There has been a lot of talk about 2020 being the year of AVOD, due in part to the fact that viewers are becoming increasingly conscious of the number of active subscriptions that they hold. In the words of Deloitte’s Kevin Westcott, more and more viewers are undertaking a “spring clean” of their subscriptions.

On top of these start-of-year predictions of course, is the sudden surge in streaming due to the fact that so many people are staying at home. Cocooning, as much of the world is experiencing, benefits streaming of all kinds, according to MIDiA research. “There are already strong signals that this is happening, with TV ratings up, TV news viewing up and Netflix doing so well that it has had to agree to reduce streams in Europe from HD to SD to reduce strain on the broadband networks.” They go on to suggest that there will be “a growing role for ad-supported propositions” at the expense of subscription-based services.

Most streaming services will have to rely on ad-based business models of some form if they are to achieve long-term sustainability, but how do they strike the right balance between business needs and that all-important viewer relationship, especially for younger generations that have grown up used to ad-free OTT? With the overall quantity of ad spots falling, the key is to increase the value of the ad inventory that is available. Addressability and programmatic will add the necessary value and there is plenty of evidence that major industry players are gearing up to make the most of their piece of the pie: AT&T launched Xandr, bought AppNexus and Clypd, while Comcast acquired FreeWheel. Meanwhile in Europe, ad sales partnerships such as EBX brought together broadcasters across the continent.

It’s important to remember that programmatic and advanced targeting represent the potential of the AVOD opportunity. The reality is that many building blocks are required to enable that potential and the most critical supporting block is the video stream. If it is not properly prepared and ready for delivery across multiple platforms and devices, then the ad sales processes that are being built across the globe will be irrelevant. Content assets need to be highly dynamic in order to cope with the demands placed on modern streaming platforms and to easily adapt to future requirements.

Implementing AVOD in the past has been achieved in a number of ways, including “pre-baking” and client-side ad insertion (CSAI), but these methods are no longer fit for purpose. “Pre-baking” is where ads are stitched on to a content asset at an encoder level, which is highly inefficient and severely limits the ability to target ads. Client-side ad insertion allows ads to be targeted, but is often clunky as extra bandwidth is required to fetch and load an ad on the player’s device while the main content is playing.

Neither of these ad insertion solutions addresses the need for content providers to deliver enhanced playback functionality. After all, advertising in online video is no longer about simply stitching an ad into a programme at a certain time. It must be done in a way that caters for other dynamic streaming factors. The only way forward is to use server-side ad insertion (SSAI), which requires that content libraries are “re-aggregated” so they can be managed in real-time through a playlist.

Re-aggregation involves creating enhanced MP4 files that contain all the necessary indexes that ensure all event markers are in place when the video stream is created. These event markers pinpoint where ad breaks begin and contain important programme information, such as where the opening credits sit. This latter piece of information is what drives Netflix’s Skip Intro feature, which no doubt will be adopted by other streaming services in time.

Enhanced MP4s form the foundation of everything that matters in delivering and monetising a premium video service today. They can be easily encoded into HLS and MPEG-DASH streams to support the full range of OTT platforms and devices while retaining all the critical event data, then they can be managed as playlists using an easily accessible web-based content management system (CMS) or control panel where they can be curated to the tastes of the viewer.

In order for AVOD services to succeed, video libraries must be highly adaptable, and this is only achieved through a playlist-based workflow. If a US-based audience requires fewer ads per mid-roll break than in Europe then this can be achieved through the playlist without any changes required to the video asset itself. If a streaming service decides to offer several pricing models, from entirely ad-based to SVOD and ad-free then this can be achieved through the playlist. For advanced targeting, a playlist-based approach allows content curation at scale because the file size of the playlist being delivered to each user’s device is so small.

Maybe we will see a long-term surge in AVOD, as most industry commentators are indicating, but perhaps not. What is clear in these uncertain times, though, is that media companies must be prepared for all eventualities, and to do this they must re-aggregate their libraries and move to a playlist-based approach.

This article was published on Videonet