AVOD SERVICES MARKET ANALYSIS

Global AVOD Services Market size is estimated to be valued at US$ 28.09 Billion in 2023, and is expected to reach US$ 71.16 Billion by 2030, exhibiting a compound annual growth rate (CAGR) of 14.2% from 2023 to 2030

AVOD (Advertising Video on Demand) services have emerged as a significant player in the digital media landscape over the past few years. These platforms offer free content streaming to viewers, supported by advertisements that are interspersed throughout the videos. AVOD services provide a win-win situation for both viewers and content providers. Consumers get access to a wide range of video content without any subscription fees, while content creators and providers generate revenue through targeted advertising. This model has gained popularity due to its accessibility, as users can enjoy a plethora of movies, TV shows, and other video content without the need for a paid subscription, making it an attractive option for price-conscious viewers.

Global AVOD services market has witnessed substantial growth and disruption, and the market is driven by increasing shift in consumer behavior towards online streaming. Due to rising adoption of smart devices, the ease of access to content has further propelled the market's expansion. Major players in the AVOD space have invested heavily in original content creation and advanced advertising technologies, enabling them to offer personalized and engaging ad experiences to viewers. While subscription-based platforms like Netflix and Hulu continue to dominate the streaming landscape, AVOD services have carved out a unique niche, tapping into a large audience base and capitalizing on the growing digital advertising market.

Global AVOD Services Market- Regional Insights

• North America: North America is the largest market for AVOD services, accounted for a share of over 39% in 2022. North America has been one of the leading regions in the AVOD services market. The U.S., in particular, has been a key driver of growth due to its large population, high internet penetration, and significant advertising spending. AVOD platforms in North America have attracted a wide range of content creators and advertisers, offering a diverse selection of content to consumers. The region has witnessed the rise of AVOD-supported streaming services launched by traditional media companies as these adapt to changing consumer preferences and market dynamics.
• Europe: Europe is the second-largest market for AVOD services, accounted for a share of over 18% in 2022. Europe has witnessed steady growth in AVOD services, with countries like the U.K., Germany, and France being key markets. AVOD platforms in Europe have faced some unique challenges related to privacy regulations and content licensing rights, but have still managed to attract a significant user base. European viewers have shown a preference for ad-supported free content, leading to the growth of AVOD platforms alongside subscription-based services in the region.
• Asia Pacific: Asia Pacific is the fastest-growing market for AVOD services, accounted for a share of over 33% in 2022. The Asia Pacific region has also seen substantial growth in AVOD services. Countries like India, China, and Southeast Asian nations have experienced a surge in online video consumption due to increasing smartphone adoption and affordable data plans. AVOD platforms in this region have capitalized on the vast user base, and have focused on delivering local and regional content to cater to diverse cultural preferences. AVOD services market in Asia Pacific has become highly competitive, with both regional and international players vying for market share.

Figure 1. Global AVOD Services Market Share (%), By Region, 2023

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Global AVOD Services Market- Analyst viewpoint

From an analyst's perspective, the global AVOD (Advertising Video On Demand) services market presents a compelling landscape characterized by robust growth opportunities and evolving challenges. The increasing trend of digitalization, coupled with a rise in internet accessibility, positions AVOD services as a pivotal player in the digital entertainment arena. Advertisers are capitalizing on the platforms' ability to provide cost-effective and targeted advertising solutions to a diverse and engaged audience. However, the industry faces challenges such as ad-blocker usage and the competition posed by ad-free SVOD services. To navigate these challenges, AVOD platforms must strike a delicate balance between monetization and user experience, leveraging technological advancements like AI-driven targeting and seamless user interfaces. The opportunities for global expansion, data monetization, and strategic collaborations with content creators and advertisers underscore the industry's potential for further innovation and sustained growth. As regulatory considerations, especially regarding data privacy and content regulations, continue to evolve, market players must remain adaptive to ensure long-term viability in this dynamic and competitive landscape.

