OF PHONE + TABLET VIDEO PLAYS

THE RISE OF MOBILE VIDEOQ3 2017

75%

50%

25%

0%

JUL2013

JAN2014

JUL2014

JAN2015

JUL2015

JAN2016

JUL2016

JUL2017

SEP2017

JAN2017


SMARTPHONES

Video plays on smartphones made up the bulk of mobile plays in Q3, outshining plays on tablets by nearly 5X. More than 48% of all video starts were on smartphones, the highest number we’ve seen in the past 25 quarters. And July’s 51.1% share of all plays also was a record for a one-month period, topping the 49.5% we saw in December 2016.

Year-over-year growth was 8.8% with three-year growth at 24.1%. The third quarter also saw an acceleration of growth for smartphone plays after a 0.9% dip last quarter, one of only a couple of declines in the past 25 quarters.

TABLETS

Tablet plays made up only 18% of all mobile starts, but a full 10.3% of all video starts. This was only the second time ever that tablet plays exceeded the 10% mark and the 18% was just 1% off its record 19% last quarter.

While tablet video plays were essentially flat quarter over quarter, annual growth continued apace, with an increase of nearly 29%.

With tablet shipments in a lull, it would be easy to dismiss the device as passé. But doing so would be a mistake, as the device may actually simply be in a mild state of hibernation. Major manufacturers of the devices haven’t yet given up on them and, in fact, the last quarter saw a mild stirring in shipments. That includes a 2% quarterly growth in shipments and a second consecutive quarter of year-on-year growth for Apple, which has increased its industry-leading market share from 19.8% to 23.1%.

In addition to (minor) signs of life in global tablet shipments, tablets increasingly are used in schools around the world. That initiative has seen both Apple and Google ship millions of units, helping to train young consumers in the joys of tablet use.

THE BOTTOM LINE

While we may be seeing a flattening of the mobile video plays growth curve, it’s not going to change its overall upward course. Younger viewers — and, increasingly, older viewers, too — remain enamored with mobility. While some viewers will only watch long-form content on the largest screens available, many more have decided that screen size, by and large, is meaningless for any application — even sports.

And the trend is global.

Smartphone sales were strong in Q3, a quarter in which many new devices were just introduced. Now that even more devices are readily available in the marketplace, expect a surge in mobile viewing.

We are on the cusp of 5G deployment, with some experimental networks already being tested and companies like Verizon vowing to deliver broadband to homes via wireless connections that will have enough bandwidth to handle any application.

Delivery to mobile devices could deliver in return the deepest analytics ever available to content providers — analytics that should be used to maximize viewer engagement.


TABLET AND SMARTPHONE

VIDEO TRENDS

EMEA

While Q2 saw EMEA’s mobile growth flatten, Q3 saw EMEA mobile video plays hit a sizeable growth spurt: a 15% quarter-over-quarter increase, with mobile taking more than 56% of all video views. Year-over-year growth was even stronger, with the region recording 22.7% growth in mobile plays.

EMEA smartphone plays increased to 42.4% of all plays, up from 35.2% a year ago, an increase of more than 20%. Q3 showed 12.2% growth over the previous quarter, as well.

Nearly 14% of all video plays were on tablets, giving them nearly one-third of all mobile plays, considerably more that the 10% seen globally. EMEA’s increase in Y/Y tablet plays was 25.4%.

EMEA has seen a surge in the amount of content being made available to stream to mobile devices, one the region’s viewers have taken advantage of. More wireless operators also are offering cheap data with no data caps, a sure way to feed demand.

GLOBAL MOBILE CONSUMPTION TRENDS

DESKTOP VS. MOBILE SHAREEMEA Q3 2017

75%

25%

50%

0%Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

DESKTOPMOBILE


APAC

Mobile video consumption in the Asia-Pacific region was the highest in the world during the third quarter, a reprise of Q2. Mobile devices’ share of video plays topped 64.4%, the highest in the world and a 24% increase from a year ago when mobile plays were already a very respectable 51.9%.

Smartphones received the bulk of video plays, with a share that topped 52%. That’s the highest percentage of smartphone plays globally and a 20.1% increase from a year ago.

