#FreeWheelVMR / Q3 2018 / FREEWHEEL VMR 1 PREMIUM VIDEO: A Bundle of Growth Q3 2018#FreeWheelVMR#FreeWheelVMR / Q3 2018 / FREEWHEEL VMR 2 The FreeWheel Video Monetization Report highlights the changing dynamics of how enterprise-class content owners and distributors are monetizing premium digital video content. The data set used for this report is one of the largest available on the usage and monetization of professional, rights-managed video content worldwide, and is based off of census-level advertising data collected through the FreeWheel platform. Video Monetization ReportTABLE OF CONTENTSQ3 2018Q3 2018 Summary PAGE 3 Core Observations: U.S. PAGE 7 Core Observations: Europe PAGE 15 Author Bios PAGE 21 Glossary PAGE 22 #FreeWheelVMR / Q3 2018 / FREEWHEEL VMR 3 MVPDs Drive Premium Video Growth in the U.S.Publishers, operators and the supporting ecosystem enabled more content via MVPD IP-enabled platforms and set-top-boxes, as well as through aggregator portals, to drive growth in Q3 2018. Syndicated ad views comprised 40% of all ad views and grew by 31%, outstripping the growth of ad views on owned and operated (O&O) platforms. Taking a closer look at syndication, IP-delivered MVPD ad views have scaled rapidly, with a growth rate of 87% YOY. The offerings of traditional cable companies eclipsed virtual MVPD skinny bundles with 78% ad view share versus 22%, though virtual MVPD ad views grew 147%, almost double the rate of traditional MVPDs.IN Q3 2018, MULTICHANNEL VIDEO PROGRAMMING DISTRIBUTOR (MVPD) IP-ENABLED PLATFORM AD VIEWS grew 87% year-over-year, helping propel the full U.S. market to growth of 26%. Europe also saw solid ad view growth of 19% despite some U.S. based publishers acting cautiously in light of GDPR. We examine these and other quarterly trends in this report, enjoy the read!A Bundle of GrowthQ3 2018 SUMMARYCHART 1 Top Line Growth and Break-Out of Ad Views by Syndication Platform, U.S.Q3 2018Distribution TypeOWNED & OPERATEDSYNDICATEDMVPD (IP Platforms) BreakdownSyndication PlatformMVPD (IP PLATFORMS)MVPD (STB PLATFORMS)PORTALS25%40%41%34%60%+87% YOY +31% YOY 78%+75% YOY +11% YOY +38% YOY +19% YOY vMVPD22%+147% YOY TRADITIONAL MVPD#FreeWheelVMR / Q3 2018 / FREEWHEEL VMR 4 Q3 2018 SUMMARYCHART 3Ad View Composition and Growth, by Device, U.S.Q3 2018-4% YOYDesktop16%+45% YOY OTT41%+63% YOY Smartphone19%+12% YOYTablet7%+11% YOY STB VOD17%Live content tends to over-index on MVPD platforms and constituted 59% of total ad views, verses a 33% share across all platforms. 67% of total MVPD IP-enabled viewing is via over-the-top (OTT) devices, which is exactly the kind of lean-back and engaged viewing advertisers are seeking. The smartphone accounts for 68% of long-form MVPD-syndicated ad views, further emphasizing the devices versatility and ubiquity.Live content ad views grew strongly year-over-year, even though they garnered a slightly smaller share than previous quarters due to fewer marquee sporting events like the Super Bowl. Ad views against clips declined by 20% despite clip video views continuing to grow, suggesting moves by inventory owners to limit the amount of ads placed against short-form content.Smartphone and OTT device growth outstripped all other devices at 63% and 45% respectively, marking them out as the platforms viewers are trending towards. The combined ad view share of both devices now makes up 60% of all ad views.CHART 2 Ad View Composition All Platforms vs MVPD (IP-Platforms) Syndicated, U.S.Q3 2018CLIPS (0-5MIN.)FULL-EPISODES (5+ MIN.)LIVE11%56%41%59%ALL PLATFORMSMVPD