2021 to be the year of AVOD as streaming 'frenzy' ends | Media Analysis | Business | News | Rapid TV News
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After a record-breaking 2020 for the subscription video-on-demand industry with significant uptake of both incumbent and newly-launched SVOD services, but with new households to sell to having exhausted, services must brace themselves for a much slower 2021 and face stiff competition from advertising VOD suppliers, says research from Omdia.
OMdia AVOD 26 March 2021
Overall, the analyst predicts that all the TV and video market’s growth in the next five years will come from streaming video and that by 2025 there will be 1.6 billion subscribers to SVOD services with OTT net adds. By contrast, pay-TV subscribers will stay flat as they have done since 2015 at just over the billion customer mark. However it added that the pace of growth in the SVOD sector is set to slow with 2020’s 246 million SVOD net additions likely to be followed by 139 million addition by the end of 2021.

Assessing why AVOD will be such a big deal in the year, Omdia research director Maria Rua Aguete said that 2021 will be the year of AVOD. “The CPMs are higher now for AVOD than linear TV, meaning that in some markets the value of AVOD could eclipse that of broadcast,” she explained. “If you are not involved in AVOD, you are missing out of a core and growing monetisation window, and Netflix will be no exception.”

The research revealed that in some key territories, in particular the US and Asia-Pacific, AVOD revenues already exceeded SVOD revenues in APAC and the USA in 2020. Omdia calculated that AVOD was generating $40 billion compared with $32 billion for SVOD. It also observed that with the six new major direct-to-consumer services added to the US market in just over a year, the costs of those services already reach the monthly costs of the average pay-TV service.

While it predicted huge revenues from AVOD and SVOD with the massive growth in subs, Omdia stressed that in terms of revenues, pay-TV will likely account for more double those from streaming video by 2025.

Going forward the analyst predicts that one in two net OTT adds in the next five years will come from the APAC region and hybrid models emerging as the new normal as consumer appetite for video content grows across all business models. Omdia also expects AVOD to become a more premium proposition.