Philo’s head of advertising, Reed Barker, sees vMVPDs (virtual Multichannel Video Program Distributors) as a natural marketplace evolution of video platforms taking advantage of advances in technology, programming, marketplace forces and ultimately what consumers and advertisers are looking for.
He shared his perspective in an episode of BIA’s Leading Local Insights podcast series. Philo is one of the new vMVPDs premised on offering customers and advertisers what they want. For subscribers it’s a premium linear TV experience, at affordable prices, with search and discovery tools that help them find their preferred content. For advertisers, Philo supports upstream consumer segmentation matched to their audiences for activation totally on programmatic platforms where they can find their audience matches in the right program environment at the right price.
Video distribution has evolved from over-the-air to cable to satellite and now to Connected TV. From a sales perspective, cable added sub-DMA zoned geographies to advertisers either want to target a specific zone for efficiency or multiple zones each with different creatives. Satellite allowed the MVPD model to aggregate geography to a national level. Now, CTV and vMVPDs evolve the MVPD model to bring new levels of data-driven audience segmentation, targeting and activation.
BIA’s local video ad forecast shows the evolution of ad spending across these platforms. Over-the-air TV remains foundational with the largest dollars investments through 2026. MVPD, aka traditional cable, will enjoy even year spikes largely from political spending but faces less demand going forward. The local Over-the-Top segment within which Philo competes will grow from $2 billion in 2022 to $3.4 billion in 2026.
The breakout star in BIA’s local video forecast in terms of growth rate and absolute spending is local online video, i.e., outstream video display inventory. It’s not the same value proposition as OTA, MVPD or CTV and variants like DTC (direct to consumer) AVOD (ad-supported video on demand) and FAST (free ad-supported TV) services with brand safe, premium program environments but targetability, optimization and attribution capabilities are extremely attractive to buyers.
As to what lies ahead for the future of video platforms, vMVPDs are likely to remain front and center, Barker argues. Where the market needs innovation is ways to better satisfy customers in their search and discovery of preferred content and then connecting them to that content as seamlessly and affordably as possible. To do that, Barker sees not a technology innovation as the driver but a better mapping of what he calls the “hive mind of the consumer.” Before we build search and discover tech, we need to understand what consumers want, how they want to find it, how they want to get it and build the new video paradigm around that.
