It’s been fascinating to follow the trail of streaming services since they first became a major force in the entertainment landscape. When they originally started disrupting the industry, the idea behind streaming was the opposite of the traditional linear TV experience: no ads, no scheduled viewing, and no hefty contracts to get out of.
But as the streaming wars have matured the subscription video-on-demand (SVOD) market, more streaming service companies have decided to bring back elements of the linear TV experience, for both financial and customer experience reasons. Ad-supported video-on-demand (AVOD) is making huge profits in the streaming market, so much so that a new report from Digital TV Research suggests that global AVOD revenue will grow from $38 billion in 2022 to $91 billion in 2028.
Digital TV Research figures suggest that Disney will be the biggest beneficiary of this revenue increase, as its two ad-supported streamers Disney+ and Hulu will account for $14 billion in combined annual revenue. Disney hasn’t even launched its AVOD tier of Disney+ yet (coming December 8), so the projections reflect how much confidence the market has in the success of that new pricing plan. In total, according to the report, by 2028 there will be 15 platforms generating AVOD revenues of more than $1 billion, including six globally, five from the US and three from China.
Netflix is the only other platform expected to reach $5 billion or more in revenue by 2028, so the report foresees massive growth going forward. Digital TV Research attributes the revenue spikes to what it calls “hybrid levels” as Netflix and Disney+ have chosen to launch. These are AVOD plans that are much more like SVOD levels, with relatively few ad loads and a focus on not bothering customers with the same ads over and over again.
“An exciting development will be the global rollout of hybrid AVOD-SVOD levels by major platforms such as Netflix, Disney+, HBO and Paramount+,” said Digital TV Research chief analyst Simon Murray. “These four platforms [including Hulu] will generate AVOD revenues of $22.6 billion by 2028 – or a quarter of the world total.”
The numbers may sound bizarrely high, but they’re a bit low compared to other research done earlier this year. An August report suggested that Netflix could see $5.5 billion in new revenue by 2027 from the ad-supported tier it launched on Nov. 3, suggesting the company is certainly in for a windfall in the years to come.
The US AVOD market is just starting to warm up and there is a lot of room for growth. A survey released earlier this month found that 37 million US customers are now using ad-supported streaming. That number will skyrocket in the coming year thanks to the AVOD plans at Netflix and Disney+, and according to Digital TV Research, they will also bring in money.