There is a huge demand for advertising-based video streaming services or AVOD (Advertising-based Video-On-Demand) content in the market. Viewers turn to ad-based services instead of paying for monthly memberships on subscription-based video streaming services. Moreover, AVOD services have become an excellent revenue-generating business for content providers. Among other monetization models, OTT advertising is predicted to become a gold mine.
Let’s give AVOD a closer look.
What is AVOD?
AVOD refers to advertising-based video-on-demand services. The main characteristic of this kind of video streaming service is free content with ads. Viewers can avoid purchasing videos, but they watch ads during the playback instead. Providers make money by advertising on videos.
AVOD has been growing since 2021 and is expected to grow more in 2023. It is free of charge — that’s why it is attractive to almost any kind of audience. Additionally, AVOD is the best way for advertisers to reach clients directly.
As viewers have multiple services to stream content, they cannot or don’t want to pay for each of them. They watch different shows and movies on multiple platforms. And it is easier if these platforms are free of charge.
What are the Benefits of AVOD?
Here’s the list of advantages:
#1 High rate of user acquisition
AVOD is a free service. Due to that, it is attractive to a wide range of customers. Although a lot of people are glad to get rid of ads and pay for an ad-free subscription, many will find an ad-based video streaming service to be a suitable option. They will be able to enjoy great content for free.
#2 Better targeting
Video streaming platforms (with their OTT or IPTV app) have better targeting capabilities than cable or satellite television. Ads can be more accurate on ad-based video streaming platforms. As a result, advertising is more personalized, and viewers interested in a product or service will see the ad.
Better targeting means that advertisers will likely reach their target customers and make more sales.
#3 Promising forecasts
According to Digital TV Research, the revenue of AVOD will reach $91 billion by 2028. The researchers said that advertising-based video-on-demand platforms would grow faster than subscription-based VOD.
How is AVOD Different from Other Monetization Models?
Here are other video content monetization models:
- Subscription-based VOD. Content providers sell monthly or yearly subscriptions to viewers. People can cancel or renew their subscriptions at the end of a purchase period.
- Transactional-based VOD. Viewers need to pay for every single piece of content on the platform. When purchasing access to one video, the rest of them are still inaccessible and require extra payment. Also, TVOD providers sometimes allow viewers to download videos on their devices.
- Hybrid VOD. Sometimes, content creators use a hybrid monetization approach. They combine several models. For example, Netflix, NimiTV and similar services made a combination of advertising and subscriptions very popular last year. They came up with the idea to offer two plans to people: an ad-free subscription at a higher price and a subscription with ads at a lower price.
AVOD can be a perfect option for content creators as it doesn’t require any payment from viewers. But it is still a revenue-generating model for platform owners.
Final Thoughts
AVOD is an ad-based video-on-demand platform that doesn’t charge viewers. People can enjoy content and save their money simultaneously. Moreover, content providers still get to generate revenue by advertising. It is a win-win situation.
If you want to create an ad-based or any other video streaming service or upgrade an existing one, we recommend you contact Setplex. They can offer an IPTV/OTT solution to achieve your business goals and provide a smooth viewing experience.
