AVOD Market Size

AVOD Market Size

AVOD Market size was valued at USD 40.8 billion in 2023 and is estimated to register a CAGR of over 8% between 2024 and 2032. The rising trend of Ad-supported Video on Demand (AVOD) reflects a fundamental shift in the way consumers engage with digital content.

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For instance, in January 2024, Amazon Prime Video captured this trend by integrating advertisements. This marked Amazon's entry into the AVOD space, strategically including ads in movies and TV shows with minimal interruptions, contrasting traditional TV and other streaming services. Subscribers can opt for an ad-free experience for an additional USD 2.99 per month, aligning with common AVOD strategies to increase revenue while enhancing user experience.

AVOD platforms offer viewers convenient, free access to a diverse array of content, which is enabled by widespread internet availability and the proliferation of smart devices. This accessibility has attracted a sizable and engaged audience, creating opportunities for advertisers to reach consumers in a targeted and measurable manner. Advancements in ad tech and data analytics further fortify this growth, allowing platforms to incorporate personalize ad experiences based on user data such as viewing preferences and demographics.
 

As the AVOD market expands, media platforms are increasingly exploring hybrid models that blend ad-supported content with premium subscription options. This approach not only caters to diverse viewer preferences but also maximizes revenue streams, underscoring AVOD's pivotal role in reshaping digital entertainment consumption and advertising dynamics.
 

The AVOD market faces a major challenge in balancing user experience (UX) with ad monetization. Too many ads/poorly targeted ads can lead to viewer dissatisfaction and increased ad-blocking behaviour, undermining revenue potential. Additionally, ensuring ad relevancy and non-intrusiveness is crucial to maintaining viewer engagement and retention.
 

Furthermore, regulatory challenges around data privacy and advertising standards pose significant risks. Adhering to stringent privacy laws and ensuring transparent data handling practices are essential for building trust with viewers and maintaining compliance with evolving regulations.
 

For instance, in November 2023, YouTube and Meta faced criminal charges in Ireland for unlawful data collection practices related to ad-blocker tracking and behavioural ad targeting. The complaint accused the companies of violating EU citizens' privacy rights by using tracking scripts without user consent. This legal action highlighted the increasing scrutiny of data collection practices in the EU and could have significant implications on the way companies handle ad blockers and data collection methods in the future.