SVOD vs AVOD: Is Advertising-Based Video On-Demand the New King of OTT? In the past 10 years, we have seen the advertising industry undergo dramatic transitions as we enter a new age of television and media consumption. When we started the last decade, OTT (over the top) was still relatively new and the term was not commonplace. Televisions were connected via broadcast, cable, or satellite, and streaming platforms could be considered a bit of a novelty.
Since then, the number of cord cutters making the jump from traditional TV over to digital has steadily climbed, until it hit a rapid ascent. In fact, 2019 saw the steepest decline in traditional ad revenue… since the Great Depression!
The growing popularity of OTT and CTV spurred the creation and arrival of streaming service, after streaming service. For a period of time, it appeared that every major network and media company was launching some type membership-based, video-on-demand service. This should not come as a surprise, especially as consumer viewing behaviors on CTV begin to resemble linear TV (and will likely overtake the latter in the near future).
How Has COVID-19 Impacted OTT Video On-Demand?
When it comes to OTT video on-demand, premium subscription-based platforms (SVOD) have dominated the space in recent years. The ad-free model is understandably popular as consumers have grown accustomed to instant service and have shown a willingness to pay for convenience.
From Netflix and Hulu to newcomers like Disney+ and HBOMax, it seemed that SVOD would hold a steady reign. But with the unprecedented circ*mstances brought about by the COVID-19 pandemic, the industry has observed a new trend begin to take place.
Economic uncertainty. Stay-at-home policies. Social distancing orders. Curfews. Statewide lockdowns. The pandemic found individuals spending more time stuck inside their homes, with less options for recreation and entertainment than ever before. News of furloughs, layoffs, and small businesses closures paired with election jitters have amplified the sense of restlessness and anxiety within consumers. Under these unique circ*mstances, we have witnessed a rapid shift in behavior as individuals adopt a risk-averse, conservative-spend attitude.
The combination of saturated streaming services and unparalleled uncertainty has created a level of subscription fatigue. Why pay for a service when there are plenty of free or inexpensive options available? Why subscribe to a suite of streaming services if you could opt out and save on the monthly membership fees? Previously, time was of the essence. Now, consumers have more time on their hands, really allowing AVOD (ad-based video on-demand) services to emerge. So… SVOD vs AVOD, what’s an advertiser need to know? Let’s dig in.
1. The Case for Subscription Video On-Demand (SVOD)
Subscription video on-demand, fondly dubbed SVOD, is the term used to describe exclusive membership-driven digital streaming services. Appealing to consumers with promises of ad-free viewing experiences, original content, and an extensive library of media that is continuously growing, SVOD platforms are the “original” OTT sell for leaving traditional cable or satellite TV behind.
What is the SVOD business model and how does it work?
In general, media businesses can make money in two ways: content offering and/or ad revenue. When it comes to SVOD platforms, one of the selling points is the uninterrupted, ad-free viewer experience. This means content is king.
SVOD models are highly dependent on creating new content in order to keep viewers engaged and retain their membership. It’s no surprise why Netflix spent $15B on original content in 2019, and Apple & Amazon both spent $6B. After all, subscription business models also mean that users can cancel at any time if they no longer find the service valuable. This creates a quantity over quality conundrum — think ‘Netflix Originals’ for example.
However, if executed properly, SVOD services do have the opportunity to gain massive market share and become the primary platform for consumers. In fact, giants like Amazon, Netflix, and even Apple, are doubling down on this model for good reason. With enough users and new sign ups, these platforms can afford membership churn.
Consider Amazon — with more than 112 million Americans holding a Prime membership, they are subsequently subscribed to Amazon’s SVOD platform as well. If Amazon were to create quality content with decent frequency, consumers may view the Prime Video service as a particularly valuable add-on service that comes with their membership. Apple had a similar approach by offering free Apple+ subs to anyone who’d recently bought an Apple device.
