Advertising revenue makes up 60% of all online video revenue, with the online video market reaching $236 billion last year, while free platforms continue to dominate the video market, Maria Rua Aguete, senior research director at Omdia, said Thursday at a discussion about AVOD at Series Mania TV festival in Lille, France.

“Something consistent is that people love YouTube. I know that many broadcasters and studios don’t want to call it AVOD, but the reality is that they offer video and people watch it, also on the big screen,” she said, kickstarting the discussion titled “Advertising Strikes Back: Are AVOD Platforms the New Big Thing?”

In many countries, Netflix comes as the second favorite service (in the U.K., it’s public broadcaster BBC, for example), but Roku Channel (pictured, Roku comedy “Reno 911!”) and Samsung TV Plus also emerge as contenders, the latter in countries like Brazil and India.

“How is it possible that a company famous for making TVs now ranks as the favorite video service? This highlights how you, as a content producer or distributor, if you want to make agreements and partnerships, need to work with these people,” she said.

In 2022, online advertising will surpass traditional linear TV. It will be below the revenues that pay TV generates, but in 2025, the number one model will be AVOD and other online advertising services.

“It will be $260 billion in revenues, which is double what SVOD will generate. Who doesn’t want to take part in this money?”

Hybrid AVOD/SVOD models are prevalent among major U.S. direct to consumer (D2C) services, she noted, as introducing them renders the ARPU [average revenue per user] across the whole subscriber base much higher.

“People don’t mind the adverts if they will watch premium content and pay half. Hybrid seems to be the ideal way of monetizing content,” she added, referring to findings by Peacock.

Also, while free online services are highly rated across the board, there is room for improvement – with AVOD, people still think it’s difficult to find content.

Benedicte Steinsrud, chief content officer at Youlook TV – an independent AVOD platform in the U.K. – noted that most of its marketing has been done via social media, with the engagement high on Instagram and Facebook, while its Nordics launch will also turn to FAST channels (free ad-supported streaming TV services) and cross-promotion.

Sponsorships are also a good way to promote the brand, added Cristian Liarte, director of originals at Rakuten TV, mentioning its deal with Barcelona soccer club. Advertising can be an opportunity to produce new content, he said, mentioning Rolex’s involvement in “Seve – Artist, Fighter, Legend” about professional golfer Severiano Ballesteros.

“The little twist that we are doing is that we are starting to involve brands to be co-producers, sharing rights and revenues. It enables you to create new content. We have to change the way we think: now, they are investing, not just paying. You bring them to the table, show how this business works. This is the way.”

As noticed by Aguete, international hit “Money Heist” didn’t succeed in an AVOD window, later finding its audience on Netflix. Knowing there are “breaks in the middle” can influence the way to create content.

“I think it all starts with the story,” said Nina Lederman, executive vice president of global scripted development and programming at Sony Pictures Television. “When you make something, you have to decide where it goes. But first you have to find the buyer that you feel will attract the viewers. I think AVOD is here to stay, it’s getting more ubiquitous in the U.S. We also have to think about ‘cannibalization’ and making sure that if we put things on AVOD, we are not hurting ourselves on SVOD.”

AVOD can find a new audience for classic libraries, but branded content will become something that everyone is going to consider, she said.

Rua Aguete also encouraged the panelists to think about the future – according to Facebook, in 2026, 25% of the population will spend an hour a day in the Metaverse. More co-productions will also need to happen in order to pay for the programming, said Lederman.