Why “Being The Glass” Creates Some Of Streaming Video’s Most Valuable Real Estate

The streaming-video wars have set off a gold rush for creative talent, attractive content libraries and even competitor/acquisitions. But  some of the most valuable claims now being staked involve who gets prime position on the connected TVs and other devices that will shape what tens of millions of viewers most easily discover, watch, and return to.

“What I’m really focused on is making sure that we have the latest and greatest content on the platform,” said Katherine Pond, the VP of business development for Vizio, one of the biggest sellers of Connected TVs in the United States.

Part of Pond’s broad remit (she also oversees IP licensing and tech development for the company) is to decide which streaming-video companies end up on Vizio’s SmartCast interface.

“What that means from a practical aspect is, of course, I have to have all the major guys on the platform, right?” said Pond. “But I also want to cater to all of our consumers’ needs, and consumer needs and wants in the content space are diverse. And so while that doesn’t mean I’m going to pick up every single thing that’s out there, it does mean that I’m going to put niche content onto the platform to make sure that I have something that consumers are interested in, and that they’re engaging with our platform and coming back over and over again.”

Vizio is now moving beyond just signing deals with library owners. It’s as close to the consumer as possible, what Pond calls “being the glass.” That means it knows exactly what the consumer watches, and can adjust programming offerings, ads and more to ensure a better experience.

As a result, the company has also begun direct ad sales around that programming, moving beyond the programmatic ads it previously served, Pond said. That’s a big step. The company is also wrapping those ads around programming it’s licensing and promoting.

A recent study by ad services company Extreme Reach suggests Connected TVs and ad-supported aggregators such as Pluto and Tubi have reshaped the video-ad landscape.

In just two years, the Connected TV sector has gone from serving 16 percent of all digital video ads in 2017 to serving 49 percent in 2019, said Extreme Reach’s Mary Vestewig said. It marks a dramatic shift from mobile video, which had dominated the sector.

“Quarter by quarter, we’ve seen the paradigm shift to a new, CTV-centric reality,” said Vestewig, Extreme Reach’s Senior Director, Video Account Management. “We expect to see fewer wild swings from quarter to quarter for the next year, but we do expect to see interesting trends driven by the growing number of AVOD players and the impact they have on the available inventory mix.” 

Pluto, Tubi, Xumo and Future Today have all become hot M&A commodities as big media companies try to lock down a presence in the sector, buying incumbents that already have relationships with device and TV makers, content libraries and audiences.

“Despite the initial disastrous experience on smart TVs, focus has returned to the big TV screen,” said Paolo Pescatore, a tech, media and telco analyst with PP Foresight. “This is coinciding with everyone jumping on the streaming-video bandwagon, and consumer-electronic manufacturers looking to differentiate their own TVs with the intention to sell more units. The platform providers are making big plays in TV as underlined by recent efforts from Amazon and Roku.”

That’s where the connected TVs and other device owners come into play, with user interfaces that make it relatively simple for users to build the programming options you want, Pescatore said.

“It is becoming more important to be able to access all of these and future services on one TV platform,” Pescatore said. “Aggregation is the holy grail.”

People like Pond are the ones making aggregation easy for consumers, cherry picking the services users are most likely to want, and making sure those are pre-loaded on the TV when it’s bought, while making it easy for consumers to browse and install apps for other services as they become available.

“What I’m really focused on is making sure that we have the latest and greatest content,” Pond said. “But what that means from a practical aspect is I have to have all the major guys. But I also want to cater to all of our consumers’ needs. That doesn’t mean I’m going to pick up every single thing that’s out there, (but) it does mean that I’m going to put niche content onto the platform to make sure that I have something that consumers are interested in, and that they’re engaging with our platform, and coming back over and over again.”

Connected TVs are increasingly attractive to buyers who want an easier way to access the flood of streaming content now available online, according to a Kantar Media study, the just-launched quarterly Entertainment on Demand service.

Among other findings, the top trigger for subscribing to any VOD service was getting a Connected TV for 13 percent of first-time subscribers, the study found. And more experienced VOD subscribers want their favorite apps embedded in their Connected TV for the easiest access.

To make that work at scale, Vizio modified a version of Google’s ChromeCast operating system and turned into what the company calls SmartCast. It works with a couple of companies, including Cinedigm, that build app templates to make Vizio-friendly apps relatively painless to create.

“The reason that I pursued this approach was because there is so much great content out there,” Pond said. “But you have these content owners or content distributors that really aren’t tech people, right? They know great content when they see it. They know how to make content that consumers are interested in, but they don’t know how to get it out there. Historically, YouTube was an easy solution, right? But that didn’t really allow all of these content creators and distributors to monetize their content in the best possible way. So working with a template partner allows us to offer an easy, affordable solution that’s relatively quick to market. And that helps me fulfill my goal of making sure that I have all of that unique content.”

That could mean dozens of apps available or downloadable through an App Store for Vizio users, Pond acknowledged.

“I don’t think there’s a magic number,” Pond said. “You’re not going to find me saying I need exactly 100 or I need exactly 1,000. But I do need enough content there to ensure that I’ve hit all the major categories.”

But it’s not just getting content from a broad range of categories. It’s also about making sure consumers have a broad range of ways to pay for it.

“Now that I have that content, can consumers access that in a manner in which they want to access it?” Pond said. “That means some consumers are willing to pay on a transactional basis. Some consumers are willing to pay for a subscription. And some consumers are willing to pay with their time, meaning with ads. And so if I can bring those different models together with that content, then I’m meeting the need.”

The company also has a “Watch Free” section powered by ViacomCBS-owned Pluto, that gives consumers access to between 150 and 200 channels. And if that’s still not enough, viewers can tap the free, ad-supported services of Comcast-owned Xumo.

But more importantly, because the company knows people are watching on its screens, the company can fine tune what it offers them, Pond said.

“One thing that’s really great about being an OEM is being the last step, because we’re the glass,” Pond said. “We have a ton of insights into what works with our consumers. So I can take those learnings and can say, ‘Vizio consumers are interested in this specifically.’ And so then you start getting into content programming, and content merchandising and content promotion, and how do we get the right things in front of the consumer that they’re interested in? That’s a huge area of focus for video in 2020, as we really start looking at even better personalization and recommendations for consumers.”