2. The Case for Advertising-Based Video On-Demand (AVOD)
Advertising-based video on-demand, or AVOD, is a relatively newer model in the minds of viewers, as far as the OTT space is concerned. AVOD platforms are ones where viewers can gain access to original content or live content for free, or for a reduced membership rate when compared to premium subscription services. The catch? As its namesake suggests, AVOD services come with ads.
What are the unique benefits of AVOD services?
When we examine the reasons why individuals abandoned traditional TV in favor of streaming services, the inconvenience of commercial interruptions is high on the list for what pushed viewers to cut the cord. There are a couple of key differences with the modern ad experience of AVOD platforms when compared with traditional television.
- Fewer ads. While consumers tune into an AVOD platform knowing there will be ad interruptions, the frequency of ads is much lower than that of traditional TV. Furthermore, the ads are generally shorter in duration.
- Dynamic ad delivery. Most ad spots on traditional TV are not relevant to the individual and can be a hit or a miss. AVOD ads offer higher personalization and customization of the ad-delivery experience, allowing marketers to speak “directly” to an individual as opposed to speaking into the void.
Not surprisingly, AVOD is growing in both popularity and profitability. Take Hulu and Roku as a reference point — they are a highly profitable sector in the OTT space that is estimated to be worth more than $300 billion by 2025!
We Can All Agree — OTT Is the Future and AVOD Is a Major Part of it.
Traditional TV has been on a decline for quite some time, and it will not be making a comeback anytime soon. OTT is the future of media and is expected to steadily overtake traditional TV as more consumers make the jump to digital. In the short period of time since its arrival on the scene, AVOD has already captured much of the streaming market. While this is exciting, it is unwise to underestimate the pressure that SVOD platforms have to retain users.
The necessity to continue producing increasingly quality content… at increasingly higher rates… as the space gets more crowded with new competitors… and audiences have more high-quality content offered at a fraction of the monthly price, SVOD platforms will have to dominate market share in order to sustain the business model.
SVOD vs AVOD – The Bottom Line
As media buyers, knowing how to read the market is crucial when it comes to long term success. Pivotal decisions on where to invest time and capital will be the differentiating factor for the marketers that thrive and the ones that get left behind.
As leaders in the OTT space, the Strategus team can say one thing with full confidence — AVOD is going to be the primary model to invest in. Given its mass adoption and projected growth in the coming years, the current stats are only the beginning. There is a window of opportunity that exists now for media buyers to take the lead and pull ahead of competitors. If you are unsure of how to capitalize on AVOD advertising, contact our team for guidance. We’re happy to help!
Posted by Strategus
FAQs
OTT is a subset of VOD, which also includes cable and satellite services.
What is OTT Avod? ›
It is an umbrella term that refers to all the different platforms, methods, and devices in which digital content is accessed via the internet. This makes SVOD (subscription video on demand), AVOD (advertising video on demand), and CTV (Connected TV) all subsets of OTT.
Is OTT same as on demand? ›
To name a few they comprise TV series, films , music content, etc which are distributed through wireless internet. Generally a VOD enables users to watch any of your video collections as per their preferences. But in OTT, it allows users to get access to video & audio content such as virtual concerts, podcasts, etc.
What is the difference between AVOD and SVOD? ›
The definition or meaning of AVOD is a type of service where users must watch ads in order to view the content they want to watch for free. AVOD vs SVOD - With AVOD users can watch for free, but with SVOD users must pay a recurring fee to watch the content.
Which OTT platform is best? ›
Best OTT platforms in India
- Disney + Hotstar. Disney+Hotstar is many people's favorite as it streams IPL (one of the biggest sporting Premium Leagues in the world), TV shows, Hotstar Originals, and movies. ...
- Netflix. ...
- SonyLiv. ...
- Amazon Prime. ...
- Zee5. ...
- Voot. ...
- TVF Play. ...
- Aha.
Launched in 2007, Netflix is the world's largest and most successful SVOD streaming service. The platform reached an industry-leading 220 million subscribers in 2021 while generating more than $30 billion in gross revenue.
