Advertising-based Video-On-Demand: What is Going On?

AVOD platforms are becoming more popular today due to the subscription fatigue that a lot of viewers are experiencing. People are canceling subscriptions to video streaming services and switching to ad-based platforms. They prefer not to pay for thousands of services and just use them for free. The AVOD platforms usually don’t charge money. However, there are some exceptions. 

Let’s talk about ad-based platforms in detail. 

3 Kinds of Ad-based Services

Surprisingly, there are several kinds of ad-based services. Let’s give them a closer look. 

AVOD

AVOD is the simplest example of an ad-based service. Mostly, AVOD platforms are free of charge for viewers. They don’t need to purchase access to watch content. Instead, they view ads from third-party companies.

This is how the AVOD platform providers earn money. They allow other brands to run their ads on the platform. The targeting is more accurate here, and there are more chances to find people that would love to buy your product or service.

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Advertisements run on OTT platforms can be more profitable. They are inserted in videos with the server-side ad insertion technology. SSAI advertising is great because ad-blockers cannot identify an ad and, consequently, cannot block them. 

SAVOD

SAVOD is a hybrid monetization model. It is the combination of subscriptions and advertisements on the video streaming platform. 

Such a model became a buzzword thanks to Netflix. When the company understood that many people cancel their subscriptions, they came up with another package plan. They announced the launch of a SAVOD package that will cost less than the subscription plan without ads. Recently, some countries have had the opportunity to purchase a new package. 

Netflix popularized that model, although it had been widespread before it. Now, Disney+ also announced that they are launching a SAVOD plan. 

The content providers think that the main benefit of SAVOD is that it offers a balance between making revenue from ads and against a slow growth of the number of subscribers.  

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FAST

FAST is a free ad-supported streaming TV. FAST services stream linear TV and don’t require sign-ins and costs. 

We need to explain that VOD services usually publish content either created by themselves or obtained from production companies. FAST services broadcast mostly programs run on television. 

Researchers report that the penetration of FAST services doubled year after year in 2021. They say that 18% of US households use a FAST service as of the last quarter of 2021. To compare, there were only 8% in the latest quarter of 2020. 

More statistics

According to statistics, AVOD services account for 32% of the overall share of video streaming services used by viewers in 2022 in North America. To compare, there was only 26% in the last quarter of 2021. They also point out that the average consumer uses at least three AVOD services. 

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Researchers conclude that entertainment video content is still a priority to viewers. However, if they can get the same or similar content at a lower price or for free, they will go for it, tolerating all the ads they need to watch. 

Final Thoughts

Switching to AVOD services is a trend among viewers and businesses. People are tired of so many subscriptions they have to purchase. So, they want to save money. That’s why they find ad-based platforms and stick to them. Businesses understand that tendency and try to retain their customers and reduce churn. They introduce changes to their platforms, such as a new purchase plan that includes a subscription and ads but is available at a lower price. 

If you want to create an AVOD service or upgrade an existing platform, we recommend you contact Setplex. They can offer a suitable solution to achieve the business goals.

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