Glossary term

AVOD (Advertising-Based Video on Demand)

What is AVOD?

AVOD is a streaming model where users can watch content for free, but they must view advertisements before, during, or after the video. Platforms earn revenue through ads instead of subscriptions.

AVOD Characteristics

• Free Access: Users can watch content without paying a subscription fee.
• Ad-Supported: Revenue is generated through advertisements shown during playback (pre-roll, mid-roll, post-roll, or display ads).
• Broad Audience Reach: Easier access attracts a wider audience, including price-sensitive viewers.
• Content Variety: Often includes movies, shows, clips, and user-generated content, depending on the platform.
• Lower Barrier to Entry: No payment is required, making it easier for new users to try the platform.
• Data-Driven Advertising: Ads are often targeted based on user behavior, location, or interests.

AVOD Ad Formats

1. Pre-Roll Ads: Short video ads that play before the main content begins. _Common length: 6–15 seconds or 30 seconds.

2. Mid-Roll Ads: Ads inserted in the middle of longer content, similar to commercial breaks on TV. _Used in movies, TV episodes, or long-form videos.

3. Post-Roll Ads: Ads that appear after the content ends—less intrusive, but also less engaging for advertisers.

4. Overlay Ads: Semi-transparent banners or pop-ups overlaid on the video, often clickable, without interrupting playback.

5. Display Ads (Companion Banners): Static or animated ads shown beside or below the video player (on desktop or mobile), often used alongside video ads.

6. Interactive Ads: Engaging formats that let viewers click, choose outcomes, or explore products, enhancing ad recall and brand interaction.

7. Pause Ads: Ads that appear only when a viewer pauses the video—non-intrusive and often static or animated visuals.

8. Sponsored Content/Branded Segments: Brands sponsor a piece of content or integrate messaging directly into the video, making it part of the viewing experience.

AVOD in the VOD

The Video on Demand (VOD) ecosystem allows viewers to access video content anytime, without being tied to scheduled broadcasts.

This ecosystem is commonly structured into three main monetization models:

AVOD (Advertising-Based Video on Demand): Viewers can stream content for free, but it includes advertisements that play before, during, or after the video.

SVOD (Subscription Video on Demand): Audiences pay a recurring subscription fee to access a platform’s complete content library.

TVOD (Transactional Video on Demand): Users rent or purchase individual content titles on a pay-per-view basis.

AVOD vs SVOD vs TVOD

From the User’s Perspective

Aspect	SVOD	AVOD	TVOD
Access	Unlimited (with subscription)	Free (with ads)	Pay-per-view
Ads	Usually ad-free	Yes, ad-supported	No ads
Payment Model	Monthly/Yearly	Free to watch	One-time fee per title
Content	Full library	Select content	Individual titles
User Control	High	Medium (ads interrupt playback)	High

From the Content Provider’s Perspective

Aspect	SVOD	AVOD	TVOD
Revenue Model	Predictable recurring income	Revenue based on ad views and impressions	Earnings per transaction (rent or buy)
Monetization Speed	Slower but consistent	Quick to scale with larger audiences	Instant, depending on user purchases
Audience Reach	Limited to paying subscribers	Widest reach due to free access	Smaller reach—only those who pay per title
Content Strategy	Focused on retention and exclusivity	Prioritizes high-volume, ad-friendly content	Emphasizes new, high-demand, or premium content
User Data Access	In-depth subscriber insights	Solid targeting data, though less detailed	Mostly purchase behavior data
Churn Risk	High—users can cancel anytime	Very low—no recurring commitment required	Not applicable—pay-as-you-go
Marketing Focus	Subscriber retention and engagement	Expanding audience and maximizing ad inventory	Title-level marketing and promotions

5 Key Impacts of AVOD on Entertainment and Advertising

1. Expanded Audience Reach AVOD platforms make content freely accessible, attracting broader and more diverse audiences, especially in price-sensitive and global markets.

2. Shift from Subscription to Ad-Based Revenue Content creators and distributors increasingly rely on advertising income, especially for monetizing older, long-tail, or lower-budget content.

3. Growth of Targeted, Data-Driven Advertising AVOD enables advertisers to deliver highly personalized and measurable ads using viewer data, outperforming traditional broadcast targeting.

4. New Life for Legacy Content Older films and series find renewed value on AVOD platforms, generating passive revenue through ad views without extra production costs.

5. Ad Spend Reallocation and Programmatic Growth Marketers are shifting budgets from linear TV to AVOD, using programmatic tools to reach streaming-first, ad-tolerant viewers efficiently.