What does Avod mean in advertising? ›
Advertising-based video on-demand, or AVOD, is a relatively newer model in the minds of viewers, as far as the OTT space is concerned. AVOD platforms are ones where viewers can gain access to original content or live content for free, or for a reduced membership rate when compared to premium subscription services.
Why OTT is called OTT? ›
OTT (over-the-top) is a means of providing television and film content over the internet at the request and to suit the requirements of the individual consumer. The term itself stands for “over-the-top”, which implies that a content provider is going over the top of existing internet services.
Is Amazon Prime video SVOD? ›
Some of the examples of SVOD include Netflix, Disney+, Prime video.
Is Amazon Prime SVOD? ›
The leading SVOD platforms in the United States 2021: Netflix, Amazon Prime Video, Disney+, Hulu, Apple TV+ and more.
In the crowded OTT market, the digital rights for the marquee cricket tournament helped Disney+ Hotstar grow and reach a leadership position. It had a 50% market share in Subscription Video on Demand (SVoD) OTT as of April 2022, according to an OMDIA report.
Why are OTT platforms so popular? ›
The accessibility of OTT content is one of the many reasons it's so popular, not to mention that OTT providers are now producing some of the best original content. To stream OTT, customers only require a high-speed internet connection and a connected device that supports apps or browsers.
What is OTT vs OTA? ›
OTA – Over The Air, aka plain old television broadcast (ATSC 1.0). OTT – Over The Top – Using broadband internet delivered by cable, satellite or IPTV to receive programs from alternate providers like Netflix, Amazon, Hulu, etc.
How OTT is changing the media industry? ›
In addition to providing fresh content, OTT has certain added benefits for live media broadcasting. Many OTT platforms allow the media companies to broadcast live news through HTTP Live Streaming (HLS), enabling viewers to remain updated with the latest happenings anytime, from anywhere.
Does SVOD have advertising? ›
While some SVOD services are ad-free, like Netflix and Disney+, others also offer lower-priced ad-supported tiers, such as HBO Max and Peaco*ck.
Can you advertise in SVOD? ›
It's not just hard to place an ad on SVOD services, it's impossible. To reach the unreachable streamers, marketers have to rethink the streaming experience.
What is SVOD stand for? ›
SVOD stands for Subscription Video on Demand. SVOD businesses make money by charging their customers a recurring subscription fee. In exchange, subscribers get access to a full library of videos, TV and/or movies.
Which is the No 1 Ott platform in India? ›
Hotstar, (now Disney+ Hotstar), is the most subscribed–to OTT platform in India, owned by Star India as of July 2020, with around 300 million active users and over 350 million downloads.
Which is the No 1 Ott platform in world? ›
OTT Service #1 – Netflix
Netflix holds a massive library of original and On-Demand video content with the availability of a large number of OTT devices. You may also find out how does Netflix makes money.
Which is the first OTT platform in world? ›
We can closely associate the OTT platforms with the Netflix. It is the platform which marked beginning of the establishment of the OTT industry. Netflix is one of the many OTT platforms that started the OTT industry.
The type of OTT service most users probably interact with most regularly is video OTT. Services like Netflix, Hulu or Disney+HotStar are video OTT services, which provide users with a number of programming options, both in terms of a licensed library of TV shows and films, as well as original programming.
Does Amazon have Avod? ›
Under Pay-for-Performance royalty terms, content partners may make their titles available in either of the following: Prime (SVOD) and be paid based on customer engagement on a Cost Per Hour (CPH) royalty model. Ad supported (AVOD) and be paid based on advertising revenue share (revshare) royalty model.
What is another name of OTT? ›
OTT television, usually called online television, Internet television or streaming television, remains the most popular OTT content.
Why is OTT so popular in India? ›
The main reason OTT platforms have become so popular is that viewers can directly access these platforms on the go. Since you can access these platforms from your mobile or laptop, you don't need to find a television to watch your favorite TV show. All you need is a stable internet connection, and you are good to go.
