Video on demand (VOD) business models are not new, but when the global stay-at-home requirements hit, along with temporary closure of movie theaters, how audiences could consume entertainment was radically disrupted.
As a result, video streaming services offered an even-more popular alternative to satisfy consumers’ increasing appetite than it already had. This immediate shift from the big screen to the living room set VOD on an impressive trajectory that shows no signs of slowing down. Consider: The simultaneous release of “Black Widow,” both in theaters and on Disney+, is a strong indicator that streaming has solidified its place in the media mix
But VOD is set to be disrupted again. Ad-supported video on demand, or AVOD, is the biggest trend in VOD, promising to be a multibillion-dollar market sitting in all your customers’ living rooms.
A shift in technology, consumer preferences
In the beginning, subscription video on demand (SVOD) was the only jewel in the VOD media crown. Platforms included the aforementioned Disney+, as well as Hulu, Netflix and Amazon Prime Video. These offered quarantined consumers a never-ending ad-free content library for an annual rate.
But SVOD is slowly losing its momentum, making long-term growth uncertain. The competition in this space is incredibly fierce, subscription costs are increasing and subscription fatigue is inevitable.
The fact is, fewer users are willing to pay for multiple platforms, and to trim monthly costs more may opt into the AVOD trend that we predict will continue to grow over the next two years. At the same time, consumers—specifically the elusive “cord-cutters” and “cord-nevers” demographic—are accustomed to streaming content through online interfaces at home, so they’ll be ripe to attract as AVOD viewers.
Impressive viewership, growth
Nearly every AVOD and video streaming statistic is deeply impressive. Among those consumers who use pay TV or video streaming services weekly, 65% watch more than two hours of paid-for streamed content daily.¹
And AVOD is gaining incredible market share. During 2021, we’ve been measuring $300 million of AVOD inventory from the top four channels each month, totaling $3.5 billion over the last 12 months from those key players. Our findings so far: AVOD expenditure for TV episodes and movies, as well as forecasts, point towards triple-digit growth over the next five years, reaching $66 billion across 138 countries.²
Source: Kantar Advertising Insights
Ad-supported video on demand, as well as online and mobile video, will continue to grow and evolve, gradually eating into linear TV budgets. AVOD promises to make effective cross-channel video strategies an essential advantage for advertisers looking to increase brand perception and grow share of voice.
¹ TGI Global Quick View 2020 (25 markets)
² Research & Markets Global AVOD Forecasts 2021