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Total AVOD (ad-supported video on-demand) viewership will crack half the US population in 2026. But that will be 5.1 percentage points lower than Netflix鈥檚 penetration rate. And because Netflix recently introduced advertising, a portion of its viewers will be counted as AVOD.

After a rough first quarter with low ad-supported video-on-demand (AVOD) adoption that saw Netflix fail to meet expectations with its first advertisers, Bloomberg reports that Netflix is now properly delivering on its viewership estimates.

Netflix鈥檚 ad tier is less than two years old, but is growing due to its password-sharing crackdown and high demand for connected TV (CTV) advertising. One in 10 US Netflix users will opt for its ad-supported tier next year, and the company鈥檚 US ad revenues will surpass $1 billion, per our March 2024 forecast. Here are five charts demonstrating the progress Netflix has made 鈥攁nd the potential it still holds for advertisers.

Respondents watch free video-on-demand (FVOD) or free live TV streaming services.

Ad-supported video-on-demand (AVOD) and subscription video-on-demand (SVOD) are driving the increases, but the field is crowded. CTV broadly, and subscription over-the-top (sub OTT) specifically, are doing extremely well, but life is tough for individual players because the competition is so fierce. Dozens of service providers will vie for a slice of this year鈥檚 $26.92 billion in spending.

The dip in CTV programmatic advertising reflects the rise of free ad-supported streaming TV (FAST) channels and ad-based video-on-demand (AVOD) tiers, like those introduced by Netflix and Disney+. These additions broaden the number of CTV ad units, leading to lower costs per thousand views (CPMs).

More ad-supported video on connected TVs (CTVs), audiences shifting to hipper social networks, streamlined streaming, and the growth of retail media will affect the media mix in 2023. Connected TV Props Up the TV Ad Market. CTV鈥檚 time has come in Canada. Its audience has been growing for years, and the opportunity for ad-supported video-on-demand (AVOD) has finally arrived at scale.

Late arrivals and free ad-supported streaming TV (FAST) services have built large audiences quickly. Late-to-the-game HBO Max (soon to be just 鈥淢ax鈥�), Paramount+, and Peacock have all built sizable viewer bases in just a few years. Previously lesser-known free services like The Roku Channel, Tubi, and Pluto TV have also surged past the 50 million viewer mark in short order.

Total AVOD (ad-supported video on-demand) viewership will crack half the US population in 2026. But that will be 5.1 percentage points lower than Netflix鈥檚 penetration rate. And because Netflix recently introduced advertising, a portion of its viewers will be counted as AVOD.

That increase is being driven by consumers watching more subscription over-the-top (sub OTT) services such as Amazon Prime and Netflix, more ad-supported video-on-demand (AVOD) services like Hulu and Tubi, and more YouTube. CTV time spent accounts for 84% of time spent with 鈥渙ther connected devices.鈥� This forecast features eMarketer鈥檚 first estimate of US adults鈥� time spent with CTV from 2019 to 2024.

Our take: It may be some time before an ad-supported video-on-demand (AVOD) tier makes its way to Prime Video, but it鈥檚 clear that the company鈥攁nd streaming industry as a whole鈥攁re determined to move in that direction.

Free ad-supported streaming TV (FAST), such as Pluto TV and Tubi. Ad-supported video-on-demand (AVOD), such as The Roku Channel and ad-supported versions of subscription services like Netflix and Disney+. YouTube, which will have nearly 45% of its viewing time on CTVs. Digital live TV services, such as Hulu + Live TV.

Prime Video launched its ad-supported tier this year and is already set to become a major competitor in the subscription, ad-supported video race. Amazon's Q1 ad revenues grew 24% to $11.8 billion thanks in part to Prime Video's ad rollout, which reached about 115 million monthly US viewers.

Why it matters: Amazon joins the growing AVOD market at a strategic moment as the industry leans more toward ad-supported models. The addition is set to more than double Amazon鈥檚 CTV ad revenues from $1.39 billion last year to $3.13 billion in 2024. Will it work?

As streaming costs continue to rise, expect free ad-supported streaming TV and ad-supported video-on-demand services to climb as consumers opt into advertising in exchange for watching their favorite content more cost-effectively. CTV鈥檚 impact on other ad channels. With both viewership and ad inventory growing rapidly, advertisers are coming around on CTV鈥攁nd so are their investments.

The ad-supported video on demand (AVOD) experience could worsen as subscription services adopt ads. They need to be careful not to increase ad loads too much. 鈥淚t is such a slippery slope and so easy to add one more minute here, one more minute there, and then we get back to the awful user experience that linear became,鈥� warned Zucker. This was originally featured in the eMarketer Daily newsletter.

Why it matters: Ad-supported video on demand (AVOD) users often gripe about being bombarded with the same ads over and over again. Streaming ad overexposure also irritates advertisers, who want their campaigns to draw customers rather than tick them off. Getting frequency right helps advertisers achieve better ROI by ensuring that ads are landing with viewers at appropriate intervals.

Perhaps the most notable is ad-supported video-on-demand (AVOD). AVOD services will add 13.3 million US viewers this year, more than triple the 4.3 million that subscription OTT services will add, according to our March forecast. Major services like Disney+ and Netflix have also launched advertising subscription tiers, spurring brand interest.

Free ad-supported streaming TV (FAST), such as Pluto TV and Tubi. Ad-supported video-on-demand (AVOD), such as The Roku Channel and ad-supported versions of subscription services like Netflix and Disney+. YouTube, which will have nearly 45% of its viewing time on CTVs. Digital live TV services, such as Hulu + Live TV.

That extreme spike mostly derives from Amazon switching all Prime Video users to ad-supported video-on-demand (AVOD) status in early 2024, but healthy OTT ad increases will continue beyond this year. Amazon crosses categories more than any other ad industry player: Most of this income will count as CTV ad revenues, and all of it will count as retail media revenues as well.

In 2024, free ad-supported streaming TV (FAST) viewers will reach 104.4 million, while ad-supported video-on-demand (AVOD) viewers will hit 180.2 million, per our forecasts. 40% of US adults have increased their viewing time on FASTs in the past year, according to Aluma Insights. The concurrent growth of viewership and ad loads on FAST and AVOD services may accelerate ad fatigue even further.

For now, consumers are more inclined to pay for an ad-free streaming experience (i.e., subscription video-on-demand, or SVOD) than one with ads (i.e., ad-supported video-on-demand, or AVOD). Subscription OTT penetration is low but poised for growth.

Netflix continues its push into ad-supported video-on-demand (AVOD). Netflix boasted nearly 5 million ad-tier subscribers during its upfront presentation in an effort to secure advertiser confidence in the offering. The increased focus on its ad-supported tier is a concession of sorts for Netflix, which maintained an entirely subscription-based model for years.

CTV鈥檚 share of daily digital media time is still rising and will top 25% this year, due in part to rapid growth in sub OTT and ad-supported video-on-demand (AVOD) time. Meanwhile, social networks鈥� share is slowly declining, from 18.1% this year to 17.7% in 2025. Social time on CTVs is negligible.

US programmatic digital display ad spend will grow 13.3% next year, reaching $178.25 billion, thanks to the rise of video formats on free ad-supported streaming TV channels and ad-supported video-on-demand tiers. Use this chart:. Evaluate your digital display ad spend. Make a case for increased investment in programmatic. More like this:. Preparing for 2024鈥檚 programmatic ad trends and predictions.