- The Rise of AVOD: A Slow Start Gains Momentum
- Europe’s OTT Subscribers (2021 – 2024)
- Strategic Industry Moves: The Power of Partnerships and Expansions
- Discover What Global Streaming Platforms Pay to License Films and Shows
- Challenges in UX, Regulation, and Monetization
- Innovations and Challenges: Europe’s Ad Tech and Hybrid Models
- Europe’s Leadership and Regional Market Dynamics
- FilmTake Away: Factors Shaping Europe’s Streaming Future
Despite lagging significantly behind the U.S., Europe’s streaming market is on the brink of a transformative phase. The rise of ad-supported video-on-demand (AVOD) platforms and hybrid monetization models is set to reconstruct the digital video market, presenting a promising future for the industry.
Consumers increasingly opt for lower-cost subscription plans with ads, driving growth for Netflix, Prime Video, and Disney+. Meanwhile, local players such as TF1+ and ITVX leverage regional strengths and localized content to lure audiences. FAST services are gaining traction, but regional nuances and regulatory complexities demand tailored approaches.
While AVOD adoption is surging, challenges abound. Like all advertisers, platforms must balance ad frequency and relevance to avoid alienating viewers, which is heightened under the EU’s stringent data privacy laws.
The Rise of AVOD: A Slow Start Gains Momentum
The global AVOD market was valued at $40.8 billion in 2023, with a projected compound annual growth rate (CAGR) exceeding 8% between 2024 and 2032. Europe is a significant player in this evolution, driven by increasing internet and smart device proliferation and a reversion in consumer preferences toward free, ad-supported content.
In 2022, Free Ad-Supported Streaming TV (FAST) services in Europe started cautiously, with platforms such as LG, Samsung, Pluto TV, and Rakuten TV offering between 45 and 140 channels in major markets like France, the U.K., Germany, Italy, and Spain.
A closer look at market trends across European countries reveals that many streaming platforms benefit from the rising demand for advertising-based models. In surveys, half of French and Spanish respondents preferred more affordable subscription plans, even if these plans included ads. This inclination was even stronger in Germany and Italy, with 60% of users favoring ad-supported plans. The trend is most pronounced in the U.K., where 69% of users preferred cheaper, ad-supported options.
There is a clear trend toward ad-supported subscription plans in Europe. Netflix users opting for ad-supported plans in surveyed markets rose from 10% to 19% last year. Amazon’s default ad-supported model for Prime Video has seen even higher adoption rates, with 23% of German users and 27% of U.K. users on the ad-supported tier.
Despite the growing uptake of ad-supported streaming among European consumers, challenges remain in advertising infrastructure. Research highlights that U.K. marketers have yet to capitalize on the connected television advertising opportunity fully. Issues with measurement, such as accurately gauging viewer engagement, and concerns over perceived cost barriers are hindering the full potential of AVOD in Europe.
As indicated in the map below, European providers are now faced with a fresh onslaught of competition in the advertising space, with the entry of most major U.S. streaming holdouts in 2024. Prime, SkyShowtime, and Max all entered the AVOD market this year. Disney+ launched ad-supported streaming in November 2023, lagging behind Netflix, which offered an AVOD tier first in November 2022.
Europe’s OTT Subscribers (2021 – 2024)
Strategic Industry Moves: The Power of Partnerships and Expansions
Leading the charge, RTL Deutschland and ProSiebenSat.1 announced a landmark partnership in February 2024 to unify their AVOD platforms. The collaboration integrates RTL’s Smartclip and ProSieben’s Virtual Minds, enabling advertisers to run seamless campaigns across RTL+ and Joyn. This initiative underscores the growing importance of digital advertising in bolstering competitiveness.
Meanwhile, global players have also recognized Europe’s AVOD potential. Prime Video introduced ads in early 2024, offering an ad-supported option as the default subscription tier. Consumers can pay an additional fee for an ad-free experience. This option strategy has quickly gained traction in countries like Germany and the United Kingdom, where adoption rates of the ad-supported tier are 23% and 27%, respectively.