Global AVOD Services Market- Drivers

• Increasing Digital Video Consumption: The rapid increase in digital video consumption has been a major driver for AVOD services. With the proliferation of smartphones, tablets, and high-speed internet access, more people are turning to online platforms for entertainment. AVOD services provide free access to a wide range of video content, making these an attractive option for price-conscious viewers.
• Shift in Advertising Spending: Advertisers have been reallocating their budgets from traditional media, such as TV and print, to digital platforms, including AVOD services. AVOD platforms offer targeted advertising capabilities, allowing brands to reach specific audiences based on their interests, demographics, and online behavior. This personalized approach to advertising enhances the effectiveness of campaigns and attracts more advertisers to the AVOD model.
• Content Monetization for Creators: Content creators and providers see AVOD as a viable option to monetize their content. By offering their videos on AVOD platforms, creators can access a broader audience without the barriers of subscription fees. As these platforms gain popularity, these attract more content creators, leading to a diverse and extensive content library for viewers.
• Competitive Landscape and Original Content: AVOD platforms are facing competition from various streaming services, including subscription-based ones. To stay relevant and retain users, AVOD platforms have invested in producing high-quality original content. This exclusive content not only attracts more viewers but also helps to differentiate AVOD platforms from their competitors.

Global AVOD Services Market- Opportunities

• Global Reach and Localization: AVOD services have the potential to reach a global audience, presenting an opportunity to expand into new regions and tap into diverse markets. By offering localized content and advertising, AVOD platforms can cater to the preferences and cultural sensitivities of viewers in different countries, further enhancing user engagement and retention.
• Mobile and Smart TV Integration: Increasing adoption of smartphones and smart TVs opens up new avenues for AVOD services. Optimizing the user experience for mobile devices and smart TVs can help to attract a broader audience and increase overall watch time. Seamless integration with these devices can also lead to higher ad impressions and revenue generation.
• Partnerships and Content Agreements: Collaborating with content creators, studios, and production houses can provide AVOD platforms with access to a vast library of premium content. Building strategic partnerships and securing exclusive content rights can be a key differentiator in the competitive AVOD landscape.
• Ad Tech Advancements: Continued advancements in ad technology offer opportunities to improve ad targeting, personalization, and interactivity. AVOD platforms can leverage AI and machine learning algorithms to deliver more relevant ads to viewers, thereby, enhancing the user experience and increasing ad effectiveness.

Global AVOD Services Market- Trends

• Rise of Hybrid Models: AVOD platforms may continue to explore hybrid monetization models, combining ad-supported content with premium, subscription-based offerings. This approach allows platforms to cater to different user preferences while diversifying revenue streams.
• Original Content and Exclusive Licensing: The trend of AVOD platforms investing in original content and securing exclusive licensing deals may have intensified. Producing unique and high-quality content remains a crucial strategy to attract and retain viewers in a competitive market.
• Ad Personalization and Targeting Advancements: AVOD platforms are likely to leverage advanced data analytics and artificial intelligence to enhance ad personalization and targeting capabilities further. By serving more relevant ads, platforms can improve user experience and increase ad engagement.
• Integration with Connected Devices and Smart TVs: The integration of AVOD services with various connected devices and smart TVs is likely to continue. This expansion allows viewers to access content seamlessly on multiple screens, catering to their convenience and preferences.

Global AVOD Services Market- Restraints

• Ad Fatigue and Viewer Disruption: Frequent and repetitive advertisements on AVOD platforms could lead to ad fatigue among viewers, resulting in a negative user experience. Excessive ad interruptions might prompt viewers to switch to other platforms or seek ad-free alternatives, affecting engagement and retention. While it's true that frequent and repetitive advertisements on AVOD platforms could lead to ad fatigue, it's also important to note that these platforms often offer free or lower-cost viewing options, which can be a significant draw for many users. Additionally, many platforms are now implementing smarter ad strategies, such as personalized and targeted ads, which can enhance the viewer experience rather than detract from it. Furthermore, ad interruptions can provide natural breaks for viewers, mimicking traditional TV viewing experiences. Lastly, the revenue generated from these ads helps fund the creation of more diverse and high-quality content, which can improve overall viewer satisfaction and retention in the long run.
• Ad Blocking and Ad Avoidance: The increasing use of ad-blockers and ad-avoidance strategies by viewers presents a challenge for AVOD platforms. These technologies and behaviors hinders the delivery of ads to the target audience, reducing the ad inventory and potential revenue for platforms and advertisers. While the use of ad-blockers and ad-avoidance strategies can pose a challenge for AVOD platforms, it also presents an opportunity for these platforms to innovate and improve their advertising strategies. For instance, platforms can focus on creating more engaging, relevant, and non-intrusive ads that viewers are less likely to block or avoid. Moreover, AVOD platforms can offer viewers the option to choose the type of ads they want to see, improving the user experience and increasing the chances of ad engagement. They can also explore alternative revenue models, such as sponsored content or product placements within the content itself, which are less likely to be blocked or avoided by viewers. Furthermore, not all viewers use ad-blockers or actively avoid ads. Many viewers understand that ads are a trade-off for accessing free or lower-cost content, and are willing to tolerate a certain amount of advertising. Therefore, while ad-blockers and ad-avoidance strategies can impact ad delivery and revenue, they do not completely negate the viability and potential of AVOD platforms.
• Privacy Concerns and Regulation: Collecting user data for targeted advertising raised privacy concerns among viewers. As data protection regulations and privacy concerns continued to grow, AVOD platforms navigate stricter compliance requirements, potentially impacting their ability to personalize ads effectively. While it's true that collecting user data for targeted advertising can raise privacy concerns, it's also important to note that many AVOD platforms are taking proactive steps to address these concerns. They are investing in advanced data protection measures and are committed to transparency about how they collect and use data. Moreover, many platforms are providing users with more control over their data, allowing them to opt out of targeted advertising or to choose the types of data they are comfortable sharing. This not only helps to alleviate privacy concerns, but also builds trust between the platform and its users. Furthermore, even with stricter data protection regulations, targeted advertising is not the only way for AVOD platforms to generate revenue. They can also leverage other monetization strategies, such as subscription fees, pay-per-view services, and branded content partnerships. Lastly, while compliance with data protection regulations can be challenging, it can also serve as a competitive advantage. Platforms that demonstrate a strong commitment to data privacy can differentiate themselves in the market and attract users who value privacy.

