Subscription-based video streaming services are becoming less popular. However, AVOD monetization, or advertising-based video-on-demand platforms, is attracting more and more viewers. Along with that, video streaming companies introduce additional purchasing plans to reduce customer churn.
Businesses implement a hybrid monetization model so that viewers can choose a suitable payment option. Let’s give a closer look at an AVOD service and learn what it is.
If you want to create your own video streaming service, whether it is AVOD, SVOD, or TVOD, we recommend you contact Setplex. They can offer you a solution to achieve your business goals.
AVOD stands for advertising-based video-on-demand. AVOD platforms usually allow viewers to watch videos for free. They don’t need to pay to consume content.
Then, how do AVOD services generate revenue? By letting third-party companies run their ads on the platform. People don’t mind watching an ad or two during a video playback. Ad videos don’t last long and aren’t as frustrating as it happens with advertising on traditional television.
AVOD services can be profitable due to their targeting capabilities. A person who is really interested in a product or service advertised will see an ad. There are more chances that they will click on the ad.
As we said above, companies are moving towards a hybrid monetization model. And SAVOD is one of their forms. It is a combination of advertising-based and subscriptions.
When huge corporations realized that people were frustrated with so many subscription-based services and stopped using them, they came up with a new purchase plan. They decrease the subscription price but add advertisements. A viewer can purchase another subscription that costs lower but includes ads.
One-by-one, the biggest video streaming companies are launching the SAVOD model. They think that this model provides a balance between reducing customer churn and making revenue from ads.
FAST is a free ad-supported streaming television. Such services stream linear TV and don’t require logins and purchases.
Unlike VOD services that stream content created by themselves or obtained from other providers, FAST services deliver programs broadcast on television. Those who love old television programs and movies can enjoy them on their devices.
According to researchers, in 2021, the penetration of FAST platforms doubled. As of the last quarter of 2021, around 18% of households in the USA use FAST services.
The disadvantages of AVOD
During any business management, you will face problems. You should be aware of possible obstacles you may encounter when running your own AVOD service.
You must be eligible for ad programs so that other companies want to run their ads on your platform. Moreover, some companies can consider your content unsuitable for ad revenue.
Furthermore, viewers may use ad-blockers to prevent a platform from showing advertisements to them. It means that you may earn less money. However, the right OTT solution can help you avoid that problem. The solution is the SSAI technology.
It stands for server-side ad insertion. It is the technology that inserts ads in the video so that they are part of it. As a result, the ad blocker cannot detect them.
All you need to do is find an OTT solution with such a feature.
Drawing the Line
Advertising-based video-on-demand services are getting popular. People are tired of multiple subscription-based video streaming platforms. That’s why they started switching to ad-based services where they don’t need to purchase access to videos. As a result, huge video streaming companies started introducing new purchase plans. They came up with a SAVOD monetization model – they offer a subscription with ads but at a lower price.