Ad-based video on demand or AVOD refers to video on demand streaming services that are supported by advertising revenues. It allows users to stream movies, TV shows and videos for free in exchange for watching advertisements. Some key providers of AVOD services include YouTube, Hulu, Peacock, Tubi and Pluto TV. These platforms offer a variety of on-demand entertainment content that can be accessed on devices like smartphones, smart TVs and tablets.
The AVOD services market is driven by rising digital media consumption and increasing preference for free streaming alternatives. According to recent data, the average time spent by US internet users watching online videos and live streaming content has increased from 80 minutes in 2015 to 118 minutes in 2020. In addition, growing access to high-speed internet and launch of affordable smartphones is enabling widespread adoption of on-demand streaming globally. Major streaming platforms are also investing heavily in developing original content libraries to attract and retain users on their AVOD platforms. Furthermore, partnerships between AVOD providers and content owners are helping users access a diverse mix of movies, TV shows, sports and news programming for free. While advertising represents a viable business model, some users may switch to subscription-based platforms for an ad-free experience over time.
The global AVOD Services Market Growth is estimated to be valued at US$ 28.09 Bn in 2023 and is expected to exhibit a CAGR of 14.% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
1. AVOD services provide an alternative to expensive pay television subscriptions. These free, ad-supported streaming platforms offer large libraries of content for no monthly fee.
2. YouTube in particular has become a very popular platform for both professional and user-generated video content. Its massive scale and brand recognition are strengths.
3. Many AVOD services are operated by large media companies that can leverage existing content libraries and distribution channels. This integrated approach is advantageous.
1. Ad-based models rely on sufficient ad inventory and ad rates, which can fluctuate depending on economic conditions.
2. Without subscriptions, AVOD services have relatively unpredictable revenue streams that depend entirely on advertising performance.
3. Compared to subscription video on demand (SVOD) platforms, the user experience may be inferior due to interruptive ads.
1. As cord-cutting accelerates, many consumers are receptive to alternatives to cable subscriptions. AVOD services are well-positioned to capture this audience.
2. New platforms continue to emerge, expanding the industry. Aggregators like The Roku Channel bring content from numerous sources together.
3. Demographic trends among younger consumers point to greater acceptance of advertising as a trade-off for lower costs or free access.
1. As more content moves to subscription-only platforms, AVOD services may struggle to attract major studio content in the future.
2. Stricter consumer data privacy regulations could undermine the ability to target ads effectively.
The global AVOD services market is expected to witness high growth, exhibiting a CAGR of 14% over the forecast period, due to increasing cord-cutting. North America currently dominates the market, and is expected to continue leading due to availability of affordable data plans and high disposable income.
North America accounts for the largest share of the global AVOD services market currently. This is attributed to factors such as availability of affordable data plans, high disposable income, and rapid adoption of OTT platforms. The Asia Pacific region is expected to grow at the fastest rate during the forecast period, due to affordable data plans, rising internet penetration, and increasing acceptance of AVOD platforms as a cost-effective alternative to expensive pay TV.
Key players operating in the AVOD services market include YouTube (Google), Hulu (Disney), Peacock (NBCUniversal), Tubi (Fox Corporation), Pluto TV (ViacomCBS), IMDb TV (Amazon), Roku Channel (Roku), Crackle (Chicken Soup for the Soul Entertainment), Xumo (Comcast), Vudu (Walmart). These players have large user bases and content libraries that give them significant competitive advantages.