LONDON—As consumers continue to manage their budget to figure out how to get access to all the content they want from streaming/video on-demand services, Ampere Analysis sees the AVoD market on the verge of significant growth to help satisfy their needs.
AVoD stands for Advertising supported Video on Demand and are often free services that feature ads mixed in with their content to draw revenue over subscription fees. At the start of 2020, only 3-6% of U.S. households use AVoD services, per Ampere, but the media analyst firm sees a surge on the way.
Examples of AVoD services include Crackle, Roku TV, Tubi, Vudu and Pluto. Roku TV is currently the most popular among U.S. consumers at 6% use. One of the reasons that Ampere believes that these services could see growth this year is because they offer access to older content that more popular streaming services may have lost access to.
Netflix’s catalog used to be largely based off content that was five years old or older—50% in September 2015. But between their focus shifting more toward original content and losing content to other SVoDs, as of September 2019 Netflix’s older content makeup fell to 35%. Many SVoDs are putting similar emphasis on original content.
AVoDs meanwhile are primarily using older content to stock their catalogs. Between Roku TV, Crackle, Vudu and Tubi, an average of 80% of their catalogs are content that is five years or older.
Ampere believes that as AVoD services continue to grow, advertisers spending for online video advertising will also see a spike. This will be helped by major players like Disney’s Hulu and NBCUniversal’s Peacock offering AVoD models in addition to SVoDs.
“AVoD is coming, and it’s going to make its mark on the Video on Demand landscape rapidly,” said Guy Bisson, director at Ampere. “It’s impact will be felt not just by the entertainment industry, but by advertising too as the shift that has already disrupted the subscription television market sweeps across the free-to-air sector.”
Bisson would go on to say that while AVoD services are following the proven path of using older content to build an interest, as they grow they may also begin to offer newer and even original content like some of their SVoD peers.
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