How AVOD, SVOD and FAST are reshaping streaming

The video-on-demand market is racing toward a projected $241 billion by 2031, but scale has brought a new set of pressures. As audiences diversify across subscription, ad-supported, and free linear streaming models, streaming services are now competing on the performance, reliability, and cost efficiency of their platforms.

SVOD has dominated video-on-demand streaming for the last decade. As of Q2 2025, there are 339 million subscriptions to an SVOD service in the United States, capturing the majority share in subscriber revenue worldwide. But now, influenced by factors such as the rising cost of living and subscription fatigue, the industry is increasingly looking to AVOD (advertising-based-video-on-demand) and FAST (free ad-supported streaming television) to keep users engaged.

The shift toward AVOD and FAST raises an important question for streaming platforms: as audiences migrate and viewing patterns fragment, how can infrastructure keep up with unpredictable demand without compromising performance or margins? Understanding this changing landscape helps explain why SVOD’s dominance is being challenged, and why platforms built to balance performance, cost and scale are gaining the edge.

The appetite for SVOD is souring

“We’re now reaching an inflection point in the streaming world,” comments Richard Broughton, Executive Director at Ampere Analysis. “This is a significant about-turn from the earlier years of streaming, in which streamers eschewed advertising for a pure ad-free subscription model.”

In some emerging markets like Latin America, where preference for free-with-ads platforms increased by 10% between 2024 and 2025, ad-supported services have always been the go-to choice (totaling 73% of LATAM households). And now the rest of the world is moving in the same direction. As of 2025, 59% of U.S. households already subscribed to ad supported tiers.

Whether it be due to households cutting back amidst rising living costs or the relatively low financial risk that AVOD and FAST incur for content providers, it’s clear that SVOD is currently sitting third in the race for growth, as ad-free SVOD penetration fell by 3% between Q1 and Q2 of 2025.

But aside from the public’s appetite for free content, what is causing this industry-wide increase in ad-supported streaming?

1. The democratization of content

Free ad-supported content comes with fewer barriers to entry than subscription-based services. Anybody with an internet-enabled device can access content from AVOD and FAST platforms, regardless of financial means.

By contrast, the cost of subscription-based services will deter some customers. In fact, cost is the primary reason why existing SVOD customers choose to cancel their subscriptions with 43% stating that subscriptions have become too expensive for what you get.

2. Lower risk

VOD platforms are realizing that over-reliance on subscriber revenue is risky. Especially given the current state of the economy, streaming services are in turbulent waters.

Switching to an AVOD model or combining subscription and ad-based revenue enables VOD platforms to protect their source of income.

We’re already starting to see evidence of this. Netflix’s ad supported plan which launched back in November 2022 accumulated approximately one million active users in just two months and Deloitte predicts that most online video service subscriptions will be partially or wholly ad-funded by 2030.

At the end of the day, for traditionally subscription-based platforms, adding an ad-supported option is preferable to losing customers to churn.

3. It’s easier to build a large audience

It’s all connected. As users seek out more affordable content, AVOD and FAST are providing ways to maintain audiences.

By offering ad-supported tiers that either reduce or eliminate subscription costs for users, platforms can dramatically increase the scope of their target audiences and maintain growth.

4. Regional factors

In emerging markets, AVOD has seen great success over the last couple of years. In Latin America, for instance, numerous AVOD platforms like Pluto TV, Roku, and Plex have seen success.

Pluto TV (a subsidiary of Viacom CBS) offers upwards of 25,000 hours of free content from 200 plus content partners to viewers in Latin America.

“We are thrilled with Pluto TV’s amazing performance in Latin America, where it has grown every month since its launch in early 2020” comments Eduardo Lebrija, EVP Chief Commercial Officer at ViacomCBS Networks Americas.

5. AVOD and FAST suit other kinds of content

AVOD and FAST make it easier to distribute different content formats. Whilst SVOD has been reserved primarily for premium content (think the latest series and movies), AVOD and FAST lend themselves to a much broader spectrum of content including older content and cult classics.

