For a long time, AVOD or ad-supported video-on-demand wasn’t as strong or preferred as SVOD, which is the subscription model of business. Amazon Prime, Netflix and other similar services utilized SVOD to make it a dominating way of running a business in the OTT industry. This was due to the lack of high-quality ad experience in the AVOD model, which irritated users and shifted them to SVOD.
However, this trend has completely changed now. In the presence of OTT advertising companies,advanced AI-based technologies for ad insertion and other factors, AVOD has risen to its true power. Another important factor has been the overcrowding of the SVOD model in the industry. Big brands dominate the SVOD market, which makes AVOD streaming models more appropriate for new, emerging players in the market.
Growing investment in the advertising model of streaming
Looking into the global perspective of the industry, the broad picture of AVOD becomes clearly visible. The worldwide investment in VOD ads is expected to reach $47 billion by 2023. This rapid growth shows how AVOD model is increasingly taking over the industry. More investments mean better solutions and higher revenue for emerging market players.
What is making AVOD solutions grow so fast?
1. Addressable advertising
With improved ad insertion solutions, addressable advertising has been possible on OTT platforms. This has helped AVOD model to grow significantly. This advertising approach is more targeted towards different audience groups, which is appreciated by brands across the globe. At the same time, addressable advertising reduces the ad load of an AVOD channel, which makes this model popular among users.
Addressable OTT digital advertisingreduces the number of ads and makes it more relevant to the targeted audience as per their location and interests. Operators get optimal control on a granular scale to manage the system. At the same time, they can offer customizability to consumers to further improve the experience of watching ads.
2. Larger variety of content
AVOD servers are known for their collection of archived content. This creates a wider library for consumers as well as advertisers to utilize for their respective purposes. Consumers get to enjoy different types of content in one place. Plus, operators get a chance to use the whole archived library of content for monetization.
On the other hand, big SVOD players reduce the library of content on their platforms. They put more focus on original content. This trend has resulted in a huge gap between market players. Licensing is way cheaper than investing in original content production. Hence, the trend of AVOD has risen exponentially in the last few years. OTT players offer a huge catalog of thousands of movies, TV shows, documentaries and other archived content to deliver variety and increase monetization opportunities.
With everything happening in the industry, there is a chance of AVOD taking over SVOD in the future. However, right now, OTT players are choosing between the two as per the exposure of their platform. AVOD is, of course, easier to establish, maintain and profit from.