The AVOD Revolution
Shifting Consumer Preferences
Advertising-based Video on Demand (AVOD) is set to dominate the streaming market in 2025. As consumers seek cost-effective entertainment options, AVOD platforms are experiencing unprecedented growth. The global AVOD market, valued at $49.04 billion in 2024, is projected to grow at a compound annual growth rate (CAGR) of 29.2% from 2025 to 2030.
Economic Factors Driving Change
The Impact of Inflation
Economic pressures have led viewers to embrace ad-supported content, causing a decline in subscription-based services. In the United States, the average number of SVOD subscriptions per household dropped by over 10% in 2024. This shift has created new opportunities for advertisers to reach engaged audiences through AVOD platforms.
Technological Advancements
AI-Powered Advertising
Artificial Intelligence is revolutionizing AVOD advertising. By 2030, the global AI advertising market is expected to surpass $1,811 billion. AI-driven targeting and personalization are enabling advertisers to deliver more relevant content to viewers, improving engagement and return on investment.
The CTV Boom
Expanding Reach and Engagement
Connected TV (CTV) is fueling AVOD growth, with ad spending projected to reach $34.49 billion by 2025, a 23.2% increase from 2024. The rise of cord-cutting and ad-supported streaming services has led to 82% of U.S. households expected to have CTV access by 2025, creating a vast audience for advertisers.
FAST and AVOD Synergy
Free Content, Premium Experience
Free Ad-Supported Streaming TV (FAST) services are complementing AVOD growth. In the U.S., weekly FAST channel users represented 46% of total video consumers by late 2024. This trend underscores the growing appetite for free, ad-supported content across various streaming formats.
Challenges and Opportunities
Measurement and Standardization
While AVOD growth presents exciting opportunities, the industry faces challenges in implementing consistent measurement standards across linear TV and CTV. Overcoming these hurdles will be crucial for maximizing the potential of AVOD advertising.
The Future of Streaming
A New Era of Advertising
As AVOD viewership in the U.S. is projected to reach 164 million by 2025, the streaming landscape is undergoing a significant transformation. This shift towards ad-supported models is reshaping how brands connect with audiences and how consumers access entertainment, heralding a new era in digital advertising and content consumption.