Whilst this kind of content is unlikely to draw subscriptions to an SVOD platform, it is still likely to draw in significant viewer numbers when distributed on a free ad-supported platform.

Welcoming the era of AVOD-first

After years of SVOD dominance, all signs point to an AVOD takeover as viewers and streaming platforms alike embrace the benefits of ad-supported content.

And as the AVOD model continues to cement itself, we’re likely to see some industry trends.

Trends like:

1. Ad-supported tiers will gain acceptance

Most streaming services have now integrated ad-supported tiers on their platforms. And this consolidation between SVOD and AVOD is set to continue.

In fact, it’s projected that this year, UK households with access to ad-supported streaming services will outnumber those with ad free services, Advanced Television reports, “marking a fundamental shift in the British advertising market.”

And contrary to initial concerns, viewers are for the most part welcoming the changes. 88% of Prime Video’s SVOD users are now on ad-supported plans.

2. Increased demand from advertisers

As AVOD continues to gain popularity, more advertisers will want to buy ad-space. AVOD’s ability to serve highly personalized ads is a big draw for advertisers and it’s changing consumers’ perceptions of ads too.

Unlike the one-size-fits-all advertising served on linear TV, today’s advertising technologies can serve consumers personalized ads that add value to the viewer. 94 million users are now signed up to Netflix’s $7.99 monthly plan, translating to roughly 170 million active viewers who are consuming targeted adverts.

Ad-free entertainment has been one of SVOD’s biggest pull factors. But with this shift to contextual advertising, the draw of ad-free content may become less important to consumers.

3. Ad revenue and market penetration will increase

Ad revenue is set to increase for streaming services that implement ad-supported tiers onto their platforms.

Take Netflix, for instance. The platforms’ ad-supported tier is only three years old yet it’s already growing exponentially with advertising revenues of $3.2 billion in 2025, and is reportedly targeting $9 billion by 2030.

Keep an eye out for FAST

The explosion of AVOD streaming may have turned heads over the last year, but that doesn’t discount its free-with-adds competitor, FAST, from being what experts argue to be the fastest growing streaming framework since 2023.

“What began as a modern twist on traditional TV has evolved into one of streaming’s most dynamic growth engines” details the Comscore 2025 State of Streaming report. “FAST channels, once seen as secondary to subscription services, now command substantial viewer attention.”

The report also identifies US viewership: 1.8 billion hours of FAST content was streamed through August 2025, up from 1.3 billion hours during the same period in 2024 – that’s a 43% increase YoY.

The rapid adoption of FAST is forcing SVOD and AVOD services to rethink their strategies. Many AVOD platforms – such as Tubi and Roku Channel - have now entered the FAST space, creating linear channels that run alongside their catalog of movies and shows of which users can select from, giving them the freedom to browse, or to switch off from ‘streaming fatigue’ and select a channel.

The result is a more fragmented but highly competitive ecosystem, where the lines between linear TV and streaming continue to blur. Platforms that fail to embrace ad-supported frameworks risk losing relevance in a market increasingly driven by audience scale and engagement.

What this means for your infrastructure

As viewing continues to shift toward ad-supported and FAST models, the demands placed on infrastructure are changing. Free access and scheduled channels introduce less predictable usage patterns, while ad delivery places greater emphasis on consistent latency and regional performance. The focus is moving from simply scaling for peak moments to maintaining steady quality and cost control as audiences and formats diversify.

This is leading many teams to take a closer look at where their infrastructure spend is going. SVOD has typically leaned into the elasticity of hyperscale cloud, needing to scale at a moment’s notice for any peaks in viewership. AVOD and FAST, on the other hand, can prioritize sustained throughput, predictable performance, and cost efficiency, as longer viewing sessions need continuous resource rather than short-lived spikes.

Having that foundation on bare metal, whilst still bursting for any viral moments or live events with hyperscale cloud, is the set up that many streaming teams are finding success with. In a market where growth is increasingly driven by free access and advertising, infrastructure decisions are central - now more than ever - to maintaining margins while keeping pace with audience demand.