Tablets tallied another 12.2%, the second highest in the world after EMEA’s 14%, an increase of 43.7% over Q3 2017. Tablets made up about one in five of all mobile video starts.

Asia-Pacific remains a hotbed of mobile video, with more operators looking to expand wireless networks to reach more distant population centers. Mobile has become the first screen for consumers in much of the region, a region where mobile subscriber growth continues to boom. Industry association GSMA estimates that SIM connections in Asia will increase from 4.2 billion in 2016 to more than 5.1 billion by 2020. GSMA also notes that the region currently has more than 2.7 billion unique mobile subscribers, and forecasts that the number will grow to 3.1 billion by 2020. Mobile broadband connections are expected to increase to 72% of mobile subscribers by 2020 from 53% in 2016.

DESKTOP VS. MOBILE SHAREAPAC Q3 2017

75%

25%

50%

0%Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

DESKTOPMOBILE


GLOBAL MOBILE CONSUMPTION

TRENDS

https://www.gsma.com/mobileeconomy/asiapacific/




DESKTOP VS. MOBILE SHARENORTH AMERICA Q3 2017

75%

25%

50%

0%Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

DESKTOPMOBILE

NORTH AMERICA

North America actually is slightly behind the global curve for video consumption on mobile devices, with just 54.2% of video plays on mobile devices, behind the 58% average for the rest of the world. Nevertheless, that total is nearly 5% higher than it was a year ago.

Smartphones made up 43.7% of video plays in the quarter, a modest increase from 42.9% a year ago. That smartphone total is actually the lowest percentage of any region we follow.

Video plays on tablets, meanwhile, accounted for 10.5% of all video plays, ranking third in the world behind EMEA and APAC. Nevertheless, plays were 20% higher than a year earlier. Tablet plays made up nearly 20% of all mobile plays in the quarter — about three percentage points higher than they did a year ago.

Tablets may continue to take a higher share of mobile plays in North America than elsewhere, as they increasingly are being used in K-12 classrooms, creating a familiarity with the devices that potentially will continue long after youngsters graduate.

The next five quarters could see enormous mobile video growth in North America as a number of major pay-TV operators push to expand their wireless networks with faster networks offering more liberal — and in some cases, free — data caps.


LATIN AMERICA

Latin America is just 1% off the rest of the world’s pace for video plays on mobile devices, closing Q3 with 57% of plays on smartphones and tablets. But the region’s mobile video growth in the past year has been strong: mobile plays increased 18.5% since last year.

Smartphones have played the biggest role in Latin America, increasing to 52.3% from 43.45% in Q3 2016. Videos are more than 11X as likely to play on a smartphone as they are on a tablet, as tablets make up just 8% of total mobile plays, and about 4.7% of all video plays. Tablet plays as a percentage of all mobile plays have been sliding for the past 21 months, from about 12% in January 2016, registering the lowest percentage of video plays in the world, less than half of North America’s number and just one third of the world leader, EMEA.

But the potential for an enriched mobile environment in LatAm is strong, and increases in the percentage of mobile starts are likely, especially as more premium content is made available online. The region has one of the lower penetration rates for fixed broadband and has been seen as a model opportunity for expanding mobile broadband networks.

THE BOTTOM LINE

Mobile devices are simply the future of online video, embraced by younger users and by the companies that control distribution, especially in hard-to-access areas where a mobile network deployment is likely cheaper and easier than a fixed network.

Making sure content is delivered as well as, if not better, on mobile devices than to traditional devices in the home will appeal to both younger users and transitioning Boomers and Gen X.

The detailed data available from mobile networks will increase ROI if utilized correctly.

DESKTOP VS. MOBILE SHARELATAM Q3 2017

75%

25%

50%

0%Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

DESKTOPMOBILE


GLOBAL MOBILE CONSUMPTION

TRENDS

LONG-FORM CONTENT

Changes in time watched for long-form content (longer than 20 minutes) remain the most stunning of all. Smartphones, tablets and connected TVs all saw time watched exceed 50% in Q3. It’s a trend we believe will continue to grow, especially as more premium content comes online and more users across all demographics adopt alternate delivery methods. We believe that tail-end Boomers, as they approach and enter retirement age, are very likely to increase their consumption of video from all sources — especially virtual MVPDs like SlingTV and DirecTV Now that allow users to access live TV at significantly lower cost than traditional pay-TV services — resulting in a surge of viewing on tablets and smartphones.

