The rise of streaming advertising in video on demand (AVoD)
Posted: Wed Dec 04, 2024 8:43 am
Covid-19 has accelerated a paradigm shift in the world of series and their consumption on streaming platforms or OTT (Over The Top), that is, on-demand content. Due to an exponential increase in the time we spend at home, consumption of these series increased to reach 131% in 2020.
We have therefore witnessed a paradigm shift both in digital transformation and in the way audiovisual content is produced, sold, distributed and consumed, focused on an increase in streaming services over the Internet.
The major players in these streaming programs, such as Movistar+Lite, Amazon Prime Video, HBO and Netflix, have increased their subscriber base by between 26 and 60%, according to data provided by Kantar, a brand consulting and data analysis company.
Such an avalanche of new users has led to great advertising phone number list competition between OTT platforms and the beginning of the transition of some companies to business models rarely seen until now in our country: content with advertising or what is better known as AVOD .
But what are Videos on Demand and AVOD?
Video on demand (VoD) is a service that allows users to choose from among the different videos available or offered by a platform the one they want to watch at that moment. This means that the user of a streaming service can choose when, where and what to watch.
video-on-demand-avod
AvOD (Advertising-based Video on Demand) is a model for consuming audiovisual content that is free for people who want to use it, but is supported by advertising funding. To better understand the concept, let's think of YouTube or Spotify, although in the audiovisual field.
The ads that appear on these channels, called AVoD, are short inserts that play while the user watches the content. They are usually displayed before the film (pre-rolls), but can also be shown in the middle of the film (mid-rolls).
Global situation of video-on-demand advertising and future prospects
Although it is still too early to say that the AVoD model has been implemented worldwide, it is currently a huge success in the United States and companies that launch their own advertising service for videos on demand are growing exponentially compared to traditional subscription-based streaming audiovisual content platforms, such as the famous Netflix, HBO or Amazon Prime, which results in users paying for several platforms at the same time depending on the content they want to watch.
In contrast, AVOD can coexist with other platforms as it costs users nothing in exchange for watching brief advertisements.
Market expansion in North America is primarily supported by Canada and the US, with North America estimated to account for a large share of the global on-demand video advertising market, followed by Europe.
"Although the AVOD model did not have a strong presence in Europe, it worked very well in markets such as the US," said Rakuten TV CEO Jacinto Roca.
And the situation changed when Rakuten TV, an on-demand content platform, launched its first AVoD channel in Europe in October 2020. This new line of business allows viewers to access a wide catalogue of free content of films, programmes and series, but with advertising inserts.
In November of the same year, the American video-on-demand platform Pluto TV (from the Viacom-CBS group) arrived in Spain with 40 exclusive channels for online television and smart devices, already founded with the peculiar formula of offering its content free to air and without having to register to see it. In exchange, it includes advertising in its programs and the client does not have to pay for them.
The success factor of the advertising-based model undoubtedly lies in its complementarity with the existing payment models that are most common in our daily lives. However, there is too much payment on offer and people soon start to talk about the famous “subscription fatigue”.
The rise of AVoD models in Spain?
According to the Advertising Observatory in Spain, in our country investment in digital video advertising increased by more than 80% between 2014 and 2018, reaching 950 million euros in the latter year. We can only imagine what 2020 and 2021 have meant in the rise of advertising in audiovisual products and, much more, in the consumption of series and films on demand.
We have therefore witnessed a paradigm shift both in digital transformation and in the way audiovisual content is produced, sold, distributed and consumed, focused on an increase in streaming services over the Internet.
The major players in these streaming programs, such as Movistar+Lite, Amazon Prime Video, HBO and Netflix, have increased their subscriber base by between 26 and 60%, according to data provided by Kantar, a brand consulting and data analysis company.
Such an avalanche of new users has led to great advertising phone number list competition between OTT platforms and the beginning of the transition of some companies to business models rarely seen until now in our country: content with advertising or what is better known as AVOD .
But what are Videos on Demand and AVOD?
Video on demand (VoD) is a service that allows users to choose from among the different videos available or offered by a platform the one they want to watch at that moment. This means that the user of a streaming service can choose when, where and what to watch.
video-on-demand-avod
AvOD (Advertising-based Video on Demand) is a model for consuming audiovisual content that is free for people who want to use it, but is supported by advertising funding. To better understand the concept, let's think of YouTube or Spotify, although in the audiovisual field.
The ads that appear on these channels, called AVoD, are short inserts that play while the user watches the content. They are usually displayed before the film (pre-rolls), but can also be shown in the middle of the film (mid-rolls).
Global situation of video-on-demand advertising and future prospects
Although it is still too early to say that the AVoD model has been implemented worldwide, it is currently a huge success in the United States and companies that launch their own advertising service for videos on demand are growing exponentially compared to traditional subscription-based streaming audiovisual content platforms, such as the famous Netflix, HBO or Amazon Prime, which results in users paying for several platforms at the same time depending on the content they want to watch.
In contrast, AVOD can coexist with other platforms as it costs users nothing in exchange for watching brief advertisements.
Market expansion in North America is primarily supported by Canada and the US, with North America estimated to account for a large share of the global on-demand video advertising market, followed by Europe.
"Although the AVOD model did not have a strong presence in Europe, it worked very well in markets such as the US," said Rakuten TV CEO Jacinto Roca.
And the situation changed when Rakuten TV, an on-demand content platform, launched its first AVoD channel in Europe in October 2020. This new line of business allows viewers to access a wide catalogue of free content of films, programmes and series, but with advertising inserts.
In November of the same year, the American video-on-demand platform Pluto TV (from the Viacom-CBS group) arrived in Spain with 40 exclusive channels for online television and smart devices, already founded with the peculiar formula of offering its content free to air and without having to register to see it. In exchange, it includes advertising in its programs and the client does not have to pay for them.
The success factor of the advertising-based model undoubtedly lies in its complementarity with the existing payment models that are most common in our daily lives. However, there is too much payment on offer and people soon start to talk about the famous “subscription fatigue”.
The rise of AVoD models in Spain?
According to the Advertising Observatory in Spain, in our country investment in digital video advertising increased by more than 80% between 2014 and 2018, reaching 950 million euros in the latter year. We can only imagine what 2020 and 2021 have meant in the rise of advertising in audiovisual products and, much more, in the consumption of series and films on demand.