People/Biz

What kind of VOD brings in the most revenue?

Transactional, ad-supported and subscription on-demand products all have their part to play in the video ecosystem.
October 26, 2018

The three most common acronyms when it comes to digital video – AVOD, SVOD and TVOD – all play pivotal roles in the global OTT market.

But which brings in the most revenue?

The latest Global Ad Trends report from Warc focuses on the OTT market and the money it brings in from subscriptions, advertising and purchases. It measured data from 138 countries and VOD platforms including Netflix, Hulu, Sony’s Crackle in the U.S., HBO Go and more. It also included YouTube, however it only measured professionally made TV shows and movies that air on the platform, not user-generated content such as vlogs and clip compilations.

The report found that consumer and advertiser spending on OTT platforms will reach a projected $129.3 billion by 2023, up from a projected $68.7 billion by end of 2018. Of that nearly $130 billion, $46.6 billion is expected to be spent by advertisers on AVOD platforms, including HBO Now, Hulu and YouTube, which all host advertisements. That’s almost double the level invested in AVOD today: $23.8 billion.

By the end of this year, the OTT market as a whole is predicted to hit $68.7 billion. That represents a rise of 29% from $53.3 billion in 2017.

SVOD currently outperforms AVOD in its revenues ($35 billion this year), with the remaining $9.8 billion in OTT revenues coming from transactional platforms, like iTunes or Amazon’s rental services.

Between October 2015 and 2017, Warc recorded a net increase of 44% in the use of AVOD and 53% in the use of SVOD among all age groups. The biggest age groups driving these increases are millennials and Gen Z, which represents a 56% increase for AVOD and 62% for SVOD.

Canada has been identified by Warc as one of 10 key markets for OTT growth. It estimates that internet penetration is at 92.4%, and with moderate-to-strong mobile and desktop speeds (around 10 MBPS and 16 MBPS respectively), the country is one Warc predicts will see a rise in consumption – and revenue – for OTT.

Although the development of mobile devices will be pivotal in the growth of OTT, Warc, citing data from comScore, said the biggest devices that will help OTT grow are streaming devices or connected TV sticks, such as Roku, Chromecast and AppleTV. Since gaming consoles and smart TVs are also somewhat popular, Warc concluded that “the living room is as important as ever when aiming to reach these consumers.”

From Media in Canada

About The Author
Senior staff writer Frederick Blichert comes to realscreen with a background as a journalist and freelance film critic. He has previously written for VICE, Paste Magazine, Senses of Cinema, Xtra, Canadian Cinematographer and elsewhere. He holds a Master of Arts in film studies from Carleton University and a Master of Journalism from the University of British Columbia.

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