Another factor is the burgeoning number of OTT services. In North America alone, more than 200 OTT services currently are deployed. More — including platforms owned by broadcasters and major studios — are on the

horizon for Q4 and beyond. Those premium content sources are bringing a wealth of highly desired long-form content to consumers who are eagerly adopting OTT as a primary source of video delivery.

In fact, over the past seven quarters, time watched for long-form content has trended steadily upward on every device.

For PCs, it was a 37% increase, a significant Compound Average Growth Rate (CAGR) of 5.41%. The rise of long-form time watched on smartphones was more marked. Since Q1 2016, smartphones have seen time watched nearly double, growing 82%, or a CAGR of 10.57%. Tablets, too, have seen strong growth for long form, with time watched increasing by 43%, a CAGR of 6.16%. Even connected TVs, which have always carried the highest long-form content time watched figures, have seen strong growth during the nearly two years we tracked them. Between Q1 2016 and Q3 2017, the percentage of time watched on those devices increased 19%, a CAGR of 2.98%.

ENGAGEMENT TRENDS

SHARE OF TIME WATCHEDBY DEVICE AND VIDEO LENGTH Q3 2017

100%

25%

50%

75%

0%PC PHONE TABLET CTV

SHORT-FORM(0–5 MINUTES)

MID-FORM(5–20 MINUTES)

LONG-FORM(20 MINUTES OR MORE)


For Q3 2017, long-form time watched was greater than 50% for smartphones for the third consecutive quarter. Tablets were above 50% for the fourth consecutive quarter and connected TVs were above 50% for the seventh consecutive quarter. The specific results were:

♦ PCs (laptops and desktops): 48%, up from 42% in Q3 2016 (+14.3%);

♦ Smartphones: 53%, up from 30% (+76.7%);

♦ Tablets: 73%, up from 43% (+69.8%); and,

♦ Connected TVs: 99%, up from 90% (+10.0%).

MEDIUM-FORM CONTENT

Since Q1 2016, time watched for medium-form content (5 to 20 minutes) has declined slightly, albeit not at the pace we’ve seen with short form (below). The reduced time watched for medium-form content really is the product of a cause and effect relationship with long- form content. As more long-form minutes have been consumed, their sheer volume is affecting both medium- and short-form content share.

To be clear, there are more total minutes being watched for all three formats, but the increase in long-form minutes is significantly diluting the other two categories.

PCs have seen medium-form time watched vary between a low of 10% and a high of 18%, but overall are lower as a destination for medium-form over the past seven quarters (a -3.94% CAGR), something that likely will continue. Smartphones have seen a modestly wider range, but see medium-form time watched trending downward, declining 50%, or -10.91% CAGR. Tablets, too have seen a decline in time watched for medium form, off 50%, or -10.91 CAGR. As expected, connected TVs also saw a decline, down 80%, or -23.53% CAGR.

For the quarter, medium time watched was fairly static Q/Q, with the exception of smartphones, but with sharp declines from a year ago. Specifically:

♦ PCs, which saw the highest time watched for medium-form content, were at 11% in Q3, compared to 12% in Q2 and 15% in Q3 2016 (-8.3%);

♦ Smartphones, as in Q2, had the second highest time watched for medium-form at 8%, down from 11% in Q2 and 18% a year ago (-38.9%);

♦ Tablet medium-form time watched was 6%, flat against Q2 but down from 17% (-64.7%) Y/Y; and,

♦ Connected TVs were at 0.5% in Q3, slipping from 2% in Q2 and 3% in Q3 2016 (-83.3%).

SHORT-FORM CONTENT

Again, the explosion of long-form content across all devices has significantly diluted the amount of short form time watched across all devices. Sports highlights, news items, short-form scripted content and user-generated content generate more clicks than medium- and long-form content, but the time watched for short form content continues to pale on all devices as long-form content rushes online.

