AVOD vs SVOD: Which is the preferred video on demand platform?

AVOD vs SVOD: Which is the preferred video on demand platform?

Video on demand (VOD) market volume is projected to reach in excess of $230 billion by 2027. Today, VOD platforms like Netflix, Disney+, and HBO Max are household staples. But it’s a double-edged sword. Global VOD success has resulted in a highly competitive landscape making it increasingly challenging for VOD platforms to remain profitable.

Even if not by name, almost everyone will be familiar with the SVOD (subscription-based-video-on-demand) model. It’s the revenue model used by the likes of Netflix and allows users to access the platform’s content catalogue for a monthly fee. But now, influenced by various factors from the rising cost of living to subscription fatigue, the VOD industry is increasingly looking to AVOD (advertising-based-video-on-demand) to keep users engaged.

In this blog, we explore the differences between these two revenue frameworks and why some industry experts are predicting that AVOD will soon overtake SVOD.

What is AVOD?

As we’ve just mentioned, AVOD stands for advertising-based-video-on-demand. AVOD is a VOD monetization framework that integrates advertisements into the viewing experience. Ads typically appear before, during, and/or after the content and viewers are required to watch the ads to access the desired content. Because the ad revenue offsets the production costs, AVOD platforms can offer their content for free – YouTube is a prime example.

What is SVOD?

SVOD stands for subscription-based-video-on-demand. Much like AVOD, SVOD is a VOD monetization framework. But unlike an AVOD model, SVOD does not generate revenue from ads. Instead, SVOD platforms like Netflix and AppleTV work more like pay TV packages (like Sky TV, for instance), with users paying a recurring fee (usually monthly) for access to a catalogue of curated on-demand content. This framework provides the VOD platform with a predictable revenue stream. In return users enjoy unlimited access to premium video content across devices.


Both AVOD and SVOD make it possible for streaming services to deliver on-demand content to users. The key difference is revenue generation. The table below illustrates the difference in functionality between AVOD and SVOD, as well as some key differences between the two.




Users access unlimited video content for free, but content has integrated ads.

Viewers pay a regular fee for access to a catalogue of ad-free video content.


Income from ad revenue is unpredictable.

SVOD platforms get predictable, recurring revenue from subscription payments.

Market share

AVOD usually generates lower revenues than SVOD. In 2022, AVOD revenues for TV series and movies were recorded at $41 billion .

SVOD usually generates higher profit margins per thousand subscribers and represents the largest segment of the OTT market. SVOD revenues were recorded at $99 billion in 2022.

Barriers to entry

Low financial barrier to entry for users.

Higher financial barrier to entry for users.


Pluto TV, Tubi, Roku Channel, Plex, Crackle

Netflix, Amazon Prime Video, Hulu, Apple TV, HBO, Disney+

Why is AVOD becoming the preferred VOD framework once more?

Until recently, SVOD has been the VOD framework of choice for most on-demand streaming services. SVOD penetration is particularly strong in the United States and Canada where 82% of households use at least one SVOD platform. But research suggests that SVOD primacy might be on the decline. For instance, in some emerging markets like Latin America 50% of viewers prefer free, ad-supported content. Likewise free ad-supported linear TV (otherwise known as FAST) is also showing signs of resurgence. And even in the U.S, the rate of AVOD adoption has now overtaken SVOD, with the number of households streaming from AVOD platforms increasing by 29% between 2020 and 2022.

“Having more choice with low financial risk keeps consumers engaged and watching”, comments Alexandra Ong, business development director, EMEA at Magnite.

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 AVOD is rising up in the popularity ranks. The so-called Netflix subscription ‘bubble’ is bursting.

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

1. AVOD democratizes 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 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 and 61% believe that streaming services are too expensive.

2. AVOD is 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. 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 with AVOD

It’s all connected. As users seek out more affordable content, AVOD is providing a way 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.

Likewise, in East Asia, AVOD has experienced sustained growth over the last few years, with the fastest market emerging in China. AVOD platforms in China generated the equivalent of $63 billion in 2022, up from $38 billion the previous year. And in Japan, the AVOD market almost doubled over the same period.

5. AVOD suits other kinds of content

AVOD makes it easier to distribute different content formats. Whilst SVOD has been reserved primarily for premium content (think the latest series and movies), AVOD lends itself 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.   

2023 AVOD trends to look for

It’s clear that AVOD is taking off globally. And as the AVOD model continues to cement itself, we’re likely to see some emerging trends.

5 AVOD trends to look out for

Trends like:

1. Ad-supported tiers will become the norm

We’ve already seen some streaming services like Netflix and Disney + integrate ad-supported tiers on their platforms. And this consolidation between SVOD and AVOD is set to continue. Deloitte Global predicts that by the end of 2023 all major subscription VOD services in developed markets will have launched an ad-funded tier to complement their existing ad-free options. And by 2030, it’s expected that most online video service subscriptions will be wholly or partially funded by ads.

2. The AVOD vs SVOD gap will narrow

It’s predicted that AVOD will gain more than three times the number of U.S viewers that SVOD will this year, adding 13.3 million viewers compared to SVOD’s 4.3 million. And the growing popularity of AVOD is set to continue as more traditionally subscription-based streaming services roll out ad-supported subscription tiers. AVOD is already rapidly catching up with SVOD and it is predicted that it will soon overtake subscription-based models as the industry standard.

3. 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. 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.

4. 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 subscriptions are expected to generate $2.2 billion globally by 2027 – more than Netflix would have generated through subscription only plans. In that same time, it’s expected that one in five Netflix users in Western Europe will have an ad-supported subscription.

5. Pay-per-view will be one to watch

Unlike VOD frameworks, pay-per-view (TVoD) allows viewers to buy access to content for a set time (typically 24 hours). And now, research shows that more people are choosing to obtain content on a pay per view basis – especially for the purpose of watching special events or exclusive content.  TVoD market revenues have been on a steady incline over the last decade and the number of users in the United States is forecast to continuously increase by 8.9 million between 2023 and 2027. It’s still some way off catching up with VOD, but it's certainly one to watch. – How can we help?

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