Media analyst firm Ampere Analysis forecasts 2020 as the year of AVOD (ad-supported video on demand).
That sounds optimistic, since only between 3 percent and 6 percent of online U.S. households now use AVOD. But Ampere claims a technological shift. Many SVOD services have replaced older content with originals and acquisitions. For example, the proportion of Netflix’s catalog over five years old fell from 50 percent in September 2015 to 35 percent in September 2019, according to World Screen.
World Screen also noted that AVOD players, such as Crackle, where 70 percent of inventory is 10 years-plus old, have absorbed older content. The demand for older content continues to grow, proving a lucrative model for distributors. (NBCU’s Peacock is actively considering an AVOD model.)
Other streamers using the AVOD model include Hulu.
Guy Bisson, director at Ampere Analysis, predicts that as AVOD’s market position grows, “we can expect them to begin acquiring newer content and even move into original production activity as they battle for eyeballs in an increasingly crowded market.”
Roku echoes Bisson’s industry position, due, in part, to the company’s launch of its Amazon Channels competitor. That lets Roku users buy premium services, such as HBO, Showtime and Epix, utilizing their Roku account.
Early last year, Roku’s CEO Anthony Wood said the company expected to reach $1 billion in revenue in 2019 by focusing on increasing monetization per user.
However, Roku’s key growth is via The Roku Channel, an AVOD streaming akin to Tubi. In February 2018, Wood called AVOD important “in terms of its value to consumers and its importance in the OTT business model.”