How AVOD Model is Taking The OTT Industry To New Heights

Posted By : Priyansha Singh | 13-May-2022


AVOD And The OTT Industry


Ever since the COVID-19 pandemic struck, the video streaming industry witnessed an exponential growth in content consumption and demand all across the globe. Due to stringent pandemic-induced lockdowns, the OTT industry, in particular, reported a massive spike in the number of user base and market players. Nevertheless, the lack of new content on TV added subsequently to this effect. 


The choices and convenience furnished by OTT platforms have additionally helped in tilting the numbers in their favor, enabling the freemium and advertising video-on-demand models to gain ultra prominence. 


In this blog, we will elaborate on the AVOD streaming model and shed some light on how it is transfiguring the OTT industry and taking it to new heights. However, let’s first begin with understanding what are VOD platforms and how AVOD relates to them.


Understanding VOD and AVOD


Video on Demand or VOD is a video delivery mechanism that enables users to watch video content wherever, whenever, and on whichever device they want to. It is different from live streaming since it offers the freedom to watch videos at the convenience of viewers instead of restricting them with a programming guide or a definite broadcasting schedule. 


VOD can be monetized in several ways such as via ad insertion, transactions or pay-per-view, subscriptions, or by releasing premium video content specifically on VOD platforms rather than releasing them in theaters. In simple terms, VOD is classified into the following segments:


  • AVOD or Advertising Video on Demand
  • TVOD or Transactional Video on Demand
  • SVOD or Subscription Video on Demand
  • Mix VOD or Hybrid Video on Demand


However, since we are focusing on ad-based VOD models in this blog, let us now understand what it actually means.


AVOD: Advertising-based Video on Demand or AVOD is a monetization strategy in which adverts are inserted into the video content in order to monetize it and almost in a majority of cases, users can consume the content for free without even subscribing or paying for the service. 


It is a business model that depends on users watching video content and ads. AVOD is typically suited for user-generated content or UGC sites such as Vimeo, YouTube, etc where the primary source of income is from advertising that is driven by massive audiences. 


How AVOD Model is Gaining Prominence in The OTT Sector?


The augmenting gravitational pull toward the OTT platform streaming has set the viewers free from predefined broadcast schedules, geographical restrictions, traditional media stereotypes, and all physical barriers. There is a fundamental transformation and change in the way in which any online video is produced, distributed, consumed, and sold to the masses. 


Furthermore, the exploding demand and preferences for video streaming have marked the digital transformational launch for any VOD and OTT businesses. Underlying the technological presence, there are a plethora of business models that furnishes supreme access to the media content. Moreover, the good thing is that the advertisers are willing to spend on this profound digital transformation in the expansive video streaming industry. And as there exists a concurrent rise in VOD platform development, the advertisers are also looking for alternative areas to advertise. On this note, the dominant business model that is applicable in reference to OTT services is advertisement-based video-on-demand platform development. Also, the emergence of improved advertising technologies is further driving the growth of AVOD in the OTT landscape. 


The Future of AVOD and OTT industry


As the audience studies reflect, a majority of multimedia content streaming consumers all over the world believe that in the future their households will have just too many subscription packages and fear that the overall costs of their usage will eventually become too high. As a result, people are already starting to accept some form of the video-on-demand model supported by advertising, with the anticipation that the ad-based model will preeminently lower the total related costs of the household for online video streaming.


Moreover, there is a growing number of distributors that are actively seeking to monetize the catalog of old movies, shows, and series with these ad-based models.


The pragmatic growth of AVOD further stimulates online video advertising since advertisers and promoters are largely interested in promoting services and goods via advertising on OTT platforms. It has given rise to pivotal corollaries such as the cost associated with online video streaming will increase, the OTT business owners will earn more, and subsequently magnify their annual turnover by strategically monetizing archived video content.


Also Read: A Guide To Creating a Video Training Platform in 2022


Benefits of advertising monetization model AVOD in OTT Business


  • It offers a low entry threshold for users and subscribers. AVOD model has led to a rapid increase in the coverage for subscribers who do not want to pay extra for VOD consumption.
  • AVOD allows monetization of ‘old’ content. Thousands of new TV shows and films are released every year, but what should be done for the old ones? Well, you can monetize them as well through advertising where users pay with their viewing time.
  • The advertising model is easier and faster to adopt as compared to the subscription service model. This offers tremendous opportunities for digital media and content providers to start an OTT business. For instance, TV Africa gained a colossal 200K active subscribers within a month of launching by just embracing this advertising model.


Final Thoughts


AVOD indubitably has an extremely bright future in the coming years considering the explosion in viewership, the race for customer acquisition, and the rise in consumer choices in the OTT industry. 


Companies all over the world that are planning to monetize video content are in the constant hunt for advanced digital advertising technologies. AVOD model offers a well-thought-out strategy for implementing audience data and enables OTT businesses to attract more and more users.


If you are looking for video streaming app development services, feel free to drop us a line. We nurture a seasoned team of OTT and VOD platform developers with in-depth knowledge of the media industry. Our experts will help you select the right VOD model for your business and help you start your own journey in the media streaming sector. 


About Author

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Priyansha Singh

Her expertise lies in creating insightful and engaging content for the readers and has worked on multiple projects such as Blockchain, IT, Marketing, Home Decor, AI, and many more. She is a trained pianist, painter, and an avid reader.

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