Why MVPDs are Partnering with Streamers for AVOD/SVOD Bundling
Family on a couch watching AVOD/SVOD programming on their TV.
Why MVPDs Are Partnering with Streamers for AVOD/SVOD Bundling
Live television services – even online services – are losing ground to over-the-top (OTT) streaming services. To fight back, some multichannel video programming distributors (MVPDs) are partnering with advertising-based video-on-demand (AVOD) and subscription video-on-demand (SVOD) services.
How are MPVDs and AVOD/SVOD services working together? It’s all a matter of providing more content for live TV services and more outlets for streaming content.
MVPDs bundle multiple linear channels for a single monthly subscription fee, via cable or satellite
vMVPDs bundle multiple linear channels over the Internet
SVOD services offer commercial-free streaming content for a monthly subscription
AVOD services offer ad-supported streaming content for free
Many MVPDs and vMVPDs are partnering with AVOD/SVOD services to bundle their content with the traditional linear subscription
What Is an MVPD?
Live TV services – MVPDs – provide viewers with dozens, if not hundreds, of individual channels to watch. According to Hub Entertainment Research, close to a third of viewers (32%) say that a cable, satellite, or internet-based live TV service is their default TV source. While that’s down from 39% in 2019, live TV is still a more popular default TV source than any individual streaming video service.
Live TV is still the most dominant home base for viewers.
A multichannel video programming distributor is a service that bundles multiple live TV channels for a monthly subscription fee. Traditionally, MVPDs have included large cable companies, such as Xfinity (Comcast), Spectrum, Cox Communications, Optimum by Altice, and WOW! Other MVPDs, such as the DISH Network, is distributed via satellite.
Many viewers like MVPDs because they make viewing simple. Viewers get a large amount of programming for a single, easily manageable monthly fee. Finding programming is as easy as clicking through the channels. Some MVPDs let viewers record programming via a DVR built into the cable or satellite box.
On the downside, fewer viewers want to pay a high price for a large number of channels they seldom watch. Viewers today prefer to cherry-pick the channels they watch and pay for, which goes against the traditional MVPD model. It doesn’t help when cable and satellite providers constantly increase their subscription fees, making this type of live TV increasingly expensive over time.
It’s not surprising that the number of U.S. households with a cable or satellite subscription declined from 96.9 million in 2017 to just 75.6 million in 2021.
MVPD + Internet = vMVPD
Cable and satellite aren’t the only ways to watch live TV. The concept of MVPD has come to the Internet in the form of the virtual MVPD, or vMVPD.
An MVP is a streaming service offering a large number of traditional broadcast, cable, and satellite channels in real-time. These services acquire viewers via monthly subscriptions, just like traditional MVPDs. The most popular vMVPDs today include:
Hulu with Live TV
A vMVPD works much like a traditional cable or satellite service, only streaming over the Internet. Viewers can choose from a large number of real-time linear channels, scrolling through a channel grid as they would on cable or satellite. Some vMVPDs supplement their live channels with on-demand streaming video. Others offer cloud-based recordings of favorite shows.
Traditional cable and satellite viewers turn to vMVPDs when they want to cut the increasingly costly cable cord but still want access to the same linear programming. vMVPDs are especially important to cord-cutting sports fans who face a paltry offering of live sports via AVOD and SVOD streaming services.
On the other hand, vMVPDs suffer from some of the same issues as traditional MVPDs, including high monthly subscription fees and the inability of viewers to pick from a more targeted selection of channels.
What Are SVOD and AVOD Services?
Streaming video services, in the form of SVOD and AVOD services, are taking more and more market share from both traditional and virtual MVPDs. Viewers like the lower monthly subscription fees (or, in the case of AVOD services, the lack of subscription fees) and being able to choose from a more targeted selection of content. This explains why Accenture projects the global OTT market will grow from $43.3 billion in 2020 to more than $87 billion in 2026.
AVOD and SVOD market size and growth 2020-2026.
Subscription-based streaming services have historically gotten the largest share of the OTT market. A subscription service offers a limited amount of content for a monthly subscription fee. Most SVOD services provide a mix of original and older programming, without commercial interruptions.
The largest SVOD services today include:
Netflix (223 million paid subscribers)
Disney+ (164 million paid subscribers)
Amazon Prime Video (117 million paid subscribers)
HBO Max (48 million paid subscribers)
Hulu (47 million paid subscribers)
While SVOD services remain popular, many viewers suffer from subscription overload. These viewers are increasingly turning to advertising-supported streaming services, where they can watch a variety of older programming for free.
The most popular AVOD services today include:
Hulu (ad-supported tier)
Pros and cons of mixing AVOD and SVOD
Why Are MVPDs Partnering with SVOD/AVOD Players?
The writing is on the wall for live linear TV services. Parks Associates reports that while 70% of broadband-enabled households subscribe to at least one SVOD, only 10% subscribe to a vMVPD.
This slow but continuing decline in MVPD viewership, coupled with the increasing demand for AVOD and SVOD programming, is leading to an interesting trend – MVPDs partnering with SVOD/AVOD services for additional content.
Both cable- and satellite-based MVPDs and streaming vMVPDs are adding new channels for content sourced from AVOD and SVOD providers. The AVOD/SVOD channels on MVPD services reach more viewers than previously possible online, serving to promote the streaming services. At the same time, the additional content helps MVPDs justify their high subscription prices.
In many ways, MVPDs and AVOD/SVOD services complement each other. For MVPDs, AVOD/SVOD services offer a new source of high-quality original content. For AVOD/SVOD services, MVPDs offer a large base of new viewers for their expensive content.
In the case of vMVPDs, viewers can easily sign up for an SVOD service through their linear streaming service. Many vMVPDs offer subscriptions to SVOD services from within their own services, using the same billing apparatus. That makes it easy for consumers to add another subscription to their monthly portfolio.
Streaming content creators benefit from this arrangement by getting a broader reach for their content. The more outlets for their content, the more they financially benefit. Whether it’s an older television program achieving a second life online or newer content needing to pay down production costs, the more viewers the better.
How to Improve Streaming Video Quality for vMVPDs, AVODs, and SVODs
No matter the distribution model – vMVPD, AVOD, or SVOD – low bandwidth, rebuffering, and other technical issues can result in unacceptable viewing quality. Fortunately, many of these issues can be mitigated with streaming video solutions to improve viewer satisfaction.
Contact Penthera today to learn more about improving streaming video quality.