This year was supposed be the year when AVOD would experience significant growth and get closer to SVOD OTT model.
The beginning of the year started to prove the expectations but then happened the global halt in, well, pretty much everything so it remains to be seen what happens next? Growth, temporary pause or complete change in trends…
AVOD, Advertising supported Video on Demand, was always considered as the not-so-efficient model compared to SVOD. However, with the increase in different SVOD services the viewers were faced with difficult task of having to choose among different OTT services. Paying for more than 2 or 3 SVOD services at the time, statistics have shown, has been too much for the average viewer. While, one way of handling this issue would be bundling of SVOD services, which we would cover in one of the future Aviion.chunks the other was focusing on offering free OTT service with placed ads within content. The ability to add content without adding cost has become more important.
Other appealing argument for using AVOD, for the operators, is the fact that AVOD models have shown to create 2.5 times more revenue than the SVOD. The companies started investing money into expanding their content database with existing content which was more efficient than producing own original content. That move enabled the operators to create deep libraries that was able to cater to many different tastes of viewers thus attracting much broader audience.
Ads in OTT services are easier to consume for viewers for 2 reasons. Firstly, they are predominantly shorter compared to payTV. In the US payTV ad load is around 11 minutes per each hour while in OTT that range is from 3-8 minutes. So, viewers are seeing less ads at the same time those ads are better targeted as they are segmented based on extensive data collected about the viewer.
All of this was setting AVOD for the accelerated success but then corona came in affecting the advertisers as the economies started taking hits. I am sure AVOD will survive the current period and that its growth is simply delayed just like many other things. Viewers are simply more inclined to take on more free OTT services that include ads rather than having to pay monthly fees for services they or may not use.
SVOD is still thriving currently, but in the future will be a successful model for the big players (Netflix, Disney+…) and for OTT services that cover very specific niche markets and are providing very specific content. All other services will probably have more success with AVOD business model or at least a hybrid AVOD/SVOD model that will enable them to offer lower subscription prices to attract more subscribers. In the end whichever model you choose for your OTT service Aviion can help you with all of them.