One of the first major streamers to introduce an AVOD tier in Europe, Netflix saw its share of ad-supported subscribers rise from 10% to 19% between mid-2022 and the start of 2024. This success reflects a broader shift in consumer viewing habits, with users opting for lower-cost, ad-supported plans to reduce expenses.
Disney+ has followed a similar model, launching ad-supported tiers in affluent regions like the U.S., Canada, and Western Europe, where subscribers are more accustomed to higher streaming costs.
Discover What Global Streaming Platforms Pay to License Films and Shows
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Challenges in UX, Regulation, and Monetization
While AVOD platforms thrive, challenges abound. Balancing ad volume and relevance is critical to avoiding viewer dissatisfaction and ad-blocking behaviors. Poorly targeted or excessive ads can drive viewers away, diminishing revenue potential. Additionally, platforms must steer through stringent EU data privacy laws, as evidenced by recent legal action against YouTube and Meta in Ireland over alleged data collection violations. These cases highlight the increasing scrutiny of advertising practices and the need for transparent data handling.
Ensuring compliance with regional regulations while maintaining monetization efficiency requires significant ad tech and data management investments. Platforms must prioritize ad relevancy and non-intrusiveness to maintain viewer engagement. For example, Netflix’s innovative “binge ad” format addresses this challenge by seamlessly integrating ads into long viewing sessions, improving user experience and advertiser ROI.
Innovations and Challenges: Europe’s Ad Tech and Hybrid Models
Technological innovation will drive Europe’s AVOD success. AI and machine learning enable more precise ad targeting, improving user satisfaction and advertiser returns. Interactive ad formats are also gaining traction, increasing viewer engagement and making platforms more attractive to advertisers.
Netflix’s strategic implementation of ad technology and TF1+’s rapid growth in digital advertising revenues underscore the impact of these advancements. Since its January 2024 launch, TF1+ has expanded its content library from 15,000 to 25,000 hours, achieving a 40% boost in digital advertising revenues.
Hybrid models blending ad-supported and premium subscription content are gaining traction. These approaches cater to changing consumer preferences. Platforms like Amazon and Netflix are adopting this strategy to maintain user engagement and financial flexibility in content investments.
Europe’s Leadership and Regional Market Dynamics
European companies have organized to drive innovations in AVOD. The ASAP4EU Consortium, launched in 2024, focuses on optimizing advertising solutions tailored to the European market. Members bring expertise in OTT platforms, ad insertion technologies, and multilingual content, ensuring compliance with regional regulations while scaling globally. This initiative highlights Europe’s commitment, albeit late, to advancing its AVOD infrastructure while trying to preserve its cultural and regulatory diversity.
While North America remains a dominant force, accounting for 38% of global AVOD revenue in 2023, Europe is rapidly emerging as a formidable contender.
Platforms like ITV Hub and RTL Group’s streaming services leverage strong local brands and localized content strategies to attract viewers and advertisers––France’s TF1+ platform, for example, now holds 7% of the country’s $2 billion digital video advertising market, showcasing its success in attracting both.
FilmTake Away: Factors Shaping Europe’s Streaming Future
Europe’s AVOD market is well behind the U.S., but it is finally entering a transformative phase, driven by evolving consumer preferences, strategic partnerships, and technological advancements. Netflix, Amazon Prime Video, and Disney+ are leading the shift with hybrid monetization models, while local players like TF1+ and ITVX leverage regional strengths to capture growing demand for ad-supported streaming.
The rising popularity of AVOD reflects changing viewer priorities, with many opting for lower-cost plans even if they include ads. However, platforms face legal challenges, including stringent EU data privacy regulations and the need for a balanced ad experience to maintain viewer satisfaction.
As pay television collapses, Europe’s success in streaming will hinge on whether evolving content delivery and advertising models can lead to a competitive advantage or condemn it to fragmented irrelevance.