Advertising supported Video on Demand (AVOD) will make its mark in 2020, according to Ampere Analysis.
The London-based firm says it anticipates the ad free models to build scale and rollout internationally.
The statement comes despite the relatively low acceptance levels in the United States that currently sit at between 3-6% of US online households, but Ampere says this is merely “the calm before the storm”.
“AVoD is coming, and it’s going to make its mark on the video-on-demand landscape rapidly. Its impact will be felt not just by the entertainment industry, but by advertising too as the shift that has already disrupted the subscription television market sweeps across the free-to-air sector,” says Guy Bisson, director, Ampere Analysis.
While starting with older content, the subscription video-on-demand (SVOD) players gave gradually replenished their libraries with their own originals and newer acquisitions. This has freed up a long tail of older content for the AVOD players, who according to Ampere average nearly 80% of their catalogues at five years old by title count, and in the case of Crackle, 70% of content is over 10 years old.
With advertisers turning to AVOD it’s anticipated the spend on online video advertising to increase. To date the spend has remained small leaving event a developed market like the US on 27.2% of online ad spend.
It’s anticipated that this will increase as studio direct models such as Disney’s Hulu and NBC Universal’s Peacock adopt a hybrid SVOD/AVOD model.