Why is ASVOD redefining the way consumers enjoy online content?

In recent years, the world of streaming entertainment has undergone a true revolution. What started as subscription video-on-demand (SVOD) services, allowing users to enjoy exclusive content without advertising interruptions in exchange for a monthly fee, has taken a bold step towards a new era: ad-supported subscription video-on-demand (ASVOD). This evolution has redefined the landscape of online entertainment, providing benefits for both providers and users, BB Media said in its latest report.

In the realm of media and digital platforms, a notable evolution in the monetization model has occurred. Initially, companies offering free video-on-demand (FVOD) started leveraging ad-supported video-on-demand (AVOD) to generate revenue. This opened new opportunities for SVOD companies, who saw the possibility of diversifying their strategies.

Leading platforms like Netflix, Disney+, Paramount+, and Discovery+ have captivated consumers with their extensive libraries of original movies and series, available at their fingertips through a monthly subscription, and in some cases, annual options as well. The absence of advertising immerses consumers in an uninterrupted audiovisual universe, and they delight in hours and hours of entertainment without annoying interruptions.

However, in a highly competitive environment with increasing production costs, companies have been forced to adapt. The demand for more accessible and diverse entertainment options has significantly increased. It is in this context that ASVOD has emerged as a new way to enjoy online content without compromising quality or our budget.

ASVOD services, like Hulu and Peacock, combine the best of both worlds: an affordable subscription and strategically integrated advertising. This revolutionary combination has opened a range of possibilities for both providers and users. Platforms can diversify their revenue sources and fund high-quality productions, while users have access to a vast catalog of content without jeopardizing their budget thanks to lower price offerings. Carefully selected and relevant ads have become an integral part of the viewing experience, and even frequent users watch them to reduce their monthly bills when subscribing to multiple services.

This streaming entertainment revolution showcases the industry’s adaptability and commitment to providing exciting and accessible experiences to all content enthusiasts. Market leaders like Netflix and Disney have implemented this new strategy and are at the forefront of the evolution towards ASVOD, where they seek to reduce subscription costs with minimal advertising presence to generate more revenue without impacting users’ pockets.

In October 2022, Netflix introduced a new ad-supported plan in several countries, and BB Media was able to quantify the impact on the number of users who continue to use the ad-free plan and those who have started to try the new plan in Mexico and Brazil. In Mexico, the Standard plan is offered at MX$219 (US$12.3), and with this new alternative, users can choose the same plan with ads for MX$99 (US$5.56), saving over 50% on the monthly fee. The same applies in Brazil, with an ad-free Standard plan at BR$39.9 (US$7.97) and an ad-supported plan at BR$18.9 (US$3.77).

During the last quarter of the previous year, in Brazil and Mexico, most users chose the ad-free plan, indicating a high level of satisfaction. However, a smaller percentage decided to try the new plan or opt for the ad-supported plan, showing a willingness to explore different options. This data reflects the diversity of user preferences in digital platforms.

In Brazil, during the first quarter of 2023, the ad-free plan still prevails with 90.6%, while 9.4% prefer the ad-supported plan. Within this latter group, it was identified that 9.4% see unrelated commercial ads. In Mexico, with an increase in the number of users who prefer the ad-free plan, reaching 95.3%, while 4.7% opt for the ad-supported plan. Within this latter group, 4.7% sees unrelated commercial ads.

“In conclusion, the world of streaming entertainment has evolved significantly with the introduction of ASVOD. While there has been a growing demand for more accessible and diverse entertainment options, most users still prefer ad-free services. As providers explore the balance between ad presence and subscription prices, it is expected that they will continue to innovate to meet the changing needs of users and generate additional revenue,”  said Eros Lico, Multiscreens+ | Prices, Plans & Bundles Leader at BB Media, and the author of the report.