In the overloaded streaming landscape, dominated by subscription-based pay-per-view (SVOD) services like Netflix, Disney+ or Amazon PrimeVideo, another model hasn't said its last word: AVOD (Advertising Video On Demand).
It is based on the classic television model. The consumer accesses the video for free after viewing one or more ads.
Its market, its democratization throughout the world... nothing is left to chance in this article!
Markets already conquered by AVOD
In the world, AVOD revenues continue to grow.
The largest share is in Asia-Pacific, with 2 billion viewers in AVOD, the continent captures half of the revenues. In China alone, the mass effect is such that platforms like Iqiyi and Tencent Video have more than 550 million users each.
North America ranks second with a 59% growth and $9.7 billion. The famous platforms are Tubi, Pluto TV, Hulu, The Roku Channel and Freedive from IMDbTV.
By 2024, the global market for free AVOD platforms is even expected to double to €50 billion in 138 countries, according to Digital TV Research.
Let’s have a deeper look into the case of North America, especially the U.S., advertising-supported video services are beginning to capture a significant share of the audience.
In this Nielsen report, we note that over the period of July 2020, among other subscription VOD services, excluding Netflix, YouTube, Hulu, Amazon, Disney Plus - Video on Demand (AVOD) services, such as Tubi and Pluto TV, account for 21%.
AVOD is therefore ahead of SVOD with +6%, but behind video from multi-channel program distributors (MVPD), i.e. cable TV in the United States. In this "other" category, games, network video and social video are also subcategorized.As you can see, in North America and Asia, the advertising-supported service is already well established. As for Europe, it came in 3rd position, but what about it?
AVOD, already conquering Europe?
It is difficult for European players to hope to reach the figures stated above, as the market is much smaller and fragmented. Another difficulty is also noticeable: changes in the laws of the European Union. In spite of this, Tubi, the American free access platform, is planning to launch in Europe. Its catalog will include 15,000 films and programs:
For the already existing offer, unsurprisingly, AVOD's bridgeheads are the United Kingdom and Germany. It is no coincidence that these are the only two European countries where the American Pluto.tv has already launched:
In France, AVOD deserves to be known
If we exclude the replay sites of channels like MyTF1 or M6replay, the current French AVOD offer is almost non-existent, apart from Youtube and Rakuten, which has just launched its offer.
Rakuten Advertising published the results of an international study on AVOD platforms, conducted by Qualtrics on 5 European countries in April 2020.
According to the study, for France, there are three main reasons for stopping the subscription to a paid service: the price is too high (28%), a lack of content (25%), and the impression of paying too much for VOD services at the same time (15%).
In addition, 42% of French people are not ready to increase their budget to subscribe to a new VOD service. Among the results, a quarter of French people do not subscribe to an AVOD platform because they are not aware of the offers available in their market. "AVOD also represents an opportunity for brands to get their message across to a responsive audience while providing access to free content. However, a non-intrusive format is necessary during the user experience”: 48% of users prefer ads with entertaining and engaging content, and 32% for brands they are already familiar with.
"There is not yet a large free VOD platform in Europe," says Rakuten TV CEO Jacinto Roca. "Since most viewers have two or three subscription streaming services, we see AVOD as a natural complement to VOD and SVOD," he adds.
AVOD, a strong ally for SVOD
According to the CEO and founder of Rakuten TV, changing consumer trends are driving the creation of AVOD services. For these new streaming players, whose offer may not be powerful enough to trigger subscription, AVOD does not compete with SVOD, it complements it. In particular, financing through advertising makes it possible to cover catalog costs (content acquisition and production).
That's why they decided to launch a free video-on-demand channel. This service will include films, series, documentaries, local and exclusive content:
A real link between the world of television and SVOD, advertising-supported video-on-demand confirms the evolution of the streaming industry towards new audiences.
The AVOD offer has been able to adapt and find its way, facing and complementing the exclusively paid offers. It offers an interesting alternative, both for video platforms and for the public.
In the long term, in a world where SVOD and TVOD platforms are multiplying considerably, will AVOD only remain complementary or could it dethrone SVOD?
If you want to know more about ad servers for your AVOD platform: https://www.kinow.com/blog-news-vod/post/how-to-choose-your-advertising-server-to-start-your-business-in-avod
Our turnkey OTT solution allows you to power your own video service or enhance it with different monetization models, contact us!