IP Video Publisher Receipts and Tech Vendor Payments: Ecosystem Profit Per COGS/OpEx Unit of Investment 2015 – 2017

Date: 2015-10

IP video publishers are forecast to deliver $22 billion in ad sales and subscription receipts across all platforms and geographies served in 2015, made against related COGS/OpEx vendor paymentsof $10.3 billion, according to a multi-disciplinary, industry-wide analysis carried out by AccuStream Research.

IP video publisher receipts, and fees paid for requisite technology support and services (i.e. CDN, mobile video adtech, desktop/cross-channel video adtech, players, integrated CMS platforms and media processing), when evaluated against tech vendor net revenues indicate positive operational margins have been maintained, currently estimated at 46% in 2015.(NOTE: This analysis pertains to tech payments only, and excludes subscription IP video service content licensing fees made to rights holders).

Publisher revenues utilized as a basis for multi-year marginal analysis are generated from the sale of video advertising (in-stream, in-banner, VOD, authenticated sign-in, viral and social), plus IP video subscription services or download-to-own stores.

Complete performance results contained inIP Video Publisher Receipts and Tech Vendor Payments: Ecosystem Profit Per COGS/OpEx Unit of Investment 2015 – 2017,show margins have historically landed in the 44 – 57% range (excluding any content licensing or rights payments), though expected to decline sequentially over the next several yearsas sophisticated IP cross-channel video adtech infrastructure deployments rampup to supportlinear and non-linear broadcast groupsmore closing the gap between operating units.

IP video publishersare tasked to run very lean digital businesses, and have enough pricing leverage in the marketplace to secure favorable agreements across the entire tech vendor landscape; publishers can demand highly sophisticated and even customized solutions at near commodity prices.

Moreover, as the market works through rounds of tech consolidation, vendors have adopted business models and sell-in strategies offering their publisher partners generous and flexible pricing, often structured against performance incentives designed to drive down unit costs further as services scale.

IP video publishers, on average, generate $2.13 in combined advertising and subscription revenue for each $1 in tech vendor billings at present, though projected to decline through 2017.

This IP video publisher an tech vendor revenue profit analysis includes net revenue across the entire ecosystem, historical growth profiles, target markets, core competencies, billing models, media spend by site, in-stream inventory, in-banner impressions, CPMs, analysis of adtech platforms and programmatic systems, ad networks, channels and aggregators, subscription revenues by service (including Netflix, Hulu, Vudu, iTunes Video, sports leagues etc.).

Video CDN is declining as a percentage of COGS share (CDN as a percentage of total IP video vendor revenues).

Cross-channel video adtech is increasing in share as the marketplace deploys more sophisticated IP video adtech systems. Video adtech vendor revenues are “net” or post any publisher payouts associated with inventory arbitrage or impressions under management by IP video ad networks or clearing platforms, or any other upfront guarantees (i.e. made by video adtech systems and networks).

Mobile video adtech is increasing in share as the marketplace deploys more sophisticated user tracking, audience analytics and predictive behavioral technologies/ audience profiling systems.

Platform and processing market positions are maturing and declining slightly as a percent of COGS/OpEx share, though increasing as a percentage of total IP video publisher receipts through 2017.


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