The age of AVOD is coming

Even though ad-supported streaming video predates subscription-focused streaming, much of the conversation around streaming services has focused on the latter, thanks to the rapid rise of Netflix. Indeed, more than 90% of OTT video service users will watch content via a subscription service at least monthly in 2022.
With the launch of its own ad-supported tier this fall, Netflix has helped usher in the next phase of the streaming conversation, which will focus on AVOD.

• We project over half of the US population will be watching content from at least one ad-supported streaming service monthly by 2026, up from 41.8% in 2022. More than half of all US internet users—50.7%, to be exact—will be watching content via AVOD services by 2023. That figure will rise to 55.8% by 2026.
• Just like with subscription OTT, AVOD viewers seem to be using multiple AVOD services at a time rather than limiting themselves to a single offering: The Roku Channel, Tubi, and Pluto TV will each have over 50 million viewers in 2022.
• AVOD user growth will be driven largely by newer entrants to the space offering a hybrid model, such as Netflix or Disney+, rather than by purely ad-supported existing services such as Tubi or Pluto TV.
• Of the totally free AVOD services we forecast, only The Roku Channel will be watched at least monthly by more than 25% of OTT video service viewers, but we expect its user base to grow just 12.0% total over the next four years; during that time, its market share among AVOD viewers is expected to shrink, to 41.2% by 2026.
• While Tubi’s user growth is expected to be slightly healthier percentagewise, rising 16.0% between 2022 and 2026, it will also lose AVOD market share during that time, sliding from 37.2% to 34.8%.
• Pluto TV will also follow the above trend, adding 9.6 million viewers over the next four years but losing AVOD market share, sliding to 36.2% by 2026.
• By comparison, 50.8% of OTT video service users will watch content on Hulu at least once per month this year.