SYNDICATED33%+56% YOY +99% YOY +76% YOY +27% YOY -20% YOY #FreeWheelVMR / Q3 2018 / FREEWHEEL VMR 5 Continued European Growth in Light of GDPREurope saw strong double-digit growth in Q3 with ad views up 19% and video views increasing 11%. However, post GDPR, U.S. publishers have sought to protect themselves from reputational and legal risk by limiting their distribution efforts in Europe for the time being. European-based publishers and operators have dedicated greater resources to being GDPR ready, supporting overall market growth.Q3 2018 SUMMARY+19%AD VIEWS+16%VIDEO VIEWSCHART 4 Total European Ad View Growth, European and U.S. PublishersQ3 2017 vs. Q3 2018CHART 5 Total European Ad View Growth, European PublishersQ3 2017 vs. Q3 2018CHART 6 Total European Ad View Growth, U.S. PublishersQ3 2017 vs. Q3 201821%AD VIEWS#FreeWheelVMR / Q3 2018 / FREEWHEEL VMR 6 Monetization of live content saw the largest boost as premium publishers tapped into new revenue sources on their O&O content across all devices, +44% year-over-year. Live content saw a boost this quarter as a result of the final stages of the FIFA World Cup playing out at the start of Q3. Full-episode content continued to dominate the market across all devices in Europe and grew +17%. Nonetheless, clips ad views increased in volume and remain an important part of the monetization mix, +5% year-over-year, as premium publishers leveraged partnerships with regional newspapers and portals to extend reach in Europe.Europe remains a highly fragmented market with high growth in ad views seen for both OTT devices and smartphones and a further squeeze on desktop share. The big screen (OTT and STB combined) is growing as the top medium for engaging audiences at scale and as a result achieved a combined share of 34%.Be on the lookout for the FreeWheel VMR: Q4 2018 which will take a comprehensive look back at the whole of 2018, laying out the key events and trends that defined the year. We look forward to bringing you these insights and more as we move into 2019.Q3 2018 SUMMARYCHART 8 Ad View Composition and Growth, by Device, EuropeQ3 2018+0% YOYDesktop29%+31% YOY OTT14%+15% YOY STB VOD20%+36% YOY Smartphone23%+9% YOYTablet14%CHART 7 Ad View Composition and Growth by Content Duration, EuropeQ3 2018CLIPS (0-5MIN.)FULL-EPISODES (5+ MIN.)LIVE82%4%14%+5% YOY +17% YOY +44% YOY#FreeWheelVMR / Q3 2018 / FREEWHEEL VMR 7 The Most Definitive Data Available on Premium VideoQ3 2018Core Observations: U.S.CORE OBSERVATIONS: U.S. / OVERALL MARKETCHART 9 Total Video Start and Ad View Growth, U.S.Q3 2017 vs. Q3 2018#FreeWheelVMR / Q3 2018 / FREEWHEEL VMR 8 CLIPS (0-5MIN.) FULL-EPISODES (5+ MIN.) LIVECHART 10 Ad View Composition and Growth by Content Duration, U.S.Q3 2017 vs. Q3 201820%57%23%11%56%33%-20% YOY +27% YOY +56% YOYQ3 2017 Q3 2018+18%VIDEO VIEWS+26%AD VIEWS#FreeWheelVMR / Q3 2018 / FREEWHEEL VMR 9 CORE OBSERVATIONS: U.S. / DISTRIBUTIONCHART 11 Ad View Composition and Growth, by Device, U.S.Q3 2013 Q3 2018Q3 2014Q3 2015Q3 2016Q3 2017Q3 2018-4% YOYDesktop+45% YOY OTT+11% YOY STB VOD+63% YOY Smartphone+12% YOYTablet16%41%17%19%7%Q3 2013CHART 11 - EXPANDEDAd View Composition by Device, U.S.Q3 2015 Q3 2018SmartphoneDesktopSTB VODOTT19%Q3 201552%6%13%10%17%Q3 201636%16%22%9%15%Q3 201728%20%29%8%19%Q3 201816%17%41%7%Tablet#FreeWheelVMR / Q3 2018 / FREEWHEEL VMR 10 CORE OBSERVATIONS: U.S. / DISTRIBUTIONCHART 12 Format Composition by Device, Ad Views, U.S.Q3 201838%33%29%Desktop100%STB VOD49%3%48%OTT45%19%36%Smartphone61%12%27%TabletCLIPS (0-5MIN.)FULL-EPISODES (5+ MIN.)LIVE