In the ever-evolving world of online video viewing, subscription-based streaming has long been the dominant force. However, a new player is emerging and gaining momentum: Advertising-Based Video on Demand (AVOD). This model attracts both new and existing subscribers by offering a low-cost or even no-cost streaming experience, supported by advertisements. AVOD platforms provide a selection of programs that are accompanied by targeted advertisements, making them an appealing choice for a wide range of viewers.
Unlike traditional platforms that have witnessed a progressive decline in popularity, AVOD platforms have the advantage of reaching a large and diverse audience. By carefully curating the advertisements shown and avoiding excessive repetition, content distributors can ensure minimal viewer distraction and effectively reduce churn. Considering the rising costs and inflation levels, this approach not only adds value to the customer’s experience but also offers a cost-effective means of generating a high return on investment (ROI).
According to Omidia, the future looks bright for AVOD streamers. AVOD is projected to surpass linear television and generate an estimated revenue of $259 billion by 2025. This growth further solidifies the appeal and potential of AVOD as a viable business model in the fast-expanding landscape of online video streaming.
The rise of AVOD in recent years has the potential to outshine SVOD (subscription video on demand). Deloitte forecasts that by 2030, a majority of online video service subscriptions will be financially supported, either partially or entirely, by advertisements. The monetization through ads offers unparalleled profitability and fosters deeper engagement with the audience. Interestingly, a survey by TiVo revealed that customers are generally accepting of advertisements when it comes to accessing free content. Overall, the AVOD market is set to experience significant growth in the coming years, further bolstered by advancements in technology like Artificial intelligence (AI) which is poised to drive the expansion of the AVOD market.
What impact does AI have on the AVOD market and business outcomes?
- AI-Powered Predictive Analysis for Business Expansion: AI forecasting software enables complex analysis and facilitates business planning. It provides intelligent data that helps businesses enter new geographic regions and ensures the sustainability of their business models in the long run. Through predictive analysis, content providers can identify the appropriate target audience, understand their demand and potential for growth based on title, genre, and preferences. AI enables better decision-making by offering a clearer picture of audience segmentation and their landscape.
- Targeted Marketing for Improved ROI: AI solutions can identify the right audience to target and provide customized suggestions based on their behavior – such as frequently watched genres and favorite titles. By offering intuitive recommendations and personalized marketing, AI enhances the customer experience based on preferences. AI-powered insights offer valuable data on customer habits, contributing to improved marketing strategies and, consequently, better business outcomes.
- Enhanced Content Monetization: Well-designed and marketed freemium AVOD content has the potential to attract and retain subscribers across various age groups. AI software analyzes data and standardizes datasets to compare performance across different AVOD platforms. This allows for determining the optimal solution to deploy, the ideal content types, and the optimal display timing. Compared to traditional approaches, AI-powered platforms will have the ability to drive content monetization significantly.
- AI for Identifying and Retaining Potential Subscribers: AI-based software can also identify users that are more likely to subscribe to the AVOD model. Subscribers who are already comfortable with AVOD platforms and their offerings are more inclined to choose a paid subscription for additional benefits. Conversely, instead of canceling an expensive subscription, customers are more likely to opt for a less expensive ad-supported tier and AI can seamlessly identify such customers and ensure long-term retention.
- Customer Data Analysis for Personalized Recommendations: AI further utilizes customer behavioral data based on varied touchpoints, including time spent watching a TV show, start and exit times, and advertising data. This substantially improves the viewer experience and increases the amount of time spent viewing suggested content by offering the best recommendations based on preferences and interested segments.
What is the future of the AVOD market with AI as the technology engine?
The future of the AVOD market, powered by AI, holds immense potential, and promises to revolutionize the media industry. As viewers increasingly turn to online platforms for content consumption, the onus is on platforms of the future like AVOD to innovate and captivate their audience. AVOD models can greatly benefit customers by reducing subscription costs or even offering free services. By leveraging AI, businesses can reshape existing content, optimize the impact of advertisements, gauge customer response, and enhance the overall viewing experience. This seamless transition to AVOD, driven by AI, has the power to disrupt the market and usher in a new era within the media industry. The stage is set for AI to play a transformative role, and the future holds exciting possibilities, as video on-demand technology continues to evolve.
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