Since 1Q 2016, the decrease in short-form time watched on PCs was about 19.6%, or -3.57% CAGR. Smartphones, once the bastion of all things short, saw a decline of 29.1%, or -4.37% CAGR over the same period. Smartphones routinely saw in excess of 50% time watched prior to Q4 2016, when it dropped below 50% for the first time. Tablets have experienced one of the largest declines in short-form content time watched, tumbling 44.7%, or -9.41%, in the seven- quarter span. And connected TVs, which have always seen the lowest time watched of all devices for short-form content, saw a decline of 98.1%, or -48.5 CAGR.

For the quarter, PCs led the short-form time watched category for the first time ever, as users increasingly used computers to “graze” online video content. Specifically:

♦ PCs remain below 50% for short-form content (0–5 minutes long), with 41% of time watched being in that category, down slightly over the past 12 months from 43%, a decline of 4.7%;

♦ Smartphones, which were dominated by short-form viewing as recently as Q3 2016 when it stood at 52%, came in at 36% this quarter, down from 52% a year ago, a decline of 25.0%;


ENGAGEMENT TRENDS

♦ Tablets were at 21%, up from a quarter ago but still down significantly from a year ago when it registered 40%, a decline of 47.5%; and,

♦ Connected TVs remain the lowest short-form time watched device: just 0.3% in the quarter, compared to 7% in Q3 2016, a decline of 95.7%.

THE BOTTOM LINE

Overall, content longer than five minutes made up 61% of time watched on smartphones, 79% on tablets, 99.4% on connected TVs and 59% on PCs (both desktop and laptop computers).

The shift to watching any content on any device doesn’t appear to be slowing down, so it’s crucial that content providers be able to maximize quality delivery on all devices. It’s also become obvious that the ability to collect and analyze data about how your customers watch — or don’t watch — video will impact your ability to pivot along with your customers as their video viewing habits continue to evolve.


It’s been an unsettling summer for the ad industry as it looks to cope with declining numbers in traditional entertainment markets as well as slower-than-expected growth in the digital industry.

Brands widely adopted programmatic over the past couple of years, but a variety of problems — ad fraud, transparency of ad placement and fees, as well as ad blocking, have caused a number of major players — most notably Procter & Gamble — to push back against the technology. But there’s potential for improvement on the horizon in the form of blockchain technology. The Interactive Advertising Bureau (IAB), for example, is developing its own working group to explore the technology’s potential for the space and its ability to make transactions transparent.

Of course, there are other ways to streamline the technology, ways that don’t necessarily require yet another tech solution. As Paul Josephsen, CMO of Adslot told eMarketer recently, one way to solve problems with programmatic “is not to give priority to some brands over others, but to create conversations between buyers and sellers.”

Regardless, programmatic continues to be a major driver in the growth of video advertising online.

During an Advertising Week panel, Adam Lowy, in charge of advanced TV at Dish and virtual MVPD Sling TV, said Sling TV saw a 263% increase in programmatic ad revenue between Q1 and Q2 2017, noting that the streamer had more revenue this September than it had in all of 2016, something he characterized as “amazing.”

VIDEO ADVERTISING TRENDS

https://www.emarketer.com/Article/Whats-Plaguing-Programmatic-Advertising/1016600

https://www.emarketer.com/Article/Whats-Plaguing-Programmatic-Advertising/1016600

http://www.adweek.com/tv-video/will-programmatic-advertising-replace-the-need-for-the-traditional-tv-upfronts/

The transition from traditional to next-gen TV viewing has been an amazing one; it’s a transition that has primarily been driven by consumers. Interesting, isn’t it, that many traditional players have dragged their feet in making the same transition in the advertising space when consumers also have made it clear that traditional ad loads and blocks of commercials simply don’t cut it?

But change is coming, albeit at a slower pace, with more brands looking to non-traditional ad formats, primarily shorter ones. The change is crucial, because, as Brian Stempeck, chief client officer at The Trade Desk, said during the panel: “This is an opportunity to make the ad experience better,” said Stempeck. “If we’re replicating TV we’re doing it wrong.”

Zenith projects 21% annual growth in online video advertising through 2019, with more of it being included on social media sites. And, said the company, more brands are looking to use both traditional TV — for its reach — and online video — for its targeting and personalization — as part of unified campaigns.


