- Ad-supported video-on-demand (AVOD) viewers in the US will include 58.2% of all OTT video service users by the end of 2022.
- More streaming services are looking to introduce AVOD tiers—such as Disney+ and Netflix—as consumers continue to seek cheaper alternatives to subscriptions.
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The number of AVOD viewers in the US will rise by 8.6% year over year to over 140 million in 2022, according to the latest eMarketer forecast from Insider Intelligence.
This growth rate continues to decline, down from 17.7% in 2021 and 30.3% in 2020, but remains noteworthy as more streaming services eye AVOD’s potential. During the COVID-19 pandemic, many streaming video apps entered the market—such as Paramount+ and Peacock—and AVOD services were able to cut through consumers’ subscription fatigue by offering a cheaper—if not completely free—alternative. And though growth has decreased, the end of 2022 will see AVOD viewers make up more than 54.3% of all digital video viewers in the US.
We define AVOD viewers as individuals of any age who, at least once per month, watch videos on an ad-supported platform that primarily offers professionally produced content, via app or website. Examples of these platforms include Hulu, Peacock, Pluto TV, The Roku Channel, and Tubi, but exclude services reliant on user-generated content, such as Twitch, YouTube, and social media platforms.
“People had more time to try free ad-supported services … due to COVID-19 restrictions, but with life returning to normal, people won’t be able to watch as much video content as before,” said Nazmul Islam, eMarketer forecasting analyst at Insider Intelligence. “Another problem is that these services don’t have as much original content as their subscription OTT counterparts. As free AVOD platforms continue to be profitable, however, we can expect to see their parent companies add more content to them in the form of original shows, news, or sports.”
Additionally, several major streaming services—and even subscription-based video-on-demand (SVOD) services, which have historically opposed advertising—have either expressed interest in or already launched ad-supported channels. All eyes are on Disney+ at the moment, which is preparing to launch a cheaper, ad-supported tier later this year that it hopes will help it reach 230 million to 260 million subscribers by 2024, per The Verge. But it’s far from the only streamer eyeing AVOD.
In 2020, the famously ad-averse HBO made the first crack in the dam between “prestige” streamers and advertisers when it launched an ad-supported subscription tier for HBO Max.
That move, combined with Disney’s growing market share, may have caused ad-free industry leader Netflix to wonder whether the grass really is greener on AVOD’s side of the fence. At a conference earlier this month, Netflix CFO Spencer Neumann said “never say never” to the prospect of an ad-supported tier, before restating confidence in the company’s subscription model.