Start OTT Business with AVoD

In 2020 there will be more OTT platforms, while the amount of money the consumer is willing to spend for content will approach the limit. A crisis is brewing in the segment of paid services. At the same time, the use of multiscreen, interactive, 4K, VR, HDR technologies enhances interest to the segment of free services that use advertising or AVoD model.

Advertising supported Video on Demand (AVoD) is a type of VoD in which the viewer can watch a movie, series or a television show for free with advertising.

"The AVOD goldrush is here, and it represents a prime opportunity for service providers, new AVOD entrants and content companies."
Sarah Henschel, senior research analyst, media, IHS Markit

The AVoD strategy is based on an advertising model of monetization, in contrast to SVOD services such as Netflix, HBO GO, which have increased audience performance over the years and instilled in the habit of paying for content. To achieve this, the purchase of highly rated premium content, for example, "Game of Thrones", the most popular television show of 2019, and providing viewers with a subscription — helped to achieve this. As a result, the monetization model of SVoD streaming services started to seem most attractive to operators.

As the audience studies show (TV Time and UTA IQ conducted the "Beyond the Big Three" study, which aimed to find out how consumers perceive the growing number of available streaming services) 70% of streaming multimedia consumers in the USA believe that their households will have too many subscription packages in the future and fear that the costs of their use will become too high. As a result, people are ready to accept some form of the model supported by advertising, with the expectation that the advertising model will reduce the total costs of the household for streaming.

Consumers will switch to free platforms with AVoD services. Major players include Pluto TV from ViacomCBS and Crackle from Sony. In 2019, Tubi, Rakuten made a significant contribution to the popularization of the AVoD model, which continues to gain popularity in 2020. The plans of other major players in the area of video streaming confirm the hypothesis of the increasing demand for AVoD. Amazon and IMDb launched IMDb TV AVoD service in January 2019. NBCUniversal launched Peacock in April 2020. HBO Max plans to launch AVoD-based applications no later than 2021.

There is a growing number of distributors seeking to monetize the catalog of old films, series, shows with new players as AVoD is provides a revenue stream in a market where licensing fees are increasingly under pressure with little to no increase in value per hour over the past 5 years.

"AVoD services are treading a well-trodden path with an early reliance on older content, but as their market position grows, we can expect them to begin acquiring newer content and even moving into original production activity as they battle for eyeballs in an increasingly crowded market."
Guy Bisson, Director of Ampere Analysis

The growth of AVoD stimulates online video advertising as advertisers are interested in promoting goods and services through advertising on OTT platforms. It gives the rise to important corollaries, such as the costs of online video advertising will increase, the owners of OTT businesses will earn more and ultimately increase their overall turnover by monetizing archived video content.

1. It is necessary to search advertisers in your region and actively work with them.

Companies planning to monetize video content need advanced digital advertising technologies, a well-thought-out strategy for applying audience data, as well as attracting users and buying content. Over the 10 years of its existence, the online video market has changed, and today it provides much more tools to increase advertising revenue and reach the audience.

We provide Telebreeze VoD technical platform to help grow your video streaming business. It supports AVoD monetization model and makes it easy to start your own video streaming service.