PRE-ROLL IMPRESSIONS

As noted above, brands have begun to adopt new, shorter ad formats that are more easily accepted by viewers. Brands have been especially eager to leverage that format on mobile devices alongside content from broadcasters. In Q3, specifically:

♦ Pre-roll ad impressions on smartphones made up 39.1% of all impressions, up sharply from Q2 2017’s 29% as well as from Q3 2016’s 29%.

♦ Tablets, meanwhile, garnered a share of 13% this quarter, essentially flat for the past three quarters and down from 15% a year ago.

♦ PCs — desktop and laptops — saw 41% of pre-roll ad impressions on broadcaster platforms, up slightly Q/Q from 37%, but slightly down from the 44% share of a year ago.

♦ On connected TVs, pre-roll ad impressions on broadcast platforms was at 6%, down from 21% last quarter and 12% a year ago.

Pre-roll share on publisher platforms was similar, showing a slight bias toward PCs. Specifically:

♦ PCs saw a 52% share in Q3, the same as a quarter ago and down from 60% in 2016.

♦ Smartphones during the quarter saw a 37% share, essentially flat Q/Q and up from 28% in 2016.

♦ Tablets were flat Q/Q at 10%, down from 12% in Q3 2016.

PRE-ROLLIMPRESSIONSQ3 2017

PCPHONETABLET

CTV

39%

41%

13%

6%

BROADCASTERS

52%37%

10%

PUBLISHERS


MID-ROLL IMPRESSIONS

PCs saw a slight dominance over other devices on both broadcast and publisher platforms for mid-roll ad impressions as brands pulled back on mobile spending with broadcasters — a reaction to both an increase in ad blocking and a general question about the efficacy of advertising on mobile devices. The drawback was most noticeable compared to year-ago figures. Publishers, meanwhile, saw smartphone ad impressions increase 50% from a year ago, mostly cannibalizing PC impressions. Some specific numbers:

♦ Broadcast platforms saw PCs maintain a just a slight lead in mid-roll ad impressions, taking a 46% share. This was flat from Q2, but up slightly from a year ago when laptop and desktop computers accounted for 42% of mid-roll impressions.

♦ Smartphones, at 25%, were the second most-popular device, up from 16% a quarter ago. Combined with tablet’s 12% share — down slightly from 16% last quarter — mobile maintained roughly the same one-third of mid-roll impressions as it did last quarter.

♦ Connected TVs recorded 18% of impressions, down slightly from 22% a quarter ago.

Publisher platforms painted a similar picture Q/Q, but showed more changes over the past year, specifically:

♦ Publisher platforms saw PC’s share of mid-roll impressions at 54%, a mild increase from 52% last quarter but down from 68% a year ago.

♦ Smartphones registered 44% of ad impressions, compared to 45% last quarter and just 30% a year ago.

♦ Tablets garnered just 2% in the quarter compared to 2.4% last quarter and 2% a year ago.

MID-ROLLIMPRESSIONSQ3 2017

PCPHONETABLET

CTV

16%

46%16%

22%

BROADCASTERS

54%44%

2%

PUBLISHERS


PRE-ROLL COMPLETION RATESBY MARKET SEGMENT Q3 2017

BR

OA

DC

AST

ERPU

BLI

SHER

0% 25% 50% 75% 100%

0% 25% 50% 75% 100%

PCPHONETABLET

CTV

Pre-roll ads remain a challenge for brands as consumers can often be put off by them. Often those disgruntled viewers choose to jump to other video sites or even abandon the video completely rather than sit through several ads before they get to their content. Historically, pre-rolls have had lower completion rates than mid-roll ads, and this quarter was no exception:

♦ Broadcasters generally saw the highest completion rates for pre-roll ads, with con-nected TVs registering 91%, down a bit from 92% last quarter and 94% a year ago.

♦ Completion rates on PCs were 86%, down slightly from last quarter’s 89% and up from 85% a year ago.

♦ Smartphones, at 84%, were down from 86% in Q2 and from 85% a year ago.

♦ Tablets saw pre-roll ad completion rates of 86%, flat from last quarter and up slightly from 85% a year ago.

