The rise of AVOD

By Sarah Simcox, Planning Manager

 The latest Thinkbox research shows linear TV still accounts for 60% of our overall viewing, but for how long? With murmurs around Netflix, ITV and Disney all changing their business models to AVOD streaming the landscape could look very different very soon.

Our video in a day:

The Thinkbox conducted research found that the average video content viewing time per day for all individuals in 2021 was a whopping 5 hours, 05 mins with linear TV making 58.7% and subscription VOD making up 11%.

Interestingly for us marketers, Linear TV counts for a massive 87% of our video advertising in a day.

And as video content viewing is still widely viewed through the TV and is something so habitual it is unlikely Linear TV and Linear TV advertising are going anywhere fast!

However, subscription VOD isn’t trailing too far behind, showing that it’s becoming a more steadfast in the video diet especially for a younger audience and households with children. Woman 16-34’s viewing content in a day is made up of 20% subscription VOD.

 

AVOD Developments:

Following the recent news about the loss of 200,000 Netflix subscribers the company announced its plan to offer cheaper, ad-supported tiers to consumers.  The world’s largest on-demand video streaming service is hoping to boost its subscriber base amid stiffer competition from rival firms.

Netflix commented that the ad-supported plans gives customers more choice and marks a major shift in how Netflix has previously viewed advertisements in its 25-year history, over which it has amassed almost 222 million paying customers.

ITV is looking to relaunch ITVHub to ITVX, which will be their AVOD platform: This move is due to the understanding that audience viewing habits are changing, so new features will include promoting series prior to TV and having dedicated channel streams, to name a few. ITV plan on launching with both an AVOD and SVOD option giving consumers more choice.

Disney has also announced that it is to introduce an ad-supported service to Disney+ later this year, in a bid to reach 260 million subscribers by 2024. And the controversial plans to sell the current state owned and commercially funded Channel4 could eventually lead to an advertising based streaming service.

Culture Secretary Nadine Dorries spoke out about Netflix offering AVOD and the negative effect on public service broadcasters as consumers get more choice on how and where they consumer their content.

The latest research from Comast revealed that 80% of consumers prefer an ad-supported service over higher cost ad-free service (SVOD.)

So, what does this mean for advertisers?

Ad-supported video-on-demand (AVOD) is expected to surpass 150 million viewers by the end of 2023. And with Netflix entering the space, it could raise those estimates higher.

And as AVOD gains hold, ad-supported streaming could be perceived as not just a low-budget option for less-affluent viewers, but as a responsible choice for affluent viewers as well.

With all these developments it would be easy to write linear TV off, but the picture is more complex. We are crossing the bridge between Linear and VOD to meet with more demand for AVOD but both offerings can co-exist.