Global AVOD Services Market- Recent Developments

New product launches

• Pluto TV launches in India: In March 2023, Pluto TV, a free ad-supported streaming service, launched AVOD service in India. The service offers a wide variety of content, including movies, TV shows, news, and sports.
• Tubi launches in Latin America: In April 2023, Tubi, another free ad-supported streaming service, launched AVOD service in Latin America. The service offers a wide variety of content, including movies, TV shows, news, and sports.
• Amazon launches IMDb TV in the U.K.: In May 2023, Amazon launched IMDb TV, its free ad-supported streaming service, in the U.K. The service offers a wide variety of content, including movies, TV shows, news, and sports.

Acquisition and partnerships

• In September 2023, Pluto TV is teaming up with Philips Smart TVs to bring its streaming service to more than 25 countries in Europe and Latin America. This partnership means that people who own Philips Smart TVs will now be able to watch a variety of Pluto TV channels that are perfect for different age groups and cover lots of different types of shows. It's a great option for people who love to watch a lot of TV in one go.
• Pluto TV (a television channel) acquires Xumo (an American internet television and consumer electronics company): In March 2023, Pluto TV acquired Xumo, another free ad-supported streaming service. The acquisition provided Pluto TV access to Xumo's content library and user base, which helped Pluto TV to become the largest AVOD service in the U.S.
• YouTube TV partners with WarnerMedia: In April 2023, YouTube TV (video sharing company) partnered with WarnerMedia (a media company) to bring HBO Max to YouTube TV subscribers. The partnership provided YouTube TV subscribers access to HBO Max's content library, which included popular shows like "Game of Thrones" and "The Big Bang Theory."
• Amazon Prime Video (a television channel) partners with Discovery (Cable channel): In May 2023, Amazon Prime Video partnered with Discovery to bring Discovery+ to Amazon Prime Video subscribers. The partnership gave Amazon Prime Video subscribers access to Discovery+'s content library, which included popular shows like "The Bachelor" and "90 Day Fiance."

Figure 2. Global AVOD Services Market Share (%), By Platform Type, 2023

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Top companies in Global AVOD Services Market

• YouTube (Google)
• Hulu (Disney)
• Peacock (NBCUniversal)
• Tubi (Fox Corporation)
• Pluto TV (ViacomCBS)
• IMDb TV (Amazon)
• Roku Channel (Roku)
• Crackle (Chicken Soup for the Soul Entertainment)
• Xumo (Comcast)
• Vudu (Walmart)
• The Roku Channel (Roku)
• Popcornflix (Screen Media Ventures)
• MX Player (Times Internet)
• Voot (ViacomCBS)

Definition: AVOD (Advertising Video on Demand) services refer to digital platforms that offer free access to a wide range of video content to viewers, supported by advertisements that are interspersed throughout the videos. Users can watch movies, TV shows, original series, and other video content without any subscription fees, while content creators and providers generate revenue through targeted advertising.