1. Dongles Of Doom Roil CTV

A new report from iSpot and Group M has revealed that dongles, hockey pucks and all manner of external connected devices have a tendency to act like set top boxes, showing ads long after the actual TV set has been turned off. 

As per the study, the actual percentage is around 17%, which, it should be noted, means that 17% of ads watched via said external devices are playing to a blank screen, NOT 17% of CTV ads overall.

It seems ads watched via a smart TV’s own operating system do not suffer this fate and so the true stat is 8% to 10% of overall CTV inventory is shown to a blank screen, a still significant amount.

Fortunately, the explanation for why this happens is fairly common sensical.

Like set top boxes of yore, external devices are usually plugged into a separate power source than the TV. Thus turning off the TV does not turn off the dongle. If the viewer just clicks “power off” without quitting out of the app, the tech that tells the streaming service that the TV has been turned off does not kick in right away and will keep streaming the program and serving the ads… sometimes for hours on end.

Compare that with programming watched directly via a smart TV’s native interface, where “Off means Off” and the stream stops the second the TV is turned off.

Many of you may have witnessed something similar (RAISES HAND) when you stopped watching a show midway by just turning the TV off (rather than hitting “back” and stopping playback on the app) and then returned days later to discover that the app had kept playing in your absence and was claiming that you were now two or three full episodes ahead of where you’d actually left off.

Now imagine there were ads in that show.

Bingo.

Why It Matters

Every new medium goes through growing pains. The good thing about this one is that there was no malicious intent and that the solution is fairly simple: develop a form of currency that actually determines if an ad has been verified as “viewed” so that brands are only paying for ads that consumers, you know, actually saw.

At the same time the  industry is working to solve this, it needs to make sure that people understand that this is a temporary issue, one that is limited to external devices.

There is some urgency to this, as there has been much erroneous reporting in the non-trade press from people whose knowledge of the industry is quite nascent (yes, that is a euphemism) and who think they have discovered some sort of grand Illuminati-style conspiracy. 

So there’s that and it will unfortunately put the brakes on some brands' decisions to move more budget to CTV, not because it should, but because they saw the headlines and made a call based on that.

Their loss.

What You Need To Do About It

If you are the streaming industry in general, both SVOD and FAST services, you want to get the word out that you are aware that this is an issue, that you are working on a solution and that solution will be measurement-based. (There are complicated reasons why it can’t be tech based, all of which center around the persistence of VOD, which in this case stands for Very Old Dongles.) 

You need to (quickly) agree on some sort of currency/verification solution that will take into account that brands understandably do not want to pay for ads that people don’t see.

Making this happen is well within the realm of the possible, you just need to get on it today and then make a big deal about it when you have the solution. The rapid growth and success of streaming means there is a great big target on your back and so the absolute worst thing you can do here is to ostrich this and pretend it’s not happening.

If you’re an advertiser and this has you worried, remember that CTV ads on apps that run via the smart TV’s native operating system don’t have this problem. So rather than cut your streaming budget, just redirect it.

If you’re a company that makes external devices, this probably just confirms what you’ve known for a while now—dongles are dying and you need to get into the TV OS game. Which most of you already are, but in case you needed some more ammunition..

2. Disney Loses Streaming Cricket Rights In India

Disney’s Hotstar property, the aptly named service that controls over 80% of the Indian streaming market, lost the rights to stream the massively popular Indian Premier League cricket matches. The winner, Paramount18, a JV between Paramount and India’s Reliance Industries, paid close to $3 billion for those rights, which give it an asset of significant marquee value.

Why It Matters

First a little table setting.

The Indian market is potentially huge, as it is the world’s second most populous country.

And Hotstar, which Disney inherited as part of its deal with Fox, has been kicking ass, dominating the market despite the incursion of Netflix and Amazon.

Part of that is boneheaded pricing on the part of the American interlopers: Netflix started out trying to charge around US$10 for the service, while Hotstar’s price for their paid service is around fifty cents. (Netflix has dropped its price twice, though they don’t seem to be getting massive pickup at the current US$3 price point either.)

Part of Hotstar’s success is that it was home to the massively popular (in India) Indian Premier League Cricket and how much the loss of those rights will affect subscription numbers is the R64,000 question.

It’s of particular importance because 50.1 million of Disney’s 137.7 million streaming subscribers are Hotstar subscribers and, even more critically, the fact that the service gained over 4 million subs in Q1 this year made up slightly more than half of Disney’s 7.8 million streaming subscriber gain.

So there’s that, but it needs to be weighed against the fact that Hostar’s ARPU (average revenue per user) is pretty ratchet: Disney makes just 76 cents per Hotstar user, about one-eighth of the $6.32 it makes from Disney+ users in the U.S..

Part of that is the low subscription fee, part of that is that advertising in the Indian market is not the big bucks play it is in the US and part of it is that the extremely high cost of Indian Premier League Cricket rights takes a big bite out of profits.

Which brings us back to the thing everyone in the global television industry is going to be watching: what will the loss of Indian Premier League Cricket do to Hotstar’s subscriber numbers. 

Will people give up the service to watch Paramount18 instead because they have no price elasticity in their streaming budget, even with the low (to Western ears) costs? Will that switch be permanent or will they return at the end of the season? And what, if anything, will all that potential switching do to Disney’s stock prices and Bob Chapek’s increasingly battered reputation?

Talk about a cliffhanger.

What You Need To Do About It

If you are Paramount18 you are going to want to make it as easy and advantageous as possible to make that switch from Hotstar to Paramount18. Think perks and extras.

If you are Disney, you are going to want to give the non-cricket-loving members of your subscribers’ households plenty of ammunition as to why they need to keep Hotstar. That may mean temporarily cutting prices or even adding in formerly paywalled content, something that could be well worth it in the long run.

I’d also think about adding in local content too. Given that over a third of Disney’s streaming subscribers come via Hotstar, I’d be doing everything I could to make them happy.

Yes, the ARPU is low, but Wall Street only seems to have its eyes on the scoreboard: who has the most subscribers. (They’re like that.) Besides which, the goal here is not so much to win in 2022 as to position yourself to win in 2052 when the Indian market has matured and ARPU is way up. In any business, loyalties are formed early and are hard to change and giving up all those Hotstar users to someone else will come back to haunt you.

So more Indian-oriented programming is in order and since India is not a one-size-fits-all market (different languages in different parts of the country for one thing) it is not going to be cheap.

If you’re Netflix, think FAST. If you want to make a mark in India, charging a price that is 6X what people are used to paying is not a good plan, long term or short term.