OTT services see growth in AVoD as cost-sensitive audiences savour free content

Growing popularity of AVoD

While streaming services like ZEE5, SonyLIV, JioCinema and many others offer premium content for monthly and annual subscriptions, it is the advertising-based video on demand (AVoD) (libraries of these services, including catch-up TV content, movies as well as some originals), that are the primary draw, given the easy access and low-entry barriers. AVoD content mainly attracts younger, cost-conscious viewers, often from tier-two and tier-three cities. These audiences lean towards regional or mass-appeal content and are comfortable with ad interruptions, experts point out.

“AVoD content typically garners significantly higher viewership compared to SVoD (subscription video on demand) content, primarily due to its free accessibility and lower barrier to entry. Platforms offering both models often find their AVoD library drawing a larger number of casual viewers, as no payment or commitment is required,” said Rajat Agrawal, chief operating officer, Ultra Media & Entertainment Group that operates OTT platform Ultra Jhakaas.

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While engagement levels, completion rates, and average watch time per session are generally higher on SVoD content, Agrawal pointed out that OTT platforms have a strong opportunity to build on advertising and monetization via AVoD. Even international giants have rolled out AVoD or SVoD with lower price points augmented with ads, Agrawal said.

AVoD libraries tend to attract significantly higher viewership compared to SVoD content because they are free and more accessible, catering to a broader audience base. This is particularly evident in regional markets, where cost-sensitivity is higher, and free access draws first-time viewers and casual audiences, said Kaushik Das, founder and CEO of AAO NXT, an Odia language platform. “In contrast, SVoD content sees lower overall viewership due to its paywall, but appeals to a niche audience that values exclusivity, quality, and an ad-free experience. These subscribers are more consistent in their consumption patterns and contribute directly to long-term revenue,” Das said.

Monetization opportunities

The potential for monetization through AVoD, though, is immense, Das added, especially as digital ad spending continues to grow. OTT platforms can capitalize on this by offering a range of advertising formats such as pre-roll, mid-roll, and interactive ads, along with sponsored content. With AVoD’s vast user base, advertisers can target specific demographics more effectively, delivering campaigns that are both measurable and highly personalized.

Siddharth Devnani, co-founder and director at digital agency SoCheers, said SVoD and AVoD are different segments of the market, though they share some overlap with each other. While SVoD lies within the top 100 million households throughout the country, AVoD is five to eight times higher. This differentiation is used frequently in media targeting, especially for premium brands.

To be sure, AVoD libraries typically rely on a mix of curated regional films, older licensed TV shows and user-generated or influencer-driven content, which are significantly cheaper than producing premium originals. “Many platforms today balance high-budget originals with a rich catalogue of older content to cater to a diverse audience base. Additionally, AVoD platforms generate revenue immediately through ad sales, this allows a quicker return on investment compared to the SVoD model, which relies on building a steady subscriber base. Further, AVoD platforms can repurpose content across formats, for example, short-form content for social media, to maximize reach and cost efficiency,” said Charu Malhotra, co-founder and managing director at Primus Partners India, a management consultancy firm.

To be sure, some platforms still believe ads compromise user experience. Ujjwal Mahajan, co-founder, Chaupal, an OTT specializing in Punjabi, Haryanvi and Bhojpuri content, said that advertising revenue is very low in India compared to Western markets, making it unsuitable for the company’s business model.

“Once you have gained user loyalty, audiences are willing to pay for content that offers value for their money. Each model serves a distinct purpose and caters to different sets of audience, the success of both depends on how well a platform balances the two to meet audience expectations and monetization goals,” said Saurabh Srivastava – chief operating officer – digital business at Shemaroo Entertainment Ltd.