Yesterday, we talked about the death of cable and the general pivot to streaming/connected TV. According to Statista, on-demand streaming revenue is projected to reach $71.2B. A large portion of that will come from subscriptions to services like Netflix and Amazon Prime. The other huge chunk might come from a different place— advertising. 

VIZIO told this story during its March IPO. VIZIO, known for selling TVs and other entertainment devices, has seen significant growth from its Platform+ segment. A ton of Vizio’s revenue comes from advertising. Although Vizio’s growth during the pandemic was stark, the company’s Platform+ segment grew 146% YoY in Q2 2021, booking $65.5 million in revenue… a sizable portion of that was profit.

On a larger scale, Hulu considers its ad-supported business a “secret weapon” in its arsenal. The company’s ad revenue transformed into a beefy, fast-growing line of revenue for its owners, Disney and Comcast. Hulu’s revenue is expected to rise by 30% this year, reaching $3 billion. For comparison, that’s just shy of Disney’s total broadcasting revenue generated from advertising last year. 

To validate advertising prospects in connected TV and streaming, Integral Ad Science ($IAS) will purchase ad-tech company Publica for $220 million. As ad spending transitions from cable to streaming services, ad-tech companies like Publica will collect more from advertisers. By 2026, revenue from OTT advertising is expected to more than double. 

This is great news for ad-supported streaming services and related players.  We’ll likely see more of these deals in the future.