Pre-rolls on publisher platforms often face more challenges than they do on broadcaster platforms. The content often is shorter and less exclusive, prompting viewers to be less committed to sitting through ads before their content begins. Still, this quarter saw publishers close the gap a bit:

♦ Pre-roll completions on PCs were at 83%, up from 82% last quarter, but below the 86% posted by broadcasters.

♦ Smartphones saw 81% of pre-rolls completed, compared to 81% last quarter, and just 3% behind broadcasters at 84%.

♦ Tablet’s pre-roll completion of 75% was the lowest for any device, underlining users’ low tolerance for pre-rolls. That’s up from 69% last quarter but still trailing the 86% completion rate for broadcasters.

VIDEO ADVERTISING

TRENDS


MID-ROLL COMPLETION RATESBY MARKET SEGMENT Q3 2017

BR

OA

DC

AST

ERPU

BLI

SHER

0% 25% 50% 75% 100%

0% 25% 50% 75% 100%

PCPHONETABLETCTV

There’s little doubt that the nature of broadcaster content — especially as an increasing amount of premium content is made available online — engenders higher engagement rates than does content on publisher platforms. Longer content, often episodic TV with two or three ad positions, hooks viewers, especially if it’s bingeable. The bottom line: Viewers are more willing to tolerate ads and less likely to graze elsewhere. Completion rates for broadcaster mid-roll ads on all devices were over 92%. Specifically:

♦ PCs, for the second quarter in a row, recorded a 97% completion rate for mid-roll ads, similar to the 98% they saw a year ago.

♦ Smartphones dipped just slightly to 94% from 95% last quarter and 96% a year ago.

♦ Tablets slipped as well, to 92% from 95% a quarter ago and 96% last year.

♦ Connected TVs maintained the highest completion rate among all devices: 98% this quarter, the same as last quarter and 2016.

As with pre-roll completion rates, publishers also saw lower rates for mid-roll ad completions than their broadcaster brethren. Interestingly,

pre-roll completion rates actually were slightly higher on publisher platforms, likely because more have adopted very short pre-roll ad formats. Specifically:

♦ PCs saw the most mid-roll ad completions at 88% in the quarter, the same as Q2 and up slightly from 87% a year ago.

♦ Smartphones saw just 73% of mid-roll ads completed, down from 74% last quarter and 78% a year ago.

♦ Tablets had an 82% completion rate in the quarter, up from 81% last quarter, but down 4% from last year’s 86%.

THE BOTTOM LINE

Finding the right mix of pre-roll and mid-roll ads can seem like as much art as science, but the reality is that good data on campaigns takes all of the guesswork out.

Trends are clear: shorter pre-rolls will result in more viewers remaining engaged with content, although even for shorter content the overall rate of disaffection is growing. For platforms with more premium content, pre-rolls can still be effective, but the biggest bang for a brand’s buck remains mid-roll ads.


This report reflects the anonymized online video metrics of the vast majority of Ooyala’s 500+ customers, whose collective audience of hundreds of millions of viewers spans nearly every country in the world. This report does not document the online video consumption patterns of the Internet as a whole. But the size of the Ooyala video and advertising footprint, along with the variety of our customers, results in a representative view of global consumption and engagement trends.

Ooyala is a leading provider of software and services that simplify the complexity of producing, streaming and monetizing video. Ooyala’s comprehensive suite of offerings includes one of the world’s largest premium video platforms, a leading ad decisioning platform and media logistics solution that improves video production workflows. Built with superior analytics capabilities for advanced business intelligence, Ooyala’s solutions help broadcasters, operators, media and production

companies get content to market faster, build more engaging and personalized experiences across every screen, and maximize return for any video business.

Vudu, Star India, Sky Sports (U.K.), ITV Studios (U.K.), RTL Group (Germany), TV4 (Sweden), Mediaset (Spain), America Television (Peru), and Media Prima (Malaysia): these are just a few of the hundreds of broadcasters and media companies who choose Ooyala.

Headquartered in Silicon Valley, Ooyala has offices in Chennai, Cologne, Dallas, Guadalajara, London, Madrid, New York, Paris, Singapore, Stockholm, Sydney, Tokyo, and sales operations in many other countries across the globe.

For more information, visit www.ooyala.com.

ABOUT OOYALA’S GLOBAL VIDEO INDEX


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