Is VOD a type of OTT? ›
In many cases, VOD and OTT overlap, but not always. That's because OTT describes the distribution model (video content delivered over the internet), whereas VOD describes the consumption model (video content that can be played back on demand).
Is Disney+ SVOD? ›
Disney+ and Apple TV+ showed some competitiveness as each increased their share of new SVOD subscribers and were the only services other than Amazon Prime to nab double-digit percentages.
Is Apple TV a SVOD? ›
Apple TV+ is a subscription video-on-demand streaming television service by Apple.
What is SVOD and BVOD? ›
BVOD content is professionally produced, broadcast-quality and includes TV shows and movies, archived shows and BVOD exclusives and originals[1]. BVOD is different from Subscription Video On Demand (SVOD) which covers paid platforms like Netflix, Stan, Disney Plus, Kayo and Foxtel Binge.
Is AWS an OTT? ›
Live Streaming on AWS
Two over-the-top (OTT) live video streaming solutions to cost-effectively encode, package, and deliver media content to a global audience.
Is Hotstar avod or SVOD? ›
AVOD model
Hotstar priced its plans as cheap as Rs. 399/year, while it also sprinkled some ads between the content. Pricing it low was necessary for Disney because of the price-sensitive audience. Also, advertisem*nt revenue would make up for fewer subscription fees.
Selecting an OTT platform depends on the kind of content you'd like to stream. For TV shows, movies, and sports, you have Sony Liv and Disney+ Hotstar, while Amazon Prime Video and Netflix are home to some of the best original shows and movies.
Who invented SVOD? ›
SVOD as we know it today was invented when Netflix launched their monthly subscription website in the United States in September 1999. Netflix had started in the late '90s as a movie rental service undermining the giant Blockbuster Video with a movie delivery service.
What are some of the latest trends in OTT industry? ›
Here is a round-up of developments in the OTT industry and trends to watch for this year and beyond.
- Content vs Platform. ...
- Modular Architecture Becomes a Necessity. ...
- Localized and Niche Offerings. ...
- The Era of Interactivity and Engagement. ...
- Multi-View and Shared Viewing. ...
- Targeted OTT Advertising With AVOD. ...
- OTT for Sports.
Despite Hotstar and Amazon Prime Video dominating the sphere of OTT platforms, there has been exponential growth in aggregated OTT services such as TATA Play Binge. It provides access to more than 16 apps, including Disney+ Hotstar, MX Player, Voot, Zee5, and SonyLIV.
Why OTT is the future? ›
We believe the future of TV is apps. OTT viewership constitutes 54% of Wi-Fi-connected homes that stream OTT video content to a television set. The Comscore OTT Intelligence report shows that 91% of those who watch live OTT streaming services stream content using a streaming box/stick.
What is the difference between OTT and streaming? ›
As you read above: OTT is an acronym for TV and film content watched via streaming services rather than cable or satellite providers. But OTT is more than services like Netflix and Hulu. Many OTT providers offer live streams with more niche content, similar to cable TV channels.
Is OTT good for advertising? ›
Bringing your audience into your ecosystem can increase engagement from users across channels. Through audience targeting, OTT ads can stretch your marketing budget further and dramatically reduce spend waste. They make it more likely that your ads are only shown to people who are likely to be interested in your brand.
Why OTT advertising is important? ›
OTT advertising enables advanced targeting.
That means you can target a consumer wherever that consumer may be, no matter what they're watching or what platform they're watching it on. Even more importantly, OTT delivers a treasure trove of data about what viewers watch and how they behave.
What are the key dynamics of OTT video market in India? ›
One of the major factors contributing to the dynamic growth of the OTT video market in India is the fact that the country offers a fertile ground for the proliferation of OTT partnerships with telcos and pay-TV operators.
Is Hulu SVOD or Avod? ›
Hulu mixes AVOD and SVOD with their paid tiers. Some customers pay a small subscription fee (SVOD) but still see ads on their shows (AVOD).
