According to the study, The Rise of Free Ad-Supported Streaming, there exists some confusion as to what AVOD actually means. TDG says two distinct streaming-video revenue models – free VOD (FVOD) and free ad-supported streaming TV (FAST) – are folded under the AVOD umbrella, when in fact any streaming revenue model can have an advertising component. It adds that advertising should be understood not as a vertical but rather as a common revenue model that all verticals can take advantage of for revenue.
The report notes that in the sector advertising-based revenue models span both on-demand and live (e.g., FVOD IMDb and vMPVD Sling TV), as well as transactional, subscription, and free distribution models (e.g., TVOD Vudu, SVOD Netflix, and YouTube). Thus it says the AVOD acronym should be eliminated from industry vocabulary and “ad-supported streaming video” used in its place as it is more accurate.
The research found that, among those that view free ad-supported streaming video on TV, 24% do so daily and another 32% weekly, which is encouraging given that these services are primarily comprised of older shows and movies—at least the on-demand portion. The remaining 44% view monthly or less.
Three-quarters of those that view free ad-supported streaming video services on TV were found to watch YouTube, more than twice the audience of its closest competitors. Among FAST providers, Pluto TV led the pack, followed by Tubi TV. Fox’s Xumo had usage in the single digits.
Yet when asked about the role of free ad-supported streaming services within their household’s total TV viewing, only an eighth of Pluto and Tubi users used the service as their first choice for shows. Furthermore, in Q2.21, YouTube generated as much ad revenue as Netflix did subscription revenue.
“Clearly the effects of work-from-home and lack of traditional leisure options during the pandemic accelerated consumer use of free ad-supported streaming services,” said TDG senior analyst Doug Montgomery commenting on the report. “Most major video providers have been preparing for this moment for years and thus able to quickly adapt to an accelerated timeline. It is a unique moment in the history of the entertainment business and those who move quickly and boldly will likely reap the benefits for years to come.”
Looking at future successful business modes,The Rise of Free Ad-Supported Streaming added that while there was a “kaleidoscope” of new providers, pricing plans, and content sources available to the CTV viewers, yesterday’s video revenue models – à la carte, subscription and free – persist and that while technologies change, fundamental revenue models do not. Rapid TV News