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Study: Smart TV Owners Drawn to Cheaper AVOD Services

Lauren Forristal

As streaming services continue to evolve, ad-supported video is gaining traction. AVOD offers consumers unique advantages. For instance, the Roku Channel, Tubi, and Pluto TV are gaining popularity mainly due to their high quantity content but also their cost ($0). Free services are a compelling value, regardless of your age or economic status.

A Vizio and Magid study found that 55% of U.S. smart TV owners (ages 18-64) watch AVOD content weekly and 53% of smart TV owners watch free ad-supported television channels (FAST).

Kantar reports AVOD services are up in Q3 2021 and are used by 21% of U.S. homes. Advertiser video-on-demand (AVOD) content is catered to users that want to stream video whenever they please, yet don’t mind if they have to watch a couple of advertisements (especially if it means fewer dollars are leaving their pockets).

Additionally, a Future Today study showed that in Q1 2021, 46% of consumers reported that they don’t mind seeing ads if they are watching TV shows and movies they enjoy.

Smart TV owners spend an average of $64/month on SVOD subscriptions compared to non-smart TV owners, who spend $46. Despite their willingness to spend more on streaming services and technology, AVOD is still an attractive value to both audiences.

The Magid report says, “These viewers have chosen streaming as their entertainment format of choice, and the smart connected TV as their medium to do so. They’re not at all resistant to ads even when they have paid options that would allow them to avoid ads completely. In fact, they’re highly receptive to ad-supported content, given the right circumstances… As AVOD services deliver more relevant ads, viewers find them less intrusive and are therefore more likely to accept them.”

Michael Nathanson of investment analysis firm MoffettNathanson at the annual Stream TV Show back in June predicted the advertising market revenue in the United States from AVOD services is estimated to grow from approximately $6.9 billion in 2021 to $18.6 billion by 2025. He also predicts significant growth of the Roku Channel, Pluto TV, and Tubi over time.

Tubi's viewing time is up 30% compared to 2020. Meanwhile, Pluto TV’s quarterly earnings revealed 54 million monthly active users globally, and Roku’s account numbers went up 22% for a total of 56.4 million.

While ads aren’t a dealbreaker for AVOD fans, audiences don’t want their services to know them too well. Another study shows that targeted ads can feel off-putting. 64% of survey participants said targeted advertising is “invasive,” 57% think its “informative,” 52% find it to be “creepy,” and 50% believe the ads are “helpful.”

As advertisers move at the same pace as consumer trends and technology, they are forced to constantly improve their strategies. Most have found that relevant ads do better than their generic peers. Either way, the majority of us don’t mind advertising as long as we can watch our favorite shows and get on with our day.

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