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Cable/Video

AVoD players not feeling pressure to sell amid M&A frenzy

As the M&A frenzy surrounding the free, ad-supported streaming video market continues to heat up, it might seem that some players in this growing and increasingly popular arena, such as Wurl and Zone TV, are being left out in the cold.

The heat in the advertising VoD streaming market is most definitely on, as major media industry players collectively have put up at least $880 million over the past year to acquire a set of free streaming services/platforms. Fox announced last week it will pay $440 million for Tubi, Comcast struck a deal to buy Xumo in a deal reportedly worth more than $100 million, and Viacom (since merged with CBS) splashed out $340 million for Pluto TV last year.

A recent exception is Future Today, an OTT platform and AVoD company that just scuttled a $60 million deal to be acquired by Cinedigm. Future Today - which distributes hundreds of free streaming channels, including HappyKids.tv and FilmRise and has relationships with Comcast (for X1 and Xfinity Flex) and LG Electronics – has instead struck a content licensing deal with Cinedigm.

Meanwhile, the CEOs of two companies entrenched in the advertising VoD market – Wurl and Zone TV – say they don't feel pressure to sell to a content or media giant to gain scale, holding that the market is still in the early stages and is plenty big to support independent players.

"I'm not feeling any pressure yet," Jeff Weber, CEO of Zone TV and a former AT&T exec, said when asked if he's itching to get a deal done. "We haven't done much thinking about M&A. Maybe we should be doing some of that, but we are heads down, building it."

Weber says he likes Zone TV's position as a platform that takes in and distributes video content to multiple streaming outlets, including a growing mix of pay-TV providers like Comcast (X1), Cox Communications (Contour) and Rogers Communications (Ignite TV).

Even as large media players expand into these platforms through acquisitions, "we have capabilities that all of them are going to have. There are a lot of [advertising] buyers."

While Zone TV has had success finding a home for Zonify, a curated, AI-assisted free streaming service, advertising is also just one piece of its business. Zone TV also enables its content partners to distribute subscription-based streaming channels using a revenue share model with both content and operator partners.

Additionally, Zone TV's biggest current line of business centers on interactive services that build on a theme or can be used for specialized promotions with pay-TV partners. Examples there include Zone TV's Santa Tracker and Halloween Countdown interactive experiences (games and on-demand movies), and a "Game of Thrones" interactive promotional experience offered in tandem with DirecTV.

"That is our biggest business and growing," Weber said.

Wurl CEO Sean Doherty also feels "no pressure" to make any big moves despite all the recent M&A action in the AVoD sector. In fact, he wonders if the sellers would've done well to be more patient.

"I think Pluto [TV] and Xumo bailed out too early, way too early," Doherty said.

"It's a giant market and we're not even in the first inning of this thing," he added, noting that connected TV advertising remains just a drop in the bucket compared to total global TV ad revenue.

Organic growth
Wurl has been able to grow on its own, announcing earlier this month that its platform reached 100 million connected TVs across nine countries, delivered 1.2 billion ad impressions and piped in more than 225 million hours of programming in 2019.

Wurl, which has raised almost $14 million, also said revenues tripled in Q4 2019 versus the year-ago period, while ad impressions rose 45% from Q3 2019 to Q4 2019.

Doherty said Wurl is also seeing improved "fill-rates" (the sale of slots in TV-style ad-pods) for streaming. Ad buyers "are understanding that connected TV is TV … and an attractive place to buy ad space. The advertisers are now on the bandwagon and [noticing] that this is working."

M&A activity has not curtailed access to content. Doherty said Wurl expects to cross the 400-channel market in the coming weeks, more than doubling what it had about a year ago. And the quality of that content will continue to rise as traditional programmers pivot more content to free streaming services and platforms to help offset the ongoing decline of pay-TV and an already-saturated SVoD marketplace.

"This year it's going to be a stampede," Doherty predicted. "You're going to see a lot of launches of streaming TV channels that were previously only available on cable."

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— Jeff Baumgartner, Senior Editor, Light Reading

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