How AVOD works
A viewer opens a title without paying. The player requests ads from an ad server and plays them as pre-roll, mid-roll or post-roll breaks. The advertiser pays the service for each thousand impressions delivered, a rate known as CPM.
Because there is no paywall, AVOD reaches a much larger audience than a subscription can. The trade-off is that each viewer earns far less, so the model depends on volume and watch time.
How AVOD revenue is calculated
Ad revenue is impressions divided by 1,000, multiplied by CPM. Impressions come from viewing hours, the number of ads per hour (ad load) and the share of ad requests that are actually filled (fill rate).
For example, 100,000 viewing hours a month at 8 ads per hour and a 70% fill rate is 560,000 impressions. At a $10 CPM that is $5,600 a month.
When AVOD is the right model
- Your audience is large but unwilling to pay, or is in a market with low card penetration
- Your catalog is broad and rewatchable rather than a few premium titles
- You want a free tier that feeds a paid subscription
- You can sell ads directly or connect to programmatic demand
AVOD vs SVOD vs TVOD
AVOD is free to the viewer and paid for by advertisers. SVOD charges a recurring fee for access to a catalog. TVOD charges once for a single title, as a rental or a purchase. Most services now combine them: a free ad-supported tier, a paid ad-free tier, and rentals for new releases.
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