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  • Peter Fontana

Understanding AVOD Part 3: AVOD Market Size and Growth


Woman sitting on couch choosing from a futuristic selection of AVOD channels.


How big is the AVOD market, and how fast is it growing? In part one of Penthera’s four-part Understanding AVOD educational series, you learned what VOD is and what it means. Part two covered AVOD business models and top AVOD platforms. In this part, you learn about AVOD creators, advertisers, and viewers in three distinct markets—the United States, Asia, and Latin America.


Key Takeaways

  • AVOD revenues in the U.S. are expected to almost triple by 2027, led by big players such as Hulu, Peacock, and the Roku Channel

  • AVOD adoption varies across the Asian region, with local providers leading the way in individual countries

  • U.S. AVOD providers are making inroads in Latin America, with the majority of viewers preferring free ad-supported content

U.S. Market

Advertising-supported video on demand, or AVOD, is the fastest-growing streaming video model today, both worldwide and in the U.S. Viewers are flocking to AVOD services because they’re willing to put up with a few minutes of commercials each hour in return for free or low-cost content. Today, AVOD viewership has caught up to that of subscription video-on-demand (SVOD) services and looks to get only stronger.

According to Digital T.V Research, U.S. AVOD revenues are expected to triple from $12.9 billion in 2021 to $31.9 billion in 2026. That’s more significant growth than projected in Japan, India, China, and other major countries.


AVOD revenues in the top five countries.


Content Creators/Publishers

In the world of streaming video, content creators are those companies producing content that attracts viewers and that publishers distribute. Publishers are those streaming services that distribute the creators’ content, that viewers watch, and on which advertisers advertise. It’s a symbiotic relationship. Publishers need creators to supply the content for their services, and creators need publishers to make their content available to viewers.


AVOD publishers distribute content from a wide variety of creators. Some AVOD content is “classic” or “vintage,” meaning it has some age on it. Other content is newer, though seldom brand new or original to a given service. (This contrasts with SVOD services, which depend on a continual stream of new and original content to attract paying audiences.)


Creators distribute much AVOD content to multiple publishers. Viewers might find a particular vintage TV series playing on several streaming services, as the relationship between creators and AVOD publishers are seldom exclusive.


In the United States, some of the biggest creators of AVOD content include, in alphabetical order:

  • 20th Century Fox

  • Columbia Pictures

  • Paramount

  • Universal Pictures

  • Walt Disney Pictures

  • Warner Bros. Pictures

The biggest AVOD publishers in the United States include:

  • Hulu (ad-supported tier)

  • Peacock

  • Roku Channel

  • Pluto TV

  • Tubi

Biggest U.S. AVOD services by revenue.


Advertisers

In the AVOD ecosystem, advertisers pay publishers to advertise their products and brands to viewers of specific content. The more viewers—and the more targeted those viewers—the more an advertiser is willing to pay for a block of advertising. Advertisers often pay to reach certain demographics, advertise on specific programs, or in a particular time block.


Some of the biggest advertisers in the U.S. are embracing the AVOD model, often diverting their budgets from traditional broadcast T.V. to streaming video publishers. These AVOD advertisers include companies such as Capital One, Verizon, and Geico. According to consulting company Kantar, the following industries spend the most on AVOD advertising:

  • Media & advertising

  • Retail

  • Communications

  • Pharmaceuticals

  • Automotive

  • Restaurants (including fast food chains)

  • Insurance

Audience/Viewers

The audience for AVOD publishers watches because they’re interested in the content and because it is free or lower cost than content on SVOD services. Advertising-consuming viewers make it possible for AVOD publishers to exist.

According to eMarketer, 127.7 million viewers in the U.S. watched AVOD services in 2021. Experts predict that audience will grow to 164 million by 2025.


AVOD will dominate in the streaming wards.


Asian Market

AVOD is equally strong in key Asian markets, even though content creators, publishers, and advertisers differ from those in the U.S. Media Partners Asia (M.A.) forecasts that Asian AVOD services will generate $24.6 billion in revenue in 2022. Experts expect the market to grow by 12% by 2027.


Content Creators/Publishers

Content creators and publishers are a mix of international players and local services. The top AVOD publishers in Asia include:

  • ClipTV (Vietnam)

  • FPT Play (Vietnam)

  • GYAO! (Japan)

  • Sony Liv (India)

  • TVer (Japan)

  • Voot (India)

  • Wavve (South Korea)

Advertisers

Like the U.S. market, not all advertisers embrace AVOD in Asia. AVOD has been slower to take off in some Asian countries, with SVOD platforms more dominant. Because of this, many traditional advertisers don’t understand and haven’t yet moved to the AVOD market.

This is different in APAC countries with lower standards of living. In these countries, lower-income viewers don’t always have the discretionary income for high-priced streaming video subscriptions and have instead embraced the ad-supported model. Advertisers in these countries have been faster in adopting AVOD advertising.


Audience/Viewers

The popularity of AVOD varies from country to country in the Asia-Pacific region. For example, Spot X’s OTT is for Everyonereport notes that 42% of Australians are willing to pay for an ad-free experience, while only 16% of Thailand’s viewers are equally willing. Support for free or reduced-cost AVOD services is highest in Thailand (84%), Singapore (81%), the Philippines (80%), and Indonesia (80%).



AVOD vs. SVOD support in select Asian-Pacific countries.


LATAM Market

The Latin American (LATAM) market strongly supports the AVOD model. As in the U.S., subscription services, led by streaming giant Netflix, got an initial hold on the market. In recent years, viewers have shifted allegiance to AVOD in Latin America.


Content Creators/Publishers Definition

Some of the biggest U.S. AVOD publishers are also making inroads in the Latin American market. These services include:

  • Plex

  • Pluto TV

  • Roku Channel

  • Tubi

These global providers and several local AVOD services source content from both U.S. and Latin American content creators. For example, Roku is partnering with Brazil’s Globopay, the largest media group in Latin America, to feed its AVOD service in the region. Not to be outdone, Pluto TV is sourcing content from more than 60 partners in more than a dozen LATAM countries.


Advertisers

Due to the growing popularity of ad-supported streaming video services throughout Latin America, advertisers have quickly jumped on the AVOD bandwagon. Local and regional advertisers and many international brands are tailoring their digital campaigns to include ads on major AVOD services. As AVOD continues to gain strength in the region, expect even more advertisers to follow.


Audience/Viewers

According to Penthera’s 2021 Latin America Video Streaming Report, 70.4% of Latin American viewers watched AVOD content in 2021. That’s only slightly behind the 87.8% who watched SVOD content and ahead of the 65.8% who watched cable or satellite services. When asked what type of content they prefer, however, LATAM audiences preferred free ad-supported content 37.3% to 36.7% overpaid subscription content.


Next Up…

In the next part of Penthera’s Understanding AVOD educational series, you’ll discover the many benefits of AVOD streaming services.


Contact Penthera today to learn more about how publishers and advertisers worldwide are using Penthera to improve the streaming video experience.


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