SVOD has paved the way for AVOD growth globally

LONDON 08 February, 2021 — The number of OTT video services used per OTT video user has risen to over 7.2 different services per month in the US according to Omdia’s latest AVOD Consumption behaviors report.

The increase in online video usage across the globe in 2020 has been driven by a greater uptake of subscription video platforms, which in turn has led to consumers to look for content across AVOD platforms.

Globally the number of AVOD active monthly users has increased in 2020 compared to 2019. India leads the globe in terms of monthly active users on AVOD platforms with more than half a billion free AVOD users. The US is second with nearly 200 million free AVOD users. Not only did monthly active users increase, but so did the frequency of viewing, highlighting a greater conversion rate to daily usage.

There is a direct correlation between the number of subscription video services and the number of free AVOD services used per month by country. 8 in 10 free AVOD users across the seven markets subscribe to an online video service and 7 in 10 have pay TV.

In the UK the number of online video services used on a monthly basis has grown to 5.4 from 4.9 in 2019, with France (4.6), Germany (3.9) and Brazil (4.5) all showing increased demand for content. India is the only market where the number of video services has dropped from 9.1 in April 2020 to 8.9 in November 2020 but is still up YoY.

Nearly two thirds of free AVOD users access such services on the TV screen. In early 2020, smart TV apps overtook the set-top box as the most used device to access free AVOD services. This was primarily driven by improved availability and greater usage of broadcaster VOD services on smart TVs in the UK and Germany.

The TV set is increasingly becoming a key medium for user-generated content. In 2020, nearly 4 in 10 YouTube users access the service on a TV screen via one of many connected devices the service is available on. Of those accessing the service via a TV screen, 63% used smart TV apps. Video sharing app TikTok made its way to Samsung smart TVs in the UK in 2020, with further European launches expected in 2021.

FINANCIAL IMPLICATIONS:

Over the next three years Omdia forecasts that global online advertising revenues are set to hit almost $120bn, consistently outperforming subscription video services by just over 20%.

^{Notes: Ad-supported revenue includes instream and outstream.}

As linear TV advertising revenues fall across many markets globally due to the rise of online video consumption, broadcasters have sought revenues by offering a ‘freemium’ content proposition online. Revenue is generated by incentivizing consumers to pay a monthly fee to upgrade or via advertising revenues from lower tiers.

The implications for commercial broadcasters mean that over time there will be more and more hybrid solutions coming into the market, where there is a balancing act between AVOD-SVOD models. Over the past few years traditional broadcasters’ (BVOD) share of online video revenues has decreased due to the duopoly of Facebook and Google, however Omdia expects that their market share is to marginally increase over the next three years.

"The simultaneous rise in both subscription online video and free AVOD consumption highlights increasing consumer awareness around content access. Free AVOD users show a high propensity to consume content; they are content hungry, not cost conscious. As on AVOD services grow in popularity and improve their content offering and device accessibility, paid services will have to work harder."

Fateha Begum, Principal Analyst, Omdia

-ENDS-

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