Despite the currently low use of advertising-supported video-on-demand (AVOD) services in the U.S.—between 3 to 6 percent of U.S. online households—Ampere Analysis is predicting “an AVOD avalanche,” as free streaming platforms go global.
Ampere asserts that 2020 will be “the year of AVOD,” as free ad models start to build scale and roll out internationally. It notes that many SVOD players have gradually replaced their older content with their own originals and newer acquisitions—citing, for example, that the proportion of Netflix’s catalog that is over five years old fell from 50 percent in September 2015 to 35 percent in September 2019. Meanwhile, the long tail of older content has been embraced by the new AVOD players, which average nearly 80 percent of their catalogs at five years old by title count—in the case of Crackle, for example, 70 percent of content is over ten years old. “This demand for older content not only provides a new market for licensing deep archive but also offers a boon for distributors and sales agents,” the firm states.
Guy Bisson, director at Ampere Analysis, commented: “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. AVOD services are treading a well-trodden path with an early reliance on older content, but as their market position grows, we can expect them to begin acquiring newer content and even moving into original production activity as they battle for eyeballs in an increasingly crowded market.”