AVOD drivers
Although ad-supported and subscription-based streaming services are not necessarily in competition with one another, each model appeals to different audiences, with older age groups tending to be more interested in ad-supported streaming content than their younger counterparts. However, with the video streaming market saturating and services increasing their subscription fees, it is unsurprising that Gen Z consumers were especially likely to sign up for platforms serving commercials. Indeed, nearly 60 percent of U.S. adults to a late 2023 survey named cost savings as their main reason driving their interest in cheaper ad-supported offers.The sheer amount of content on AVOD services is also an appealing prospect for potential and current users. While SVOD content catalogs have in theory a higher concentration of the latest blockbusters and in-demand TV shows, as well as own productions, the growth of AVOD content is mostly driven by older licensed TV series and movies. However, main ad-supported streaming providers, such as Amazon’s Freevee, have also released new originals.
The most popular AVOD services
In order to respond to this heightened level of user engagement, several large SVOD services, such as Netflix and Disney+, have launched their own ad-supported tiers. Success has proved them right: the share of sign-ups for a Netflix basic account with ads jumped from 10 percent at launch in November 2022 to 30 percent in September 2023. Other AVOD services have seen consistent subscriber increases in recent years as well. For example, Tubi grew its userbase by over 20 million between May 2022 and mid-2023 alone. Roku is also going from strength to strength, having nearly tripled its number of active accounts in five years.For consumers unwilling to financially commit to SVOD, but who still prefer large on-demand libraries, AVOD appears to be a good option. With the number of AVOD viewers increasing at a faster pace than SVOD in the U.S., advertising-based streaming could have a bright future.
