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AVOD platforms look set for meteoric rise in the USA, complementing SVOD, according to Ampere Research

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AVOD platforms look set for meteoric rise in the U.S., attracting a user base that is complementary to SVOD, according to the research firm Ampere Analysis, whose Q3 2020 figures show that 17% of Internet users in the country used one or more AVOD services in the prior month, up from 13% in Q3 2019. The company has found that in the USA, households taking AVOD are different to those taking SVOD – with active users tending to be older and more likely to be from lower income households. Almost one in five AVOD viewers live in households with annual earnings of less than $15,000 per year.

“The rise of AVOD services has been spearheaded by Fox-owned Tubi, whose considerable catalogue size is larger than that of Netflix,” the company explains. “Tubi offers more than 29,000 titles, over five times as many movies as Netflix. This service is only beaten, in terms of overall catalogue size, by Amazon Prime Video.” Free AVOD platforms, more generally, are able to offer catalogue sizes similar to the major SVOD platforms in the U.S., the company adds. “These large and diverse catalogues are crucial for AVOD services to ensure regular engagement, as advertising revenue is highly dependent on user consumption – a contrast to subscription VOD services which can subsist on smaller catalogue bases, providing key titles are sufficiently high profile.”

Ampere Analysis describes the major AVOD services as “still nascent” but notes that after a series of acquisitions they are largely backed by well-funded media and technology firms. “As a consequence, Ampere does not anticipate Covid-19-linked advertising demand issues will be a fundamental issue for the groups. Minal Modha, Consumer Research Lead at Ampere Analysis, says: “Despite some resistance to the high levels of advertising on U.S. broadcast channels, 44% of consumers in the U.S. still say that they don’t mind seeing advertising on TV, so AVOD services are quickly filling a market position. Free ad-funded platforms will find themselves well-positioned to attract an audience that is either unable or unwilling to pay for multiple subscriptions.”

Ampere states that AVOD and SVOD are not competing for exactly the same audiences. “25% of AVOD users are aged 45-54 versus 22% of SVOD viewers, and 19% of AVOD users are aged 55-64 versus 14% of SVOD subscribers, the company’s research shows. “Nearly half of U.S. AVOD users have an annual household income of less than $30,000 per year, compared to one-third of SVOD users.”

Modha continues: “With distinct audiences, we believe that these two offerings aren’t competing directly with each other but rather can co-exist. We have seen some companies offer both a free and paid-for tier, such as Amazon’s Prime and IMDb TV, Hulu and NBC’s Peacock. In the current climate, with both economic uncertainty and a greater need for people to stay at home, we expect the use of AVOD services to continue to rise as more consumers will be turning to these platforms as they seek entertainment without increasing their financial outlay.”

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