Don't we all love our streaming platforms? Well,
I sure do!And because our fave series and flicks are so close to our hearts, we thought it was ideal to check out what's happening in this space when it comes to advertising — because yes, those ads play a significant role in determining our happy levels when chillin'.
media update's Robyn du Preez spoke to Leslie Adams, sales director at Reach Africa, about AVOD and SVOD and their impact on streaming here:
What is AVOD?
Advertising video on demand (AVOD) — also known as ad-funded video on demand — refers to a business model that streaming services employ to monetise their platform through advertising.
Viewers benefit from free or more affordable access to premium content, at the 'cost' of watching a couple of ads.
Streaming services also employ subscription video on demand (SVOD) and a hybrid solution where both AVOD and SVOD are employed.
For example, Netflix and Showmax currently subscribe to SVOD models, while e.tv's 'eVOD' and Viu, South Africa’s largest streaming service provider, follow an AVOD model.
However, Showmax and other big global players such as Netflix and Disney+ are now introducing advertising-supported options.
How would the introduction of AVOD benefit the streaming space?
The benefits to the viewer include
making premium content more accessible. AVOD allows the viewer to watch premium content either completely free of charge (the viewer pays no subscription fee), or at a lowered subscription cost.
For our market, which sees many consumers under financial pressure, this is a highly attractive offering.
We’re also seeing this in our audience consumption patterns, where viewers are ‘hunting’ the best content.
Nothing good on Netflix this week? Let's cancel and sign up to Disney + instead! New season of the Handmaid's Tale is on? Better resubscribe to Showmax!This mindset is becoming increasingly prominent in our viewers. Many are also cancelling their premium live TV subscriptions in favour of several streaming services in its place.
For the provider, as the streaming space becomes more competitive, it's only a matter of time before price becomes a key differentiator.
Introducing an AVOD offering allows these providers to increase their revenue while expanding their subscriber bases, which will become key to survival in an increasingly saturated landscape.
In your opinion, what do you think is the importance of advertising-funded options in this space and the marketing industry as a whole?
- For the end users: more affordable access to premium streaming services.
- For the platforms: larger user bases and a forecasted increase in their (ARPU) average revenue per user.
- For the advertising industry: access to an entirely new audience and audience environment that consists of those who already consume content ahead of traditional TV.
Would you say that advertising-supported subscriptions can benefit audiences? Why?
With 26 streaming services already legally available in South Africa, it will allow users to consume more content from more content players within the streaming space — all without necessarily increasing user spending.
Part and parcel of lowering this barrier to entry is a simultaneous drive by government, telcos and fibre players to increase affordable Internet access, which we are seeing in large-scale project roll-outs.
This will mean that more South Africans gain access to high-quality Internet at lower costs, which will also lead to an increase in time spent streaming.
How can advertising-supported subscriptions be integrated into streaming platforms in a user-friendly way?
When Netflix and Disney+ announced that they were introducing ad-supported tiers, early streaming adopters almost instantly rejected the idea of the current experience being interrupted by advertising.
However, when we look at South Africa's most popular streaming service Viu.com, which employs both an SVOD and an AVOD business model, we have an excellent case study where a streaming service can provide a tiered offering to suit each of their streaming audiences.
Viu charges a premium for an ad-free environment while simultaneously offering an ad-funded option for the audience who loves the content on offer, but where affordability is also an important factor.
In your opinion, why do you think that now is the right time to be adding a lower-priced option for viewers on streaming platforms?
From a user perspective, it all comes down to value and access and ad-funded video-on-demand tiers will give users both.
From the streaming service perspective, it offers a way of retaining users even when their content offering isn’t at its best while widening and growing a user base that may have been previously excluded due to costs.
This all while monetising their user bases through either subscriptions or advertising — or in some cases, both.
For the advertising industry, streaming will reshape TV advertising going forward as the most notable new entrant since social media, offering a highly engaged audience in a premium environment.
Well, that was thought-provoking! What are your thoughts on AVOD? Let us know in the comments section below.
With all this AVOD talk, where does one actually look for a savvy and stellar streaming service? Look no further than our article, The top five streaming services in South Africa.
*Image courtesy of Canva