With ZenithOptimedia predicting a further 9.9% fall in global ad spend this year the picture for advertising supported services seems dire. Spotify's woes in this respect are well reported. VCs who a year ago nodded sagely at ad supported revenue models will now laugh a business founded on that premise out of the building.
But, as Channel 4 has shown, the position isn't so dire. But there is another threat for Internet TV services. Increasingly, low paying MPUs are featuring video content. So, an advertiser might be paying £25 CPM for a pre-roll or instream ad, whilst running beside it is a video for which the advertiser paid £4 or less. The former barely covers the cost of streaming 5 mins of HD video, so the challenge for the market is not only to increase inventory, but also to defend the value of the slots.