After the surge: AVOD is streaming’s saving grace

Just as the havoc that the Covid pandemic wrought was stupefying and surreal, so too was the incredible surge in streaming by consumers locked down and looking for something else to think about. The boom in streaming services had the industry reeling. However, I think we all thought there would be an end to the devastating impact of the virus (maybe not quite yet) while the streaming wave would just continue. Well, it seems, the big streamers may have been a touch too enthusiastic about the increase in viewing, and perhaps didn’t factor in “subscription fatigue.” During the pandemic, 35% of consumers increased their subscriptions, but 64% are now scaling back due to rising costs, according a recent OnePoll survey..

Now that we’re seeing more people get out of their homes, inflation hitting household budgets hard and the summer months upon us, subscriptions are taking a hit. KMPG recently reported that 17% of UK consumers canceled an SVOD subscription this year. And with Netflix’s loss of nearly 1 million customers in the second quarter, it’s no surprise that the major SVODs have had to take a good hard look at their programming budgets and are now making some adjustments. Although there are still some mouthwatering investments in original programming being made, the big general entertainment platforms are reportedly cutting in other areas… like staffing.

Meanwhile, AVOD, once the bastard stepchild of the streaming business, has proven to be a model worth emulating. Netflix famously announced its intentions to offer an ad-supported option early next year.

It just makes sense. Having six or seven or twelve subscription services just isn’t sustainable for most consumers. AVOD has long been a model that can marry the best aspects of streaming with that of the old basic cable model that many are already comfortable with, but with less disruption and ad load.

But while AVOD might feel a bit more like the traditional “TV-watching” experience, it certainly is a lot more sophisticated. It has also become a lot more technically advanced in the past couple of years. Speaking from my own experience at wedotv, the surge in viewing during the pandemic gave us enough data to tailor and refine our product, work out what people wanted to watch most and imagine a better platform.  A more personalized consumer experience is our goal for 2023 and we are building a robust AI- based audience recommendation engine to accomplish this. However, for now, that surge in viewing and data it provided has given wedotv a healthy 20,000,000 active monthly users in 2022 so far.

Beyond that, we also needed to address the different technical specifications of a whole array of distribution platforms that host our service – from mobile to FAST to web … and even to cable. We found that off-the-shelf/plug-and-play type solutions couldn’t address these complexities while still maintaining our desired customer experience, so we developed our own.

This maturation of AVOD and the continued refinements being made in the addressable TV market have not escaped the attention of advertisers who are always looking for more targeted ways to highlight their products and reach a receptive audience.  And there are still ad euros to be had out there. More and more, advertisers are realizing that AVOD sells ad campaigns very, very well. And it hasn’t plateaued yet! There’s so much more growth to be had in this space.

I’m not implying that SVOD in on death’s door – not by any stretch, it revolutionized the way we consume entertainment. Indeed, the best SVODs will survive and the ones with the best content and deepest pockets will ride out any storm, but they are clearly looking at ways to increase their viewers as well as their revenue. AVODs rise in popularity during the height of the pandemic has made a lot of streamers sit up and take notice. Where some smaller subscription services might not be able to sustain a downturn, we are already seeing more and more services embrace an ad-supported or hybrid subscription model. For some, it could be the difference between surviving and thriving.

Chris Sharp is Chairman of the wedotv, the advertiser-supported video on demand platform.